Wang’s Happy Trading

Market did a total reveral of what it did yesterday. Today, it opened high and soon turned around a continued to slide lower all day. VIX, again, gave us some good clues. That $18 support held firmly and VIX just bounced off. I got “increasingly cautious” as the day went:
HappyTrading
Posted May 7, 2008 at 7:30 am | Permalink (Edit)
market
volatile; VIX holding that $18 support; be a little more careful today.

HappyTrading
Posted May 7, 2008 at 7:59 am | Permalink (Edit)
market
a little too volatile to trade right now.

HappyTrading
Posted May 7, 2008 at 8:19 am | Permalink (Edit)
VIX
threatening to go higher again.

HappyTrading
Posted May 7, 2008 at 9:00 am | Permalink (Edit)
market
what I’m cautious about the market right now is looking at VIX’s daily chart. The $18 support is holding firm and is drawing a flatline on the bottom. On the other hand, the resistance levels on SPX and Nasdaq is also drawing a flatline on top. We’ll have to see how things go. Market needs to make a breakout move soon.

HappyTrading
Posted May 7, 2008 at 9:28 am | Permalink (Edit)
market
churning today; killing some premiums in the options.

HappyTrading
Posted May 7, 2008 at 10:17 am | Permalink (Edit)
VIX
coming up; be very careful.

HappyTrading
Posted May 7, 2008 at 12:01 pm | Permalink (Edit)
wow, cashed out walked away for 2 hours and look at the market!

I’m more than 95% cash. Wouldn’t hurt to wait a couple of days. VIX showing intraday tops. Some eager buyers coming back in. I might look at some June puts. But, then again, it might be good just to take the day off.

(Market comments like the ones above can only be seen on the member board, as things happen during the day.)
I cashed most of my long positions out and held largely in cash, although I did “nibble” on some June puts. Some people might try to tell you that the market went down “because” of the high oil prices. While oil prices may have exerted some pressure, the market didn’t seem to be bothered with $123. So, why be bothered with $124? Everyday, the market moves to its rhythm. There could be a million different forces that may affect how the market moves, and everyday, countless people will try to “reason” it out and try to find “logical” explanations for its movements. Sure enough, some times things do seem “logical”. (They have to be, right? That’s how the human mind works. The human mind needs its logic. If this reason doesn’t make sense, look for another one. Eventually, the mind will likely convince itself that some reason makes the “perfect” logical sense. Ha ha! Ok, I’m being just a little facetious.) Some other times, I just let the charts tell me which way the market’s “mood swings”!

The market ended in a sea of red with the Dow losing 206.48 points, SPX sliding dropping 25.69 points, and Nasdaq tumbling 44.82 points:

VIX jumped +8.35% to $19.73. USO (oil) continued higher to $99.80, up +1.44% (It reached above $100 intraday). UNG (natural gas) jumped +2.36%. Rest of the market was pretty horrendous: XLF (financials) -3.6%, HGX (housing) -3.13, INX2 (Internet) -2.15%, SWH (software) -2.17%, FXI (Chinese ADRs) -5.87% (!!).

SPX

SPX dropped 25.69 points to close at 1392.57. It closed below its 10-day MA and the MACD went lower.

Nasdaq

Nasdaq fell 44.82 points to close at 2438.49. It also closed below its 10-day MA. Its MACD dropped as well.

The market tried to push and push, but, could not break the resistance levels that we’ve been looking at (SPX 1425; Nasdaq 2500). SPX got up to 1419.54 and Nasdaq was at 2496.65. In addition, VIX could not break below $18, at least not yet. So, for now, I’m just going to let the market do its breathing exercises and see how things shape up in the next couple of days. This is the week before options expiration. Stocks have been going up and up. There are a lot of premiums build into the March call options. Very often, we see the market do violent moves during the last 2 weeks before the front month options expire. The premiums on the options get killed on both sides (calls and puts). Of course, you may say that’s my way of making sense out of what’s happening!

This morning S and CLWR announced a new joint venture: WiMAX network. (By the way, looking at the charts, the rumors had perhaps leaked out 2 weeks ago! Compare the daily chart of S and CLWR). However, both S and CLWR closed lower in today’s market environment. Even GOOG got a piece of the action. GOOG tested $600 again today, but closed down 1.26%. RIG reported stellar earnings that topped estimates. It traded as high as $162.35 early in the morning, and ended in the red at the close, down $0.45. Makes “perfect” sense, right? Right. After the market, CROX reported earnings with good guidance. Its shares went above $11.5 in AH trading.