That was easy!
Right out of the box, at 9:51, I concluded my first set of member market observations with: "Someone is loving the global economy with these bets! OIH busting out to new highs too! On the whole, it looks like we’re heading up!"
And up we did head, with the Dow climbing 125 points from that spot yet the only 2 plays we made in the DTP were puts, one on the transports and one on Google as we weren’t buing into the "rally" at all. We went short on the IYTs at 11:21, just ahead of the day’s high and our DTP is already out but the $10KP is waiting to see which way the wind blows tomorrow (and we don’t like to day-trade in our small virtual portfolios).
Our faith in our long-suffering PEIX was finally rewarded with a 60% gain on the day. As I said in the afternoon: "If PEIX can create something that can be burned for fuel for $2.30 per gallon and is running at a profit (very small) shouldn’t they be more valuable than a refiner? This was during a quarter with record high corn prices too…"
At 1:36 I noted the XLE seemed up way too much for the move in oil and at 1:58 we got nervous enough to buy back the DIA puts we sold earlier in the day and the Dow quickly dropped another 100 points. We even got ahead of the end of day dip when I warned at 3:32: "Another leg down is forming – be careful folks!"
It’s fun when you can clearly see the market moves forming ahead of time. As I said over the weekend, I was concerned we were over-hedged as I called a top last Thursday and we placed most of our June covers at around 12,950 so it was not pleasant to see the Dow race to 13,150 the day after expiration but we held firm and waited as it is also not pleasant to adjust your callers on a daily basis just because the market goes up or down 100 points.
We did take off our covers on Apple at what we hope was a bottom but the logic there is we’ll re- cover with lower calls if they can’t get it together tomorrow. From a technical standpoint, it was a good day, marred by negative comments by the CEO of SNDK, who said that high oil prices may weaken consumer discretionary demand. That is what was being blamed for the market drop and what scares me the most is that this was news to some investors!
