The market definitely erred on the side of caution yesterday. It held up above VWAP all day long which statistically points to a rally late in the day, however I held the belief that we would not rally simply due to the factors I already described which are month end and risk to the downside. The rally yesterday I feel skewed the risks even more to the downside because I feel like we will need a decent beat for GDP to have this rally continue and get over 1000.
We are again in a scenario like we were at 950 where we are overbought and close to resistance. We are admittedly a little ways away from the all important 1000 level. This is a psychological level which means it is a technical level because if it is paid attention to it becomes a self fulfilling prophecy like I have said before. If GDP comes in light or worse than expected we could see a decent reversal of this rally. Although I don't think that will happen I am decently prepared for it.
Yesterday almost at the exact high of the day on the S&P I decided to get into SDS calls as a hedge going into the GDP number. I ended up buying back my short IYR calls because it ran significantly yesterday close to my strike and was eating up a significant amount of capital in margin. This proved to be a great move as the sell off I expected into the close materialized and my SDS calls are nicely profitable.
Corn recovered and finally broke out of it's downtrend of the past 3 months. This should signal a run to 350. It should encounter resistance there but if it gets above that we could see a fast back to 400. If the S&P does happen to get above 1000, there is not much resistance until 1100 so the party may continue. However, we are currently at extreme readings in the bullish percent on the NYSE and on the nasdaq. The $BPNDX is at new extreme highs where we have historically seen a reversal and the NYSE is close to extremes as well. Interestingly the bullish percent on energy is at fairly low levels, which means they could see some significant movement if things continues to the upside. Lastly, the Baltic Dry index still couldn't get above it's 50 day MA yesterday so the flag continues.
DRYS reported earnings last night and beat estimates by a couple cents. Their outlook was actually decently positive saying they were seeing improvement and signs of a recovery. The stock was up after hours and I am hoping that will help my DSX position and the Baltic Dry to break out of it's flag. If I were extremely lucky DSX will hold up well even if GDP does not beat expectations or we have a sell off. Overall I should be decently positioned going into this number either way. I may look to change my bias depending on how things shape up.
With this sleep schedule I am on I may as well be a money manager haha.:-)
Total Return for 2009: 147%
Friday, July 31, 2009
Wednesday, July 29, 2009
GDP Holds the Key
I can't really tell right now if the lack of conviction selling is a positive or if this is simply just propping up the market so we can sell it off hard when GDP comes out regardless of results. I have come to realize over the years that in the absence of real news to push stocks, the illusion of performance can be predictable. This is obviously based on the psychology of traders and money managers since ultimately they move the market and the market trades on psychology. Take this week for example, going into month end the market is moved by those people getting in and out of stocks ahead of the time when their performance is measured. By deducing what we know about people, that they are greedy and fearful, we can determine probabilities for short term movement. This is by no means a hard and fast rule but so far things have acted fairly predictably up until this point.
We had a large run, those people who are somewhat reasonable will want to sell their positions and lock in their monthly gains if they just caught a 10% move in the S&P or more, they can afford to sell stocks down 2% while locking it in. After that selling pressure is relieved, the people who missed out on the rally for the most part want to jump into the stocks that went up so it looks like they were holding them the whole time. This creates a snap back or at least a temporary floor in prices. It is essentially the reverse if we have a large decline.
Keeping the typical money manager in mind and their quest for absolute return you then speculate as to what reactions may be for up coming events. This can help give you an edge(or at least a perceived edge). Overall, most people likely want stocks to go up because it is much easier when they do and everyone looks better for it and makes more money. We are somewhat in a pickle because we have run up quite a bit into this number so you wonder what is priced in for expectations. However, if we were to somehow get a positive GDP number I think we could see the rally continue because this will be a reason to buy stocks and it also coincides with the 31st of July so any added gains would be a bonus, adding pressure to the upside as shorts cover and longs pile in so they don't miss the rally.
The consensus on intrade is that we have a 75% probability of a positive GDP number. I was unaware of that statistic until today but makes me want to be long biased if people smarter than myself think there is a 75% chance of it coming in higher than estimates. Obviously I still have to manage risk properly but I am now skewed long.
Today was fairly boring, although I was fairly pissed off because my entire loss was due to my /ZC position until it reversed late in the day. Small losses, small gains and large gains are fine, it is the large losses we want to avoid which I didn't do last week so overall I consider it positive when I end up flat or higher after I get into new positions.
I am trying a long term trade on a stock and we will see how long I can be patient. I essentially took a synthetic stock position in DSX for March 2010 expiration. This is purely a play on the idea that we will have some what of a recovery going into next year and if not, as long as things essentially stay the same I will collect a nice premium in the mean time. The beauty is that even if it does nothing I will make 10%. I of course still have my exit chosen in case a recovery does not happen. I also decided to get into CHK on the pull back to near support. My concern is these stocks have all run up significantly recently but if the rally keeps going, so will they. Not to mention it held up nicely even as UNG was selling off.
I sold some front month puts on ACH as it pulled back to a pontential support level. I also decided to sell some front month calls on IYR as a hedge to the downside. One of the reasons I hate selling is it just uses up so much capital for margin and you have limited upside but I felt like this hedge was decent because it should be on a relative weakness candidate and even if it does go up the volatility should contract in my favor. In retrospect I could have sold less calls and bought long puts as my hedge but we'll see what happens.
Friday could very well determine the next couple months and 50 points in the S&P. Since I am net long I'd prefer a rally on better than expected numbers but I am willing to be flexible. Expectations on jobless claims seems fairly low so I doubt it is a factor tomorrow but could be a catalyst for selling if it is unexpectedly bad.
Total Return for 2009: 138%
We had a large run, those people who are somewhat reasonable will want to sell their positions and lock in their monthly gains if they just caught a 10% move in the S&P or more, they can afford to sell stocks down 2% while locking it in. After that selling pressure is relieved, the people who missed out on the rally for the most part want to jump into the stocks that went up so it looks like they were holding them the whole time. This creates a snap back or at least a temporary floor in prices. It is essentially the reverse if we have a large decline.
Keeping the typical money manager in mind and their quest for absolute return you then speculate as to what reactions may be for up coming events. This can help give you an edge(or at least a perceived edge). Overall, most people likely want stocks to go up because it is much easier when they do and everyone looks better for it and makes more money. We are somewhat in a pickle because we have run up quite a bit into this number so you wonder what is priced in for expectations. However, if we were to somehow get a positive GDP number I think we could see the rally continue because this will be a reason to buy stocks and it also coincides with the 31st of July so any added gains would be a bonus, adding pressure to the upside as shorts cover and longs pile in so they don't miss the rally.
The consensus on intrade is that we have a 75% probability of a positive GDP number. I was unaware of that statistic until today but makes me want to be long biased if people smarter than myself think there is a 75% chance of it coming in higher than estimates. Obviously I still have to manage risk properly but I am now skewed long.
Today was fairly boring, although I was fairly pissed off because my entire loss was due to my /ZC position until it reversed late in the day. Small losses, small gains and large gains are fine, it is the large losses we want to avoid which I didn't do last week so overall I consider it positive when I end up flat or higher after I get into new positions.
I am trying a long term trade on a stock and we will see how long I can be patient. I essentially took a synthetic stock position in DSX for March 2010 expiration. This is purely a play on the idea that we will have some what of a recovery going into next year and if not, as long as things essentially stay the same I will collect a nice premium in the mean time. The beauty is that even if it does nothing I will make 10%. I of course still have my exit chosen in case a recovery does not happen. I also decided to get into CHK on the pull back to near support. My concern is these stocks have all run up significantly recently but if the rally keeps going, so will they. Not to mention it held up nicely even as UNG was selling off.
I sold some front month puts on ACH as it pulled back to a pontential support level. I also decided to sell some front month calls on IYR as a hedge to the downside. One of the reasons I hate selling is it just uses up so much capital for margin and you have limited upside but I felt like this hedge was decent because it should be on a relative weakness candidate and even if it does go up the volatility should contract in my favor. In retrospect I could have sold less calls and bought long puts as my hedge but we'll see what happens.
Friday could very well determine the next couple months and 50 points in the S&P. Since I am net long I'd prefer a rally on better than expected numbers but I am willing to be flexible. Expectations on jobless claims seems fairly low so I doubt it is a factor tomorrow but could be a catalyst for selling if it is unexpectedly bad.
Total Return for 2009: 138%
CFA Level 1: PASS
Got my level 1 CFA results yesterday morning, I assumed the worst in that I thought I did pretty well but likely still fell just short but I passed! Probably one of the greatest feelings and best accomplishments I have had to date. It feels great to be done with that hurdle and move on to Level 2. I was actually surprised at how well I did I got above 70% on 7 out of 10 sections of the test and almost for sure got above 70% overall. I think this may be the first time that the minimum passing score was at least 70% or maybe a 69% after looking at some scores that were a band 10 fail(top 10% of failures). Even with the MPS much higher than 2008(likely closer to 65%) there was a fairly large jump in the passing rate from 35% to 46%. Either way, I passed and know that I know the material(and hopefully potential employers do too now) and get to study for level 2 now! :-)
In terms of the market I have recovered some over the past two days. Things have played out pretty much as expected so I have taken that opportunity to recoup some losses. ISRG had a pull back and I decided to cut it loose after I gained back half my loss. This was a great move at the time as it made a new high again yesterday but we will see what happens going forward. I was noticing on the monday down day that the financials were diverging and staying up when the market was down so I sold my SKF position fairly quickly thinking that if the market strengthened financials could take off. I took the opportunity to lighten my SPY puts as well. On Tuesday I closed more of my put position on the SPY and now have just a normal position size on. Each day it has still been that I have higher gains earlier in the day and the market rebounds into the close so essentially being disciplined and selling into weakness has been the difference of making back money and not.
I am now short the S&P 500 via Sept puts in case we do test 955 as we technically should before resuming the rally. To hedge this I still have my December Corn futures contract which continues to annoy me. It is sitting around this 33o level after breaking its downtrend it will likely consolidate here before moving up.
I am now just waiting and looking to get into some more positions when they are at lower risk entries. Futures are down slightly right now, Asia sold off decently with Shanghai pulling back 5%. S&P futures hit a low of 964 but have since rebounded. This could be seen as a bullish divergence however I partially feel like it is a head fake and we end up selling off. Materials will likely be under pressure all day but they have run a lot in such a short period of time it would be crazy not to expect some pullback.
I find it humorous, and it likely goes unnoticed, but since my interview where I was talking markets and I was asked what stocks I personally liked I said I liked materials and metals(for inflation and real demand eventually) and specifically FCX and ACH. Since that day which was June 13th FCX has moved 25% and ACH has moved 38%. I obviously wish I had been in on those moves, I was waiting a little too long to see if we broke down. I feel partially vindicated, even though that is short term outperformance I expect it to continue for years.
We could see a struggle today as a sell-off may be the logical choice but we have buying for month end window dressing as people get into the names they have missed so far and that helps put a floor under prices and prevents a larger decline. If materials take a hit today due to the Asian pullback it could offer some decent entry points. Oil is also pulling back which should cause natural gas to sell off as well. I am hoping CHK comes down and I can get into it close to 20. I'll be watching coal names as well, ANR at 30 is a good entry point. I will likely choose some longer dated options and possibly some synthetic stock positions. One thing is for sure though is I will definitely be hedging any longs with more S&P puts or individual weak stocks but I need to find some.
On a side note, one pairs trade that I think could work out well in the future is Long AAPL and short RIMM. Both do perform together however when Apple finally has the Iphone on multiple carriers I think RIMM will be much more hard pressed to sell Blackberries, same with PALM. The other trade could be long AAPL and short T as they will no longer get guaranteed revenues from people wanting the Iphone.
Things are looking up again, I just need to manage risk as always and trade the way I know how and I should hopefully resume my forward progress.
Total Return for 2009: 137%
In terms of the market I have recovered some over the past two days. Things have played out pretty much as expected so I have taken that opportunity to recoup some losses. ISRG had a pull back and I decided to cut it loose after I gained back half my loss. This was a great move at the time as it made a new high again yesterday but we will see what happens going forward. I was noticing on the monday down day that the financials were diverging and staying up when the market was down so I sold my SKF position fairly quickly thinking that if the market strengthened financials could take off. I took the opportunity to lighten my SPY puts as well. On Tuesday I closed more of my put position on the SPY and now have just a normal position size on. Each day it has still been that I have higher gains earlier in the day and the market rebounds into the close so essentially being disciplined and selling into weakness has been the difference of making back money and not.
I am now short the S&P 500 via Sept puts in case we do test 955 as we technically should before resuming the rally. To hedge this I still have my December Corn futures contract which continues to annoy me. It is sitting around this 33o level after breaking its downtrend it will likely consolidate here before moving up.
I am now just waiting and looking to get into some more positions when they are at lower risk entries. Futures are down slightly right now, Asia sold off decently with Shanghai pulling back 5%. S&P futures hit a low of 964 but have since rebounded. This could be seen as a bullish divergence however I partially feel like it is a head fake and we end up selling off. Materials will likely be under pressure all day but they have run a lot in such a short period of time it would be crazy not to expect some pullback.
I find it humorous, and it likely goes unnoticed, but since my interview where I was talking markets and I was asked what stocks I personally liked I said I liked materials and metals(for inflation and real demand eventually) and specifically FCX and ACH. Since that day which was June 13th FCX has moved 25% and ACH has moved 38%. I obviously wish I had been in on those moves, I was waiting a little too long to see if we broke down. I feel partially vindicated, even though that is short term outperformance I expect it to continue for years.
We could see a struggle today as a sell-off may be the logical choice but we have buying for month end window dressing as people get into the names they have missed so far and that helps put a floor under prices and prevents a larger decline. If materials take a hit today due to the Asian pullback it could offer some decent entry points. Oil is also pulling back which should cause natural gas to sell off as well. I am hoping CHK comes down and I can get into it close to 20. I'll be watching coal names as well, ANR at 30 is a good entry point. I will likely choose some longer dated options and possibly some synthetic stock positions. One thing is for sure though is I will definitely be hedging any longs with more S&P puts or individual weak stocks but I need to find some.
On a side note, one pairs trade that I think could work out well in the future is Long AAPL and short RIMM. Both do perform together however when Apple finally has the Iphone on multiple carriers I think RIMM will be much more hard pressed to sell Blackberries, same with PALM. The other trade could be long AAPL and short T as they will no longer get guaranteed revenues from people wanting the Iphone.
Things are looking up again, I just need to manage risk as always and trade the way I know how and I should hopefully resume my forward progress.
Total Return for 2009: 137%
Friday, July 24, 2009
Follow-Up Failure
I stand corrected; today was my worst day of the year. The past 4 days in a row it has been the same thing, either my largest gains happen early in the day or my lowest losses and then things get continually worse. I figured I had at least weathered the worst of the storm yesterday, nope. Today the market really wasn't up, but guess what was, ISRG. Corn futures essentially reversed back down to their 330 breakout level which of course added to my losses. The added problem with no movement in either direction was the drop in volatility further hurting my option positions.
I am expecting the sell off to come at some point early next week as we go into month end and companies take their profits. It is likely we only have a day pull back as we get the profit taking then people hop back into positions for window dressing. I'll look to lighten or completely exit my positions into weakness. Ultimately I think we test 950-955 again but I am not sure if I have the patience given that everytime this week I have allowed my positions to work they hurt me. Even this morning I had a nice profit and figured I would let the market work but then we rally. If we get a pullback to 960 in the short term I'll exit.
This has been an extremely demoralizing week all around. I have lost all forward progress and reverted back to my worst levels since April. Obviously my return is still good overall but this drawdown is unacceptable and to think I could have avoided it by selling out at the morning on Thursday kills me. With losses comes smaller position sizes going forward so progress will likely be slower back up unless we miraculously got a gap down on Monday of a decent size. The even better thing is of course the fact that after the close the SPY was almost another half percent higher(note sarcasm). I will HOPE that this was hedging of short positions. Rallies don't last forever but they can last longer than I can take the loss so we will see. I assume a decent amount of people are in my position making me even more concerned that it won't happen.
Just a note about the return figures, they have taken a huge hit this week. Overall return is down a lot, my account is not down nearly that much since the total return is based off my initial starting balance. If I get the pullback I want on Monday I may just sit out for a bit and wait for better entries and take a step back for a while. Obviously the important thing is living to trade another day, which I am but it is as much(if not more) a mental battle as it is a capital battle.
Total Return for 2009: 123%
I am expecting the sell off to come at some point early next week as we go into month end and companies take their profits. It is likely we only have a day pull back as we get the profit taking then people hop back into positions for window dressing. I'll look to lighten or completely exit my positions into weakness. Ultimately I think we test 950-955 again but I am not sure if I have the patience given that everytime this week I have allowed my positions to work they hurt me. Even this morning I had a nice profit and figured I would let the market work but then we rally. If we get a pullback to 960 in the short term I'll exit.
This has been an extremely demoralizing week all around. I have lost all forward progress and reverted back to my worst levels since April. Obviously my return is still good overall but this drawdown is unacceptable and to think I could have avoided it by selling out at the morning on Thursday kills me. With losses comes smaller position sizes going forward so progress will likely be slower back up unless we miraculously got a gap down on Monday of a decent size. The even better thing is of course the fact that after the close the SPY was almost another half percent higher(note sarcasm). I will HOPE that this was hedging of short positions. Rallies don't last forever but they can last longer than I can take the loss so we will see. I assume a decent amount of people are in my position making me even more concerned that it won't happen.
Just a note about the return figures, they have taken a huge hit this week. Overall return is down a lot, my account is not down nearly that much since the total return is based off my initial starting balance. If I get the pullback I want on Monday I may just sit out for a bit and wait for better entries and take a step back for a while. Obviously the important thing is living to trade another day, which I am but it is as much(if not more) a mental battle as it is a capital battle.
Total Return for 2009: 123%
Thursday, July 23, 2009
The End of the Bear Market
Unfortunately I didn't post this in the morning when I emailed it out to some people otherwise I would look like a genius calling it before such a large rally(not that it helped me any, see previous post). ;-) Anyways, this is a graph of the 20 week and 40 week moving averages on the S&P 500. If you go back over the past century, when these cross it signals a change in market cycles. There have only been a few false signals but when the 20 crosses below the 40 it signals the start of a bear market, and when the 20 crosses back above the 40 it signals a new bull market cycle. As we can see we have the 20 crossing back over the 40 finally a few days ago. I assume a lot of others see this as well and is one of the reasons we have rallied so much recently.
Regardless of your own personal viewpoint this is a bullish signal and points to higher stock prices so dips should be bought from here on out. My personal viewpoint is that we are still in a very weak economy that isn't improving much however we have had better than expected earnings even if a lot of it has simply been due to cost controls. Again the market trades on psychology and looks forward so even with the current reality we may see the S&P hit 1,050 or whatever target GS has on it because people are willing to pay up for stocks until we reach that point. This means I may as well go along for the ride managing risk and buying dips as necessary until I am told otherwise by the market that sentiment has changed. I am looking to ride the market down until the re-test of 955 then will get long biased again.
Remember that regardless of what any pundit says or what I think or say the market will show the way and it is showing that it wants to go higher at the moment. I will look to get in after we work off this extreme overbought condition and likely get long mostly commodities and energy and metals.
Total Return for 2009: 145%
Terrible Day
I got hit with a double whammy today. Didn't get the job I wanted and had my worst losing day of the year all at once. Oh well, I have to keep moving forward. I am fairly frustrated because I had to get out of my short AMZN strangle because I would have received a margin call at some point. So even though I wanted to hold over earnings and thought it would reverse(my top short strike was 100) I had to exit and what happens after earnings? Stock tanks. AMZN was one of the main losses today which now cannot be made up by that drop I likely would have recouped all the previous days losses plus some more with the decrease in IV. Oh well, had to manage risk and at the time who knows it could have kept ripping higher, though likely not to 100 since that is essentially an all time high(also a reason I chose it as my short strike).
ISRG is another pain. The stock apparently had great earnings and gapped up HUGE. At around the 208 level I figured it had probably run it's course and people would start to take profits and I could ride it back down to test the gap at 200. I entered towards the end of the day and apparently people were still short and covering or just really like the stock cause it kept going up finishing at 215. My time line is to have it test it this month but i'd rather start out with a gain instead of a loss. There was another reason for my large loss today.
All my short positions got creamed today and I am sure I wasn't alone as the shorts scrambled to cover and kept the rally going, it was essentially straight up all day long. This was the rally into the extremes I originally wanted to have happen at 950 but obviously did not. I will likely get smacked for it and normally don't do this but I averaged up my SPY puts. I am holding September paper so I have some time and my target is the retest of 955. My only saving grace today was my Q calls and my corn futures position.
Going into tomorrow I am still short and will look to cut other positions into weakness as I see fit, with MSFT and AMZN disappointing and after having such a huge rally I can't imagine we don't have some profit taking into the weekend but obviously I have been wrong before. These are the draw downs I try to avoid but this was the perfect storm and I got pummeled.
Total Return 2009: 145%
ISRG is another pain. The stock apparently had great earnings and gapped up HUGE. At around the 208 level I figured it had probably run it's course and people would start to take profits and I could ride it back down to test the gap at 200. I entered towards the end of the day and apparently people were still short and covering or just really like the stock cause it kept going up finishing at 215. My time line is to have it test it this month but i'd rather start out with a gain instead of a loss. There was another reason for my large loss today.
All my short positions got creamed today and I am sure I wasn't alone as the shorts scrambled to cover and kept the rally going, it was essentially straight up all day long. This was the rally into the extremes I originally wanted to have happen at 950 but obviously did not. I will likely get smacked for it and normally don't do this but I averaged up my SPY puts. I am holding September paper so I have some time and my target is the retest of 955. My only saving grace today was my Q calls and my corn futures position.
Going into tomorrow I am still short and will look to cut other positions into weakness as I see fit, with MSFT and AMZN disappointing and after having such a huge rally I can't imagine we don't have some profit taking into the weekend but obviously I have been wrong before. These are the draw downs I try to avoid but this was the perfect storm and I got pummeled.
Total Return 2009: 145%
Wednesday, July 22, 2009
Can't Nobody Hold Me Down
Once again the market gapped down in my favor and then rallied back up to my chagrin and loss of paper profits. I am trying to be patient and let my positions work but this has happened two days in a row. The market is acting bullish and normally I would welcome it but I guess I find it annoying due to my net short position. I also find it annoying because we got some less than good news from some of the major financials today. WFC had great results on the surface however their write downs were fairly large and they predicted hard times in the next couple quarters. MS had nearly triple the loss expected and the stock gapped down but finished even on the day. This happened essentially across the board. There were some positives with US Bank beating estimates and fairly limited write downs which helped the stock rally. This is a time that is separating good banks from bad and it definitely still appears like US Bank is one to have in the portfolio long term.
I was looking like a genius at the open, SKF was up, SPY was down and the Q's were flat to up, everything in my favor. Financials reversed as did the S&P, the Q's continued up so the hedge was fairly useful but didn't make up for the overall change. It was very odd, at the end of the day the SKF finished flat yet my options lost .20, as did the SPY but the options gained .20.
The quiet rockstars were actually my short strangle positions in AAPL and AMZN. Despite gapping up $5 my AAPL position made money from the volatility contraction just as I predicted. Same with AMZN, they don't report until tomorrow after the close but volatility already started to contract putting more money in my pocket. I do have to say that one could likely make a decent monthly income with option selling strategies, but it will never match the risk reward potential of a long option. I will defintely use selling strategies to enhance my gains when appropriate in times like this.
The complete surprise today was my corn futures position. At the end of regular trading I had a loss, then I saw someone tweet about corn and took a look and I suddenly had a nice gain as something caused it to shoot up 3%. I obviously hope this continues and will be curious to see why it moved like that. I was obviously looking for movement to the upside but that was a swift move. Since I am holding a December contract I am debating if I should take a time trade and just hold it until December and see what happens. I could actively trade it and commissions are not too bad but I am curious what my profit will be come December if any.
ADM confirmed it's inverse head and shoulders pattern today so I may look to get long on a re-test of 29 just to make sure it isn't a fake out but the pattern looks very nice. Overall, with the broad market I can't argue that things are acting bullish and the more we test the 955 level it will eventually break so I will be quick to cut my short positions if that happens. We have another slew of earnings on deck for tomorrow so we'll see what happens futures are up decently at the moment. I feel ok about my overall positions but am feeling a bit more exposed since I highly doubt my strangles will help me out as much in the future as they did today. I may need to add a select long position. Overall I just want a pull back to 930 to exit and get long biased again but as I have been taught many times in this game it has nothing to do with what I want.
Total Return for 2009: 163%
I was looking like a genius at the open, SKF was up, SPY was down and the Q's were flat to up, everything in my favor. Financials reversed as did the S&P, the Q's continued up so the hedge was fairly useful but didn't make up for the overall change. It was very odd, at the end of the day the SKF finished flat yet my options lost .20, as did the SPY but the options gained .20.
The quiet rockstars were actually my short strangle positions in AAPL and AMZN. Despite gapping up $5 my AAPL position made money from the volatility contraction just as I predicted. Same with AMZN, they don't report until tomorrow after the close but volatility already started to contract putting more money in my pocket. I do have to say that one could likely make a decent monthly income with option selling strategies, but it will never match the risk reward potential of a long option. I will defintely use selling strategies to enhance my gains when appropriate in times like this.
The complete surprise today was my corn futures position. At the end of regular trading I had a loss, then I saw someone tweet about corn and took a look and I suddenly had a nice gain as something caused it to shoot up 3%. I obviously hope this continues and will be curious to see why it moved like that. I was obviously looking for movement to the upside but that was a swift move. Since I am holding a December contract I am debating if I should take a time trade and just hold it until December and see what happens. I could actively trade it and commissions are not too bad but I am curious what my profit will be come December if any.
ADM confirmed it's inverse head and shoulders pattern today so I may look to get long on a re-test of 29 just to make sure it isn't a fake out but the pattern looks very nice. Overall, with the broad market I can't argue that things are acting bullish and the more we test the 955 level it will eventually break so I will be quick to cut my short positions if that happens. We have another slew of earnings on deck for tomorrow so we'll see what happens futures are up decently at the moment. I feel ok about my overall positions but am feeling a bit more exposed since I highly doubt my strangles will help me out as much in the future as they did today. I may need to add a select long position. Overall I just want a pull back to 930 to exit and get long biased again but as I have been taught many times in this game it has nothing to do with what I want.
Total Return for 2009: 163%
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