Oil hit a new high record high (hey.....that's new......), so off we go with the Energy stocks this morning. The Chicago PMI comes out 15m after the open, so look for that report to move the market a bit. I am being selective and small as I nibble around this mixed open.
7:32 am MT: I nibbled a small call position on MUR, I also picked up small call positions on CLF, CNX, AGU, and MOS. Basically, between about 7:30 am and 7:45 am I was nibbling on calls. I want 1-2 more Energy stocks and maybe one more Coal stock and I should be set. If we get a nice little pullback intra-day, I will probably add to the positions.
8:20 am MT: Analysts are so focused on oil prices this morning - and the selling from last week, that they haven't even reported (or analyzed) the Chicago PMI, which came out over 30m ago. The number was 49.6 vs 48.0 estimated, which is a very good number that has a decent chance of bouncing the market a little on at least some short-covering. On the previous post I talked about "elevator analysis" in the comments section. Watch today, you may see a living, real-time example of exactly what I mean. Since the analysts (and educators) are fixated on the past, there is almost NO NEWS on the Chicago PMI in real-time. Now, if we do get a bounce, you just watch, every headline or lead-in will have something about "the market went up today because of a better than expected Chicago PMI report." The market hasn't bounced yet, so all the backward thinkers haven't got the guts yet to put out their headlines or analysis. They're waiting for it to happen, then they'll write up a very intelligent-looking report all about what happened earlier in the day. It will look like pure genius because they can tell you all about why the market went up in the past.
I just checked and here is a smattering of current morning headlines: CBS Marketwatch - "Bears Regain the Upper Hand", Yahoo Finance - "Oil Passes 143 a Barrel", MSN Money - "Crude Tops 143 a Barrel", etc. etc. CNBC is focused on how bad the first half of the year was in their headline article, etc. etc. If the market bounces, every one of those headlines will have new elevator analysis by the end of the day which will include something about Manufacturing in the Midwest, or the Chicago PMI. Now, I don't think the Chicago PMI is all that huge, especially with the ISM out tomorrow. But the point is, 99.9% of the "analysis" you see out there is really just elevator analysis, it doesn't help you as a trader.
8:45 am MT: I missed the perfect entry on adding to AUG and MUR because Papermoney went down for about 30 minutes. It is what it is.....I managed to pick up a little more CLF and CNX on that pullback, and then I tried to get the other two trades in and by then the software was down. I also picked up a little call position on DO. I'm loaded about exactly how I want to be right now. If MUR and CLF keep running on a frozen rope today then I will lock down most of those profits before the end of the day.
9:10 am MT: I sold the small position on MUR for a .35 cent profit, or 7% gain intra-day. Normally I would keep half the position since my target is 100 and the stock is not quite there yet, but I didn't get a chance to add to my position earlier because of the software issue with Papermoney.
9:30 am MT: Traders are taking a "selling in Energy and Basic Materials means buy everything else" approach right now. It's nothing new as far as the rotating and gyrating in the market. It will be interesting to see if the market can bounce, and bounce more or less across the board, without the buying in one area being based on the selling in another. I'm speculating that short-covering and some bargain buying in other areas will be enough to bounce the market and that traders won't completely abandon Energy and Basic Materials. However, I took very small positions in those areas just in case the gyrating is more volatile than I expected.
9:45 am MT: I added to the MOS and AGU positions. I still have half-sized positions or less across the board, so I have plenty of wiggle room to withstand some gyrating.
11:15 am MT: Mixed Monday continues as the market sloshes back and forth. I added a little more to the CNX calls earlier. I may take part of my profits on the CLF calls if the stock jumps back up to 122. All in all, things are just kind of crunching along in a lot of sectors. There isn't much momentum in any one place, so it will be interesting to see how the day closes. It may be that the market stays quiet most of the day. It doesn't appear like it's headed towards a late day sell-off because the internals look ok on the SPX.
1:15 pm MT: I sold half the CLF calls for a 1.30 profit, or 12% intra-day on the trade so far.
7:30 pm MT: Market Wrap: Nothing happened today that changed my mind about the market or the sectors that I'm watching or trading. It was a quiet day and more should not be made of it than it was. The Naz, Small Caps, and Mid Caps underperformed, but it was still a pretty quiet day. Analysts lowered estimates on the ISM report due out tomorrow morning, just as I suspected they would. We have a decent chance of getting a number that comes close to the analyst's estimate of 48.6, which could give the market a bump on short covering alone. I suspect that any number over 49 would do the trick, and a number over 49.6 would most probably do it. If the number comes in below 48.0 then we might see another day of selling, with the SPX possibly dropping to 1,256 and the Naz dropping to 2,266. I have fairly small long call positions right now, which is about right for me considering the market conditions IT and ST, and considering the probability of a bounce (I speculate it's about 60% - 65%). If I thought that a bounce was more like a 70% - 75% probability, I would have about twice the position sizing that I have.
We'll see what tomorrow brings.....
Monday, June 30, 2008
Saturday, June 28, 2008
Watchlist Saturday
Here is my watchlist for the upcoming week. I have included a market posture as well. I indicate stocks that may be starting to go bullish (or bearish) but are not quite ready in italics. I indicate stocks that are bullish (or bearish) but may be too extended short term in parenthesis. I indicate stocks that are bullish (or bearish) and might still be playable short term in a regular font. I indicate stocks that are bullish (or bearish) that appear to be closest to a buy signal, or are giving a buy signal, in bold font. The bolded stocks are the most compelling to me because they may be a trade entry soon. I have abbreviated Intermediate Term (IT), and Short Term (ST).
Dow: IT Bearish and ST Neutral. The Dow dumped down through a major support level this past week, and closed at new lows for the year. There is short-term support in the region of 11,200 - 11,300, which the Dow tested yesterday. If we get a bounce back to 11,600 - 11,650 (11,750 is possible, but less likely), the Dow could still roll over and leg down to 11,000 even. Interestingly enough, 10,750 is the 50% retracement of the 5-year Bull Market, so I would expect that to be a critical area if we see some sort of selling climax in the next little while.
SPX: IT Bearish and ST Neutral. The SPX dumped down into a major support zone for the year between 1,256 - 1,274. If we get a bounce back to 1,300 (and maybe even as far as 1,310 - 1,320), the SPX could still roll over and test the 1,255 area. If the Dow has a climactic type of sell-off to 10,750, then the SPX could drop to the 1,220 - 1,240 area, and perhaps as low as 1,200.
Naz: IT Bearish and ST Neutral. The Naz dumped down into a support area of 2,290 - 2,310. If the Naz bounces back to the 2,350 area, it could still roll over and tag the next support zone down in the 2,260 area. The more I look at the long term charts, the more I wonder if the Naz is going to roll down to 2,150 - 2,200. It's amazing to me how desperately bullish Fund Managers were as they gobbled up Tech stocks for 3 months without regard for the macro-economic fundamentals or the Long-Term Head and Shoulders neckline from last year around the 2,540 area, (which you can see really well on a line chart). The high on the Naz before it rolled over was 2,551, surprise surprise.....
Here is my Weekly Watchlist. Make sure to check the option spreads before paper trading. Ideally, I want spreads of .10-.20 cents on options for stocks between 20-200 dollars.
BULLISH SECTORS/GROUPS AND STOCKS:
Short Index ETF's: SRS, (SKF, FXP, QID, TWM, SDS, DXD)
Copper: FCX, PCU
Chemicals/Agriculture: CF, TRA, MOS, CF, AGU, POT
Coal: WLT, ANR, FDG, MEE, ACI, CNX, (FCL)
Energy: ATW, HERO, HK, HP, PCX (probably won't make a higher high), DO, WLL, OXY, SWN, HES, MUR, (WFT, NBR, HP)
Steel: AKS, SCHN, CLF, STLD, X
Gold: (GG, ABX, AEM, NEM)
Note: V, BUCY, FWLT, ILMN, CELG, ACN, FLIR, WYE
BEARISH SECTORS/GROUPS AND STOCKS:
Index ETF's: (IWM, MDY, QQQQ, EEM, DIA, SPY, XLB, IYT, IYR)
Cyclicals: (MMM, UTX, BA)
Defense: (HON, GD, RTN)
Transportion: (UPS, FDX, CHRW)
Tech: (IBM, ERTS, RIMM, ADSK, TYC, TMO, WDC), ADBE, XLNX
Retail: NKE, (BBY, GME)
Manufacturing/Machinery: (ROK, PH, IR, CAT, ETN, EMR, TEX)
Food & Beverage/Personal Products: K, GIS, CL, KO, PG
Leisure: (HOT, LVS, WYNN)
REIT's: PLD
Financials: (TRV, ALL, MET, PRU, COF, AXP, PFG, ICE, NYX, MER, LM), NTRS, STT
Note: CL, IMCL, GILD (Head and Shoulders Top?), MHS, ETR, (BG)
Here is how I think things will go next week. First of all, keep in mind that there are only four trading days since the 4th of July is on Friday. On Monday before the open we get the Chicago PMI. Barring a catastrophic number, we will probably see the markets bounce from an oversold condition short term. The ISM on Tuesday is the second biggest economic report of the month, and again, barring a catastrophic number, look for the upswing to continue. If Factory Orders and the Oil Inventory Report on Wednesday meet expectations, then the swing might even continue into Wednesday, or at least not roll over hard. Thursday we get the Employment Report, which is the biggest economic report of the month. It's coming a day early, but we are still scheduled to get the report as usual. If the Employment Report even meets expectations (-50k on Nonfarm Payrolls and a drop to 5.4% from 5.5% on the Unemployment Rate), and the market has had an upswing for three days prior to the report, then I expect the bulls to lock and walk ahead of the 3-day weekend, which would probably be enough to roll the market back over.
Now, It the Chicago PMI stinks it up on Monday we will probably sell down a little. If the ISM stinks it up on Tuesday - especially in the employment component - then look for a possible climactic type of sell-off into Wednesday. Either way, it looks like the ISM on Tuesday (or possibly the Chicago PMI on Monday) and the Employment Report on Thursday - coming before a 3-day weekend - will act as bookend pivot points for the market next week. I wouldn't be surprised by either one of these scenarios: a bounce early in the week and an fade at the end of the week, or a climactic sell-off early in the week and a bounce on short-covering at the end of the week. I don't care which one it is, but I would give the bounce at the beginning of the week the greater odds, probably a 60% - 65% chance of happening. Look at the DXD or Short-Dow ETF and you get the idea. We are pretty overcooked short-term. It doesn't mean that we won't get some kind of climactic sell-off on catastrophic economic numbers Monday or Tuesday, but we are likely to swing up on the markets before we sell-off again.
Dow: IT Bearish and ST Neutral. The Dow dumped down through a major support level this past week, and closed at new lows for the year. There is short-term support in the region of 11,200 - 11,300, which the Dow tested yesterday. If we get a bounce back to 11,600 - 11,650 (11,750 is possible, but less likely), the Dow could still roll over and leg down to 11,000 even. Interestingly enough, 10,750 is the 50% retracement of the 5-year Bull Market, so I would expect that to be a critical area if we see some sort of selling climax in the next little while.
SPX: IT Bearish and ST Neutral. The SPX dumped down into a major support zone for the year between 1,256 - 1,274. If we get a bounce back to 1,300 (and maybe even as far as 1,310 - 1,320), the SPX could still roll over and test the 1,255 area. If the Dow has a climactic type of sell-off to 10,750, then the SPX could drop to the 1,220 - 1,240 area, and perhaps as low as 1,200.
Naz: IT Bearish and ST Neutral. The Naz dumped down into a support area of 2,290 - 2,310. If the Naz bounces back to the 2,350 area, it could still roll over and tag the next support zone down in the 2,260 area. The more I look at the long term charts, the more I wonder if the Naz is going to roll down to 2,150 - 2,200. It's amazing to me how desperately bullish Fund Managers were as they gobbled up Tech stocks for 3 months without regard for the macro-economic fundamentals or the Long-Term Head and Shoulders neckline from last year around the 2,540 area, (which you can see really well on a line chart). The high on the Naz before it rolled over was 2,551, surprise surprise.....
Here is my Weekly Watchlist. Make sure to check the option spreads before paper trading. Ideally, I want spreads of .10-.20 cents on options for stocks between 20-200 dollars.
BULLISH SECTORS/GROUPS AND STOCKS:
Short Index ETF's: SRS, (SKF, FXP, QID, TWM, SDS, DXD)
Copper: FCX, PCU
Chemicals/Agriculture: CF, TRA, MOS, CF, AGU, POT
Coal: WLT, ANR, FDG, MEE, ACI, CNX, (FCL)
Energy: ATW, HERO, HK, HP, PCX (probably won't make a higher high), DO, WLL, OXY, SWN, HES, MUR, (WFT, NBR, HP)
Steel: AKS, SCHN, CLF, STLD, X
Gold: (GG, ABX, AEM, NEM)
Note: V, BUCY, FWLT, ILMN, CELG, ACN, FLIR, WYE
BEARISH SECTORS/GROUPS AND STOCKS:
Index ETF's: (IWM, MDY, QQQQ, EEM, DIA, SPY, XLB, IYT, IYR)
Cyclicals: (MMM, UTX, BA)
Defense: (HON, GD, RTN)
Transportion: (UPS, FDX, CHRW)
Tech: (IBM, ERTS, RIMM, ADSK, TYC, TMO, WDC), ADBE, XLNX
Retail: NKE, (BBY, GME)
Manufacturing/Machinery: (ROK, PH, IR, CAT, ETN, EMR, TEX)
Food & Beverage/Personal Products: K, GIS, CL, KO, PG
Leisure: (HOT, LVS, WYNN)
REIT's: PLD
Financials: (TRV, ALL, MET, PRU, COF, AXP, PFG, ICE, NYX, MER, LM), NTRS, STT
Note: CL, IMCL, GILD (Head and Shoulders Top?), MHS, ETR, (BG)
Here is how I think things will go next week. First of all, keep in mind that there are only four trading days since the 4th of July is on Friday. On Monday before the open we get the Chicago PMI. Barring a catastrophic number, we will probably see the markets bounce from an oversold condition short term. The ISM on Tuesday is the second biggest economic report of the month, and again, barring a catastrophic number, look for the upswing to continue. If Factory Orders and the Oil Inventory Report on Wednesday meet expectations, then the swing might even continue into Wednesday, or at least not roll over hard. Thursday we get the Employment Report, which is the biggest economic report of the month. It's coming a day early, but we are still scheduled to get the report as usual. If the Employment Report even meets expectations (-50k on Nonfarm Payrolls and a drop to 5.4% from 5.5% on the Unemployment Rate), and the market has had an upswing for three days prior to the report, then I expect the bulls to lock and walk ahead of the 3-day weekend, which would probably be enough to roll the market back over.
Now, It the Chicago PMI stinks it up on Monday we will probably sell down a little. If the ISM stinks it up on Tuesday - especially in the employment component - then look for a possible climactic type of sell-off into Wednesday. Either way, it looks like the ISM on Tuesday (or possibly the Chicago PMI on Monday) and the Employment Report on Thursday - coming before a 3-day weekend - will act as bookend pivot points for the market next week. I wouldn't be surprised by either one of these scenarios: a bounce early in the week and an fade at the end of the week, or a climactic sell-off early in the week and a bounce on short-covering at the end of the week. I don't care which one it is, but I would give the bounce at the beginning of the week the greater odds, probably a 60% - 65% chance of happening. Look at the DXD or Short-Dow ETF and you get the idea. We are pretty overcooked short-term. It doesn't mean that we won't get some kind of climactic sell-off on catastrophic economic numbers Monday or Tuesday, but we are likely to swing up on the markets before we sell-off again.
Friday, June 27, 2008
Market Thumps and Bumps
All the economic reports came in slightly better than expected this morning but the market opened down anyway. This means that there is still some residual selling from yesterday's shock and awe. I am still holding to my thought that we will get a Thump and Bump. We already have had the Thump with the drop at the open. Traders may drift this down for a little while and thump it a little more, but somewhere during the day we could see shorts come in and cover ahead of the weekend.
I will be coming and going on and off throughout the day, so I will post as I can.
8:05 am MT: we just had the first round of short covering the past 10 minutes. If the market does manage to drift back down, don't be as aggressive with your puts today as you were yesterday. At any time the "Twitchies" could come in and try and "outsmart" each other. You should be out of half of yesterday's puts by now and selling the rest into any downdrifts we get today. We may still get another downward drift after this morning's early short-covering, but I expect any new lows to be met with more short-covering, so be nimble today.
10:15 am MT: the market did drift back down to the morning's lows about an hour ago, and the shorts once again covered and ran the market back up. If you are out of about 3/4 of you put positions right now, that's probably a good thing. If the Naz crosses above 2,320, then we might finish the day in the green. If we go north of 2,330, then we might get a bounce that carries over into Monday. It's still possible that the market sells a little more, so a test of 2,300 is not out of the question. At that point I would be out of almost all my put positions and watching for short-covering into the close. So a cross above 2,330 would cause me to bail on the last of my puts, or a drop to 2,300 would cause me to lock down the last of what I had and walk away for the weekend.
1:30 pm MT: the Naz sold off a little more down to 2,290 and the shorts immediately came in and drove the index back up to 2,320. At the start of the bump the Naz had a Morning Star Reversal on the 30m charts. Then the index rolled over again a few minutes ago and the shorts came right back in with a Morning Star on the 5m charts. So the shorts are doing what I thought they would today, they're covering every fade. This is one of those mixed days where the bulls don't want to be long and the bears don't want to be short. By now, I would be scaled out of all my puts, especially on the drop to 2,290 - 2,300. Everything I said about a Thump and Bump is playing out just like I thought, we'll see if this holds into the close. I gave an additional explanation on what a Thump and Bump is in the Comments. A lot of these terms you've never heard of because they are often my own description or name for what I see.
2:05 pm MT: Market Wrap: The Naz did indeed finish the day with a Thump and Bump. The candlestick pattern is similar to a Dragonfly Doji, which is similar to a Hammer. The jist of it is that shorts covered the lows at 2,290 and the Naz finished the day at 2,315. Don't be surprised if we bounce a little more on Monday. The NDX also finished with a Thump and Bump. Last night I posted that I thought we would get a Thump and Bump today and that the Dow would hold 11,250 - 11,300, the SPX would hold 1,275, and the Naz would hold 2,305 - 2,310. Today, the Dow held 11,297, the SPX held 1,272, and the Naz held 2,390 (the Naz was a little lower than I thought it might go, but not entirely unexpected because that was the bottom of the gap on April 15 - April 16). The Dow was the worst performer today and didn't bump much at all, which is not too far off the mark since the Dow has been the worst performer in the market's current bearish IT trend. The SPX has a Spinning Bottom candlestick today (my term for a Spinning Top at a potential swing bottom).
I think the market has about a 60% chance of bouncing a little more on Monday ahead of the big ISM report on Tuesday. Next week will be a big week on the Economic Calendar with the Employment Report, the ISM, and even Factory Orders and Chicago PMI. I'm a little leary of the ISM on Tuesday unless analysts lower their expectations a little bit. Usually the game is for the analysts from financial institutions to put in catastrophic - and therefore easy to beat - expectations. Unless they lower the estimates over the weekend I think the estimates of an ISM number over 49.0 are too high, which could leave the market vulnerable to selling again on Tuesday. I'm expecting the analysts to play the game a little better than that and change the estimates over the weekend. If they do that, and dramatically lower the estimates, and we get a bounce on Monday, then the bounce has a chance to hold up on Tuesday if the ISM numbers are less than catastrophically bad. We will have to get through a less than catastrophically bad Chicago PMI on Monday as well in order for all that to happen. All in all, standing back from the Moon and looking at the Earth from thousands of miles in space, I still think we have a 60% chance of bouncing on Monday.
I will be coming and going on and off throughout the day, so I will post as I can.
8:05 am MT: we just had the first round of short covering the past 10 minutes. If the market does manage to drift back down, don't be as aggressive with your puts today as you were yesterday. At any time the "Twitchies" could come in and try and "outsmart" each other. You should be out of half of yesterday's puts by now and selling the rest into any downdrifts we get today. We may still get another downward drift after this morning's early short-covering, but I expect any new lows to be met with more short-covering, so be nimble today.
10:15 am MT: the market did drift back down to the morning's lows about an hour ago, and the shorts once again covered and ran the market back up. If you are out of about 3/4 of you put positions right now, that's probably a good thing. If the Naz crosses above 2,320, then we might finish the day in the green. If we go north of 2,330, then we might get a bounce that carries over into Monday. It's still possible that the market sells a little more, so a test of 2,300 is not out of the question. At that point I would be out of almost all my put positions and watching for short-covering into the close. So a cross above 2,330 would cause me to bail on the last of my puts, or a drop to 2,300 would cause me to lock down the last of what I had and walk away for the weekend.
1:30 pm MT: the Naz sold off a little more down to 2,290 and the shorts immediately came in and drove the index back up to 2,320. At the start of the bump the Naz had a Morning Star Reversal on the 30m charts. Then the index rolled over again a few minutes ago and the shorts came right back in with a Morning Star on the 5m charts. So the shorts are doing what I thought they would today, they're covering every fade. This is one of those mixed days where the bulls don't want to be long and the bears don't want to be short. By now, I would be scaled out of all my puts, especially on the drop to 2,290 - 2,300. Everything I said about a Thump and Bump is playing out just like I thought, we'll see if this holds into the close. I gave an additional explanation on what a Thump and Bump is in the Comments. A lot of these terms you've never heard of because they are often my own description or name for what I see.
2:05 pm MT: Market Wrap: The Naz did indeed finish the day with a Thump and Bump. The candlestick pattern is similar to a Dragonfly Doji, which is similar to a Hammer. The jist of it is that shorts covered the lows at 2,290 and the Naz finished the day at 2,315. Don't be surprised if we bounce a little more on Monday. The NDX also finished with a Thump and Bump. Last night I posted that I thought we would get a Thump and Bump today and that the Dow would hold 11,250 - 11,300, the SPX would hold 1,275, and the Naz would hold 2,305 - 2,310. Today, the Dow held 11,297, the SPX held 1,272, and the Naz held 2,390 (the Naz was a little lower than I thought it might go, but not entirely unexpected because that was the bottom of the gap on April 15 - April 16). The Dow was the worst performer today and didn't bump much at all, which is not too far off the mark since the Dow has been the worst performer in the market's current bearish IT trend. The SPX has a Spinning Bottom candlestick today (my term for a Spinning Top at a potential swing bottom).
I think the market has about a 60% chance of bouncing a little more on Monday ahead of the big ISM report on Tuesday. Next week will be a big week on the Economic Calendar with the Employment Report, the ISM, and even Factory Orders and Chicago PMI. I'm a little leary of the ISM on Tuesday unless analysts lower their expectations a little bit. Usually the game is for the analysts from financial institutions to put in catastrophic - and therefore easy to beat - expectations. Unless they lower the estimates over the weekend I think the estimates of an ISM number over 49.0 are too high, which could leave the market vulnerable to selling again on Tuesday. I'm expecting the analysts to play the game a little better than that and change the estimates over the weekend. If they do that, and dramatically lower the estimates, and we get a bounce on Monday, then the bounce has a chance to hold up on Tuesday if the ISM numbers are less than catastrophically bad. We will have to get through a less than catastrophically bad Chicago PMI on Monday as well in order for all that to happen. All in all, standing back from the Moon and looking at the Earth from thousands of miles in space, I still think we have a 60% chance of bouncing on Monday.
Thursday, June 26, 2008
Naz Dumps the Market
The GDP report was pretty much in-line with expectations, which is not enough to offset the huge drop in the Naz futures pre-market. See yesterday's Market Wrap for an update on why Tech is down big in pre-market trading. It's looking more and more like the Naz will have it's third nasty bullish bounce headfake in June. We have seen two Bearish Kicking Patterns already. In other words, the Morning Star Reversal, or confirmed bounce on the Naz yesterday is probably going to get blown up this morning. The Naz is probably headed back to 2,350, and maybe lower. Watch for selling in many areas across the Dow and SPX as well. It may be that the market indexes will drop right back down to recent short-term support areas. Be aware of those areas if you decide to trade puts.
I will be looking to exit my FCX and CF calls. I would normally look to trade some puts on the Q's and on some other stocks this morning, but I am leaving for the day right now, so I'm not doing anything myself. I'll be back later in the afternoon to do a market wrap. You can comment to one another through this post if you like.
I sold the FCX calls at breakeven early in the day. I still have a small call position on CF.
9:30 pm MT: Market Wrap: The Naz did indeed finish with its third Bearish Kicking Pattern of the month. The overall market sold off extremely hard, and the Dow finished at new lows for the year. Today played out pretty much how I thought it might, which is why I put out the Red Alert last night and this morning. If you played puts today and locked some or most of the position down before the end of the day, that's exactly what I would have done if I was trading. Now, based on the amount of selling today, I'm looking for a Thump and Bump tomorrow. By that I mean that the market will probably thump down, maybe even gap down a little out of the gate, and then Fast Money may start covering shorts ahead of the weekend, which would give the market a little bump mid-day or later in the day. So I would be selling the rest of my puts into any early weakness tomorrow.
The next support zone for the Naz is 2,300 - 2,310. The next support zone for the SPX is 1,270 - 1,277, with 1,275 being a round number that will probably be on a lot of traders minds. The next key support zone for the Dow is still a long way down at 11,000, although traders often turn the Dow on the 250's as well, so 11,250 could be the area if the Naz and SPX hold the zones I mentioned above. Interestingly enough, the Dow's most significant long-term support level is 10,750, which is the 50% retracement of the Bull Market.
PALM missed earnings and dropped over 4% after hours. The company isn't significant technically, but it could facilitate the Thump out of the gate. Also, before the open tomorrow, if Personal Income and Spending, and Core PCE (an inflation indicator) come out slightly negative or worse, then the Thump would be very likely.
If we get a Thump, I will be looking for the Bump by mid-day or so as the shorts start locking ahead of the weekend. As always, I don't know if we will get a Thump and Bump, but it does time out well considering tomorrow is Friday and shorts are sometimes pretty twitchy ahead of the weekend. And if price action on the markets does play out that way, then I would expect 2,305 - 2,310 to hold on the Naz, 1,275 to hold on the SPX, and 11,250 - 11,300 to hold on the Dow. As always, we shall see.....
Don: I wanted to give you a heads up on ICE. That's bad data coming off of Prophet. The first giveaway is that the after-hours are showing the stock up 7.21, which is exactly what it was down today. The second giveaway is that there is no after-hours news on ICE. The third giveaway is that none of the other exchanges (NYX, NDAQ, etc.) are up significantly after-hours. And the fourth and final giveaway is that I checked with some other chart feeds that I get and nobody else has them up after-hours. So you probably still have a great put trade going with ICE. However, if we get a Thump right out of the gate, you know what to do, right? I don't have to say it.....
As for me, I will be checking in and out during the day tomorrow, so I will post as I can, but I need to attend to some very important family things throughout the day. I will try and keep my nose in the market from time to time, but I won't be super involved. I will be doing the VC tomorrow as usual.
I will be looking to exit my FCX and CF calls. I would normally look to trade some puts on the Q's and on some other stocks this morning, but I am leaving for the day right now, so I'm not doing anything myself. I'll be back later in the afternoon to do a market wrap. You can comment to one another through this post if you like.
I sold the FCX calls at breakeven early in the day. I still have a small call position on CF.
9:30 pm MT: Market Wrap: The Naz did indeed finish with its third Bearish Kicking Pattern of the month. The overall market sold off extremely hard, and the Dow finished at new lows for the year. Today played out pretty much how I thought it might, which is why I put out the Red Alert last night and this morning. If you played puts today and locked some or most of the position down before the end of the day, that's exactly what I would have done if I was trading. Now, based on the amount of selling today, I'm looking for a Thump and Bump tomorrow. By that I mean that the market will probably thump down, maybe even gap down a little out of the gate, and then Fast Money may start covering shorts ahead of the weekend, which would give the market a little bump mid-day or later in the day. So I would be selling the rest of my puts into any early weakness tomorrow.
The next support zone for the Naz is 2,300 - 2,310. The next support zone for the SPX is 1,270 - 1,277, with 1,275 being a round number that will probably be on a lot of traders minds. The next key support zone for the Dow is still a long way down at 11,000, although traders often turn the Dow on the 250's as well, so 11,250 could be the area if the Naz and SPX hold the zones I mentioned above. Interestingly enough, the Dow's most significant long-term support level is 10,750, which is the 50% retracement of the Bull Market.
PALM missed earnings and dropped over 4% after hours. The company isn't significant technically, but it could facilitate the Thump out of the gate. Also, before the open tomorrow, if Personal Income and Spending, and Core PCE (an inflation indicator) come out slightly negative or worse, then the Thump would be very likely.
If we get a Thump, I will be looking for the Bump by mid-day or so as the shorts start locking ahead of the weekend. As always, I don't know if we will get a Thump and Bump, but it does time out well considering tomorrow is Friday and shorts are sometimes pretty twitchy ahead of the weekend. And if price action on the markets does play out that way, then I would expect 2,305 - 2,310 to hold on the Naz, 1,275 to hold on the SPX, and 11,250 - 11,300 to hold on the Dow. As always, we shall see.....
Don: I wanted to give you a heads up on ICE. That's bad data coming off of Prophet. The first giveaway is that the after-hours are showing the stock up 7.21, which is exactly what it was down today. The second giveaway is that there is no after-hours news on ICE. The third giveaway is that none of the other exchanges (NYX, NDAQ, etc.) are up significantly after-hours. And the fourth and final giveaway is that I checked with some other chart feeds that I get and nobody else has them up after-hours. So you probably still have a great put trade going with ICE. However, if we get a Thump right out of the gate, you know what to do, right? I don't have to say it.....
As for me, I will be checking in and out during the day tomorrow, so I will post as I can, but I need to attend to some very important family things throughout the day. I will try and keep my nose in the market from time to time, but I won't be super involved. I will be doing the VC tomorrow as usual.
Wednesday, June 25, 2008
Nasdaq Bounces but the Rest of the Market Doesn't
Important Notice: make sure you read the Market Wrap at the end of today's post.
Durable Orders came in flat, but in-line with expectations. In other words, less than catastrophically bad. That's enough to give the market a slight boost out of the gate. I will watch the first few minutes and decide if I want to lock and walk on my puts. I will probably just sit tight ahead of the Fed.
7:35 am MT: I going to basically do what I said and sit tight on the Bigger Picture. Because my positions are so small, the only put I'm willing to get out of just yet is the QQQQ trade. I want to really stand back from the gyrating and freneticism of the Day Traders as they try to make something out of nothing ahead of the Fed. I will go birdwalking through my Watchlist and look for the next idea, but I'm not looking to do much until late in the day.
8:15 am MT: I decided to cull out the IWM puts for a small .05 cent loss, which is basically a scratch trade. I'll dink around with the tiny put positions I still have on SOHU and the Q's. I may get out of those as the day goes along, but I'm not doing anything dramatic right now.
8:35 am MT: I don't want to watch all the minutia of the Day Traders today, so I sold the last two small put positions. I lost .19 cents on the Q's, and I made .21 cents on SOHU. By the way, for anyone who asks me if I'm a Day Trader because I'm taking my Swing Trade profits on the same day sometimes, or taking the profits quickly.....Here is yet another example of how I had three profitable Swing Trade entries yesterday that I could have locked and walked intra-day yesterday, and instead I chose to carry part of the position overnight. I took 3 winners and turned them into 2 losers and a partial winner. So I paid the price for holding a Swing Trade too long in a Choppy Market. I know I keep hammering on this, but the market is too volatile this year to expect 4-7 day swings most of the time like you would get in normal trending market conditions.
It's interesting because I get comments by "others" all the time like: "Dwight, you're just scalping" or "Dwight is flying around on fire blasting in and out of trades" or "Dwight, you're just generating a ton of commission as you churn and burn through options all day long" or "Dwight you're just a Day Trader" or "Dwight your way of doing things is too fast and too crazy" etc. etc. etc. Those types of comments are coming from less experienced "others" who don't know how to constantly adapt to ever-changing market conditions. Those of you who are directional swing traders will continue to do yourself a favor this year by keeping swings to 1-3 days and taking profits sooner rather than later. We may eventually get back to less choppy conditions, but until then, be nimble.
I will continue to throw out Iron Condors from time to time for those of you who don't want to be directional swing traders right now.
12:20 pm MT: And the Fed announces.....Nothing! Ta daaaa!.....So there was no policy change, and they think the risks for inflation are increasing (however the Fed expects inflation to moderate.....Which is another way of saying that they hope the economy will slow down enough to drop inflation so they don't have to raise interest rates too soon and look like stooges who mishandled the interest rate cuts). Be that all as it may, we are getting a Technical Bounce today, and the Naz may finish with a Morning Star Reversal. I'm not buying the bounce because I won't be able to trade tomorrow, but it's probably worth nibbling on with calls because the bullish swing may last for another day or two.
12:50 pm MT: I paper traded an Iron Condor on SPY again today: a 124/125 (bull put) and 138/139 (bear call). The net credit is paying out anywhere from .30 - .32 cents, which means that it's probably close to .30 cents even on a TOS real money account. So .30 cents of profit with .70 cents of risk, or a 43% return on risk for 22 1/4 days or about 16 1/4 trading days (Fourth of July is in there gobbling up time too!). The short sides are beyond two supports and two resistances as well, so about an 85% probability of success whether you assess that on the charts or on the TOS probability analysis parabola. Any way you slice it, it's a pretty good setup.
1:00 pm MT: I did decide to nibble on FCX and CF calls based on the Hammers that are forming today.
1:45 pm MT: I added a little to the FCX and CF calls. I'm not looking to play much over the next two days, so this is good enough for me, especially since I won't be able to watch it very much tomorrow.
10:15 pm MT: Market Wrap: The Nasdaq bounced with a close-to-perfect Morning Star Reversal, but the Dow and the SPX didn't follow. Earlier in the day Financials, Retail, Tech, Homebuilders, and Cyclicals were all leading the way. But just before the close most stocks in those areas sold off, with Tech managing to hold on to some of the gains. At the same time, a lot of Energy and Commodity stocks, which were selling off early in the day, bounced towards the close. The trading activity by the end of the day was following a three month long theme of buying Energy, Commodity-related, and Tech stocks, while selling Financials, Retail, Homebuilders, Cyclicals, and Consumer Discretionary stocks. Normally I would still be looking for a bounce tomorrow on the Dow and SPX, and a carry through on the bounce from the Naz, despite the end-of-day gyrations. However, after the close RIMM missed earnings and dropped like a cannonball welded to a meteorite. RIMM was down over $11.00 in after-hours trading. In addition, ORCL announced earnings after the close and dropped 3.5% in after-hours trading. And if that wasn't enough of a dog-pile on Tech, ADSK gave earnings guidance after the close and dropped down 2.5% in after-hours trading. Now, that may sound like a lot, but it actually gets worse. In more after-hours trading NKE dropped almost 5% after their earnings announcement. BBBY is the only company of note that is actually up in after-hours trading from their earnings announcement.
It looks very much like the Naz will gap down at the open tomorrow, maybe as low as 2,375 - 2,380. About the only thing that might keep the market afloat early in the day is a positive GDP report, which is due out before the open. If the GDP report can't prop up the Market, the Naz could drop below the 2,368 - 2,375 area, which would signal the possibility of its 3rd Bearish Kicking Pattern in the month of June. A drop below 2,368 - 2,375 would be a potential put opportunity for a move back down to 2,350, and perhaps even lower, over the next several trading days. It could also mean a quick drop on the Dow to 11,600 - 11,700, and a drop on the SPX to 1,295 - 1,300. I don't know if all this will play out, but be extremely cautious about long positions at the open tomorrow morning. We are probably in for a pretty volatile early day of trading, we shall see.....
It is possible, if we get a decent GDP, that the selling is more isolated in Tech, and some sectors may actually try to bounce a little. But tread lightly at first tomorrow morning. I will be looking to exit my two half-sized call positions in FCX (Copper) and CF (Chemicals) early in the day if the market is selling off too much.
One other note: I will only have time to open a post and make a comment or two before I have to go away tomorrow morning. I will be back later in the day to post a market wrap, but I won't be on VC tomorrow night.
Tuesday, June 24, 2008
Market Gyrates Around Ahead of the Fed
Several news reports are probably harbingers of things to come, and it has Wall Street a little spooked in the pre-market. UPS guided down, which is an indication of rising fuel costs and slowing business activity. Dow Chemicals will raise prices as much as 25% in July to offset rising fuel costs. Bernanke is already starting the rhetoric to raise rates as soon as August because of.....drum roll please.....rising fuel costs.
And of course, you can't have news without the other half of the issue.....Financial companies are expected to lay off as many as many as 175,000 employees by this time next year. The Financial sector has shed 83,000 jobs in the past year and some analysts think the worst is yet to come.
Sssooooooooo, I'll be looking for puts on the Q's, SPY, MDY (if the spreads are good), and perhaps a few other stocks this morning. In addition, if Energy and Commodity stocks gap up at all at the open, I will lock and walk on the calls from yesterday. I'm not looking to get too excited about piling on to a bunch of trades ahead of the Fed tomorrow, I just want a few puts, and I want to scale out of my calls a bit.
7:35 am MT: I hit my profit target of 115.00 on CLF so I sold the position. I took part of the profits on X. I took part of the profit on HK right out of the gate, and then on the big fade I sold the rest. DNR was very fussy out of the gate, the option chain would not open when I had a profit on the early move up. So I stopped DNR on the fade when the option chain finally opened for a .05 cent loss (basically a scratch trade). I will probably never trade DNR again since the market makers on the options aren't playing fair. I also picked up a set of Q's puts on the pop up after the gap down.
7:45 am MT: I sold the last of the X calls, and I'm all out of the calls from yesterday. I said that I expected the calls to be a quick trade early this week, and they were. Here are the final results on the calls from yesterday: DNR was a scratch that lost .05 cents. HK was a .40 cent profit, or 6% gain. CLF was a 1.90 profit, or 16% gain. X was a 1.78 profit, or 17% gain. I went over 80k in profits on the year this morning (starting with the 50k account in January).
8:00 am MT: I nibbled a small put position on SOHU. I also picked up a tiny put position on IWM. I'm expecting both to bounce this morning, so the small position is really a chaser to hedge against a dogpile. But I think they will bounce, and allow me to get a nice entry for the rest of the position. Remember, with the Fed tomorrow, and a bunch of economic reports as well, and RIMM earnings after the close tomorrow (and ORCL, NKE and MON earnings tomorrow as well), I don't want to get too loaded up on puts heading into a very "newsy" day.
8:15 am MT: I added a little to the IWM puts on this intra-day bounce.
8:50 am MT: I added a little to the SOHU puts on the little intra-day bounce.
9:00 am MT: I know that many of you want to experiment with options strategies that are less time consuming to manage. So I will throw out Iron Condor setups from time to time that I like. Here is as close to a no-brainer as it gets. The SPY July 125/124 (bull put) and 138/139 (bear call) Iron Condor will net about .30 cents credit right now, with only .70 cents of risk. That's a 43% return on risk for only 24 days, and it's only a one point spread. It's a pretty darn good setup as far as Iron Condors go, I will paper trade it and I suggest those of you who are interested in "easy to manage" options strategies also paper trade it.
9:20 am MT: I finished adding to the IWM and SOHU puts. I'm set for the rest of the day and looking for a fade. I have small enough positions that I may carry these through the "newsy" day that I expect tomorrow. I'm not looking at any calls right now, but as always, that could change if we get strong technical signals.
11:00 am MT: The Dow is trying to hold support, and the Dow's technical bounce is setting off short-covering in Financials. Because the Dow and SPX are trying to hold support areas, and because of the newsy day we are headed towards tomorrow, I am holding only 3 small put positions. I want most of my portfolio in cash today. There's not much else to say, or do for that matter. And it will get quieter as we get closer to the Fed tomorrow. So I'm just sitting tight for now.
1:00 pm MT: Not much has changed in the past two hours other than the indexes made a lower low on the 5m charts and might be in a Bear Flag right now on those same 5m charts. That could lead to a fade into the end of the day. In the Big Picture, the market is just spinning it's wheels in the mud, but the mud is still sliding the car downhill despite the fact that the Dow and the SPX are at support on the Daily Chart. If we roll down near the days lows, I will take half my profits on the Q's and IWM puts, and about 1/3 my profits on the SOHU puts.
1:06 pm MT: The Bear Flag on the 5m charts did play out to the downside, so we'll see if the market finishes the day down near the lows or not. It's basically a toss of the coin to me on the last hour. But like I said, in the Big Picture the market is still pretty squishy despite being at support.
1:55 pm MT: I sold a small portion of the Q's, IWM, and SOHU puts before the close. So far I am making about 5% on the Q's, 5% on IWM, and 9% on SOHU. I kept a majority of the positions and I will look for a bump down in the morning to sell most of the rest ahead of the Fed. I think that after the first hour or so tomorrow morning that the market will probably get really quiet and flat. We'll see if the economic reports (especially the Durable Orders) gives me a gap down in the morning that I can immediately sell my puts into and lock ahead of the Fed.
7:15 pm MT: Market Wrap: The Nasdaq broke support at 2,385 - 2,390 and immediately dropped to the next support level at 2,350 - 2,352. With all three major indices testing supports today, it is likely that they hold those levels at least until the Fed announcement tomorrow in the middle of the day. It's possible that a poor Durable Orders report drops the market back down to those areas tomorrow morning before the Fed, but I'm speculating the supports hold until the announcement. If the market does drop down right out of the gate, or in the first hour, I will exit the rest of my three put positions and then probably just sit tight until the announcement.
One quick note: I'm taking Thursday off, but I will probably open a post on Thursday anyway so you can comment to each other. I may have enough time to throw a couple of market comments on the post on Thursday, but I won't be around for most of the day, and I won't be doing the VC on Thursday.
And of course, you can't have news without the other half of the issue.....Financial companies are expected to lay off as many as many as 175,000 employees by this time next year. The Financial sector has shed 83,000 jobs in the past year and some analysts think the worst is yet to come.
Sssooooooooo, I'll be looking for puts on the Q's, SPY, MDY (if the spreads are good), and perhaps a few other stocks this morning. In addition, if Energy and Commodity stocks gap up at all at the open, I will lock and walk on the calls from yesterday. I'm not looking to get too excited about piling on to a bunch of trades ahead of the Fed tomorrow, I just want a few puts, and I want to scale out of my calls a bit.
7:35 am MT: I hit my profit target of 115.00 on CLF so I sold the position. I took part of the profits on X. I took part of the profit on HK right out of the gate, and then on the big fade I sold the rest. DNR was very fussy out of the gate, the option chain would not open when I had a profit on the early move up. So I stopped DNR on the fade when the option chain finally opened for a .05 cent loss (basically a scratch trade). I will probably never trade DNR again since the market makers on the options aren't playing fair. I also picked up a set of Q's puts on the pop up after the gap down.
7:45 am MT: I sold the last of the X calls, and I'm all out of the calls from yesterday. I said that I expected the calls to be a quick trade early this week, and they were. Here are the final results on the calls from yesterday: DNR was a scratch that lost .05 cents. HK was a .40 cent profit, or 6% gain. CLF was a 1.90 profit, or 16% gain. X was a 1.78 profit, or 17% gain. I went over 80k in profits on the year this morning (starting with the 50k account in January).
8:00 am MT: I nibbled a small put position on SOHU. I also picked up a tiny put position on IWM. I'm expecting both to bounce this morning, so the small position is really a chaser to hedge against a dogpile. But I think they will bounce, and allow me to get a nice entry for the rest of the position. Remember, with the Fed tomorrow, and a bunch of economic reports as well, and RIMM earnings after the close tomorrow (and ORCL, NKE and MON earnings tomorrow as well), I don't want to get too loaded up on puts heading into a very "newsy" day.
8:15 am MT: I added a little to the IWM puts on this intra-day bounce.
8:50 am MT: I added a little to the SOHU puts on the little intra-day bounce.
9:00 am MT: I know that many of you want to experiment with options strategies that are less time consuming to manage. So I will throw out Iron Condor setups from time to time that I like. Here is as close to a no-brainer as it gets. The SPY July 125/124 (bull put) and 138/139 (bear call) Iron Condor will net about .30 cents credit right now, with only .70 cents of risk. That's a 43% return on risk for only 24 days, and it's only a one point spread. It's a pretty darn good setup as far as Iron Condors go, I will paper trade it and I suggest those of you who are interested in "easy to manage" options strategies also paper trade it.
9:20 am MT: I finished adding to the IWM and SOHU puts. I'm set for the rest of the day and looking for a fade. I have small enough positions that I may carry these through the "newsy" day that I expect tomorrow. I'm not looking at any calls right now, but as always, that could change if we get strong technical signals.
11:00 am MT: The Dow is trying to hold support, and the Dow's technical bounce is setting off short-covering in Financials. Because the Dow and SPX are trying to hold support areas, and because of the newsy day we are headed towards tomorrow, I am holding only 3 small put positions. I want most of my portfolio in cash today. There's not much else to say, or do for that matter. And it will get quieter as we get closer to the Fed tomorrow. So I'm just sitting tight for now.
1:00 pm MT: Not much has changed in the past two hours other than the indexes made a lower low on the 5m charts and might be in a Bear Flag right now on those same 5m charts. That could lead to a fade into the end of the day. In the Big Picture, the market is just spinning it's wheels in the mud, but the mud is still sliding the car downhill despite the fact that the Dow and the SPX are at support on the Daily Chart. If we roll down near the days lows, I will take half my profits on the Q's and IWM puts, and about 1/3 my profits on the SOHU puts.
1:06 pm MT: The Bear Flag on the 5m charts did play out to the downside, so we'll see if the market finishes the day down near the lows or not. It's basically a toss of the coin to me on the last hour. But like I said, in the Big Picture the market is still pretty squishy despite being at support.
1:55 pm MT: I sold a small portion of the Q's, IWM, and SOHU puts before the close. So far I am making about 5% on the Q's, 5% on IWM, and 9% on SOHU. I kept a majority of the positions and I will look for a bump down in the morning to sell most of the rest ahead of the Fed. I think that after the first hour or so tomorrow morning that the market will probably get really quiet and flat. We'll see if the economic reports (especially the Durable Orders) gives me a gap down in the morning that I can immediately sell my puts into and lock ahead of the Fed.
7:15 pm MT: Market Wrap: The Nasdaq broke support at 2,385 - 2,390 and immediately dropped to the next support level at 2,350 - 2,352. With all three major indices testing supports today, it is likely that they hold those levels at least until the Fed announcement tomorrow in the middle of the day. It's possible that a poor Durable Orders report drops the market back down to those areas tomorrow morning before the Fed, but I'm speculating the supports hold until the announcement. If the market does drop down right out of the gate, or in the first hour, I will exit the rest of my three put positions and then probably just sit tight until the announcement.
One quick note: I'm taking Thursday off, but I will probably open a post on Thursday anyway so you can comment to each other. I may have enough time to throw a couple of market comments on the post on Thursday, but I won't be around for most of the day, and I won't be doing the VC on Thursday.
Monday, June 23, 2008
Mixed Day on Wall Street
The market is set for a quiet, slightly positive open. Steel is in the news with X getting an upgrade from GS, so watch for X to break it's Rectangle trading range. I may stop out of CLF first thing this morning if it moves up too much.
7:32 am MT: I stopped out of the last portion of my CLF puts. The final trade was a .48 cent profit, or 5.5% gain. GS did a nice job of blowing up the put. But I'm not convinced that GS is right, so I'm not buying X calls. I think some old fashioned manipulation was going on here, but it's a long day so we'll see how it goes, I'm still open to the possibility that I might buy calls on X.
7:45 am MT: I'm still assessing this, but I think the little wiggle up this morning actually increases the likelihood of more selling today. I think that some institutions are either hoping or manipulating. Either way, I would be very cautious of buying calls just yet. It may be ok later, but I'm just watching right now, and wondering if this is going to sell down some more.
8:00 am MT: It's worth it to take a moment and read my response to Krystal's comment from yesterday's post in the Comments section.
8:05 am MT: The SPX broke a 2-Day Channel and may be headed towards Friday's low. I took a little more profit on the Q's puts. I will take a little more profit at Friday's low on the SPY puts. I'm also doing a little day trade with X calls on the Morning Star off the gap at 186. I'm not throwing this trade out there in general, it's just a little thing I'm doing because of a pattern signal. I will probably be out in under 30 minutes.
8:15 am MT: The SPX is holding Friday's lows for now, so I sold the rest of my SPY and Q's puts, and I'll watch the price action intra-day for awhile to decide what my next trade will be. The Q's put was a .20 cent profit, or 8% gain. The SPY put was a .22 cent profit, or 5% gain.
8:20 am MT: I sold half the X calls for a profit.
8:30 am MT: I sold the second half of the X calls and locked in my profits. The X day swing was a .60 cent profit, or 5% gain in 20 minutes. It looks like Steel really has come to life, so I may buy calls on X, CLF, or SCHN on the next intra-day pullback. It may seem a little weird to you that I traded the X calls just now, but I was actually throwing a test trade at Steel to see if it was a real move or not today. So far it looks pretty good, and now I'm willing to go back in and swing trade calls on the sector.
8:52 am MT: With the Nasdaq breaking down to new lows, and sitting right at the June 12th lows, I bought back in to some Q's puts. I'm speculating that the June 12th lows won't hold. As always, we shall see.....
One quick Fed note for Wednesday's rate announcement. Fed Funds Future's traders are pricing in a non-event, or in other words traders don't expect a rate cut or a rate hike. However, what traders are looking for is a "language" change, which is trader lingo for: "will the Fed start hinting at future rate hikes?" Most traders are expecting just that, a shift in sentiment by the Fed as they focus more on fighting inflation (I'm not going to say it, I'm not going to say it, I'm not going to say it......ok, I did my "serenity now" exercises and I'm not going to say it). It is interesting to note that FFF traders have really spiked the odds of a rate hike recently. Now the FFF are forecasting a .25 bp hike at either the August 5 or September 16 FOMC meeting. In addition, the FFF are predicting .50 bp of hikes by the October 28/29 FOMC meeting. And if that wasn't enough, FFF traders are actually predicting as much as .75 bp in hikes by the December 16 meeting. That's NOT what the market wants to see, but stock traders have been staring down the barrel of that gun since June 6th, which is exactly when the SPX reversed down and blasted through the 50dma. I still think the market may bounce in the next day or so, but any short term bounce is going to have a tough time making a lot of headway in our current market environment.
9:15 am MT: I picked up a small call position on DNR. I might do the same with HK. I am still watching X, CLF, and SCHN for small call positions.
Here is my Analyst of the Day: Goldman Sachs downgraded both the Financial sector and the Consumer Discretionary sector to Underweight this morning, stating that those sectors will "lag in the current economic environment." Really?.....really Goldman, you think?!!?......So what you're saying is that you've finally figured out that Financials and Consumer Leisure/Entertainment/Frivolous spending will underperform? Really?.....excellent recognition skills! Meanwhile the rest of us have been playing puts on those sectors for most of the year.....There you have it, Goldman Sachs wins my Analyst of the Day award.
Here are some interesting bullish movers today: CLF, FSLR, HK, NOV, SWN, WLT, FLR, UPL, FTI, X, PCU, PTEN, DNR, TRMB. There's more, but those were some of the most interesting to me. Note that Energy and Steel are two of the strongest sectors, and Gold appears to be coming to life, probably as an inflation hedge.
Here are some interesting bearish movers today: WDC, DRYS, EXM, COH, JPM, ADSK, VRSN, ANF, ICE, KSS, KLAC, TGT, RTH, BBY, PH. There's more, but I'm mostly focused on the Index ETF's like the Q's. Note that Retail, Consumer Discretionary, Financials, Oil Shipping, and Tech are some of the worst performing sectors.
11:15 am MT: I picked up partial call positions on X, CLF, and HK. I'm looking to carry the positions for a couple of days.
11:30 am MT: I had to sell a little of the CLF for a profit, it's just so red hot so fast. I'm holding part of the position, and I will add to the position if it pulls back a little intra-day, but the stock is so hot right now that I have to lock down those profits. The CLF trade is a .65 cent profit, or 8% gain in a few minutes (so far). I sold half the position, but I will be looking to buy right back in before the close.
12:00 pm MT: I bought back a couple of the calls on CLF cheaper than the original entry a few minutes ago. CLF basically gave me a cookie, so I took it a couple minutes ago. I'll look for another cookie tomorrow.
12:20 pm MT: I sold the CLF calls again for another profit. The stock is just so screaming hot intra-day that I really think I have a good chance of getting the calls cheaper before the end of the day, but we shall see.....The final trade was a .44 cent profit or 6% gain intra-day. I'm floating an order to buy the August 110 calls at 11.50 or better before the close. I'm just fine with the other call trades for now, and I will even look to add to those positions before the close.
12:37 pm MT: With the Naz holding support and the Q's starting to form a Hammer late in the day, I stopped out of the Q's puts for a .27 cent loss, or 9%. I will now wait for a more significant breakdown of the 2,390 area to buy puts. The market gave a little headfake through that area this morning, but it reversed and has created a little uncertainty for Q's puts now, at least until I see more confirmation.
1:35 pm MT: I nibbled back in to a CLF call, there has been no pullback on this stock today. I'm still looking for any pullback to add to the position, but this may hold and gap up tomorrow.
1:50 pm MT: I nibbled a little more on CLF on this little wiggle back just before the close. I'm playing Steel and Energy for another 1-2 days in this swing. If we get a big gap up in the morning on any of the stocks I bought calls on (CLF, X, DNR, HK) then I will immediately sell half the position.
Market Wrap: The Dow and SPX finished with Dojis today, and had a very narrow trading range. The Naz faded in the last hour right to support. I am currently holding calls on CLF, X, DNR, and HK (Energy and Steel), and I don't have any puts. If the indexes break today's lows tomorrow morning, I will probably jump back in to puts on the Q's, MDY, and maybe even SPY and DIA. There was a lot of gyrating around in the news, but most of it was pretty typical to our current environment. Oil was up, Financials were down, and Tech continues to weaken. Traders may be approaching Wednesday as a catalyst day for the next move. I thought we might get a technical bounce by Tuesday, but so far Traders are not acting like they are in the mood to speculate ahead of the Fed. The FOMC meeting is a two-day affair this go around, so it officially kicks off tomorrow, although the probability is that nothing significant will happen until Wednesday.
7:32 am MT: I stopped out of the last portion of my CLF puts. The final trade was a .48 cent profit, or 5.5% gain. GS did a nice job of blowing up the put. But I'm not convinced that GS is right, so I'm not buying X calls. I think some old fashioned manipulation was going on here, but it's a long day so we'll see how it goes, I'm still open to the possibility that I might buy calls on X.
7:45 am MT: I'm still assessing this, but I think the little wiggle up this morning actually increases the likelihood of more selling today. I think that some institutions are either hoping or manipulating. Either way, I would be very cautious of buying calls just yet. It may be ok later, but I'm just watching right now, and wondering if this is going to sell down some more.
8:00 am MT: It's worth it to take a moment and read my response to Krystal's comment from yesterday's post in the Comments section.
8:05 am MT: The SPX broke a 2-Day Channel and may be headed towards Friday's low. I took a little more profit on the Q's puts. I will take a little more profit at Friday's low on the SPY puts. I'm also doing a little day trade with X calls on the Morning Star off the gap at 186. I'm not throwing this trade out there in general, it's just a little thing I'm doing because of a pattern signal. I will probably be out in under 30 minutes.
8:15 am MT: The SPX is holding Friday's lows for now, so I sold the rest of my SPY and Q's puts, and I'll watch the price action intra-day for awhile to decide what my next trade will be. The Q's put was a .20 cent profit, or 8% gain. The SPY put was a .22 cent profit, or 5% gain.
8:20 am MT: I sold half the X calls for a profit.
8:30 am MT: I sold the second half of the X calls and locked in my profits. The X day swing was a .60 cent profit, or 5% gain in 20 minutes. It looks like Steel really has come to life, so I may buy calls on X, CLF, or SCHN on the next intra-day pullback. It may seem a little weird to you that I traded the X calls just now, but I was actually throwing a test trade at Steel to see if it was a real move or not today. So far it looks pretty good, and now I'm willing to go back in and swing trade calls on the sector.
8:52 am MT: With the Nasdaq breaking down to new lows, and sitting right at the June 12th lows, I bought back in to some Q's puts. I'm speculating that the June 12th lows won't hold. As always, we shall see.....
One quick Fed note for Wednesday's rate announcement. Fed Funds Future's traders are pricing in a non-event, or in other words traders don't expect a rate cut or a rate hike. However, what traders are looking for is a "language" change, which is trader lingo for: "will the Fed start hinting at future rate hikes?" Most traders are expecting just that, a shift in sentiment by the Fed as they focus more on fighting inflation (I'm not going to say it, I'm not going to say it, I'm not going to say it......ok, I did my "serenity now" exercises and I'm not going to say it). It is interesting to note that FFF traders have really spiked the odds of a rate hike recently. Now the FFF are forecasting a .25 bp hike at either the August 5 or September 16 FOMC meeting. In addition, the FFF are predicting .50 bp of hikes by the October 28/29 FOMC meeting. And if that wasn't enough, FFF traders are actually predicting as much as .75 bp in hikes by the December 16 meeting. That's NOT what the market wants to see, but stock traders have been staring down the barrel of that gun since June 6th, which is exactly when the SPX reversed down and blasted through the 50dma. I still think the market may bounce in the next day or so, but any short term bounce is going to have a tough time making a lot of headway in our current market environment.
9:15 am MT: I picked up a small call position on DNR. I might do the same with HK. I am still watching X, CLF, and SCHN for small call positions.
Here is my Analyst of the Day: Goldman Sachs downgraded both the Financial sector and the Consumer Discretionary sector to Underweight this morning, stating that those sectors will "lag in the current economic environment." Really?.....really Goldman, you think?!!?......So what you're saying is that you've finally figured out that Financials and Consumer Leisure/Entertainment/Frivolous spending will underperform? Really?.....excellent recognition skills! Meanwhile the rest of us have been playing puts on those sectors for most of the year.....There you have it, Goldman Sachs wins my Analyst of the Day award.
Here are some interesting bullish movers today: CLF, FSLR, HK, NOV, SWN, WLT, FLR, UPL, FTI, X, PCU, PTEN, DNR, TRMB. There's more, but those were some of the most interesting to me. Note that Energy and Steel are two of the strongest sectors, and Gold appears to be coming to life, probably as an inflation hedge.
Here are some interesting bearish movers today: WDC, DRYS, EXM, COH, JPM, ADSK, VRSN, ANF, ICE, KSS, KLAC, TGT, RTH, BBY, PH. There's more, but I'm mostly focused on the Index ETF's like the Q's. Note that Retail, Consumer Discretionary, Financials, Oil Shipping, and Tech are some of the worst performing sectors.
11:15 am MT: I picked up partial call positions on X, CLF, and HK. I'm looking to carry the positions for a couple of days.
11:30 am MT: I had to sell a little of the CLF for a profit, it's just so red hot so fast. I'm holding part of the position, and I will add to the position if it pulls back a little intra-day, but the stock is so hot right now that I have to lock down those profits. The CLF trade is a .65 cent profit, or 8% gain in a few minutes (so far). I sold half the position, but I will be looking to buy right back in before the close.
12:00 pm MT: I bought back a couple of the calls on CLF cheaper than the original entry a few minutes ago. CLF basically gave me a cookie, so I took it a couple minutes ago. I'll look for another cookie tomorrow.
12:20 pm MT: I sold the CLF calls again for another profit. The stock is just so screaming hot intra-day that I really think I have a good chance of getting the calls cheaper before the end of the day, but we shall see.....The final trade was a .44 cent profit or 6% gain intra-day. I'm floating an order to buy the August 110 calls at 11.50 or better before the close. I'm just fine with the other call trades for now, and I will even look to add to those positions before the close.
12:37 pm MT: With the Naz holding support and the Q's starting to form a Hammer late in the day, I stopped out of the Q's puts for a .27 cent loss, or 9%. I will now wait for a more significant breakdown of the 2,390 area to buy puts. The market gave a little headfake through that area this morning, but it reversed and has created a little uncertainty for Q's puts now, at least until I see more confirmation.
1:35 pm MT: I nibbled back in to a CLF call, there has been no pullback on this stock today. I'm still looking for any pullback to add to the position, but this may hold and gap up tomorrow.
1:50 pm MT: I nibbled a little more on CLF on this little wiggle back just before the close. I'm playing Steel and Energy for another 1-2 days in this swing. If we get a big gap up in the morning on any of the stocks I bought calls on (CLF, X, DNR, HK) then I will immediately sell half the position.
Market Wrap: The Dow and SPX finished with Dojis today, and had a very narrow trading range. The Naz faded in the last hour right to support. I am currently holding calls on CLF, X, DNR, and HK (Energy and Steel), and I don't have any puts. If the indexes break today's lows tomorrow morning, I will probably jump back in to puts on the Q's, MDY, and maybe even SPY and DIA. There was a lot of gyrating around in the news, but most of it was pretty typical to our current environment. Oil was up, Financials were down, and Tech continues to weaken. Traders may be approaching Wednesday as a catalyst day for the next move. I thought we might get a technical bounce by Tuesday, but so far Traders are not acting like they are in the mood to speculate ahead of the Fed. The FOMC meeting is a two-day affair this go around, so it officially kicks off tomorrow, although the probability is that nothing significant will happen until Wednesday.
Saturday, June 21, 2008
Success Stories
I created this post so that you can see some positive trading experiences from your fellow traders. I will put some of your success stories on this post and keep adding to it over time. I think it will be a great way for you to support and inspire each other to persevere, even in challenging conditions.
If you have what you think are even modest successes, like going from losing money consistently to being breakeven, then share the story if you like in the comments section after any current post. Even those kinds of advancements for a beginning trader are crucial. And if you have had a profitable week or month, even under tough, choppy market conditions, then again, share the story if you like because those successes are actually more remarkable than many of you realize, especially for new options traders. Tell me your trading successes, whatever they are, and I will pass them along for everyone's benefit.
SUCCESS STORIES:
If you have what you think are even modest successes, like going from losing money consistently to being breakeven, then share the story if you like in the comments section after any current post. Even those kinds of advancements for a beginning trader are crucial. And if you have had a profitable week or month, even under tough, choppy market conditions, then again, share the story if you like because those successes are actually more remarkable than many of you realize, especially for new options traders. Tell me your trading successes, whatever they are, and I will pass them along for everyone's benefit.
SUCCESS STORIES:
Dwight,
I started investools Jan 2008. I really started following you in March. When I decided to learn how to trade, I decided to set up a small account. I wanted to be conservative since I knew nothing about the market.
I thought you would interested in some numbers.
Jan-Feb - My account dropped 20% (pre-Dwight)
March-Today - My account has increased 62% from that point.
Thanks
Chic
June 20, 2008 9:39 PM
I started listening to Dwight 2 weeks ago and since that time here is what I have done.
25 wins
13 loses
10% overall gain after commisions in my account and a great trade on ANR Friday morning got filled at $10.30 and out at $14.45 in 2 hours.Correct me if I'm wrong but I think that qualifies for a Snoopy Dance.So thanks Dwight for the help and the extra effort in your page.
Garrett
June 28, 2008 2:03 PM
Dwight,
I got stopped out on one of my bear call spreads first thing this morning, then the stock price dropped back down. This made me mad enough to want to throw out all my stop loss rules (arghh*!@#!**). I said to myself, I'll just follow Dwight today WITHOUT MY RULES, and guess what: I made more than double REAL money on BNI with you (double the loss on my stopped out order). YOU helped me turn a losing day into a winning one, Dwight!
I realize that having made this money was just a quick fix, and following you does not make me a trader; only a copycat. But if I copy you enough times, I could learn to trade a bit more like you, with similar return rates (I hope sooner than later). In case you are bothered that you may be enabling the Mavericks and Gooses come lately, remember, THE TEACHER LEARNS MORE than his students, BY TEACHING the Mavericks and Gooses.
Ilona
Hey Dwight..
I love your insight and wisdom. Thank you for taking the time to go into your ideas and real life stuff.
I held my ultra shorts until this am and the market did what you said it would. I was out flat within 10 minutes on 7 positions and had the biggest day I have EVER had.. huge... THANKS for all you do for us.
Bill F
Watchlist Saturday
Here is my watchlist for the upcoming week. I have included a market posture as well. I indicate stocks that may be starting to go bullish (or bearish), or are bullish (or bearish) but are not quite ready in italics. I indicate stocks that are bullish (or bearish) but may be too extended short term, in parenthesis. I indicate stocks that are bullish (or bearish) and might be playable short term in a regular font. I indicate bullish (or bearish) stocks that appear to be close to a buy signal, or are giving a buy signal, in bold font. The bolded stocks are the most compelling to me because they may be a trade entry soon. I have abbreviated Intermediate Term (IT), and Short Term (ST).
Dow: IT Bearish and ST Bearish to Neutral. The Dow is flying down to support at 11,750 on heavy selling volume, and may finish the job on Monday. The market is getting fairly close to the Bernanke Pavlov Zone or BPZ, so don't be surprised by some sort of rhetoric coming from the Fed early next week. ST resistance is at 12,000.
SPX: IT Bearish and ST Bearish to Neutral. The SPX is also falling pretty hard on heavier volume. There is ST support at 1,310, and then again at 1,300. The BPZ on the SPX is 1,275, so the SPX is not falling quite as fast as the Dow. ST resistance is at 1,325 and then again at 1,342.
Naz: IT Bearish and ST Bearish to Neutral. The Naz has two Bearish Kicking Patterns in June (June 6 and June 20). That's two nasty headfakes in a little over two weeks, which doesn't bode well for Tech stocks, at least for several more weeks. We may see nice bounces next week, but expect them to be short-lived, and expect the general Tech stock trend to continue consolidating on the IT, and perhaps go more bearish. The Naz has ST support between 2,388 - 2,400. The next support down is 2,350. Resistance is 2,430.
The Dow has been downtrending for a month, and the SPX is not far behind. The Naz and the NDX are currently rolling down from Double-Tops, which are looking a little like Rounding Tops as well. Now, even the Small Caps (SML), and the Mid Caps (MID) are forming Head and Shoulders Tops (unconfirmed but getting close). This means that the Russell 2000 (RUT) is also forming a Head and Shoulders Top. We may get oversold short term sometime on Monday, or perhaps Tuesday at the latest, but any ST bounces won't change the IT trend right away. We may be in for more bearish trading at least until the speculation on July Earnings Season kicks in early next month.
I'm very comfortable with the Q's puts right now. Several of the Mid Cap and Small Cap indexes and stocks could continue to roll down Monday and perhaps Tuesday. I think that Tech, Energy, some Metals, and some other Commodity areas look pretty weak short-term. I think the "Energy down and Market up" trade may not be as correlated as it was the past month. It looks like most everything is consolidating on the "Economic Slowing" and "Summer Slowing" sentiment which has picked up momentum with traders the past 2-3 weeks. I am still looking for a bounce on Monday or Tuesday, and I may play some quick calls, but the overall market is decidedly bearish.
Here is my Weekly Watchlist. Make sure to check the option spreads before paper trading. Ideally, I want spreads of .10-.20 cents on options for stocks between 20-200 dollars.
BULLISH SECTORS/GROUPS AND STOCKS:
Short Index ETF's: FXP, QID, TWM, SRS, (SDS, DXD)
Copper: PCU (but FCX is rolling over, so watch PCU closely)
Chemicals/Agriculture: (CF, TRA, MOS, AGU), POT
Coal: (MEE, ANR, CNX, ACI, WLT)
Energy: (PXD, NBR, HK, CHK, HP, ESV, DNR)
Steel: X, STLD
Railroads: UNP, NSC, CSX
Tech: (ENER, ATVI), RIMM, CSIQ
Note: APOL, GS, JOYG, CMI
BEARISH SECTORS/GROUPS AND STOCKS:
Manufacturing/Machinery: IR, EMR, PH
Financials: (ALL, TRV, COF, AXP, PRU, MER), ICE
Index ETF's: IWM, MDY, QQQQ, EWZ, EEM, (DIA, SPY)
Defense: (HON, GD)
Leisure: (HOT, LVS), WYNN
REIT's: PLD
Oil Shipping: DRYS, EXM, GNK
Note: A lot of Energy is consolidating down: APA, SLB, SII, XLE, ECA NBL, BHI, (XOM)
Note: Retail has rolled over: (WMT, COST, RTH, SHLD, BBY, TGT, AMZN, KSS)
Note: Tech is rolling over: IBM, WFR, KLAC, ERTS, SOHU, AAPL, ADBE, QCOM, NIHD, WDC, INFY, ADSK
Note: Some Steel/Aluminum is consolidating: AKS, AA, SID, CLF, MTL
Note: JEC, AMT, (AMX, MMM, CI, PG, CL)
One quick note: I started creating videos and testing the upload and formatting process for Blogspot early last week. I can't get past a formatting restriction on Blogspot that re-sizes my videos down to about 3 x 4 inches on a 19 inch monitor. I think it's too small to be useful so I'm working on alternatives. There is no way around the Blogspot formatting restrictions, so I am going to create a regular web page to host the video tutorials. I hope to have that done in the next few days.
Dow: IT Bearish and ST Bearish to Neutral. The Dow is flying down to support at 11,750 on heavy selling volume, and may finish the job on Monday. The market is getting fairly close to the Bernanke Pavlov Zone or BPZ, so don't be surprised by some sort of rhetoric coming from the Fed early next week. ST resistance is at 12,000.
SPX: IT Bearish and ST Bearish to Neutral. The SPX is also falling pretty hard on heavier volume. There is ST support at 1,310, and then again at 1,300. The BPZ on the SPX is 1,275, so the SPX is not falling quite as fast as the Dow. ST resistance is at 1,325 and then again at 1,342.
Naz: IT Bearish and ST Bearish to Neutral. The Naz has two Bearish Kicking Patterns in June (June 6 and June 20). That's two nasty headfakes in a little over two weeks, which doesn't bode well for Tech stocks, at least for several more weeks. We may see nice bounces next week, but expect them to be short-lived, and expect the general Tech stock trend to continue consolidating on the IT, and perhaps go more bearish. The Naz has ST support between 2,388 - 2,400. The next support down is 2,350. Resistance is 2,430.
The Dow has been downtrending for a month, and the SPX is not far behind. The Naz and the NDX are currently rolling down from Double-Tops, which are looking a little like Rounding Tops as well. Now, even the Small Caps (SML), and the Mid Caps (MID) are forming Head and Shoulders Tops (unconfirmed but getting close). This means that the Russell 2000 (RUT) is also forming a Head and Shoulders Top. We may get oversold short term sometime on Monday, or perhaps Tuesday at the latest, but any ST bounces won't change the IT trend right away. We may be in for more bearish trading at least until the speculation on July Earnings Season kicks in early next month.
I'm very comfortable with the Q's puts right now. Several of the Mid Cap and Small Cap indexes and stocks could continue to roll down Monday and perhaps Tuesday. I think that Tech, Energy, some Metals, and some other Commodity areas look pretty weak short-term. I think the "Energy down and Market up" trade may not be as correlated as it was the past month. It looks like most everything is consolidating on the "Economic Slowing" and "Summer Slowing" sentiment which has picked up momentum with traders the past 2-3 weeks. I am still looking for a bounce on Monday or Tuesday, and I may play some quick calls, but the overall market is decidedly bearish.
Here is my Weekly Watchlist. Make sure to check the option spreads before paper trading. Ideally, I want spreads of .10-.20 cents on options for stocks between 20-200 dollars.
BULLISH SECTORS/GROUPS AND STOCKS:
Short Index ETF's: FXP, QID, TWM, SRS, (SDS, DXD)
Copper: PCU (but FCX is rolling over, so watch PCU closely)
Chemicals/Agriculture: (CF, TRA, MOS, AGU), POT
Coal: (MEE, ANR, CNX, ACI, WLT)
Energy: (PXD, NBR, HK, CHK, HP, ESV, DNR)
Steel: X, STLD
Railroads: UNP, NSC, CSX
Tech: (ENER, ATVI), RIMM, CSIQ
Note: APOL, GS, JOYG, CMI
BEARISH SECTORS/GROUPS AND STOCKS:
Manufacturing/Machinery: IR, EMR, PH
Financials: (ALL, TRV, COF, AXP, PRU, MER), ICE
Index ETF's: IWM, MDY, QQQQ, EWZ, EEM, (DIA, SPY)
Defense: (HON, GD)
Leisure: (HOT, LVS), WYNN
REIT's: PLD
Oil Shipping: DRYS, EXM, GNK
Note: A lot of Energy is consolidating down: APA, SLB, SII, XLE, ECA NBL, BHI, (XOM)
Note: Retail has rolled over: (WMT, COST, RTH, SHLD, BBY, TGT, AMZN, KSS)
Note: Tech is rolling over: IBM, WFR, KLAC, ERTS, SOHU, AAPL, ADBE, QCOM, NIHD, WDC, INFY, ADSK
Note: Some Steel/Aluminum is consolidating: AKS, AA, SID, CLF, MTL
Note: JEC, AMT, (AMX, MMM, CI, PG, CL)
One quick note: I started creating videos and testing the upload and formatting process for Blogspot early last week. I can't get past a formatting restriction on Blogspot that re-sizes my videos down to about 3 x 4 inches on a 19 inch monitor. I think it's too small to be useful so I'm working on alternatives. There is no way around the Blogspot formatting restrictions, so I am going to create a regular web page to host the video tutorials. I hope to have that done in the next few days.
Friday, June 20, 2008
Financials Dump the Market so Yesterday Was a Big Headfake
Worries about the Financial sector gapped the market down pretty severely this morning. MER stated that Regional Banks were in capitulation mode, LEH predicted losses will continue to grow at FRE and FNM, and Moody's downgraded their ratings on Bond Insurers. The result has been a really red morning in the markets. The SPX finally broke support at 1,331. This is where I point back to my grumblings yesterday about "Smart" Money and "Dumb" Money, and how I thought that Dumb Money was short-covering and bargain chasing a story that was never really there. Talk about those "Mavericks" missing the Big Picture. I guess they felt "the need, the need for speed" again, but it looks like Smart Money just deflated their vollyball. I kept harping on the fact that price fixing oil in China was NOT NEWS, which is why I refused to load up on calls. Well.....one big giant head fake later and the Dumb Money just got their head handed to them on a silver platter.
I stopped my two partial call positions on CTSH and STLD. I also sold my SPY puts into the gap down and then bought back a different strike a few minutes later. I also bought QQQQ puts, and I took a very small put position on CLF. I'm diversifying over to August options, although I have July and August puts on SPY and the Q's because I'm going to sell the July's later today.
8:30 am MT: here are the final numbers for the trades: STLD was a .46 cent loss on a half-sized position, so minimal damage. CTSH was a 1.08 loss on a half-sized position, which was nastier, so I'm glad I nibbled instead of going all in on yesterday's market action, it saved my account a lot more damage. The SPY put was a .27 cent profit, or 8% gain on a full sized position (can you see why I kept the hedge.....). I did a quick put trade on the Q's for a .15 cent profit, or 6% gain on a full sized position. Then I let SPY and QQQQ bounce a little and bought back in to July and August puts.
8:38 am MT: I sold the July put position on the Q's for a .20 cent profit, or 7.5% gain on a full sized position. I'm going to hold the August puts into next week. I also just picked up .40 cents in profit on the CLF position after selling. If it bounces a little intra-day then I will re-enter the position.
8:48 am MT: I sold the July put position on SPY for a .17 cent profit, or 5% gain on a full sized position. I'm going to hold the August puts until at least later in the day, and perhaps next week. I'm satisfied with the day of trading so far and I'm looking for new put ideas.
Here are some put ideas for today (you should wait for bounces intra-day on the stocks that are getting absolutely hammered, like SOHU):
SOHU, WYNN, MER, QQQQ, ADSK, KLAC, WFR, CLF, CELG, EEM, BBY, RTH, IWM
9:20 am MT: I bought some smaller put positions on IWM, EEM, and CLF. I will sell the EEM puts later in the day if it drops back down to 138. I'm going to go kick back for a little while and let this all settle in my brain. We have options expiration today so I expect quite a bit of gyrating between now and the close. If we sell off into the close and make new market lows intra-day, we'll be hearing the lamenting and groaning by traders on the floors of the exchanges all night long.....But as a speculator, I think the odds of just that happening are going to be greater than 50%. It doesn't guarantee that the market makes new intra-day lows today, but that's what I think has a good chance of happening. As always, we shall see.....
12:55 pm MT: The market made new lows intra-day just as I suspected. About an hour ago I sold the IWM and EEM puts for nice profits for a few hours of work. Now, isn't it interesting that the biggest selling is coming from Tech and specifically Big Tech? How many of you caught that right out of the gate today. We have our second Bearish Kicking Pattern in June on the Naz. If you ever wondered how Smart Money beats up on Dumb Money, there it is. I'll get into the analysis a little more later when I have some time.
I just sold half the CLF puts. I also sold a little of the August SPY and QQQQ puts. Here are the numbers: The IWM put was a .33 cent profit, or 9% gain intra-day. The EEM put was a .40 cent profit, or 6.5% gain intra-day. The CLF put (including the .40 cents from the earlier trades) is a 1.65 profit, or 19% gain intra-day, and I'm still holding half the position. The SPY put is a .55 cent profit, or 12% gain intra-day, and I'm still holding 3/4 of the position. The Q's put is a .27 cent profit, or 11% gain intra-day, and I'm still holding 3/4 of the position.
I think I've got all the trades up to date. I was very busy on the phones and I really had to stretch myself to multi-task. It's one of the toughest things that I have to do - talking and answering questions about some random thing while I'm trading and analyzing the market with the other half of my brain. It's even tougher to try and get the posts written while I'm doing all that. I'm working hard on coming up with a plan where I can focus completely and post in a timely manner more consistently.
One other quick note: I have netted another $9,000 in profits with my trading since last Friday in the Papermoney account. This pushes my total profits on the year to over 78.5k after starting with a 50k account size equivalency in January. That is a 157% growth rate of the account in 5 1/2 months in tough market conditions. For those of you following me regularly since January, you've seen it all right here in front of you.
Looking forward towards Monday, if the SPX drops into the 1,310 area early in the day I will probably exit all three of my remaining put positions. I won't be surprised to see a bounce by mid-day Monday, or Tuesday at the latest. If we get a bounce late Monday or sometime on Tuesday then look for Wednesday to be the catalyst day for news to carry the market further in the bounce or to roll it over. We have a lot of reports due out that day, with Durable Orders and the FOMC Policy Statement probably getting the most attention.
I stopped my two partial call positions on CTSH and STLD. I also sold my SPY puts into the gap down and then bought back a different strike a few minutes later. I also bought QQQQ puts, and I took a very small put position on CLF. I'm diversifying over to August options, although I have July and August puts on SPY and the Q's because I'm going to sell the July's later today.
8:30 am MT: here are the final numbers for the trades: STLD was a .46 cent loss on a half-sized position, so minimal damage. CTSH was a 1.08 loss on a half-sized position, which was nastier, so I'm glad I nibbled instead of going all in on yesterday's market action, it saved my account a lot more damage. The SPY put was a .27 cent profit, or 8% gain on a full sized position (can you see why I kept the hedge.....). I did a quick put trade on the Q's for a .15 cent profit, or 6% gain on a full sized position. Then I let SPY and QQQQ bounce a little and bought back in to July and August puts.
8:38 am MT: I sold the July put position on the Q's for a .20 cent profit, or 7.5% gain on a full sized position. I'm going to hold the August puts into next week. I also just picked up .40 cents in profit on the CLF position after selling. If it bounces a little intra-day then I will re-enter the position.
8:48 am MT: I sold the July put position on SPY for a .17 cent profit, or 5% gain on a full sized position. I'm going to hold the August puts until at least later in the day, and perhaps next week. I'm satisfied with the day of trading so far and I'm looking for new put ideas.
Here are some put ideas for today (you should wait for bounces intra-day on the stocks that are getting absolutely hammered, like SOHU):
SOHU, WYNN, MER, QQQQ, ADSK, KLAC, WFR, CLF, CELG, EEM, BBY, RTH, IWM
9:20 am MT: I bought some smaller put positions on IWM, EEM, and CLF. I will sell the EEM puts later in the day if it drops back down to 138. I'm going to go kick back for a little while and let this all settle in my brain. We have options expiration today so I expect quite a bit of gyrating between now and the close. If we sell off into the close and make new market lows intra-day, we'll be hearing the lamenting and groaning by traders on the floors of the exchanges all night long.....But as a speculator, I think the odds of just that happening are going to be greater than 50%. It doesn't guarantee that the market makes new intra-day lows today, but that's what I think has a good chance of happening. As always, we shall see.....
12:55 pm MT: The market made new lows intra-day just as I suspected. About an hour ago I sold the IWM and EEM puts for nice profits for a few hours of work. Now, isn't it interesting that the biggest selling is coming from Tech and specifically Big Tech? How many of you caught that right out of the gate today. We have our second Bearish Kicking Pattern in June on the Naz. If you ever wondered how Smart Money beats up on Dumb Money, there it is. I'll get into the analysis a little more later when I have some time.
I just sold half the CLF puts. I also sold a little of the August SPY and QQQQ puts. Here are the numbers: The IWM put was a .33 cent profit, or 9% gain intra-day. The EEM put was a .40 cent profit, or 6.5% gain intra-day. The CLF put (including the .40 cents from the earlier trades) is a 1.65 profit, or 19% gain intra-day, and I'm still holding half the position. The SPY put is a .55 cent profit, or 12% gain intra-day, and I'm still holding 3/4 of the position. The Q's put is a .27 cent profit, or 11% gain intra-day, and I'm still holding 3/4 of the position.
I think I've got all the trades up to date. I was very busy on the phones and I really had to stretch myself to multi-task. It's one of the toughest things that I have to do - talking and answering questions about some random thing while I'm trading and analyzing the market with the other half of my brain. It's even tougher to try and get the posts written while I'm doing all that. I'm working hard on coming up with a plan where I can focus completely and post in a timely manner more consistently.
One other quick note: I have netted another $9,000 in profits with my trading since last Friday in the Papermoney account. This pushes my total profits on the year to over 78.5k after starting with a 50k account size equivalency in January. That is a 157% growth rate of the account in 5 1/2 months in tough market conditions. For those of you following me regularly since January, you've seen it all right here in front of you.
Looking forward towards Monday, if the SPX drops into the 1,310 area early in the day I will probably exit all three of my remaining put positions. I won't be surprised to see a bounce by mid-day Monday, or Tuesday at the latest. If we get a bounce late Monday or sometime on Tuesday then look for Wednesday to be the catalyst day for news to carry the market further in the bounce or to roll it over. We have a lot of reports due out that day, with Durable Orders and the FOMC Policy Statement probably getting the most attention.
Thursday, June 19, 2008
Nasdaq Bounces While Market Contemplates Next Move
The market opened quietly and a little down after the Jobless Claims number missed expectations slightly. The indexes are simply holding support levels while the market awaits the Philly Fed report and the Leading Indicators report.
I took profits right out of the gate on the BTU call, and I locked down a few more of the puts while we await the economic reports. The BTU call was a 2.55 profit, or 44% gain for a few hours of trading from yesterday to today.
8:03 am MT: The Philly Fed report came in quite a bit worse than expected, which immediately dropped the Dow through support and pushed the SPX to the brink. Leading Indicators was in-line with expectations, which brought the market most of the way back. The battle begins in earnest now, and it looks like it's tipping slightly in the bears favor, but we shall see.....
8:30 am MT: The SPX is battling along the 1,331 support and the shorts are getting nervous. At the end of the day, it will be interesting to see if the level holds or not, I suspect it won't. If it's up to some of the twitchy Hedge Fund managers, then we could be awhile before we know. As it is, I decided to pick up some more SPY puts on a separate trade and see if I can make some money on a breakdown. We shall see.....
8:40 am MT: I could be wrong, but I don't think anything significant technically will happen for at least another hour or more, maybe until later in the trading day. I think there are too many Hedgies playing right now and the Big, Smart Money Managers are sitting on their hands. I think that the Smart Money is waiting for the Hedgies and Day Traders to finish putzing around and then they may step in. I suspect that they will sell the market, but whatever it is, we may not know for several hours.
8:55 am MT: I sold everything I had at market orders just now and cleaned it all out. The Shorts-Coverers and Bargain Hunters are playing off the report out of China that the government there intends to raise fuel prices to slow demand. I'm always amazed at the lack of insight and intelligence from some major fund managers when they read a report like this, but I guess that's why not all of it is "Smart" Money. The report means practically nothing in the bigger picture of the energy problem and the current economic conditions, and in fact the price of oil only dropped in to the mid to low 130's over the report (here is where I give a big shrug and a yawn). Be that as it may, it's killing the rest of the downswing for now. And it's adding choppiness and aggravation to the market and trading. I'm neither a bear or a bull, probably, for the rest of the day.
9:10 am MT: Well, it looks like the "Dumb" Money played right into the hands of the "Smart" Money, because some pretty big sell orders just came in and clobbered the short-coverers. I went ahead and picked up some SPY puts again, because, after thinking about it for a moment, I decided that I'm going to go ahead and speculate that Smart Money will eventually sell enough that the SPX will break the 1,331 support. So I guess that makes me still a little more bearish in the current downswing. We shall see.....
9:30 am MT: Here are the final numbers on the put trades: DIA was a 1.23 profit, or 38% gain. SPY (the second trade) was a .07 cent profit, or 1% gain, SPY (the third trade) was a .35 cent loss, or 10%. QQQQ was a .35 cent profit, or 17% gain, QQQQ (the second trade) was a .07 cent profit, or 3% gain. KLAC was a 1.18 profit, or 33% gain. OMC was a .14 cent profit, or 4% gain. And EMR was a .56 cent profit, or 40% gain. By the way, by gain I mean return on investment, for those of you who are new to following me. All in all it was some nice trades, but I would have liked to ride the puts a little more into a full downswing. But as you know by now, from the choppiness of the year in trading we are having, it's better to take profits sooner rather than later. I am still riding one set of SPY puts in case we do finish out a full downswing, that's all I'm willing to risk in speculating on the full move.
12:50 pm MT: It's pretty obvious that traders are going after Big Tech stocks later in the day. The Naz is leading the buying today, and the Nasdaq-100 is leading the Naz. I'll keep chewing on this a bit and decide if I want to buy some calls on a couple of Tech stocks before the close.
1:30 pm MT: I nibbled lightly on calls for CTSH and STLD.
Here are some more interesting bullish movers today:
Tech: ENER, CTSH, QCOM, ATVI, RIMM, AAPL, WDC
Steel: TS, X, STLD
Railroads: NSC, UNP, CSX
Biotechs: GILD
Other: DHR, PH, AMZN, CMI
I'm keeping my SPY puts for now as a hedge against this all being a giant head-fake. I'm dialed way back on my positions and watching and waiting. It could be that the downswing is over, it's probably over on the Nasdaq, which looks like a bounce today. So I don't want any puts (other than the hedge). I'm also not getting too excited about calls either. It may be that there is a little trading to do before the weekend, but I'm not sure we'll get something like last Friday.
If the SPX moves above 1,350 then I will stop out of my one put and I will start adding to the call positions. I like the bullish list above if the market does keep bouncing up. I will also look for other movers and shakers during the day. Tomorrow is options expiration, so we may see quite a bit of gyrating around. I may not do a lot of trading tomorrow, but we shall see.....
I took profits right out of the gate on the BTU call, and I locked down a few more of the puts while we await the economic reports. The BTU call was a 2.55 profit, or 44% gain for a few hours of trading from yesterday to today.
8:03 am MT: The Philly Fed report came in quite a bit worse than expected, which immediately dropped the Dow through support and pushed the SPX to the brink. Leading Indicators was in-line with expectations, which brought the market most of the way back. The battle begins in earnest now, and it looks like it's tipping slightly in the bears favor, but we shall see.....
8:30 am MT: The SPX is battling along the 1,331 support and the shorts are getting nervous. At the end of the day, it will be interesting to see if the level holds or not, I suspect it won't. If it's up to some of the twitchy Hedge Fund managers, then we could be awhile before we know. As it is, I decided to pick up some more SPY puts on a separate trade and see if I can make some money on a breakdown. We shall see.....
8:40 am MT: I could be wrong, but I don't think anything significant technically will happen for at least another hour or more, maybe until later in the trading day. I think there are too many Hedgies playing right now and the Big, Smart Money Managers are sitting on their hands. I think that the Smart Money is waiting for the Hedgies and Day Traders to finish putzing around and then they may step in. I suspect that they will sell the market, but whatever it is, we may not know for several hours.
8:55 am MT: I sold everything I had at market orders just now and cleaned it all out. The Shorts-Coverers and Bargain Hunters are playing off the report out of China that the government there intends to raise fuel prices to slow demand. I'm always amazed at the lack of insight and intelligence from some major fund managers when they read a report like this, but I guess that's why not all of it is "Smart" Money. The report means practically nothing in the bigger picture of the energy problem and the current economic conditions, and in fact the price of oil only dropped in to the mid to low 130's over the report (here is where I give a big shrug and a yawn). Be that as it may, it's killing the rest of the downswing for now. And it's adding choppiness and aggravation to the market and trading. I'm neither a bear or a bull, probably, for the rest of the day.
9:10 am MT: Well, it looks like the "Dumb" Money played right into the hands of the "Smart" Money, because some pretty big sell orders just came in and clobbered the short-coverers. I went ahead and picked up some SPY puts again, because, after thinking about it for a moment, I decided that I'm going to go ahead and speculate that Smart Money will eventually sell enough that the SPX will break the 1,331 support. So I guess that makes me still a little more bearish in the current downswing. We shall see.....
9:30 am MT: Here are the final numbers on the put trades: DIA was a 1.23 profit, or 38% gain. SPY (the second trade) was a .07 cent profit, or 1% gain, SPY (the third trade) was a .35 cent loss, or 10%. QQQQ was a .35 cent profit, or 17% gain, QQQQ (the second trade) was a .07 cent profit, or 3% gain. KLAC was a 1.18 profit, or 33% gain. OMC was a .14 cent profit, or 4% gain. And EMR was a .56 cent profit, or 40% gain. By the way, by gain I mean return on investment, for those of you who are new to following me. All in all it was some nice trades, but I would have liked to ride the puts a little more into a full downswing. But as you know by now, from the choppiness of the year in trading we are having, it's better to take profits sooner rather than later. I am still riding one set of SPY puts in case we do finish out a full downswing, that's all I'm willing to risk in speculating on the full move.
12:50 pm MT: It's pretty obvious that traders are going after Big Tech stocks later in the day. The Naz is leading the buying today, and the Nasdaq-100 is leading the Naz. I'll keep chewing on this a bit and decide if I want to buy some calls on a couple of Tech stocks before the close.
1:30 pm MT: I nibbled lightly on calls for CTSH and STLD.
Here are some more interesting bullish movers today:
Tech: ENER, CTSH, QCOM, ATVI, RIMM, AAPL, WDC
Steel: TS, X, STLD
Railroads: NSC, UNP, CSX
Biotechs: GILD
Other: DHR, PH, AMZN, CMI
I'm keeping my SPY puts for now as a hedge against this all being a giant head-fake. I'm dialed way back on my positions and watching and waiting. It could be that the downswing is over, it's probably over on the Nasdaq, which looks like a bounce today. So I don't want any puts (other than the hedge). I'm also not getting too excited about calls either. It may be that there is a little trading to do before the weekend, but I'm not sure we'll get something like last Friday.
If the SPX moves above 1,350 then I will stop out of my one put and I will start adding to the call positions. I like the bullish list above if the market does keep bouncing up. I will also look for other movers and shakers during the day. Tomorrow is options expiration, so we may see quite a bit of gyrating around. I may not do a lot of trading tomorrow, but we shall see.....
Wednesday, June 18, 2008
Market Gaps Down and Fades Away
Morgan Stanley played the earnings game just like you'd expect from a Broker, but FDX didn't get the memo.....
MS came in with less than catastrophically bad numbers (at least they beat the dramatically lowered estimates). FDX was a different story, they missed the numbers and they guided down, which is the double whammy. The big story here is that FDX is a barometer for business activity in the economy. So the knee-jerk, market-wide reaction is bearish. A closer inspection however, will show that a lot of the problem was rising fuel costs. Overall I think that the news we had yesterday, and the earnings reports from this morning will keep the pressure on the market, or at the very least keep the bulls corralled. That should be enough to continue the downswing for another day or two.
I will probably sell the rest of the SPY puts right into the open, but keep the rest of the put trades. Here is the explanation: I noticed how reluctant the Bulls were yesterday, and how jumpy the shorts were as well. I am guessing that the shorts will come in and cover right on the Gap just like the Bulls sold right on the Gap yesterday. However, I still think the swing is down, so I will get back in to partial positions on puts while also riding a lot of the puts I keep.
7:35 am MT: I sold the rest of the SPY puts, half the DIA puts, half the QQQQ puts, and all of the OMC puts (I don't like OMC for now).
7:55 am MT: I sold a little more of the JPM puts, and I sold a little of the KLAC puts. Here are the numbers: The SPY trade (completed) was an .88 cent profit, or 22% gain. OMC (completed) was a small .05 cent gain. DIA is a .98 cent profit, or 30% gain so far. QQQQ is a .26 cent profit, or 13% gain so far. JPM is a .94 cent profit, or 24% gain so far. And KLAC is a 1.13 profit, or 32% gain so far.
I was correct about the shorts covering right out of the gate, so I hit these outs really well. I expect some more fussing around, which will give me a chance to jump back in to SPY, and add back positions on the other puts.
8:50 am MT: If the SPX is going to bounce intra-day, it will probably be right here at 1,335. Therefore, I sold a little more of the DIA and QQQQ puts. If we get a bounce, then I will come in and enter another big put position on DIA, SPY, QQQQ, and possible some individual stocks.
The DIA is a 1.13 profit, or 34.5% gain so far, and the QQQQ is a .34 cent profit, or 17% gain so far.
11:10 am MT: The market did bounce right off SPX 1,335 earlier, just as I warned. It was a good, hefty short-covering rally, which I used as an opportunity to get back in to puts on DIA, SPY, QQQQ, and OMC. I also took a tiny call position on BTU just because I would like a little coal. On the drop back down to the intra-day supports, I sold a small amount of the DIA and SPY puts.
I also sold the rest of the JPM puts, the final trade was a .75 cent profit, or 19% gain. I don't like how twitchy the shorts are being about the Financials right now, but I understand why they are, so I'm done with that sector for now.
11:15 am MT: Alert: the market broke to new lows intra-day. This was a key tipping point for the shorts. They will probably lay off the covering now and the market is unlikely to finish the day in the green.
12:30 pm MT: There's not much to do right now but ride the puts. If the Dow dumps in to the 11,950 area before the end of the day, then I will scale out of some more of them, so far so good.
1:40 pm MT: We had another round of short-covering off the 12,000 lows on the Dow intra-day, but I'm not concerned yet, I think it will fade into the close.
3:30 pm MT: Market Wrap: The Dow followed through nicely on the downswing today and dropped to new short-term lows. The SPX is hanging on to the previous low, and the Naz is still above the previous low. We may get another drop tomorrow, but the SPX will have to break below 1,331. If that happens then the SPX may drop to 1,324 pretty quickly, the Dow would probably drop to 11,950, and the Naz would probably drop to 2,390 - 2,400. If we do get the breakdown and drop I will look to exit all my put positions as we approach those levels. Financials are getting too much short-covering and are being very reluctant to the downside. They may even be getting some bargain buying. Either way, I don't want anything to do with the sector right now, puts or calls. There aren't any really significant catalysts before the open tomorrow, although the Leading Indicators and Philly Fed reports 30m after the open will probably move the market a little. If the Philly Fed is poor enough, it could cause the SPX to break down through 1,331. If oil prices jump up, then that will add more pressure to the downside.
Speaking of oil (and coal), here are some interesting bullish movers in Energy and Coal stocks:
Coal: ACI, BTU, CNX
Energy: XTO, DVN, CNQ, ECA, MRO, PXP, UPL
MS came in with less than catastrophically bad numbers (at least they beat the dramatically lowered estimates). FDX was a different story, they missed the numbers and they guided down, which is the double whammy. The big story here is that FDX is a barometer for business activity in the economy. So the knee-jerk, market-wide reaction is bearish. A closer inspection however, will show that a lot of the problem was rising fuel costs. Overall I think that the news we had yesterday, and the earnings reports from this morning will keep the pressure on the market, or at the very least keep the bulls corralled. That should be enough to continue the downswing for another day or two.
I will probably sell the rest of the SPY puts right into the open, but keep the rest of the put trades. Here is the explanation: I noticed how reluctant the Bulls were yesterday, and how jumpy the shorts were as well. I am guessing that the shorts will come in and cover right on the Gap just like the Bulls sold right on the Gap yesterday. However, I still think the swing is down, so I will get back in to partial positions on puts while also riding a lot of the puts I keep.
7:35 am MT: I sold the rest of the SPY puts, half the DIA puts, half the QQQQ puts, and all of the OMC puts (I don't like OMC for now).
7:55 am MT: I sold a little more of the JPM puts, and I sold a little of the KLAC puts. Here are the numbers: The SPY trade (completed) was an .88 cent profit, or 22% gain. OMC (completed) was a small .05 cent gain. DIA is a .98 cent profit, or 30% gain so far. QQQQ is a .26 cent profit, or 13% gain so far. JPM is a .94 cent profit, or 24% gain so far. And KLAC is a 1.13 profit, or 32% gain so far.
I was correct about the shorts covering right out of the gate, so I hit these outs really well. I expect some more fussing around, which will give me a chance to jump back in to SPY, and add back positions on the other puts.
8:50 am MT: If the SPX is going to bounce intra-day, it will probably be right here at 1,335. Therefore, I sold a little more of the DIA and QQQQ puts. If we get a bounce, then I will come in and enter another big put position on DIA, SPY, QQQQ, and possible some individual stocks.
The DIA is a 1.13 profit, or 34.5% gain so far, and the QQQQ is a .34 cent profit, or 17% gain so far.
11:10 am MT: The market did bounce right off SPX 1,335 earlier, just as I warned. It was a good, hefty short-covering rally, which I used as an opportunity to get back in to puts on DIA, SPY, QQQQ, and OMC. I also took a tiny call position on BTU just because I would like a little coal. On the drop back down to the intra-day supports, I sold a small amount of the DIA and SPY puts.
I also sold the rest of the JPM puts, the final trade was a .75 cent profit, or 19% gain. I don't like how twitchy the shorts are being about the Financials right now, but I understand why they are, so I'm done with that sector for now.
11:15 am MT: Alert: the market broke to new lows intra-day. This was a key tipping point for the shorts. They will probably lay off the covering now and the market is unlikely to finish the day in the green.
12:30 pm MT: There's not much to do right now but ride the puts. If the Dow dumps in to the 11,950 area before the end of the day, then I will scale out of some more of them, so far so good.
1:40 pm MT: We had another round of short-covering off the 12,000 lows on the Dow intra-day, but I'm not concerned yet, I think it will fade into the close.
3:30 pm MT: Market Wrap: The Dow followed through nicely on the downswing today and dropped to new short-term lows. The SPX is hanging on to the previous low, and the Naz is still above the previous low. We may get another drop tomorrow, but the SPX will have to break below 1,331. If that happens then the SPX may drop to 1,324 pretty quickly, the Dow would probably drop to 11,950, and the Naz would probably drop to 2,390 - 2,400. If we do get the breakdown and drop I will look to exit all my put positions as we approach those levels. Financials are getting too much short-covering and are being very reluctant to the downside. They may even be getting some bargain buying. Either way, I don't want anything to do with the sector right now, puts or calls. There aren't any really significant catalysts before the open tomorrow, although the Leading Indicators and Philly Fed reports 30m after the open will probably move the market a little. If the Philly Fed is poor enough, it could cause the SPX to break down through 1,331. If oil prices jump up, then that will add more pressure to the downside.
Speaking of oil (and coal), here are some interesting bullish movers in Energy and Coal stocks:
Coal: ACI, BTU, CNX
Energy: XTO, DVN, CNQ, ECA, MRO, PXP, UPL
Tuesday, June 17, 2008
Market Pops and Drops and the Dow Confirms a Rollover
Futures are up on GS earnings, which beat expectations. Traders are focusing on GS despite worse than expected Housing Starts and Producer Inflation. This is playing out just as I expected, and as I posted for the past several days. What this means is that short-covering in Financials should continue this morning, at least for a little while. I will look to sell RIMM on any gap up at the open, especially if it goes to about the 143 area.
7:35 am MT: I sold the calls on RIMM, HK, FWLT, WDC, and stopped out of IBM and ECA. Here are the final numbers: RIMM was a 1.09 profit or 11% gain, HK was a .65 cent profit or 17.5% gain, FWLT was breakeven, WDC was a .65 cent profit or 15% gain, IBM was a .20 cent loss, and ECA was a .20 cent loss.
7:50 am MT: I have started the process of nibbling on puts. I picked up partial put positions on DIA, SPY, QQQQ, JPM, and KLAC.
8:05 am MT: The market gapped up this morning and then traders immediately faded stocks. I think that traders may try to keep pushing things up a little, but watch this, because we might finish the day in the red. The indexes are potentially forming Bear Flags, which could roll over today or tomorrow. I exited all my call trades and I started nibbling on puts, which I will add to if the market confirms a rollover, or perhaps if the market extends the upswing a little further. As always, I don't know the future, but so far things are playing out like I expected them - all the way down to the squishy economic reports and the Brokers playing the earnings game like a Stradivarius.
8:25 am MT: I added a little to the DIA, SPY, Q's, and KLAC puts.
8:55 am MT: I picked up some puts on EMR. Now, again, this is just a reminder: the market may continue to try and push up a little today and tomorrow, and there are still some bullish movers, so I'm nibbling and positioning on puts rather than running like my hair is on fire to pile into puts. The bullish moves today are in Chemicals/Agriculture, some Energy, some Coal, and some Tech. Stocks like UPL and NBL are making nice bullish moves, along with a number of others. However, I am starting to focus more on puts myself.
Of all the news this morning, I think the most significant is that Industrial Production and Capacity Utilization missed estimates. The indication is that the economy is not picking up any steam, while at the same time Energy and Goods inflation are moving up (PPI came in higher than expected). The numbers continue to show an economy that is not in a recession, but is not robust either. The economy is crunching along with some significant issues (inflation and attenuating consumer spending along with the Financial industry writedowns) that traders are unlikely to really push the market up strongly, and we will probably even swing down a little sometime in the next couple of days.
9:25 am MT: I nibbled on some OMC and NSC puts. There are some other possible bearish forming stocks like PH, IR, UTX, and several other Railroads.
9:45 am MT: The SPX is at a key short-term tipping point. If the SPX can hold 1,353 - 1,355 then the market may bounce for awhile, possibly until tomorrow. If the SPX fails at the point mid-day, then the market is unlikely to recover today and we will probably see a confirmed rollover after a gap and fade out of the open. A drop below 1,350 will probably mean a quick move to 1,345, at which point I will start scaling out of my puts. It could happen today, it could happen tomorrow, it might never happen, we shall see.....
1:00 pm MT: The market has sloshed through the mid-day and is still holding the key intra-day support levels. The Dow is taking the lead as the laggard, in other words it's the softest index right now. The 12,180 level is pretty key intra-day and the Dow is assaulting it right as I type. So we are at a late-day tipping point. We'll see how this goes, but it still looks like a fade.
1:17 pm MT: The Dow failed at 12,180. It is very likely that we finish the day in the red.
1:50 pm MT: I sold the NSC puts with the stock down and sitting on the 50dma. Normally I would ride with a confirmed rollover, but the Railroads are a bit of a cult trade, so I want it to clear some more of the trash down below before the next put. I made .50 cents or 13.5% intra-day. I also sold a small part of the JPM puts for a .55 cent profit, or 14% gain intra-day so far. With JPM I wanted to take a little off ahead of the MS earnings tomorrow morning, just in case.....I also sold half the SPY puts for mostly the same reason, the biggest sector weighting on the SPX is the Financial sector. The SPY puts are a .60 cent profit, or 15% gain intra-day so far.
2:15 pm MT: I told you I was going to be active on Monday and Tuesday.....Very nice calls from Friday through Tuesday, just like I posted. And very nice puts so far, after the last move up in the upswing this morning started to fade. In case you were wondering how to turn on a dime, I demonstrated it for you right in front of your eyes. The key is preparation, you have to come to the market with an idea, and some research, and you have to be ready. There are plenty of times I do a lot of work and then the market doesn't do what I thought it would do, but I keep doing the work, because many times it does play out fairly close to or even exactly like I prepared for, and I make money. I have tacked on over 4k to my account profits since Friday. I'm now up to 73.5k profit in the Papermoney demo account since January (starting with a 50k account size equivalent), which is about 147% account growth so far this year.
Market Wrap: The Dow confirmed a rollover today. The other indexes look like they are forming Bear Flags. Financials really gapped and dumped (gap up and dump down). Energy and Chemical stocks were the strongest broad area, with everything else looking squishier or down. I am still going to be active getting in and out of puts tomorrow, and maybe for several more days. I am also looking at a few of the Energy and Chemical stocks for potential calls, just because I know how desperate the Fund Managers are to have some part of their portfolio stay in the green. Look for the MS earnings to have some impact in the morning, and the Oil Inventory Report to affect Energy stocks 60m after the open. Outside of that, barring a news bogey, it will probably be a technical move, which means we are probably headed down, we shall see.....
Here is a list of interesting bullish stocks in the Energy sector:
UPL, HP, NE, MRO, NBL, PXP, and NFX.
There are others, but I might dabble a little in a couple of those tomorrow. Be aware that the Oil Inventory Report 60m after the open will probably move the Energy stocks one way or another.
Here is a list of interesting bearish stocks (some of which I have puts in already):
Financials: ICE, JPM, PRU, STT, MER, LEH, MS (earnings tomorrow), AXP
Index ETF's: DIA, SPY, QQQQ
Railroads: NSC, BNI, UNP
Tech: KLAC, ESRX, ADBE (Head and Shoulders Top today) (Note: SOHU might form a H/S Top)
General: EMR, PH, UTX, IR, HON, NOC
Note: X rolled over today and AKS is fading with some selling, is this a sign that Steel is weakening?
7:35 am MT: I sold the calls on RIMM, HK, FWLT, WDC, and stopped out of IBM and ECA. Here are the final numbers: RIMM was a 1.09 profit or 11% gain, HK was a .65 cent profit or 17.5% gain, FWLT was breakeven, WDC was a .65 cent profit or 15% gain, IBM was a .20 cent loss, and ECA was a .20 cent loss.
7:50 am MT: I have started the process of nibbling on puts. I picked up partial put positions on DIA, SPY, QQQQ, JPM, and KLAC.
8:05 am MT: The market gapped up this morning and then traders immediately faded stocks. I think that traders may try to keep pushing things up a little, but watch this, because we might finish the day in the red. The indexes are potentially forming Bear Flags, which could roll over today or tomorrow. I exited all my call trades and I started nibbling on puts, which I will add to if the market confirms a rollover, or perhaps if the market extends the upswing a little further. As always, I don't know the future, but so far things are playing out like I expected them - all the way down to the squishy economic reports and the Brokers playing the earnings game like a Stradivarius.
8:25 am MT: I added a little to the DIA, SPY, Q's, and KLAC puts.
8:55 am MT: I picked up some puts on EMR. Now, again, this is just a reminder: the market may continue to try and push up a little today and tomorrow, and there are still some bullish movers, so I'm nibbling and positioning on puts rather than running like my hair is on fire to pile into puts. The bullish moves today are in Chemicals/Agriculture, some Energy, some Coal, and some Tech. Stocks like UPL and NBL are making nice bullish moves, along with a number of others. However, I am starting to focus more on puts myself.
Of all the news this morning, I think the most significant is that Industrial Production and Capacity Utilization missed estimates. The indication is that the economy is not picking up any steam, while at the same time Energy and Goods inflation are moving up (PPI came in higher than expected). The numbers continue to show an economy that is not in a recession, but is not robust either. The economy is crunching along with some significant issues (inflation and attenuating consumer spending along with the Financial industry writedowns) that traders are unlikely to really push the market up strongly, and we will probably even swing down a little sometime in the next couple of days.
9:25 am MT: I nibbled on some OMC and NSC puts. There are some other possible bearish forming stocks like PH, IR, UTX, and several other Railroads.
9:45 am MT: The SPX is at a key short-term tipping point. If the SPX can hold 1,353 - 1,355 then the market may bounce for awhile, possibly until tomorrow. If the SPX fails at the point mid-day, then the market is unlikely to recover today and we will probably see a confirmed rollover after a gap and fade out of the open. A drop below 1,350 will probably mean a quick move to 1,345, at which point I will start scaling out of my puts. It could happen today, it could happen tomorrow, it might never happen, we shall see.....
1:00 pm MT: The market has sloshed through the mid-day and is still holding the key intra-day support levels. The Dow is taking the lead as the laggard, in other words it's the softest index right now. The 12,180 level is pretty key intra-day and the Dow is assaulting it right as I type. So we are at a late-day tipping point. We'll see how this goes, but it still looks like a fade.
1:17 pm MT: The Dow failed at 12,180. It is very likely that we finish the day in the red.
1:50 pm MT: I sold the NSC puts with the stock down and sitting on the 50dma. Normally I would ride with a confirmed rollover, but the Railroads are a bit of a cult trade, so I want it to clear some more of the trash down below before the next put. I made .50 cents or 13.5% intra-day. I also sold a small part of the JPM puts for a .55 cent profit, or 14% gain intra-day so far. With JPM I wanted to take a little off ahead of the MS earnings tomorrow morning, just in case.....I also sold half the SPY puts for mostly the same reason, the biggest sector weighting on the SPX is the Financial sector. The SPY puts are a .60 cent profit, or 15% gain intra-day so far.
2:15 pm MT: I told you I was going to be active on Monday and Tuesday.....Very nice calls from Friday through Tuesday, just like I posted. And very nice puts so far, after the last move up in the upswing this morning started to fade. In case you were wondering how to turn on a dime, I demonstrated it for you right in front of your eyes. The key is preparation, you have to come to the market with an idea, and some research, and you have to be ready. There are plenty of times I do a lot of work and then the market doesn't do what I thought it would do, but I keep doing the work, because many times it does play out fairly close to or even exactly like I prepared for, and I make money. I have tacked on over 4k to my account profits since Friday. I'm now up to 73.5k profit in the Papermoney demo account since January (starting with a 50k account size equivalent), which is about 147% account growth so far this year.
Market Wrap: The Dow confirmed a rollover today. The other indexes look like they are forming Bear Flags. Financials really gapped and dumped (gap up and dump down). Energy and Chemical stocks were the strongest broad area, with everything else looking squishier or down. I am still going to be active getting in and out of puts tomorrow, and maybe for several more days. I am also looking at a few of the Energy and Chemical stocks for potential calls, just because I know how desperate the Fund Managers are to have some part of their portfolio stay in the green. Look for the MS earnings to have some impact in the morning, and the Oil Inventory Report to affect Energy stocks 60m after the open. Outside of that, barring a news bogey, it will probably be a technical move, which means we are probably headed down, we shall see.....
Here is a list of interesting bullish stocks in the Energy sector:
UPL, HP, NE, MRO, NBL, PXP, and NFX.
There are others, but I might dabble a little in a couple of those tomorrow. Be aware that the Oil Inventory Report 60m after the open will probably move the Energy stocks one way or another.
Here is a list of interesting bearish stocks (some of which I have puts in already):
Financials: ICE, JPM, PRU, STT, MER, LEH, MS (earnings tomorrow), AXP
Index ETF's: DIA, SPY, QQQQ
Railroads: NSC, BNI, UNP
Tech: KLAC, ESRX, ADBE (Head and Shoulders Top today) (Note: SOHU might form a H/S Top)
General: EMR, PH, UTX, IR, HON, NOC
Note: X rolled over today and AKS is fading with some selling, is this a sign that Steel is weakening?
Monday, June 16, 2008
Tech and Financials Bounce as Market Fights Resistance
Oil rose to a record price again, and the NY Manufacturing Index came in worse than expected. The market reacted negatively to the news in early trading Monday morning. Interestingly enough, in other news LEH played the earnings game pretty well, as I speculated. LEH managed to be less than catastrophically bad with their report, and the stock was actually up a little early in the day, which helped Financials, and gave the market a little boost.
7:50 am MT: I sold the CMI calls for a tiny gain, but I may buy back in later in the day. I sold the CNX calls for a .70 cent profit, or 9% gain, and I may buy back into those later as well.
7:55 am MT: I bought back in to the CMI calls, and I'll run with those for a few more minutes, squeeze a little more profit out of the play, and finish the CMI trade. The pattern with CMI is to get most of the move done in the first 45 minutes. So I'm targeting about ten more minutes and closing it out.
8:10 am MT: I sold the CMI calls again. I consider the two trades as one, so the final tally is an .80 cent profit, or 14% gain on CMI. I also bought back in to the CNX calls on the bounce of the Bull Flag on the 10m charts.
8:15 am MT: here is a quick note on the overall market this morning. I actually liked that it opened down a little. I think it actually give the bounce a little more time. If we had gapped up at the open I would have been selling like crazy. The wiggle out of the gate gave me a chance to play around a little and go surfing for plays. There are times when a little wiggle can be good for the continuation of a bounce, and I'm speculating that this morning is one of those times. I could be wrong, but I like what I see so far.
8:25 am MT: I sold the CNX calls again, and like CMI I'm treating it as one trade, so the final tally was a 1.05 profit, or a 14% gain on CNX.
8:40 am MT: I like the bounces on CLR, HK, and WDC. I like the breakouts on RIMM and SPWR. I nibbled on calls for RIMM and WDC, and I may look at CLR or the others as well.
8:45 am MT: I sold half the FWLT calls for a .60 cent profit, or 18% gain so far. A few minutes later, with STLD battling at a short-term resistance, I sold part of those calls for an .80 cent profit, or 16% gain so far.
You can probably see this by now, but I'll state it anyway. I'm moving more towards Tech (QCOM, RIMM, WDC) and moving gradually away from some of the other areas. I'm still working the other areas, but Tech is looking better than anything else in the near-term.
9:10 am MT: I nibbled on some IBM calls. I like the Reverse Head and Shoulders on the 120m charts. You can see it on the 60m charts as well, with a mini Double Bottom inside the Head. I have partial positions on three Techs, and a full position on a fourth. So I'm good with what I have for now.
Market Update: If the Dow can push through resistance along the 10dma, it will probably make a run to 12,350 (horizontal resistance), or perhaps 12,450 (projecting the 20dma as resistance). So a push through the highs of the day would possible lead to a run of about another 100 points. The Naz is trying to decide if it can push through resistance at 2,475 (I noted that area yesterday and the Naz hit 2,472.65 before consolidating this morning). If the Naz can push through, then it will reach for 2,500 (which means some smarty pants will sell at 2,497.86593411). I don't know if the markets can push through or not, and I don't know if they can do it today. But if we do push through, I'll be locking down profits all the way up. If we don't, and we roll over, then I'll stop all the calls and start buying puts.
9:35 am MT: I locked and walked on the STLD calls for a total trade of .62 cents profit, or 13% gain. I may trade it again on a breakout of the days high, but I'm fine with the quick profits for now. I also sold the JOYG calls at breakeven. You can see that, as usual, I'm not especially tolerant in the market climate we continue to grind through. I may pick up the JOYG calls again, but it may be after the market decides what it's going to do with its short-term resistance.
10:00 am MT: I locked and walked on FWLT for a total trade of .63 cents profit, or 18% gain. FWLT took a dump just after I sold it, so that was nice timing. I still like it, but I can obviously get back in cheaper if I want to. I also sold the RIMM calls for a 1.00 profit, or a 9% gain for a 1 hour and 20 minute trade. I love RIMM right now, but it got pretty white hot intra-day, so I'd rather take my money, watch for an intra-day pullback, and lather rinse repeat.....
10:10 am MT: I stopped out of QCOM for a small .18 cent loss. It's the same story as JOYG, I have very little tolerance for "fussy" in our current market conditions. When stuff gets a little to loosey goosey I dump it, whether I'm right or wrong I don't care, I just move on to other stuff that has some teeth behind it (or horns I guess, since I've been trading calls today). The only things I'm holding right now are partial call positions on WDC and IBM. I want back into RIMM on a pullback, and I may look at some other stuff as well, but I've got one BIG EYE (Popeye?) on what the overall market wants to do at these levels - because that's what all the other traders are doing right now. I think there are a whole lot of BIGEYES out there in trading land musing over our market at this moment. It's like a huge Marty Feldman convention in Tradersylvania and Igor and Dr. Frankenstein want to know if the Monster is really alive.
If you didn't quite get that metaphor, watch the first minute and 22 seconds of the following and you'll get an idea of what traders are wondering right now:
7:50 am MT: I sold the CMI calls for a tiny gain, but I may buy back in later in the day. I sold the CNX calls for a .70 cent profit, or 9% gain, and I may buy back into those later as well.
7:55 am MT: I bought back in to the CMI calls, and I'll run with those for a few more minutes, squeeze a little more profit out of the play, and finish the CMI trade. The pattern with CMI is to get most of the move done in the first 45 minutes. So I'm targeting about ten more minutes and closing it out.
8:10 am MT: I sold the CMI calls again. I consider the two trades as one, so the final tally is an .80 cent profit, or 14% gain on CMI. I also bought back in to the CNX calls on the bounce of the Bull Flag on the 10m charts.
8:15 am MT: here is a quick note on the overall market this morning. I actually liked that it opened down a little. I think it actually give the bounce a little more time. If we had gapped up at the open I would have been selling like crazy. The wiggle out of the gate gave me a chance to play around a little and go surfing for plays. There are times when a little wiggle can be good for the continuation of a bounce, and I'm speculating that this morning is one of those times. I could be wrong, but I like what I see so far.
8:25 am MT: I sold the CNX calls again, and like CMI I'm treating it as one trade, so the final tally was a 1.05 profit, or a 14% gain on CNX.
8:40 am MT: I like the bounces on CLR, HK, and WDC. I like the breakouts on RIMM and SPWR. I nibbled on calls for RIMM and WDC, and I may look at CLR or the others as well.
8:45 am MT: I sold half the FWLT calls for a .60 cent profit, or 18% gain so far. A few minutes later, with STLD battling at a short-term resistance, I sold part of those calls for an .80 cent profit, or 16% gain so far.
You can probably see this by now, but I'll state it anyway. I'm moving more towards Tech (QCOM, RIMM, WDC) and moving gradually away from some of the other areas. I'm still working the other areas, but Tech is looking better than anything else in the near-term.
9:10 am MT: I nibbled on some IBM calls. I like the Reverse Head and Shoulders on the 120m charts. You can see it on the 60m charts as well, with a mini Double Bottom inside the Head. I have partial positions on three Techs, and a full position on a fourth. So I'm good with what I have for now.
Market Update: If the Dow can push through resistance along the 10dma, it will probably make a run to 12,350 (horizontal resistance), or perhaps 12,450 (projecting the 20dma as resistance). So a push through the highs of the day would possible lead to a run of about another 100 points. The Naz is trying to decide if it can push through resistance at 2,475 (I noted that area yesterday and the Naz hit 2,472.65 before consolidating this morning). If the Naz can push through, then it will reach for 2,500 (which means some smarty pants will sell at 2,497.86593411). I don't know if the markets can push through or not, and I don't know if they can do it today. But if we do push through, I'll be locking down profits all the way up. If we don't, and we roll over, then I'll stop all the calls and start buying puts.
9:35 am MT: I locked and walked on the STLD calls for a total trade of .62 cents profit, or 13% gain. I may trade it again on a breakout of the days high, but I'm fine with the quick profits for now. I also sold the JOYG calls at breakeven. You can see that, as usual, I'm not especially tolerant in the market climate we continue to grind through. I may pick up the JOYG calls again, but it may be after the market decides what it's going to do with its short-term resistance.
10:00 am MT: I locked and walked on FWLT for a total trade of .63 cents profit, or 18% gain. FWLT took a dump just after I sold it, so that was nice timing. I still like it, but I can obviously get back in cheaper if I want to. I also sold the RIMM calls for a 1.00 profit, or a 9% gain for a 1 hour and 20 minute trade. I love RIMM right now, but it got pretty white hot intra-day, so I'd rather take my money, watch for an intra-day pullback, and lather rinse repeat.....
10:10 am MT: I stopped out of QCOM for a small .18 cent loss. It's the same story as JOYG, I have very little tolerance for "fussy" in our current market conditions. When stuff gets a little to loosey goosey I dump it, whether I'm right or wrong I don't care, I just move on to other stuff that has some teeth behind it (or horns I guess, since I've been trading calls today). The only things I'm holding right now are partial call positions on WDC and IBM. I want back into RIMM on a pullback, and I may look at some other stuff as well, but I've got one BIG EYE (Popeye?) on what the overall market wants to do at these levels - because that's what all the other traders are doing right now. I think there are a whole lot of BIGEYES out there in trading land musing over our market at this moment. It's like a huge Marty Feldman convention in Tradersylvania and Igor and Dr. Frankenstein want to know if the Monster is really alive.
If you didn't quite get that metaphor, watch the first minute and 22 seconds of the following and you'll get an idea of what traders are wondering right now:
http://www.youtube.com/watch?v=CfKccGP3TeM
10:50 am MT: I bought back in to the FWLT calls because I like how the stock is holding up intra-day. I want to have enough trades on the table in case the market does try to make another leg up today or tomorrow.
1:00 pm MT: about an hour ago I bought back some RIMM calls and picked up some calls on ECA and HK. This was my first chance to post the trades.
3:00 pm MT: Market Wrap: Tech and Financials led the way today, with some Tech still trending up and bouncing, while Financials were simply continuing to bounce up from oversold conditions. As of the close today the market is at a key short term tipping point, so watch the price action closely tomorrow. Remember, Tuesday is the newsiest day this week with several economic reports and the GS earnings before the open. So if the market starts selling off tomorrow, I will be exiting the remainder of my calls and buying puts. If the market can't blast through the highs of today with some vinegar and baking soda behind it, then I will continue to scale out of my calls and start scaling into puts. If the market can make some bullish noise tomorrow, then I will run with my calls and add a few more throughout the day, and target Wednesday (or even Thursday morning) for the end of the upswing. I could be wrong, but my senses are telling me that the upswing could be done tomorrow. But the market has a lot of news to digest and gyrate over tomorrow morning, so I'm not trying to get to "Nostradwightus" right now, I want to see this play out early in the day tomorrow.
I am probably going to sell some of my calls early in the day if the market gaps up. I will sell all of RIMM on a gap up at the open. If the market holds up, and I see some nice intra-day pullbacks then I will get back in, and maybe even add positions. I think trading activity will be be heavier tomorrow morning, and it will probably feel pretty newsy, so really focus on price action in the morning. One final note: ADBE must have missed expectations with earnings because the stock is down over $1.30 after-hours, we'll see how it plays out tomorrow morning.
1:00 pm MT: about an hour ago I bought back some RIMM calls and picked up some calls on ECA and HK. This was my first chance to post the trades.
3:00 pm MT: Market Wrap: Tech and Financials led the way today, with some Tech still trending up and bouncing, while Financials were simply continuing to bounce up from oversold conditions. As of the close today the market is at a key short term tipping point, so watch the price action closely tomorrow. Remember, Tuesday is the newsiest day this week with several economic reports and the GS earnings before the open. So if the market starts selling off tomorrow, I will be exiting the remainder of my calls and buying puts. If the market can't blast through the highs of today with some vinegar and baking soda behind it, then I will continue to scale out of my calls and start scaling into puts. If the market can make some bullish noise tomorrow, then I will run with my calls and add a few more throughout the day, and target Wednesday (or even Thursday morning) for the end of the upswing. I could be wrong, but my senses are telling me that the upswing could be done tomorrow. But the market has a lot of news to digest and gyrate over tomorrow morning, so I'm not trying to get to "Nostradwightus" right now, I want to see this play out early in the day tomorrow.
I am probably going to sell some of my calls early in the day if the market gaps up. I will sell all of RIMM on a gap up at the open. If the market holds up, and I see some nice intra-day pullbacks then I will get back in, and maybe even add positions. I think trading activity will be be heavier tomorrow morning, and it will probably feel pretty newsy, so really focus on price action in the morning. One final note: ADBE must have missed expectations with earnings because the stock is down over $1.30 after-hours, we'll see how it plays out tomorrow morning.
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