Last night on Fast Money, Gartman made a great comment explaining that If you’re bullish on a few positions, buy them. But, make sure you turn around and buy some downside protection as well– eliminate the broader market risk. That’s exactly what I’ve been doing lately.
Example: Buy AAPL, short the Nasdaq.
TraderCaddy also made a good note saying, “TheBoys will not let the market rally until a deal is approved.” I happen to agree with that statement and at this point, if you’re long, make sure you are hedged.
For the third day in a row the portfolio ended the day lower. Nothing has really changed, still net long with a few hedges in place.
One bright spot today was MEMC Electronic Materials, Inc. [[WFR]] , I love the way it held up today– love it.
However, there are a few stocks I despise at this point:
Amazon.com, Inc. [[AMZN]] (sold a few calls against my position)
Freeport-McMoRan Copper & Gold Inc. [[FCX]] & National-Oilwell Varco, Inc. [[NOV]] no traction!
Note: Daytrading this sideways action is a quick way to death. Wake me up when this is over.
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Indeed. We went from a “free money” trading environment to a “preserve capital or die” trading environment.
-DT
stocks are dead, foo. Straight merc’d.
I don’t think people noticed, but the TSV indicator on tc is really damn accurate and it shows extreme outflows from AAPL and FCX on medium and longer term charts (weekly, monthly).
http://www.ibankcoin.com/dannyblog/index.php/2008/09/22/sundry-oil-correlation-and-volume-charts/
I dunno.
I’m covering at 1150, and waiting for the LoBV.
what’s the rush, ya know? Bull markets last months/years, not days/weeks. I ain’t catching the falling knife of the world. Nor do I buy the “congress won’t nuke us” theory either — they are too stupid to garner that assumption. If they get it right, kudos, I’ll go from there.
Finally, my main expectation is something along the lines of a retest. I just can’t accept a v-bottom from ~1150.
not to mention that with the exception of a few days last week, people seem complacent again, like a rescue is a sure thing. I mean, we gotta get rescued, right?
Maybe things like the VIX are highish, but I want palpable fear. Like, CNBC anchors shitting roosters on-air fear. DR smoking two marlboro reds at once while he interviews El-Erian fear. Well known bloggers calling it quits fear. Something like that.
I sensed some real fear last week but I agree now it feels much more complacent. Things will just churn until the next dramatic data point.
Down 2k on a govt. screw up would be a gift.
Not sure if you mentioned this already, but remember that potential breakout from last week? HEES http://finviz.com/quote.ashx?t=hees
The Boss is complacent. (No down side hedges??).
Someone needs to talk to him.
__
Yeah right. I’ll spare myself the auto firing that would take place.
You don’t need to worry about the Fly, ever. It’s like worrying about the lantern.
Jake, you’ve been in such a good mood since somebody here called you Mr. Mal Content today. 🙂
I’m going to tiptoe away, backwards, little by little, from Jake to the other side of the room in case a laser beam suddenly strikes him down and ignites a sudden explosion of volcanic magma.
Fly’s recent market moves have been made like a space alien magician on speed. I’m just watching.
I sensed fear last week… especially when GS dropped from $100 to $85 in literally 3 or 4 minutes, and STT lost half its value.
However, it would be great if a blog or two folded. Like, if due to the “financial crisis” iBC lost a tab. Actually, what would be best, is if Ali Velshi of CNN just quit. I hate that dude.
-DT
No tabs will be lost DT, ibc bloggers always have severe bankage of coin.
You’re moving on up in your trading in the Real Office DT, congrats.
no iBCers, but someone else
A perfectly hedged portfolio would make $0. Money would just trade from one hand to the other. Rather than hedge, I pick a position with good risk-reward and try to cut losses early. I’m looking at positions that have already lost 50-60% and are sitting on support. Where I do hedge is in my option trading. I’ve been buying vertical spreads, where I buy a lower strike call while offsetting by writing higher strike calls.
bluedog, good points. You get to decide how much upside you want to give up. If you know what you’re doing, it’s pretty easy to set your target, determine your max gain, determine your max risk (the difference in prices of the premium), and keep things simple okay, this stock won’t go above $80, so I’ll sell a $80 call, and minimize my break even point.
I like the spreads with expection to speculating on something BIG.
If you’re speculting on a huge buyout or drug passing FDA approval, you’re often better off just buying a higher strike price call, and taking a high risk/high reward, since it’s very hard to determine the potential upside.
Hat, one thing I like about the vertical spreads is implied volatility erosion works for you with the written calls. That seems to help offset against the calls when you want to go long but don’t like the 70-80% IV.