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The market opened lower and continued down in the morning. I sold my puts and started watching for new opportunities as I commented in the Trade Room:
HappyTrading January 15, 2009 7:37 AM
short plays
might want to lock in profits and wait for the afternoon to see if there’s going to be another wave of selling. VIX intraday charts getting toppy…
Soon, the market started to come back up. The market has be very volatile and I had been doing some trades on the “put” side with tight stops:
January 14, 2009
11:38 | HappyTrading APA ($74.10) Sold to Close APAMO Jan 75 put, at $2.50 -31%
11:37 | HappyTrading MA ($142.40) Sold to Close MALMJ Jan 150 calls, at $9.00 +17%
January 15, 2009
07:43 | HappyTrading APA ($70.60) Sold to Close APAMO Jan 75 put, at $4.70 +47%
I stopped out of APA yesterday and went back in, and was able to turn the trade into a gain. I also went back into the MA puts this morning and added to my profits from yesterday:
That’s $5.2 gain per contract or, +53% on top of yesterday’s +17% gain. MA continued to drop and those options traded as high as $20.4 and closed at $19.8. The APA puts traded as high as $5.5, but, closed at only $1.75. I am being careful and locking gains, sometimes leaving some good profits on the table. But, it’s better than losing good gains completely; or worse, turning gains into losses.
It was definitely a strange day. Soon after lunch, we started seeing some stocks trading up while others were going down:
HappyTrading January 15, 2009 9:34 AM
ESI/APOL
quick jump!
APA
coming down…
HappyTrading January 15, 2009 9:34 AM
WFC
quick drop!
Then, the market just took off, as the market seemed to be convinced that the stimulus package will be announced. We started going into “call” plays:
HappyTrading January 15, 2009 10:20 AM
ESI
holly cow (bull)!!
RIMM
feb calls!
HappyTrading January 15, 2009 10:23 AM
PCLN
another bull play.
HappyTrading January 15, 2009 10:29 AM
BRCM/QCOM
waking up!
Traders smelling something…
BillbigD January 15, 2009 11:12 AM
Tech and Finance leading the charge higher
Bagger Vance January 15, 2009 11:40 AM
going to exit our RIMM Feb calls here for a great score….Happy is in the same one.
QuarryMan January 15, 2009 12:16 PM
Those Jan 60 VMC calls are talking to me as a speculation on tomorrow’s opening.
We locked in profits on puts just before the market started bouncing, and, were able to take advantage of the turning point and initiate some call plays. But, we were also being careful and keep lots of cash to make sure that this bounce is not just another knee-jerk reaction.
The Dow closed up +12.35 points; SPX added just +1.12 points; Nasdaq gained +22.2 points:
Most sectors turned into green by the time the market closed. Techs were especially strong in the bounce: SOXX (semiconductors) +2.5%; BTK (biotechs) +2.74%; INX2 (internet) +1.15%. XME (metals and mining) added +2.42%. GDX (gold miners) gained +3.3%. FXI (Chinese ADRs) finally went recorded a win, advancing +1.71%.
SPX
SPX added +1.12 points to close at 843.74, below 850. The daily MAs and MACD were down.
Nasdaq
Nasdaq gained +22.2 points to close at 1511.84, above 1500. The daily MAs and MACD flattened a bit.
Although the market saw a good bounce today, it is not out of the “danger zone”, yet. Nasdaq closed above 1500, but, SPX still could not get above 850. Financials were still weak. We’ll at least need to see couple of more days of continued strength to turn the daily MAs back up. The market is still volatile, so trade carefully. Also, you don’t have to trade everyday! If you find the market too bumpy, wait for the right opportunities to come. Watch the volume and the breadth. If you see the whole market heading in one direction with high volume, you might find higher probability trades! And, again, don’t be shy about taking profits!
Good night and HappyTrading! ™
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