Market Selling Slows Down

Are we in the eye of the storm or has the storm passed? That's the question on traders minds today as the Senate continues to kick back and forth over the $700b bailout proposal. Warren Buffet gave the market some support as he made a huge investment - through bonds and warrants - in Goldman Sachs. Traders may take a "glass is half full" approach this morning, at least for awhile.

The major indexes are at a point that any substantial drop today probably means a round trip back to last week's lows. As per this year, I'm being selective and using good risk management. And as per the past week, I'm playing very short swings and not holding anything overnight.

7:40 am MT: I’ve been going up and down my watchlists looking for ideas. I just don’t see much that makes me excited, and if I do like something – the spreads are too wide. I did find one trade on STI calls, which is actually trading in .10 - .30 cent spreads. I almost didn’t believe my eyes, since so many other Financials and Regional Banks are still trading really wide spreads. I did a little nibbler in case this is all an illusion.

8:00 am MT: I nibbled on some AEM calls. It looks like the market is still wringing its hands and running around in a residual panic from the past several days. I probably won’t do very much today, so I’m keeping it focused.

2:00 pm MT: Trading Wrap: I nibbled lightly on STI and BBT calls. Since I’m cherry picking the position, I’m willing to hold overnight. I also went heavier into TRA puts to take some advantage of the Energy and Commodity stock consolidation today. I sold most of the TRA puts and all of the AEM calls during the day. I added another $272 to the “paper” money account today. Nothing major, but I’m still chugging along this week.

4:00 pm MT: Market Wrap: The market appears to be slowing down the selling in a variation of a Deliberation candlestick pattern. It helped that oil consolidated down another couple of dollars today. I think everyone is waiting to see how the $700b bailout shapes up, and if it will ever get off the launching pad. There is still a lot of hand wringing on Wall Street, and even the bailout will not completely alleviate the stomach churning going on with traders and financial institutions. If we do get positive news or a bounce in the morning, I will look at SPY and DIA as possible quick, short swing call plays. I’m also diddling around with the two Regional Bank calls (STI and BBT). I still don’t have any interest in taking large positions, or holding full positions overnight on directional trades. This is still a day to day market.

One note: due to a serious family issue I won’t be putting out a huge amount of postings the next few days. I will hit the core issues and post the “paper” trades that I do, but I need to keep things to a minimum for a few days. I will be off work tomorrow, but I will be on VC tomorrow evening.