While most stocks were beaten badly into the close today, I noticed an unusual set of circumstances unfold before my eyes.
I hold a 4-5% position size in TZA calls, which I’ve been holding since the 13th. Those calls did ok. However, I am also holding calls in DECK, GMCR, UNXL, BAC, and YELP, and shares in ADHD, PLUG, PACB, and JKS which all flourished today, as if I had known they would do so in advance.
It is quite an unusual circumstance being net long stocks, when stocks as a whole are down sharply, and then banking coin in your longs as well as in a big hedge. It’s as if I was meant to play this sport.
About the market, there are 3 things I want to point out tonight for you to ponder. First, I am watching only two market “tells” right now. One is the Russell, which did not move to new lows today, and the ITB, which was relatively strong on a day of market defeat. The housing stocks led this breakdown by a full day, and their rejection of this breakdown will quietly summon stocks to trap short sellers in borrowed positions, and cause them to cover at substantially higher prices.
Last but not least, I am watching the McClellan. It is my bread and butter in terms of market timing. While the Dow, S&P, and Nasdaq traded to new lows today, the McClellan did not. Breadth was not terrible today. In fact, there were a good collection of stocks that rallied today, as you well know. With a little blow off in the VIX today, I want to call “bullshit” on this move lower in stocks. Rather than do so, I will try to position myself where I feel it will count most in the coming weeks.
OA
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Also, sorry I am non responsive this week guys. I am out participating at a center for special needs kids. I will be back to normal on Monday. Thanks for the understanding.
Good stuff man!
you definitely have the hot hand right now. My hat is off to you.
Hoping those WLT and AA calls bounce soon..
Yes Black Toe, sometimes the glass is half empty.
Hat tip to helping the kids that need it the most and appreciate it more than most.
It is probably not a bad idea to take note of commercial vs retail short interest. Still super high on the retail side. Many more accounts need to blown out before much selling I would think
Actually I think it Is perfect. Further downtrend over the next couple months will convince the retail players to get more aggressive on the short side. This will act as an ultimate trap and set the stage for an explosion.
For what it’s worth I think we are close to short term lows and will bounce, but I think there could possibly be one more leg lower in September then the market gets going.
The public has not come out to play yet.
http://static.safehaven.com/authors/swarts/24162_a.png
The public’s perception is still the main missing ingredient in all this. Always has been.
Ya I still don’t know any average joes that think stocks are the shit to be in. Probably a sign we might have a long way to go. It’s a long way to the top if you wanna rock n roll
FDML a traderstewie idea..Jeff,whats your opinion on common shares here?
Looks easy to manage. Not a bad play here.
Awesome call on that ‘bullshit’ move lower.
you did it again: http://ibankcoin.com/rcblog/files/2013/08/Screen-Shot-2013-08-22-at-8.26.27-PM.png $UNXL
I need to start keeping score.