Gosh, we thought we were pretty clever yesterday!
We weren’t buying into the afternoon rally and I had predicted the day would finish at 7,850 in my 1:08 alert to members and, at 2:59, with the Dow up at 8,004 I reminded members: “That was a gift for taking out putters ahead of tomorrow’s data – I hope you guys took advantage of it!” We promptly dropped another 125 points from there and we thought we had played it perfectly into today’s unemployment data yet now, at 6:45 am,the futures have made an AMAZING recovery,jumping more than 1% since the close.
We expected good news from AAPL so that can’t be it (could it?)and we played them the way we played GOOG, selling front-month premium looking for not much of a move over $125. It’s a long way to the open and I probably should ignore the pre-markets entirely but do they really believe in Asia and Europe that the US is going to pop 75 points at the open just because AAPL is still the best consumer product company on Earth? More to the point, have our memories gotten so short that GM defaulting on a $1Bn payment and the carnage that may cause in the banking sector is already water under the bridge just 90 market minutes after we found out?
See, this is the kind of trouble thinking leads to. I will just take my own advice and watch our levels and trade accordingly. Fortunately, we are 1/2 covered on our long puts with DIA $79 puts at the moment so it’s very easy for us to fully cover and flip more bullish, that’s they whole idea of using a flexible cover system like this. Our reason for being slightly bearish into the close was mainly the Unemployment Data at 8:30, once we get past that – IF the markets hold – we would be willing to join the party.
China had a party this morning with the Hang Seng bouncing back 2.25% (336 points), popping right back over the 15,000 mark but, on the whole, it’s just where we gapped down to on Tuesday morning’s 600-point drop (5%). So down 5%, down 2.5% more, up 2.5%. Yay, I guess… China’s Central Bank said the country is back on track to hit 8% growth after GDP came in at 6.1% for Q1 and sent the markets lower on Tuesday. “The economy is…