Wheee what a day!
Who said we placed a spread bet on the Dow moving 200 points one way or another in yesterday’s morning post? Me, that’s who. And how much did the Dow move yesterday? 199.89 points. OK, so I was wrong by .11 but our plays worked out just fine and we flipped bearish again as we flew up and we’ll see if my streak continues this week. We would have gone more aggressivley bearish but we were worried about end of the month (and end of the year for many hedge funds) window dressing that would keep things going for one more day.
Everything went according to plan and we got the bounces we were looking for but the RUT failed to retake 589, which was our cannary in the coal mine’s breakdown level from last week. As I alerted members at 12:15, that and the Qs failing to hold 42 into the close, which failed to confirm the Nas move over our 2,088 watch level. We have our DIA puts, we have our SRS longs, we have our DXD longs (which are half price as our DDMs paid off yesterday) and we shorted SPG into the close as Cap noted they had a ridiculous run-up ahead of today’s earnings.
As I said to members in the afternoon, my gut said to go more bearish but we allowed ourselves to be spooked by Mr Stick in the afternoon and ended up about 55% bearish with a 1/2 cover of our long DIA puts but we already made a quick 20% on the sale of short puts in the morning so it’s a position we had a little slack in going into the close. Our logic is, even if we have another up day today, we’re still going to want some pretty serious coverage into the weekend unless the Russell and the Qs can confirm this move up today.
Bulls should be spooked by the fact that a blow-out GDP report, showing an economy with a HUGE turnaround and the President crowing on TV about how great things are going could ONLY erase 1/2 the losses we suffered since last week. Another market move I hit on the head yesterday was my prediction that, after 3 consecutive 1.8% down days in a row, the Hang Seng would jump 3.6% this morning and we topped out with a 3.3% move up before falling back below the 2.5% rule at 21,752.
Do we have any…
