May 30, 2007 – Reversal? doubt it.

It is starting off as a beautiful morning. There was snow overnight to put a frost on everything. Very pretty.
This morning from the bedroom window

Pre-market
Yesterday China announced they are going to Triple the tax on securities investments. It is seen as an excuse to sell. I don’t think the market takes too big of a hit. I think the smart money saw some China fallout happening. I actually think the mkt will probably rally off the lows, and rocket back to highs.
I just missed the FXI when it gapped back to 112 a few days back. And with my AVY and AIG shorts, I didn’t want too go short on too much is this bull mkt.
I am looking forward to a summer of chop in the indexes. That will be good for the selling of Iron Condors and other sideways strategies (butterflies, calendars, etc)
It should be a fun trading day

AM Report
The market has come off it’s lows. AVY has acted very poorly. It broke out over it’s previous resistance of 64.32. It bumped it’s head on the 64.70 resistance. If It it retraces so I can get out for a scratch I will get out. If it rises above 64.75, I am out. On to the next trade. UPDATE. I am out. I ended up losing only $20 and some commission. Better to do that, then hang on, losing more, or messing around with a range bound trade. Refer to Mental Capital
I am looking to get out of half of my CIEN, for a 400% gainer. Bought for .15, I just sold them for .65. That works for a nice two-week trade. With a pre-open earnings report, I wanted to take some off the table. I will let the others half ride through earnings. There is still a very nice reward:risk. 2+:1. The spread is moving back in in the afternoon, probably in anticipation of the earnings announcement. If I can get the right price I will buy in the half that I sold at a lower price. (looking at .30)
PALM. dropped below 16, I thought there would be good opportunity to put on a few more Calendar levels at bargain prices. No luck there, but the price rebounded very quickly. Up on the position. There announcement may be this new product It keeps moving up, and is now above the uptrend line.
AMTD.
Interesting trade. Vol is low, yet the Jul/Aug 20p Calendar is very moderately priced @ .15. I have my 4 order units in place, and I will buy down to .11. I have my first and second levels on. This offers a very nice 4:1 reward to risk ratio for 41 days. Breakevens of 18.34 and 22.14. The current price is 19.35, with an uptrend. I also, there is also talk of the retail trader coming alive, which helps AMTD. I will be patient on the fills here. Earnings is just prior to expiration, on July 19.

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