Up on a Down Day

So, even though I could complain about being up much more during the day than what I finished at(I just did), I have to be happy about being positive in a down or mixed day.

I gained about 1% back today while the Dow and S&P were down. The frustrating thing was seeing my account up 5% at one point. I assumed I would give some of that back but not so much of it. Overall though, things generally did what they should, my calls gained in value and so did my puts.

Except for SGR, which is a thorn in my side, it broke back above 50, which signaled an exit, which I tried to do at the end of the day but did not get filled. When I realized I was not getting filled and tried to correct it the market had just closed and I am now holding it over night. I'll cut it loose tomorrow at the open and hope it doesn't gap up.

My Visa position is testing my patience as I sit with a loss. It sold off hard into the close. I have a feeling we may see manipulation and a pin at 85 for options expiration. Walmart reported today which I thought it was reporting tomorrow. The numbers were good, outlook was cautious, I think the market likes that retailers are still shopping even though its at discount stores.

Tomorrow we get CPI, I feel slightly exposed. I contemplated some front month OTM SPY puts as insurance to a negative surprise. If we get a reading inline or lower than expectations I think we see a rally. If inflation is higher than expected there will be fear of the fed having to raise rates so we may sell off.

I added another bullish position in FSLR. It had a large move today close to all time highs, I feel it will break out and go for a run in the near term.

CPI comes out before the market opens so we'll see how the futures are when I wake up. Oil is still a concern, but the 10 year was up today and the dollar still held.

Lets hope diversification proves to be helpful tomorrow regardless.

Diversification

Well, after another crappy day on friday I ended up making back a couple percent today and also took the opportunity to diversify my account. I now have 5 call positions and 3 put positions. I am approximately 65% delta positive. This should insulate me more from down days while helping my bullish stance on up days.

RIMM was a big mover today, it broke out past a new high in the morning and I wanted to hop on board but waited for a pullback that never came. Visa got hammered for a while but came back. This is a discretionary position that I feel will work out but still don't know if exceptions are good(obviously conviction doesn't trump rules).

EWZ finally started back up and I took the opportunity when it was at support friday to add to my position that I had missed initially. I would like to see a move to 100.

I bought calls on SIRF, there is heavy call volume and open interest on the June 7.50 and 10 dollar calls. For .60 I bought 10 contracts of the 7.50 because that is still my 2% risk tolerance, and it could pay off big to the upside if there are people betting with more knowledge than I have(which is what I am assuming).

FXI showed some signs of life today, which I am hoping will start trading up with EWZ.

Dry bulk shippers were huge today so my DRYS position finally became profitable and I am hoping it will run back to old highs and I can add with dips along the way.

In a related note I bought puts on POT, as the dollar strengthens commodities should weaken and POT is hitting hard resistance at 200, it seems to move quite a bit so if people start selling it could fall quite a bit. I am hoping for it to fall back to 175 or so otherwise I'll exit with my 2% loss. LVS continues to slowly break down but I am looking for a more drastic move to hopefully come soon.

SGR was a new put play along with POT, looking to ride it back down to 40 hopefully, or exiting with a break back above 50. Even though afterhours doesn't mean much usually, SGR was up more than it was down today, but there doesn't appear to be any news so we'll see.

These are exactly the type of plays I am looking for, relative strength or weakness, so I can make money on puts on up days and money on calls on down days because the stocks continue their trend regardless.

I think I may hop on board the Q's again once we have a pull back since I just realized I am not long any tech right now which is a big mistake. I think we could see some good action weds if Walmart reports a good quarter, but tomorrow may lack conviction, but of course I really have no idea. At this point I have 2/3 of my capital at work with 1/3 to help if needed. I feel decently diversified. I'd like to get long the dollar still, which is still bullish but in a different way.

With M&A appearing to come back in that is a good signal for the credit markets and stocks IMO, meaning I may want to get long GS again. We'll see how it goes, either way I hope I am diversified enough to do well and not get caught again like I did last week.

Fake Out

Well, the last paragraph was very telling about my exposed bias to the bullish side. It ended up kicking me right in the gut. I am still up 17% overall but gave back nearly 7% over the course of the day, which is unacceptable.

Obviously the market does not follow my expectations. My assumption or hope of a rally into the close did not happen, the opposite happened and we had a sell off, apparently under the fears about maybe the economy not recovering and rising oil.

This is where a mechanical trading system would come in handy where I could set my exits for either a profit or a loss then just let it go. I would have been stopped back out of both FXI and BIDU today. BIDU broke its trend that was holding so nicely earlier in the day. I came back to find the profits I had previously banked on my V trade gone. DRYS held its previous support level but gave up all gains and turned into a loss just below my limit.

We will see how things go tomorrow because we broke back through 1400 today on the S&P, it did hold 1390, but a close below that would signal a failed break out. In my opinion there is not a reason to completely change stances on the market, and sell offs do occur in a bull market but I can't say we are in one yet, especially if support fails tomorrow.

Time to go shopping for some puts to balance myself out. Obviously I'd rather buy some puts on an up day with downtrending stocks going back up to resistance, but maybe there are some break downs. Not to mention index puts if we go through the 1390 level.

It's never fun to see gains throughout the day then by end of day your watchlist says "you have no gains to display". Oh well, tomorrow is another day and we'll see what happens.

Positive Progress

Sorry about the lack of updates(not that anyone reads this). It's been a busy week for me for school and work. While I was away, my account decided to increase in value, which is ideal. Yesterday which was mostly a down day, I actually gained 3%, mostly thanks to V.

I actually sold V today when it was close to 90, assuming we may take a breather after this fantastic run. It may end up like my AAPL where it just keeps going, but oh well. Never hurts to take a profit and I can always get back in if the trend is still strong or find something better altogether. I also exited my WFR postion, I broke even on that trade, which is sort of disappointing seeing as how I was up 1k at one point. But I gave it the opportunity to go back down and it seems to be showing strength and breaking the down trend so I decided to cut it loose. If I can keep selling for profits and breaking even on losers that's ideal, however it will not be very likely to happen that often.

I decided to buy the dip in FXI, although I am slightly concerned about the fact that it gapped down so much. But, it is close to some support so I have managed risk and will exit if needed. I also decided to buy the dip in BIDU, it was resting at diagonal support so I decided to buy a call and will exit if the trend is broken.

I bought some DRYS, after it broke out monday. I like obviously the break out and the fact that it is an old favorite of the stock market. I have no evidence to support this but a well known name could benefit from extra people piling in assuming past performance, which makes me more money. :-)

I am now up about 24%. Not too bad in 2.5 weeks. The most exciting part about it is I am sticking to my rules and not taking excessive risk and I am still getting nice returns. I bought this dip today on some stocks, I need some bearish plays though since my one put play is done. Not sure why the sell off today in the market, could be that we stay in a range until we get more data but I hope we see some buying into the close to set things up for tomorrow. In writing that, I realize I am too biased to one side because even though I try to pick stocks that are strong even on down days, or weak on up days(for puts) I should not care what the indices do. I am thinking of getting long the dollar since it seems like there is much more upside potential than downside and it will be good diversification.

A Push Is A Win

As they say in Vegas, "A push is a win." Meaning when you tie the dealer in blackjack you don't make any money but more importantly you don't lose any. This week was a push. I am flat compared to last week so I am still up 15% overall since starting back.

I can't be too upset, because of course I could be losing money. However its hard to see the winners I was holding that I cut loose keep making more highs. GS broke 200, so I may get back in, AAPL has yet to really take a breathe so I am not in that but plan to when it does. NVDA is working out nicely so far and I am waiting for a pull back in EWZ to get my full position on.

Visa finally had a pullback, I actually doubled my position in V. I am currently slightly below my 2% loss, in the longer term I don't see any reason for V to pull back much more because as the economy and consumer sentiment gets better spending will increase which is all good for Visa. Visa was getting unloaded though on friday fairly heavily, which I assume is profit taking, it seemed to find support around 82 but I'll have to watch it and cut it loose if necessary.

I still don't have all my capital at work. In fact, I have only 1/3 of it in trades right now. I will be looking to add positions and diversification next week on monday. The more trades I have on the greater chance I have of making money, however I can never decide if I want to put that much out there at once. I'd have to say as a general rule I'd like to have 20% available at any given time if necessary so I still have a lot of head room to add trades.

The good news is that we came down and held 13,000 and 1400 on the Dow and S&P so I think we are poised to move higher. We may be slightly overbought here and could trend sideways for a little while but if there are some good earnings next week and microsoft takes over yahoo it could be good reason to rally. I will need to be on the look out for bearish trades because I don't want to get too leveraged one way. Maybe I can hedge with some index puts if necessary. I'll do some research this weekend and try and get setup

"You've Arrived, How Lovely!"

So it finally happened today. After the market did some thinking overnight and decided they liked the fed's stance enough to assume they will be on hold, we rallied. And as you can see by the below chart of the SPY, we finally broke and finished above 1400 on the S&P500. This should mean we go higher.(click the pic to enlarge)

I basically exited all but one position today. I did leave profits on the table but they reached my targets and I sold just as planned. The dilemma I had is now that they were reaching my targets, the S&P was breaking 1400 which meant there should be no stopping them now. I followed my rules, knowing I will have more opportunities and I plan to buy back in on dips of pretty much anything, such as AAPL, GS, RIMM.

I had to exit with losses too, SLB was a bust, I exited in the middle of the day before the close which made me lose more than I could have, but you never know. Apparently they are putting the oil services in with commodities and oil because it sold off hard. VIA broke back above 39, plus I wanted to exit because it was too illiquid, only lost 350, but still sucks. I cut ACH loose too because it fell below 42, I think it finished barely above it but I didn't like that it didn't participate in this rally, even with the FXI making gains. Plenty of other China stocks I can get into, but of course I am sure it will gap up tomorrow, haha. I need to work on getting slightly closer to my exit on my entries, because with decay I ended up losing more than my 2% on both ACH and SLB, in fact it was about 5% total combined, not good.

I entered a few new trades. I still have my WFR puts, which rallied today back to diagonal resistance, I considered doubling down but decided not to. I will need to learn to do this to really help my profits though I think. My new trades were June 90 calls on Visa(V), June 95 call on EWZ(brazil ETF) which only got 1 contract filled, then promptly went up, wish I had my full load on, oh well. Last was June 22.5 calls on NVDA.

Overall I ended up about 2.5% on the day. I finally broke above the resistance level in my account of 30k, however I gave that back when I took a day trade on the Q's with some puts. It was successful in that I had a plan and traded it and got out with a small loss of 200 when it showed me it still had strength and didn't want to fall.

It goes without saying I don't know what will happen tomorrow, but I am thinking maybe we see some profit taking, and I partially hope so as it will allow me to get into some other stocks that have ran up lately. If the S&P pulls back to 1400 I am going to buy some calls on the SPY I think. The tough thing will be keeping bearish plays to help balance my bullish bias. I am hoping this signals the start of the next bull market because that should make trading a bit easier and options cheaper in general.

Volatile Fed Day

Today was one of those days that again was very volatile, although it didn't happen until the last 1.5 hours of the day. We steadily increased into the fed announcement, dropped, then shot up then promptly sold off after hanging around highs for a while. My account was up +2000 at its peak essentially and ended up +600. I had orders in to sell my GS, didn't get filled, I had it at 19.20 and I think bid only got to 19.05 at its high then it sold off. I am highly considering selling off most of my positions before a fed announcement, but of course you never know, we could have gotten a huge rally(and did breifly).

Diversification actually saved me today, WFR sold hard on an analyst downgrade, dropping almost 10% so my puts gained 950. This actually was the sole reason I was up about 1% today when all was said and done. My other positions are still there, I thought I may have to exit VIA, which I still may because I don't like how illiquid it is, but it closed back below 39 by end of day. SLB closed above 100 but sold off into the close which is slightly concerning, although most stocks did the same. My Q's position was the biggest mover, again I considered entering a sell at 2.30, but thought I'd wait till end of day to see where we ended. The Q's broke a 2 week uptrend hard, but bounced off some horizontal support at 47. This is a scenario where I struggle with what to do, I could add to my position and tighten my stop if I think we still go up. But I don't think I want to add to my risk if we have another big move to the down side, better to play it safe.

We'll see how the rest of the week plays out, I was hoping this would be the push to get the S&P above 1400, which only happened briefly and then we finished below the 1390 level on top of that. I am hoping this was mere profit taking, because the feds language didn't seem very bad IMO, but what do I know. Of course, obviously my opinion doesn't matter its what the big money thinks. People can't argue at this point though that we are in a recession because we were flat with last quarter which was better than expected. This could be revised down later but that means we would need another 2 quarters of declining growth now to technically be in a recession.

Nothing seemed to act as expected though, commodities should have sold off, dollar should have strengthened theoretically if people were bullish on this cut but that did not occur which is why I am weary.

Bottom line, none of my trades are broken so I stay in them. My ACH is beyond my max risk barely but the trend is still there, its a matter of the spread so I am still in. May not be the case tomorrow...