Friday, September 19, 2008

Shorts Are On the Run Again


Pre-market futures are up about as much as I've ever seen them.....The market is set for a huge gap up at the open.

The SEC is temporarily banning short selling on certain Financial stocks. Also, the Treasury and the Fed will introduce a $50b plan to help stabilize money market funds with loans to banks.

The newsy Financial Crisis Intervention drumbeat continues today. I expect the shorts to be absolutely screaming this morning. Volatility is also relatively high.

I will sell much of my DIA, SPY, STI, COF, and PRU calls into the big gap at the open. But I will look to pick those positions right back up if we get a pullback and it holds. If you are entering new positions right at the open - in case the market takes off and doesn't look back, take very small positions at first that you can add to if the market pulls back. That way you can diversify against the expected volatility and potentially wild price action this morning.

I speculate that the shorts could be on the run again for much of the day, but I think we will probably have a few "settling down" points throughout the day as well. We shall see.....
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9 comments:

  1. stevecSeptember 19, 2008 at 9:05 AM

    Dwight, I am at a crossroads, I want to participate in the market but I am to scared to lose $$. One half is telling me I am going to miss out on something big like yesterday the other says its to crazy so sit out. Should I wait because there will always be more oppurtunity or take a chance and get back in small?

    I really feel like i blew for not be in yesterday to this mornings move. But on the other hand I havent lost any $$ for a week or so because I havent been in anything.

    Thanx

    ReplyDelete
  2. JoeSeptember 19, 2008 at 9:13 AM

    Dwight,

    I've done some research on T-Notes, but there are some questions I don't have answered. I know what they're purpose and how they're used, but don't they go opposite the market? $TNX jumped a lot today. Also, how do the futures work with these?

    I'm currently in Q's and SPY, got in with the 30m bounce at around 8:30MT. Then added more a few minutes later. Up 20% on both - looking for signals to exit. Wanted to get in some financials after all the news yesterday and this morning, but spreads way to wide.

    Joe

    ReplyDelete
  3. ClaudiaSeptember 19, 2008 at 9:26 AM

    Dwight,
    I get selling the calls at the gap this morning and waiting for a pull back to re-enter - at what point do you determine that the pull back has held and you re-enter those calls?

    ReplyDelete
  4. AnonymousSeptember 19, 2008 at 10:32 AM

    Hey Dwight, How do you know when its time to starting trusting the technicals again instead of just trading off the news?

    jon

    ReplyDelete
  5. AnonymousSeptember 19, 2008 at 1:37 PM

    HI....oh my gosh,check out KFT. It broke through resistance at $34.31 on huge volume. I know we're not supposed to hope but my analysis screams higher. I'm in the Oct 35 OTM Call. Apparently, KFT took the place of AIG on the DOW do you think this is bullish?

    Thanks!! Denise

    p.s. i'll be on virtual coaching tonight for the first time in soooo long. : )

    ReplyDelete
  6. ChristinaSeptember 19, 2008 at 6:47 PM

    Stevec,
    Congratulations on NOT losing money this week. There are tons of people out there who probably lost money this week - just check out the ranges on those daily candles. Don't feel bad for not participating. This week has been atypical and as new traders who have never traded through such times, it is wiser to keep your money safe. If you had left on a vacation last Friday to a remote island and returned today without looking at the charts, you wouldn't suspect anything happened all week as the SPX closed about the same level as it did last Friday.

    Dwight - I can't thank you enough for navigating us through this week. Under your guidance, I am so happy I didn't lose money and I even made $420 trading very small positions and getting out very quickly. Thanks again! When are we going to get you full time :)

    ReplyDelete
  7. AnonymousSeptember 20, 2008 at 7:17 AM

    Dwight:
    Thanks again for breaking down the news and markets into understandable terms and implications.
    I'm appreciate you taking the time during the virtual coaching to explain the current events and how to trade them. Practical application vs theory - I'll take practical application any day.
    Thanks much
    Robert
    CANI212

    ReplyDelete
  8. Tucson KeithSeptember 21, 2008 at 1:20 PM

    Hey Steve,
    You are really lucky that you were out last week, I had the crap beat out of me last week. I haven't taken a beating this bad since the nightmare on Wallstreet this past January. I sure hope that conditions are better for me next week so that I can turn this back into my favor.
    Keith

    ReplyDelete
  9. AnonymousSeptember 21, 2008 at 1:29 PM

    Hey Keith,
    These are certainly unusual times.... $500 billion bail out to be borne by tax payers, moratorium on all short activities until October 2nd ... for now...
    No wonder market intraday volatility is wacko.
    So take heart, this ain't no walk in the park.
    Dwight, look forward to your comments re. inflationary effects of this bailout or not?
    Thanks

    ReplyDelete

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