Well, let’s see…gold is above $1000; oil is at all-time highs; the dollar is falling to record lows (buying less than 100 yen for the first time since 1995); retail numbers suck; and economicst agree that we’re in a recession, yet somehow the market recovered from -2.0% to finish positive (on the 1 positive news of the day!).
But I’m not complaining, as I’m 80% long (excluding straddles). Added 2 long positions this morning (from yesterday’s watchlist) and then, in the spirit of taking it easy, did nothing else. In fact, due to work, I didn’t even get to look at the market again until after close.
DP Buys:
- [[GME]] Jul 2008 45. calls – went with the July calls due to their lower volatility & theta, yet almost exactly the same delta, than the corresponding April options (and no May/June options are available).
- [[PALM]] calls – small position with Mar 2008 5. calls. These are ITM, but with PALM barely hanging on to the $5+ level and expiration in just over a week, they are pretty high risk. So I made the total position value equal to my max. loss/position allowed to be safe.
Missed the ball on [[AMGN]], as it ripped higher, although [[AXP]] is still a viable opportunity for some puts. AMGN could reverse as well, depending on how the FDA rules on their chemotherapy drugs.
CPI, aka. the inflation indicator, comes out tomorrow morning, before market-open. This will be a market mover, as usual… If I’d have to guess, I’d say it will be bad and we’re taking the elevator down. Should that be the case, I will flip all calls for puts and enjoy the ride.
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Just curious
Whats the basis for your current market positioning, considering how well you’ve highlighted the case for being bearish? Short term technicals?
Short answer, yes.
Almost all my trades are based on short term technicals. I keep half an eye on general market conditions and news, but only near-term as well.
I almost never look at fundamentals.
I use my take on general market sentiment (bearish for tomorrow) to guide the trades that I enter, but I will not let it outweight the technicals.
So, because I am bearish on tomorrow (unless CPI is better than expected), if I have to chose b/w a bearish or bullish trade, I’ll take the bearish one.
If we gap down, I’ll probably just close out all my calls, possibly open a few puts (haven’t looked through my watchlist yet…AXP maybe?), and call it a week.