What a few weeks its been in the stock markets. If you're a bear, you are most likely rolling in money, if you aren't and don't have protection on your accounts, you may be nursing big losses. I guess I'm somewhere in between.
I started selling most of my positions at the beginning of the month. I'm now down to:
KRY
LVLT
MVIS
NYX
PGDP(now PZG)
WFC
I should have cut most of them. I have a tiny loss in MVIS because I just bought it this week, otherwise it might be a larger loss. I also own 10 calls that are trading a little under where I bought them. WFC rallied hard today on short covering and is also trading at a very slight loss. NYX, however, is killing me, and I'm not sure where the bottom will be. Currently down 18% and I also hold some calls that I'm pretty certain are not going to expire in the money. I should cut the losses and wait till things look better, but its hard. I need to find a good book on trading and psychology and how to overcome things like this.
There are some really bullish candles on the charts today, but I think this will just be a short bounce before we retest the lows of today and eventually break through them. inthemoneystocks.com does some excellent technical analysis at the end of each day in a free video. Goto the 'daily market report' link on the right side and at the bottom of the report is a link to the video. Or you can subscribe to the madd money blog. http://maddmoney.blogspot.com/
On a technical basis, we should get a small bounce tomorrow and maybe Monday and Tuesday. Tomorrow is OE and the big players don't want to get put a ton of stock so they will push prices up. After that it all depends on how many debt bombs go off and if the fed does anything. We should go back and test the lows of today, maybe bounce again, but eventually push through these lows, and then look out below. Thats paraphrasing what the inthemoneystocks.com guys are saying.
I started dabbling in puts last week, and I'm probably in over my head now unless this market absolutely collapses. If you do have a large portfolio and have/had large gains, I highly recommend you look into protective puts. Especially in a market like this. Its probably too late to protect all your gains, but if we keep trending down, you may hate yourself if you don't. Also remember that cash is indeed a position. And getting out now to get back in later at a lower price is a great way to make money.
I've been using puts more for speculation. I've been buying puts on DIA which is an ETF that follows the DJI. Forevery 100 points the dow moves, this etf moves a point. I've owned Sept puts at 132, 130, and I bought some at 127 today when things were looking really crummy. The 132 puts would be equilivent to dow 13,200 and the 127s to 12,700. Pretty simple.
I own 2 132s, 5 130s, and 3 127s. I sold 3 of the 130s today for an 86% gain over 2 days. Hopefully we can breakdown next week and I can unload the rest of these, or reevaluate how long to hold them.
Tomorrow I am going to try to flip some Aug calls on the SPY which follows the S&P index. I've got a limit order in, but I'm guessing the market will gap up and I won't get in. After today, I'm going to try not go get greedy on them, especially considering tomorrow is OE.
If you don't want to go short with puts, there are some good inverse ETFs out there that go up 2x as much as the index they follow goes down.
Short 1x
PSQ-QQQ
DOG-DJI
SH-S&P
Short 2x
SDS-S&P
QID-Nasdaq
DXD-DJI
There are also some that short sectors like real estate and financials. If we bounce here any of these may provide good entry points. See the whole list at: http://www.proshares.com/funds
This is just like teenage sex, protect yourselves out there.
Comments on grains tomorrow if I feel like it. Don't get your hopes up.
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