Another day that went pretty much as we expected.
There was no head-fake today, our indices headed pretty much straight down from a strong open but, very disappointingly, the levels we wanted to hold; Dow 13,250, Nasdaq 2,550 and S&P 1,470 quickly turned into firm upside resistance.
Both Happy Trading and I were forced back to more cash and I don't like the sound of that as we are rarely both nervous at the same time! Happy did manage to close out NOV Sept $120s with a 32% profit and we both got out of our current Apple calls (sadly but profitably) and it only took until 10:03 for me to comment: "DD on my DIA $132 puts and adding back $130 puts at $1.75 as pre-roll. Just a little nervous looking at the internals."
MRN made a great early call to re-up the puts on CFC as we thought little of the BAC emergency loan and he promised at 9:48 to "pull CFC down to fill the gap by sheer will power!" Let's hear it for the power of (I guess) negative thinking! Between my Monday's printing of the day's chart before the open and MRN's psychic abilities, we are becoming quite the market force…
We tried to maintain a positive attitude but by 11:10 we gave up on our DIA calls, turning the virtual portfolio net neutral and went back to pulling profits off short-term contracts. By 11:17 we were covering our Long-Term Virtual Portfolio plays as CFC's CEO decided to give MRN a hand by saying he couldn't see the housing crisis NOT leading us into a recession!
It's very nice to be a part of a well-hedged group, we spent the afternoon talking about martial arts, kayacking and nice vacation spots while tossing around a few trades but nothing that happened this week has caught us off guard. My macro view of things for the afternoon was: "Holding 13,200 is not too bad. Let’s keep perspective with the Nas over 2,525 and the S&P over 1,450 we would have been thrilled to be here last week! Europe had a crap finish, giving up a full point of gains from open to close – as I said in the morning, it’s totally up to us to keep this party going but I remember from when Greenspan said it, it’s very hard to recover from the word Recession and I think Greenspan’s comments took a day to hit the fan, then there were 2 days of talking it to death. Hard to imagine everyone going long into the weekend with that concern hanging over their heads.
"I think the fear of a mortgage meltdown is somewhat overblown in that it is easy to avoid if the government steps in and commits $100Bn a year to restructure consumer debt but there will be so many idiots arguing how to administer it or if to do it that it will probably never get done. A crisis like this needs strong leadership and we sure don’t have that!"
An hour later, Bill Gross backed me up with his own statement.
Juliet posted an interesting video of a girl complaining about the ridiculous wast of paper generated by our friends at T and I can't imagine how paper billing is a default policy for them. We added a few puts on CAL and WYNN as the market action looked pretty poor, these were added to earlier FXI puts (our GS puts got stopped out) so we are now pretty bearish considering we are still mainly (over 80%) in cash with very few naked calls. While I would love to see the markets turn around, it's just not looking likely and certainly not ahead of the weekend.
We got just what we DIDN'T want today – rejected at our levels, the dollar broke below the 50-dma, gold held $668, oil pushed back to $69.83, not the way my Tuesday wish list would have liked it! We'll take a fresh look at things tomorrow but I'm not expecting much action and, like I said earlier, flatlining here isn't terrible, just a little disappointing.
