More History Made

So the rally finally came that I was expecting, although it came with even more force than I expected which caused me to leave a lot of money on the table as a result. Twice I looked for day trades to see if the rally would fade and twice I had to exit again because the trend just kept going up. History books seem to keep being written in this market. With the Dow gaining nearly 11% in the session, the second highest percent gain and the highest point gain in history.

Besides exiting my calls too soon, GE particularly pissed me off. I had my stock set to sell on the open at 22.25, it opens and 22.30 and apparently I didn't get filled because it promptly dropped and kept dropping the whole day. I ended up bailing at 21.20, so there is a 1k less gain on that trade. I did however buy back the puts I sold at .85 for .15 so I made 700 there, not too shabby. It is likely I could have collected the entire 850 but in this market I didn't want to risk it.

My target of 9500 was essentially reached today. I was hoping for a pause at 9000, then a resume on good confirmation of libor rates going down. As of right now it looks like the rally is set to continue with futures up 2%. I am upset I bailed out and missed that extra 500 dow points obviously, but the easier trades will come on the way back down and I won't chase the trend beyond some possible day trades. when we get near 10,000 I will put on a put position. Stocks in the ag and materials sector should also be close to some good resistance and ready to get some puts as well.

My only position at the moment is some stock in XL Capital. They report earnings tomorrow morning before the open so this is partially a gamble. However they are trading at 1/3 of supposed book value so if earnings and guidance is remotely decent we could see a pop. If not, then I shouldn't have too much downside risk. It did run up into earnings so that is a partial concern that it will sell on the news, but again it should be limited risk.

I may look to exploit these high volatility numbers with more option selling if we have a rally tomorrow and reach close to 10,000.

My general feeling is we see 10,000 then as earnings start to come out and are worse than expected and guidance gets cut we will see a lot if not all of this rally come off over the next couple weeks. Then there will be focus on the usual things like consumer spending. If the market is not doing well I don't see a good christmas but if it holds up going into the holiday season I have faith in people to keep spending money they don't have if they are employed.

I will let the chart show the way but these are annoying times to be an option buyer with such inflated prices but I am hoping the vix comes down significantly soon and we start to have more well defined trends we can follow.