Direction Needed

Yesterday WMT is basically inline with expectations, reaffirms guidance but falls. Jobless claims are worse than expected, both things I didn't want, yet we rallied anyways. Seems like the market wanted to test 900 as well. I got back into puts on the SPY slightly early since we had that weaker data come out but I was able to get into IYR puts at near the high yesterday.

Now we need to either break 900 again or 875. We have yet to test 875 but I suspect once we do it will hold at least the first time. People on tv seem to think we will be in the range of 875 to 900 for a bit which could be and could give the opportunity to trade that channel. Ultimately I'd like to have a break down and retest 850 and possibly 800. After retail sales dropped I started to think about the upcoming scenario even for the summer and it didn't seem promising. We have new graduates coming out so potentially even more jobless pushing unemployment higher quicker than forecast. This continues to cut consumer spending and makes a more quick recovery nearly impossible. This could in fact lead to the credit card defaults and eventually bad commercial real estate loans causing issues as Meredith Whitney and others have claimed(as much as I don't like her).

I had actually been surprised by the more positive data as of recent even though I was long it was good but now seems more like an uptick in a downward trend. Do I think we re-test the lows or go lower? Very doubtful in my opinion but we could see a decent retracement now farther than I thought before. I am still long biased since we technically have not broken 875 yet but if that happens I'll look to get bearish.

All of my short option positions are currently sitting OTM, AAPL shook me out which is annoying because that would have been another one that worked out. This is a subjective analysis but I want to say out of 10 times I have had short options it only hasn't worked once, i've had to buy them back for a loss. The win percentage is great but the risk/reward will still never match a good directional play but can definitely be used to lower cost basis or generate a more steady profit stream. We could see some volatility today as stocks get pinned to certain strikes for expiration. Monday will be the day to start paying attention again.

Total Return for 2009: 159%