What a fantastic day!
Another one we hit on the head as the covers we took ahead of the fed were bought back for great discounts in the morning and then the market was kind enough to rocket straight up all morning, allowing us a nice opportunity to re-cover (just 1/2 this time) even higher than where we fell off yesterday. It just doesn't get any better than that!
This has been a truly fantastic week, even our oil puts finally paid off and we finished above the levels and my EOD comment to members bears repeating here: 'Overall I’m up to maybe 1/3 invested as I’ve made an effort to invest more this month ahead of the rally. We’re heading up so fast I’m not too keen on chasing things until we’re safely over 13,300. As usual, I would feel much better seeing a healthy pullback after this almost uninterrupted 10% run off the March bottom. 200 DMA resistance will be tested at Dow 13,053 but don’t forget it’s not the same Dow mix that created that line so it’s meaningless (take that TA slaves!).'
"We’ll watch the 200 dma on the S&P at 1,433 and the Nas at 2,524 and the NYSE at 9,480 with much more interest. Transports just shattered the 200 dma at 2,732 with a 96 point move today and the RUT (753) and the SOX (423) have a ways to go. Once we hang out above those numbers for a while, then we can talk about deploying another 30%."
We are on quite a roll, we even covered our June DIA puts at 11:52 with the current $128 puts for a quick 30% and $1.50 that will pay for us to roll up $3 so we're good on our protection all the way to 13,300! My big mistake of the day was 2 attempts to take puts on Google, the morning attempt gave us an easy escape but our EOD cover in the DTP got hit hard but it did allow us to sleep well after rolling our callers up to the $580s, sacrificing a lot of protection in order to gather more premium.
We also took the money and ran on the May oil puts and covered our Junes, looking for a bounce into the weekend – we even bought VLO calls of all things! Overall the energy sector was off 2.2%, which is exactly a 20% bounce on the 2.5% rule so not bullish at all but since when has reality ever bothered the oil bulls so we look forward to some shenanigans that will give us another chance to go short again. As I said in comments, you can superimpose the Housing sector from June of 2006 over the Energy sector now and you'll be able to see the future.
Financials were up huge today (3.9%) with regional banks hitting the 5% rule at 5.1% overall. The CRB looks well on it's way back to my 370 target. I missed it by 7 points after my original March prediction but I think we'll get them this time! The dollar gained a whole point today and just a little more and we're through 73.5, on our way to 76 which, if we break through, will blow the commodities right through 370 to retest 350 (back at '06 highs). That could mean $70 oil!
It was very, very encouraging to see money fly out of commodities and go straight into tech, it's exactly the rotation we've been looking for but let's make sure we get through tomorrow's jobs data as I am very concerned with the string of poor economic data the market has been ignoring this week including the worst auto sales numbers since the Bush 1 recession.
