Late Day Giveaway

Yesterday was playing out extremely well for a majority of the day which of course meant it would not continue. I had tweeted that I was wary of a reversal in the afternoon, treasuries were looking fairly toppy and starting to reverse. Generally as bond prices come back down it will confirm a rally in equities. In this case it wasn't much of a help in that regard but we rallied anyways. I still had a decent day gaining back a few percent but I was up much more earlier. I had made a few moves before the rally in anticipation of something and to better balance myself since I was fairly short.

I exited my IYR position because I was already short biased and that position was pushing my limits. My thoughts were that if we got some bad bank news about commercial real estate it would collapse back down but I was holding too much that way and it would hurt worse if it went against me. I also sold my MFE position yesterday to give myself a little more cushion for my other positions.

AAPL reported huged earnings, again. Very nice results and a trend that is likely to continue for quite a while, I would be buying pullbacks for the long term for sure. I sold a strangle into earnings and the day of the release it was up a decent amount but we'll see how it is with the gap higher. I basically gave it a range from 130-175 to finish between, that would have both strikes expire worthless. I sold a strangle on AMZN again giving myself a wide range from 100-70, which is also profitable.

To balance my shorts I went long QQQQ calls as tech has been relative strength and continues to impress. I also went long some December corn futures as another long exposure play. With corn trading near 320 which is basically right at a 5 year support level I figured risk was easy to manage and we could see a move off this level. I would hope a lot of people are hedging their businesses if they have it as an input because to have this be back at a 5 year low when we have 5 more years of population growth and will have inflation at some point seems like a bargain, but time will tell.

Financials reported today with somewhat mixed results. US Bank beat expectations and had fairly limited write downs which is great news for them. :-) Wellsfargo beat expectations but had quite a bit of write downs and said they expected them to increase which I think is finally showing some of the reality that is out there and one of the additional reasons I was net short. MS reported a much greater loss than expected. I guess it is hard when you don't have the inside info like GS does to trade on. In all seriousness though I think the MS results have to be somewhat of a surprise and the financial results in general have to take some of the rosy view off the rally and make you wonder how much of the previous good results were due to the government assistance.

So as of now I am essentially short the SPY and long the Q's as my hedge and so far it appears to be shaping up decently before the open. This could be the roll over from 950 I was looking for but I definitely don't want to keep giving back gains on rallies so I'll watch things closely.

Total Return for 2009: 155%