Woo-hoo, that was fun!
Up 100 from the opening dip by 9:44, then down 130 an hour later, then up 135 by noon, another 90 point drop between 12:45 and 2:00 followed by a 140-point gain at 2:45 after which we dropped 150 into the close. Somebody is trying to shake retail investors out of the markets! There was a time when a 100-point Dow move made headlines, now it doesn’t raise an eyebrow. Way back in August I warned: "that if our government pursues Asian-style Central Banking policies they will subject our markets to Asian-style market swings" and now we reap what the Fed has sown.
It’s been a crazy week so far, I had intended to make more picks for the free site in order to demonstrate the value of our new subscription service but, as I said last Wednesday, when the Dow opened at 12,590 – "Sometimes, the only winning move is not to play." When you see a trade in the main post it means I feel pretty good about it as those are trades I can put up that do not require perfect timing or that I feel are subject to intra-day nonsense, the fact that I put it on the main post means I expect the trade to be valid up to 12 hours ahead of time so, by default, they are more fundamental trades than momentum trades.
On Tuesday morning I finally saw a pick I liked (although, as I said at the time, risky) and I said "Oil should take a big hit this morning and I still like SU puts. The Jan $110s at $5.80 have almost no premium and can be played as a momentum trade as we watch for a break below $103.50. You have to keep tight 10% stops on or you can get burned. The $100 puts at .45 are a fun gamble if you can be happy with .65 as it flashes down. OII also has potential to tumble and $70 puts are .55."
The SU $110 puts are now $15.75, the SU $100 puts are $6.10 and the OII $70 puts are $3.20. Those were my only "in column" picks for the week and they won’t count but, starting on Monday, I’m going to run another "Free Picks" virtual portfolio for members on the basic subscription site as our first new member virtual portfolio. There won’t be a lot of action but we’ll try to pick a few winners for these troubled times. Our Free Picks Virtual Portfolio last spring was phenomenal and led to the permanent establishment of the very popular $25KP, which is what we had arbitrarily started our first Free Picks virtual portfolio with.
It’s going to be very difficult to do well in this market compared to last year’s great rally but I like to think there are always opportunities for savvy traders – we’ll see if I’m right in short order!
While we saw several opportunities yesterday during intra-day trading we weren’t so enthusiastic getting the runaround early today but, in the afternoon, things picked up. We attempted to make something of GOOG and INTC at the open but killed those trades just 20 minutes later as we didn’t like the first pop and drop of the day. We did go back to the well on XOM $85 puts, which gave us a quick Daily Double and we followed Apple down to $160 on our Aprils but covered them with the Jan $160s at $3.90 because it just seemed silly not to take the money. We grabbed CROX during their conference and the Fast Money crew talked about it this evening, although this video is 90% nonsense, 10% content but props to Karen for pointing out the manipulations, which we covered for.
I was bullish enough to finally grab some DIA calls (the Feb $127s) at 1:13 but the reaction to a "not so horrible" Beige Book was muted and quickly reversed so it’s still up to the Fed to give us a reason to rally and Mr. Bernanke goes to Washington tomorrow so get psyched for that circus. We also saw opportunities with a spread on MA and DUG (which I really like) and some calls on LVS as Khan gave us a great heads up on a 70% rise in Macau gaming revenues so I’ll make the LVS Mar $80s, now 7.35 my third Free Pick of the week – thanks Khan!
Ozzi gave us our final XXX trade of the day with MSFT Jul $35s at $2.55 and a 3/4 cover of the Feb $35s at $1.22 (hopefully better tomorrow) so we’ll praise or blame him for that one! This is another one we can get behind as it’s a nice, liquid position suitable for wide participation.
Now that we are limiting the free content, we’ll be able to discuss more of these liquid trades in the main posts, along with more on trading strategy, which will save some digging around in comments. I’m really excited about the new basic membership site, it’s going to be a challenging year but you know what the Chinese say about crisis and opportunity
(actually, they don’t say that, it’s a misinterpretation I discussed last year)…
Danger and change are the elements that make up the Chinese word fro crisis, not opportunity, but a well managed virtual portfolio can avoid the dangers of the markets and we welcome the changes when they come and that will leave us ready to sieze the opportunities that are presented to us.
It’s going to be an exciting year!
