As I mentioned yesterday, the ADP numbers were not good.
Now it’s one thing to see something happen and quite another to do something about it. One of the reasons we like to be in cash is we get to wait for the market to do something silly so we can bet against it. Yesterday was a gift as the Dow climbed all the way to 8,577 at 10:30 and wegave it a few minutes for the Crude Inventories, which were a disappointment for the oil bulls and our first Trade Alert of the day went out to Members at 10:35 saying: “OIH $95 puts are a good deal at $1.58.” These trades don’t happen in a vacuum – we had been watching OIH all week and decided it was a safer short than USO, which also sold off nicely but the OIH was no slouch with the $95 puts finishing the day at $2.30 (up 45%).
Just a few minutes later, at 10:43, we were able to take advantage of the DIA $84 puts at .84, which finished the day at $1.08 (up 28%) and we were able to get back to cash while speculating on TOT $55 puts at $1.20 and BG $60 puts for $1.30 into today as we expected some downside follow-through to grip Europe, who were overly complacent yesterday. I wanted to mention this as I hear from many traders who are getting hit hard because they feel the need to stay “invested” for fear of missing something and the only thing you are missing inthis market by not having a cash position is a good night’s sleep. Having cash allows us to pick our spots, make money and get back out to cash. We’re not day-traders but we sure as hell take our profits if we hit our goals in a day!
We’re still waiting for the market to pick a real direction but there are some things we do know and one of them is that oil is massively over-priced. AAA just released a report stating that the peak for gasoline prices has already passed and estimates that auto trips will be down 2.6% this summer. As I keep saying, people simply CAN’T afford to pay these pumped-up prices, no matter how much speculators wish it to be otherwise. Clearly the dumb money is following Goldman et al into the commodity game – just like last year and…
