Tuesday, July 29, 2008

Another counter trend bull run coming?

Today's strong market action favors another counter trend bull run, which may last as short as 2 days (if this Friday's July job report coming in with well above 100k losses), or as long as a few weeks. But it will not be a smooth one for sure as it will run into heavy resistances almost every steps up.

In anticipating such move, I would overweight the tech sector on the long side, while shorting commodity/energy/metal materials related sectors (oil,coal,agriculture,fertilizers and steel) if those leaking ships also get lifted up near their recent highs or important resistance zones.

Just found out the ELN went down over 30% in AH, and was really upset because about 2-weeks ago, I had plan to create a strangle play in anticipation of the month-end drug study news. Got too busy lately, and got lost....

Good luck all, and share your views if they are very different.

9 comments:

angry razor said...

a horror story...after reading this pca, wabbit or anybody please answer my questions and be brutally honest.
1. Tue fslr is 264, earnings wed after close, I strangle 230p, 300c both for $8...fslr ends the day at 280.
2. Wed mm brings it down to 271 and ends up at 285, my call is $14 my put is 3.5. Fslr beats and goes up to 304 ah.
3. Thur, My worst fears, its sliding pm to 299, 5 min before open I place a sell at market to get what I can.
4. At open it was 16.36 but etrade executed at 6:38 for 14.40, I lose about 300.
questions
1. Do options open at 6:30 or 6:35?
2. How the fuck do the premiums get that blown out to the previous close when I'm still up 14 pts?
3. Tell me what I did wrong before I kill myself in about 30 minutes, thanx rzr

flyingwabbit said...

razor:

first, calm down bro! You got a bad rep from the brokerage but you did not lose much here.

second, yes, the option suppose to open at 6:30 PST, but if you use Ameritrade like me, it is normal that your order won't filled at the opening minutes when the underlying stock moves rapidly. Check with PCAguy to see if his brokeage house does better job.

third, the main reason why your call premium was well short of your expectation is that the IV built up into the ER and plummet over 16 points (over 22%) after ER, which destroyed a huge chunk of any premiums gains.

last, don't kill yourself over such this, which is NOT a debacle by any stretch, I hope we will get together some time in the future, and over a few beers, hear my horror stories, by stories, I meant debacles one after another as if it will never end....

Take a good care, man, feel free to smash up a few trash cans before going to the bed!

wabbit

razor said...

couple more
1. How do you feel about amertrade service in general, good execution?
2. Have you ever seen any strange things hapen to your account, I have seen etrade not accurately update my balance, gain or loss-commission, the math does not add up at times.
3. Yesterday I was up $100 on fslr call, sold at market(stupid) it sold lower than the bid/ask and my account went down 100!!! when you sell options at market can they sell outside the bid/ask? never seen an equity do that.

razor said...

funny you mentioned eln, see it today? I bought it at 4 and rode to 16 last time this happened, I just bought biib sept65c's if it does recover, also bought ma at 226.

flyingwabbit said...

razor:
ameritrade's custom service is fine, but its order execution is not good enough for any serious DT. what you mentioned all happened to me in ameritrade. and yes, when you sell at market, you are asking for a royal screw, and more than often got it.
Your MA 225 bought was an excellent move, I myself was waiting for it to get to closer to 220, obviously kicking myself now. as for ELN, I sure hope it can drop to 5-7 this time, we will see..

Left Lane With The Blinker On said...

Have you discontinued this blog?

flyingwabbit said...

hi, lefty :)

No, I have not discontinued this blog, I have just been super busy lately with a couple of projects, which likely to tie me up for weeks to come, really sorry, but as I said, I will try my best to post something from time to time during the period.

fw

Stock Shotz said...

Great call to get short the energy sector. I think we are going to see maybe a little more downside there, but I think we see a return to the energy bull run soon. I think the overall trend for oil and nat gas is still bullish.

Our show interviews major players in the markets and Jim Rogers says that oil is going higher. We interviewed Ryan Krueger last week and he said that if this bull run in energy is over it will be the shortest ever. I agree. You can hear these interviews and more at www.stockshotz.blogspot.com

It will be interesting to see if the agriculture names (particularly the fertilizer names) can recover this week.

flyingwabbit said...

stock shots:

thanks and I pretty much agree with your view on the energy sector. too busy but will try to post a few lines today or tomorrow.