Follow the Rules

So today we gapped up and both my put positions were in losing positions. DECK ran up to nearly 63 dollars, and my line was 60 and it was pushing past my loss limit. I didn't completely panic out of it, I let it come back as I saw the market pulling back then exited at what I thought was a better price. DECK reversed completely and ended up down on the day. I also exited IYR as it was breaking to new highs and I assumed it would continue. I bought back my AAPL calls as the market started to recover too. I did all of this in the first half an hour. I was basically "right" on 1/3, DECK would have still been at a loss but not at my limit and still protect me to the downside, AAPL went down as much as two dollars and ended up down slightly but the calls decayed more in my favor which would have recouped more premium.

Overall I prob lost 1% on making those moves, IYR ended up finishing higher than where I sold making the move right for the time being but it was still below resistance and my loss limit so I could have held. I was too eager to cut those positions because I saw the market start to rebound and I thought it could be the huge up day I was looking for but for the most part my positions did what they should. I need to remember trading rule #6: Do NOT trade in the first hour unless absolutely necessary. The hard thing is acting early on pull backs has worked this whole time generally going long. My new position in CHK is starting to work out nicely and I think should continue. One thing I have noticed and plan to analyze is holding long term vs. short term trading. FCX, which I originally had July options on at 26, is now at 52 and I exited at 42, thats significant money left on the table. Of course I did get out before it traded in a range for a while so time in market should be considered but it is still something to think about.

The stress test "leaks" sent financials ripping higher today. I really just want a large up day so I can get some low risk put positions. The 930 target is in sight and that will be the place I initiate some short positions. We will be overbought in most of the major sectors and the McClellan oscillator is near extreme overbought conditions as well. Financials seem like a good place to short except that they keep going up. There are some predictions of a 50% retracement of the rally, I highly doubt that, although it is possible, I'd look for a pull back to 875 still. I will still try to pick relative strength and weakness candidates but likely position a bit more bearish in the short term if we hit 930. My hope is that the retail sales numbers are good tomorrow and the jobless claims are close to ADP and we could see that rally continue and then I will look to take some bearish positions. Overall on the day I only had a small profit.

Overall Return for 2009: 143%