Just Another One Night Stand

As we move into this next phase for stocks, try hard to avoid your obsessions over and recent love affair with certain stocks.

Remember, you can love them all you want, but they won’t love you back.

You have to have the mindset of “love them and leave them.” Without getting too personal here, let me tell you to focus on other stuff around you. Just because most of these stocks put out for you recently, doesn’t mean they will do it again. There’s a good chance new leadership is born here, just like it was 3 months ago.

As noted yesterday, today is a confirmation day of yesterday’s shift change in value. We’re buyers of dips moving forward, and we’re focused on set-ups over “the market.”

OA

Long Wkly 7 calls .23

As discussed yesterday, “there was an initiative buyer in stocks.” We are in tradeable bounce mode. Having taken off the hedge for a big gain and added to longs, I am feeling pretty good about our market map this week. It was crystal ball-ish.

Note: I am long VMW Nov 85 calls here.

More later,

OA

After Hours with Option Addict members: on Monday we painted a market picture for the week, which in hindsight, was a thing of beauty.

It called for a sell-off in the Nasdaq/Russell yesterday, with underperformance in the Dow/S&P. Then we discussed a “follow-through” day, in which the Nasdaq/Russell would probe lower, but the Dow would reverse from small losses early, or go from red to green.

“For the first time ever, the Dow is your indicator” said yesterday.

Match that with a little chat/email capitulation, we have a tradeable bounce.

I don’t repeat this to pat myself on the back, I do this to reiterate the edge we have in using sentiment to measure market movements.

OA

Booked half of my TZA, +300%

Sold these at the high, might I add.

As we discussed last night, you’ll want to start looking at stocks that are behaving differently than the overall market, when planning a buy list. Notice the “quality” indices (Dow and S&P) are hardly down, while you are still getting more weakness in the Russell and Nasdaq. This was part of our market analysis going back to Monday.

Take a look at the two charts below to illustrate what I mean by “behaving differently than the market.”

SPY

GS