Progress Resumes

The past couple days have been positive in terms of account appreciation and getting back on track position wise. On tuesday, oil and consequently the USO was acting fairly strong and I had already seen my puts on the USO turn from a decent profit to a small loss on the gap overnight so I decided to cut those loose and keep it at a small loss. That proved to be a smart play because not only did it finish higher yesterday but also moved much higher today as well.

Again I saw an annoying side effect of owning options, volatility decay. The RTH and XLY were down most of yesterday yet my puts lost money thanks to the drop in the implied volatility. Tuesday I had mostly mixed winners and losers except for one big winner which made up for the rest, which is exactly what I want to see if I can't get a better directional move. The same thing happened today with a slightly smaller winner making up for mostly a lack of direction.

I am positioned long commodities essentially and short retail, however I am starting to get slightly concerned with the overall market. I have been thinking we would go down for a while now but have acted bullish lately, especially oil. However, the SPX has gapped up or gone above 950 now twice and been rejected quickly both times. If we test it a third time and don't break it I think it points to downside. The catalyst I think will be the elevated 10 year rates becoming a head wind to equities along with higher oil and gas prices temporarily slowing their consumption(although we have yet to see that). I will stay bullished bias until things change, we have some important data coming out tomorrow with retail sales and jobless claims. My RTH put position could put a hurt on me if things come out better than expected but hopefully jobless claims will be tame as well and my other positions will make up for it as has been the case the past couple days. Slowly but surely I am trying to climb back to old levels to make new highs I just have to be patient and smart.

Total Return for 2009: 156%