Thursday, June 19, 2008

Looking for a compass?

The market is becoming more treacherous very day with bulls and bears all looking for the direction. My short-term bias is neutral as I expect the major indices bounce around between the recent lows and the May lows, my intermediate term bias is bearish as I think that a test of the March lows is a real possibility. Both bulls and bears got hurt in recent sessions so maybe it pays to be a fast-running wabbit like me :)

On recent trades:

Weds June 18

** DT GS (puts) and AAPL (calls)
for modest gains.
** RIG: Swing, bought half position (5) July150 puts when it was around 149.5.

Thurs June 19

** MOS: planned SW-puts, but chickened out in the opening moments and then later when it rebound towards 157 :(
** OIH and USO: planned to short near the tops, but GoldmanSucks' upgrade ruined my "conviction".
** ANR: planned to initiate a speculative put position in anticipating a blow-off top with ez=105-110; failed to step up in the opening moments, but later bought 5 July95 put when it rebounded and stalled just below 97. My IT right now is MA10/92, but today's candle/volume combined with the extreme overbought conditions may suggest that a short-term trading top at least with downside to 85-88. Should I once again be quick on taking profits? Any thoughts on ANR welcome.
** RIG: this morning's Goldmensucks' upgrade ruined my "resolution" to add another 5 contract around 152, but still holding the original position, IT=145/147. But it might be pinned to 150 tomorrow.

Thoughts on the energy and related sectors

Look at USO chart, I feel increasingly strong that oil is on the verge of big pullback in next few days, and when that happens, the related sectors will do the same (look at OIH chart).

The coal sector(especially ANR, MEE, JRCC), and to the less extent the solar sector may take a sizable hit should the oil breaks down. While I am on the commodities, I also expect sizable pullbacks in fertilizers, especially CF and MOS.

A note to PCAGUY

Man, you got steel balls for sure! I myself try hard not to average down (UNLESS it is well planned scaled-entry) because whenever I do it, I got half-cooked. Deep pockets sure help a lot, but I am still unsure your way in recent drys play is fundamentally sound :) but congrat on good wins!!!

Do you really like FIDO's Active Trader Pro? Any major pitfalls?

One big concern I have is if FIDO has "Gainskeeper" (Ameritrade has) that would automatically generate forms for annual income tax return?

I am watching GS too, but since it closed above 186, I will be waiting at 190/195.

Later, all!


pcaguy said...

I will sell my GS puts first thing tomorrow for whatever gain is available. I expect 50 cents on 75 contracts. I'll take a dime early if I have to.
I may buy some OIH Sep calls first thing in the morning.
I fully expect the Jersey Boys to run up GS and OIH into tomorrow's close. Quad witching and all that.

Averaging down:
I agree it is a flawed plan and can lead to some horrendous loss positions. I have suffered big losses before using this strategy.
However, each day I try to select the best option trades both long and short to mitigate my market risk. I would say that 25% of the time I am glad to get out at a break even. But some of these trades do become big winners, too.
I'm hanging around here to see what other traders are doing for strategy. I'm hoping to improve.

MEE, FSLR, ANR, etc...:
I'd love to see them come crashing down. That would turn them into trading stocks that would trade in a range which is what my strategy works best in.


pcaguy said...

Sold 75 contracts -GPYSP at $5.15 first thing on downdraft to $183.8.
Bot 5 July calls -ODLGD at $7.70.
Have bids in for 5 each at $7.6, 7.5, 7.4, etc.
Closed puts trade when they hit my sell target on tick down right at the open.
Waterski day, gonna be 80+ at Lake Billy Chinook.