This is getting very interesting!
As we expected in yesterday’s morning post, the morning pump was a great selling opportunity and we had a very good time riding the gentle dip we got in intraday trading. The Dow hit it’s high for the day at 10:03 and by 10:09 I had an alert out to members to ignore the consumer confidence number and go more bearish on the Dow, buying back the Sept $95 puts we sold Monday for a quick 20% profit. We also grabbed the OIH $105 puts for $2.30 that made a nice buck during the day (43%) and we entered a couple of spreads on ERY at 10:57, well ahead of oil falling off a cliff in the afternoon.
Great call by David at the Oxen Group on making DUG his long of the day yesterday with a perfect buy in at $15.10 and hittingthe4% goal for thatday trade. It wasDavid’s call that inspired us to pick up the very profitable (and much riskier) ERY trades, which were alsoanidea of hisfrom an earlier trade so mega Kudos tothe OxenGroup!
We got a second rally on low volume around noon and my 12:09 comment to Members was: “Still a very good time to look at some of those long put plays we discussed in yesterday’s morning post” so I guess you can say we were still pretty bearish at that 9,600 line on the Dow. Keep in mind that thetop of our prior trading range was 9,100 on the Dow so the 5% rule off that mark takes us to 9,555, which was where I predicted we’d close. We had a good chance to press our long DIA covers higher but we feared the overnight stick and we went with a 1/2 cover on our long puts, selling theDIA$95 puts for $1.75 just in case we have another crazy pre-market pump.
As you can see from David Fry’s S&P charts, we are “outside the box,” very much as we were in June but note that we held that level (S&P 950) for quite a while before getting a 10% correction into early July. I’m not getting the feeling that we have enough energy to sustain us up here that long but, the way things have been going, we kept all of Monday’s bear covers inlonger time-frames because as Chantale very aptly put it: “It s hard to predict when somebody on coke will…
