Worthless Hedging...

This has happened before and is probably the most frustrating thing possible. I position myself for protection against pullbacks so I am hopefully less affected, yet the relative weakness positions go against me at the times they should be even more weak.

I have obviously had large up days, and leverage cuts both ways and can have large down days but when you expect and plan for them and then have WORSE results because of new positions it makes you wonder if it is even worth it. In reality the positions didn't make it that much worse but it was worse nonetheless. In actuality I could have waited for a re-test after the break down in BAX, however with the market being down today(and that being my assumption yesterday) why would I assume a stock making new lows would be up on a down day? I wouldn't assume that and did not which makes it more annoying that it was causing most of the problems. All things said and done I would have avoided probably another 4% of losses had I just held my old positions through till today not to mention saved all the commissions I paid yesterday.

I got a bit spoiled having multiple up days in a row but it makes me think that I should possibly try and pick relative strength candidates and hedge with the broad market and not specific stocks. Had I chosen the SDS like was my other plan I would have had a nice hedge and limited my downside nicely yesterday and today as well it looks like.

Right now the futures are off by about 10 points near the all important 800 level. I am hoping tomorrow we test 800 and stabilize, if we do I will look to enter some nice long positions with good entry points. I feel like we could see significant upside in the financials if they come out better than expected but it definitely requires risk management. I've got a large list of stocks I'd like to buy but they were all at or near their trend lines today so tomorrow will be a true test where they could breakdown or hold.

Alcoa reported today, with a miss as was expected although a loss of .59 vs .56 is worse than expected. The stock was only off 3% in after hours though so it could be worse. Futures held up then sold off after market close. I feel like the market just needs to get to the 800 level and test it again and hold then resume after working off some of the overbought condition.

Total Return for 2009: 84.5%