Added an AMZN Hedge

I bought AMZN May puts just OTM today near the open to hedge my portfolio for tomorrow. Specifically, I am trying to hedge my AAPL calls from the general market tape. The S&P has been struggling with breaking through and holding 1400 which is leading me to suspect that the market may give back a little this week (and use the Fed announcement as an excuse for profit taking).

AMZN has had trouble breaking through $85 and I took the chart to indicate that it had failed to break resistance there. I therefore thought that this overvalued stock may sell off anyway and the "pairs trade" with AAPL is a bonus.

Market at a Cross Road

Things are coming together, roads are merging, and it means something. What it means is something we are soon to find out. What am I talking about? I am talking about the direction of the market.

We are now at a major inflection point technically. The DOW has rebounded to around that 50% fib number from the high at the top of the recent trading range of 12,800 in the same location that a major trend line is placed. The market knows it, and whether we break beyond this range on volume and continue an uptrend that preserves a long term Bull Run, or whether we retest and expect another leg down into the bear morass may very well be decided in the short term (see chart).

Almost all the technical channels and indicators favor the bulls, but this is a news driven market and this can change in a New York minute. For me, I am betting LONG and I added to existing positions this week. I added (actually doubled) to my position in AAPY on Wednesday when the stock was trading below $4.00. It appears that news leaked out that APPY will have to wait a little longer for an FDA study to be completed (delaying a potential roll-out of their human appendicitis test by 4-5 months).

The damage to the stock was done before the company made that announcement. Seeing APPY as a long term bet, I felt that I could wait a little longer and doubled down at what I thought was a bargain after traders seemed to express disappointment. The stock has since rebounded some since the Board of Directors apparently agreed with me and announced a $5 million stock buy back because they believe the stock is undervalued.

I also have spent to week leveraging into a position in ATI. The announced earnings met what I was looking for from management and Pat Hassey (ATI CEO) was able to paint a more positive outlook for the company for the next year. I have continued to nibble at deep ITM calls with an October expiration all week.

I also doubled down on BOLT at $18.00 yesterday. The stock bounced off of resistance perfectly and is rebounding (see chart). I wanted to see that bottom before adding some more. A trader may have taken the bet off the table when BOLT failed to break out at $24.00, but because this is thinly traded, I felt an investor’s approach makes better sense. The double down will now essentially be for trading around a core position and I will be unloading some of my buys after the stock gets back into the $20’s again shortly.

I haven't added more to GRMN (I am already overloaded), but this week showed that the stock was building a base and putting in a series of higher lows. This is a kind of base that the stock needs at this point after a traumatic start to the year (see chart).

Finally, AAPL reported great earnings and appear to be executing exactly in accordance with their game plan. News headlines actually dubbed the AAPL economic outlook as “what recession?” This kind of positive momentum is great for the stock with the company now building towards an event driven cycle of new product releases for the rest of the year with some excitement being driven by the expected release of the iPhone 3G. I bought some May calls from AAPL just before earnings were released in what was an emotional purchase.

I haven't been posting as often as I used to. Hopefully, that will change some in the future, but my time commitments on other priorities have increased here in the short term.

Riding My Investments

Being in the saddle as a "long" requires patience. There is not point chasing the market with additional buys when you are already long unless you see good technical trends that give you a reason to average up. As traders, we are buying the momentum. As investors, we are buying the value and growth.

With my current portfolio being primarily about value, there is less to trade and less to write about. Since last Wednesday, I have basically been "minding my p's and q's" and sitting on a position that has been moving higher.

I have, however, been selling some into strength. This market will retrace, even to just take some profits, so I want to be sure to take some chips off the table. On Friday, I sold half my AAPL May calls and the rest of the May calls were sold when the stock hit $165.00 this morning. My April AAPL calls expired and exercised as well.

That leaves me with the only other trade (other than a 10 minute trade I will mention in the P.S.) that I have made over the last three trading days: I bought some deep ITM ATI calls (Oct65 calls). I bought a few on Friday as a marker and bought a few more today.

I think the stock is almost done going down and $70.00 will probably be its bottom (at worst) on the latest re-trace. Yes, this is the same stock that I was short just a week ago, but the thesis is very different. Back then I believed that the X for ATI rumor was bogus and that the stock had moved higher on no reason (which was a profitable trade and may have been correct). Now, I believe that ATI will, in fact, exceed their earnings expectations on Wednesday morning and that the market (for stainless steel) will be described as "firming". By buying deep ITM calls, I am able to invest in ATI with less cash while paying just a small premium over a fairly long time horizon.

On other stocks, those that follow charts are sure to notice the re-trace in BOLT that looks strongly like a "handle" in a cup-with-handle formation (chart). I made the decision to just hold my long position right through the re-trace, but I am watching the $21.00 price level very carefully. This stock is thinly traded so one would expect volatility, but I don't want to give all my profit away either.

APPY is also struggling while GRMN may have found a bottom. I am planning on sticking with both for now.

P.S. On Thursday night with five minutes left in the trading day, I got suddenly got nervous about not hedging anything ahead of GOOG's earnings. I settled on buying a few SPY puts. Then, at 4:04 pm, GOOG announced and I was immediately able to cover those puts - something I wasn't sure was possible. I knew that the SPY options desk stayed open slightly longer than the trading day, but my 4:05 pm execution of an options position was a first for me and something that I will remember. Covering then cost me a LOT less than if I had waited until the open.

Bottom Looks Better and Better

It is a little sloppy, but a technical bottom on a lot of charts are starting to look better and better. Yes, I have had a few drinks with dinner, but I have not lost my senses.

Consider exhibit #1. The COMPQ has been up 5 of the last 6 weeks (including this week), and the S&P and the DJI have been up 4 of the last 6 weeks. The bears can't deny those facts.

Exhibit #2 is that the VIX has broken down. The fear gauge is at its lowest level in 2008 (see chart). Everyone is seeing the same data and it is telling us that the credit crunch may be improving slightly and it is at least definitely not getting materially worse. Earnings have also recently taken a turn for the better, making folks on the sidelines think that they are missing out on something.

Exhibit # 3 is the COMPQ chart. This is a market that wants to run. The bottom was put in and retested and a cup and handle has been put in since the end of February on the daily chart.

Exhibit #4 is the transportation index (see chart). It broke out today and cleared major resistance. Transportation is often a bellweather for a major move up. Dow theory may live.

And finally, Exhibit #5 is the financials shown by the XLF (chart). It is possible to imagine a major rally without the homebuilders but impossible to imagine one without participation from the financials. A major test of the $24.30 area on the XLF was turned back this week AGAIN. This is proving to be a major firewall and leads me to get a little more bullish.

So I have been having a major discussion with folks on the TIE Message Board on InvestorVillage about the market's future and, just like the guests on CNBC, everyone has a different opinion. One camp believes that Bank earnings will take us another leg down. I believe that the psychology of the market has turned and that much of the bad news is priced in.

So far, the bank's earnings have not shaken this market. MER in the morning is key to determining where the market goes. If MER doesn't blow up, then whatever Citi does on Friday morning will seem like a Citi problem and not anything systemic. Another big day also puts us at the upper bound of the trading range we are in.

If we can hold it together through the week, then S&P 1400 by May 1st is looking very real as I predicted months ago.

Holding the Line

Smiles all around on the trading floor today and the market shrugs off the CPI and the Beige Book. The news is that earnings, at least today, don't look as bad as everyone feared.

I am not sure I am buying this mood shift yet, but the way that the market is reacting today is very encouraging. The market gapped up and then held the line all day long. It is the best kind of up move in my opinion. Traders were not trying to move (or where unable to move) the market to their advantage. The buying has also been steady and not rushed (intraday S&P chart). The VIX is also down to its lowest level of 2008 after breaking through a long term trend line (chart).

The McClellan Oscillator is not screaming overbought and the current trading range indicates that we still have some upside. As a result, I have made the decision to not hedge my account today. A prudent move would be to buy some protective puts near close, however, the market is technically ready for a multi-day run.

The question, of course, is will earning results in the next 24 hours change the mood? My sense is that the leaks coming out of the financials have investors bracing for the worst, meaning to me that the upside trade is much better than the downside risk.

Tomorrow, I may kicking myself, but greed is taking over for this trader at the moment.

As a P.S., I am watching BOLT closely. It is approaching major resistance at $24.00 and failure to break out through $24 means that it may retrace. I will be taking some profits on BOLT is it doesn't break $24.00 ANSS is also moving nicely and AAPL is holding its own. I also think that GRMN is close to a bottom and I will add more once I see a bottom.

BOLT Breaks Out

The stock (BOLT) finally left its base around midday yesterday and, as of last night, looks poised to break through its upper resistance just shy of $21. This is major resistance, but BOLT's open this morning is encouraging.

The oil and gas services provider (seismic exploration) finally looks poised to retain some upward momentum (Daily chart). A good base was established around the $19.00 range and this will be an area where traders will place their stops.

If it breaks through $21.00, I plan on adding a little more expecting the stock to make a run at $24.00 (the next major resistance point). My core position was purchased at an average price of $15.85 so a 30% gain to-date is one of my bright spots in my portfolio in these challenging times.

Speaking of challenges, GRMN continues to slide. I added some more yesterday (deep ITM calls). The fundamentals scream bargain with the stock trading at less than 10 times 2008 earnings. The market will continue to be irrational with GRMN until the company proves that the consumer is not dead. It is my plan to wait out this irrational behavior. Fortunately, we only have another two weeks until earnings when the company can hopefully shed some light onto what the year will look like in terms of guidance.

Sell First, Ask Questions Later

With the news out of GE this morning, it was time to sell my May AAPL calls and get a little defensive shortly after open on the premise that the news of the earnings miss may turn out to be a multi-day trading event.

Now, at 11 AM, it is looking like the market is actually holding up fairly well, but the trend will probably be down all day today and into to Monday so there is no point in being in a hurry about getting back in.

My ATI puts have completely hedged my long positions and I am up for the day. I had to take some profits and I did peel a few off the table at $3.50 this morning, but the majority will be held until later this afternoon, when I plan to close out the position.

The GE news is hitting the market just when we were once again near the top of the trading range we have been traveling within for the last month, so the technical damage is still pretty reasonable. If I was to pick out stocks that would miss earnings badly, it would not have been GE, but I think that most people are expecting more misses like this and a lot is priced in. I still expect the market to stay in this trading range for another 2-4 weeks so I will still be selling the rallies and buying the dips.

ROCM Having a Good Week - Finally!

Rochester Medical may finally be catching some notice after closing at $12.50 today. Starting on April 1st, Medicare is implementing a new reimbursement policy covering the use of Intermittent Catheters. This has been expected for many months, but the news has finally allowed investors to react to "actionable" news.

The main policy change now allows an intermittent catheter user a maximum of 200 catheters per month instead of four catheters per month under previous policy. Rochester Medical put out a press release about this change, understanding that this was news. They believe this is a very positive change in helping reduce urinary tract infections and improving the quality of life for Intermittent Catheter users, which they manufacture and market.

This is a long term secular trend that should lead to increased sales in the US. Investors will now be waiting in anticipation of growth generated from a beefed up sales force - stay tuned, management needs to execute on this one. Regardless, this will add some relevance to this quarter's conference call.

On another note, I added some more deep ITM calls with GRMN today. The stock is now trading at 10x 2008 earnings and was down today on some poor results by Tom Tom. I truly believe that GRMN is severely undervalued at this point.

I also hung onto my ATI puts today. The market really didn't give me an opportunity to cover at open. The thesis is intact, and I intend to hold for now while also carefully watching any breakout above $86.00 which will chase me to the sidelines.

Betting Against ATI

On Friday, traders received a jolt in the early afternoon when a rumor went around that ATI was a buy-out candidate for US Steel (X). The stock, which gapped lower at open on a downgrade, moved from a $72.50 mark north towards $84.00 on the news with shorts fueling the rise on a squeeze.

When the stock hit $82.00, I bought April puts. These kind of rumors have been circulating within the industry for years without merit and an ATI for X deal just doesn't make sense. It was like Ford buying Land Rover - they are just different animals. ATI focuses on specialty metals, while X focuses on commodity steel and I see very little synergy between the two.

For an ATI shareholder, the specialty metals play would be lost within X, thereby limiting the upside of an investment. ATI management is also outstanding and I would find it challenging to bring this management into a combined concern.

This put play (see ATI chart) is not without major risk. The deal may not happen, making my thesis right, but an unsolicited offer can still be offered by X, making this play very risky. I do not have serious money on this bet, but a cool-off of the rumor on Monday has allowed my ATI trade to find dry land.

I see this trade as a 2-3 day play on a rumor that seems unlikely.

I made no other trades on Friday or Monday. AAPL, however, could use a rest at this point and I would be careful adding anything at this point.

GRMN Under Pressure

Just like the stock price, if I saw this guy on the street, I would also be a little apprehensive. Anyway, GRMN is having what we like to call a "distribution day". The following hit the wires this morning:

(9:02 AM ET) LONDON (MarketWatch) -- Shares of Garmin(GRMN, Trade ) dropped 10.5% in pre-open trade as Chief Financial Officer Kevin Rauckman told Reuters in an interview that first-quarter revenue is expected to drop between 40% and 50% from the previous quarter, when sales were boosted by holiday spending. Analysts polled by FactSet had forecast a 40% drop in first-quarter revenue on a sequential basis. Rauckman also was quoted as saying that margins will fall below 40% for the year. Shares in Garmin rival TomTom dropped 5.6% in Amsterdam.

As of 11:30 AM (EDT), the stock is down more than $2.50 and more than 16 million shares have traded hands. I think that Garmin has it's challenges, but I also think this whole thing is overdone. It is an investment and not a trade, so I am sticking with my long position. I had a stink bid in on GRMN two days ago but pulled it thinking it wouldn't get filled. It would have this morning and I would take that bet again right now.

However, my thinking has changed since Lenny Dykstra's article this morning about buying deep-in-the-money calls with Garmin. I think he is right. The premium is minimal with deep ITM calls, and October is far enough out for the stock to regain its mojo, while I don't need to tie up the capital to hold stock until October when I may exercise.

On further weakness, my plan is to double down with ITM calls on GRMN.

By the way, while traveling, I picked up XLF puts both on Tuesday afternoon and on Wednesday morning to hedge my position. I also let half my AAPL calls go this morning when the stock hit $150.00. The stock needs a rest and I wanted to book some profits. I am tired of giving money back as we sit in this trading range.

Traveling Again

I am sitting in an airport on another trip. I therefore sold my GS calls for a profit this morning on the opening strength knowing that I would not be able to babysit them for a couple of days. Everything else seems to be doing well and being long is paying off. GRMN is the only stock that I have a little concern about.

I am planning to trade around a core position on all my stocks this week until volume tells us which way the trend is going. I have another stink bid in for GRMN at $52.50, but otherwise, I am just planning on my AAPL calls finally breaking out (RIMM and their earnings will affect this big time) and my long positions to gradually appreciate as we roam around in this trading range.

By the way, I plan on exercising all my existing April AAPL calls. I also see that ANSS received an upgrade this morning and is bouncing back. Life is good.

Ansys Correction

I noted some incorrect math in my previous post that I wanted to correct. William Trent in his blog correctly used market cap to analyze what investors think of the deal. His numbers are different than mine, but the outcome is the same (it may be because of what time we are posting this).

Assuming Friday's closing price for ANST of $23.42, provides a previous market cap valuation of $546 million. Friday's ANSS closing price of $37.92 provides a previous market cap for ANSS of $2.97 billion for a combined total of $3.52 billion for the two companies. This compares to a new market cap of $3.09 billion for the "new" ANSS at today's close, after including the 11.1 million new shares dilution as proposed by the company.

It is fairly evident that the market has clipped about $400 + million in market cap off the combined value. That is not positive, but I still expect good things from this management team. I am also willing to give them the benefit of the doubt, given their track record and what this says about the company's perceived health given the economy.

On another topic, my remaining GS calls are looking a little long in the teeth. Any catalyst for the trade is gone and the stock is trading with the sector. Not a good position for an options position and there are many other ways to play the sector with less risk. I am looking to exit the position on a good upside day or to cut losses if the price action looks severe this week.

Ansys Buys Ansoft

Ansys (ANSS) announced this morning that it acquired Ansoft (ANST) for a deal valued at $832 million in cash and stock. This translates to $16.25 in cash and 0.431882 shares of ANSS for each one share of ANST stock for existing ANST.

In order to fund this acquisition, ANSS is diluting by 11.1 million shares and borrowing against a credit line (as well as cash on hand from both companies) to the tune of $414 million dollars. This gives ANST holders a 39% premium to Friday's price and represents a 12% dilution to ANSS.

For investors of ANSS, like myself, the stock is off about 9% in premarket. In a warped way, this actually means the Street likes the deal, netting 3% on the 12% dilution. For ANST investors, they really don't have to change their location for reading the stock tables - just moving up one name to ANSS.

For ANSS, this represents entry into the electronic-design automation segment, and one look at ANST's chart, and it appears that their investors have liked that company's results. Whether ANSS overpaid or got a bargain is something I don't know at the moment, not being familiar with ANST, but I am willing to give management a vote of confidence in the short term.

ANSS did say that they expect the deal to be modestly accreditive within the 1st full year and the deal is expected to be closed sometime in the 2nd quarter.

Calling Out the Other Team

I figured a sports analogy is appropriate because it is March Madness. Most players have been coached to never call out the other team. It usually just makes the headlines and motivates the other team with bulletin board fodder. However, sometimes it also motivates your own team and sometimes it is just responding to untruths.

That scenario comes to mind when the Bank of America Apple analyst and a few others started to publicly question AAPL's goal of selling 10 million iPhones this year. I thought they looked pretty dumb when Steve Jobs and Apple's CFO both then came out and politely refuted the analyst's concerns. In corporate speak, they "called out" the "Doubting Thomas" analysts and told the world that 10 million iPhones "will happen". The stock moved down on the analyst's concerns, but never really responded to the company's call out.

That is why I am enjoying what came off the wires at lunch today:

12:01 (Dow Jones) Banc of America's channel checks point to Apple (AAPL) beginning significant production of 3G versions of iPhone in June -- 3G being crucial for international sales. Since this likely implies a launch announcement in calendar 2Q, firm says its estimate of 8M iPhones sold this year is starting to look too conservative. BofA now believes AAPL will build more than 11M iPhones by end of CY 3Q. For every 1M extra iPhones sold, BofA says implied upside is up to $400M in revenue and 12c EPS. AAPL's stated goal is to sell 10M by year end. Shares up 2.8% at $144.18. (EBW)

Now don't they look stupid? AAPL is up and still fighting to close the gap and continue what could be the mother of all cup-with-handle patterns.

P.S. My GS calls are looking in trouble. I may add to the position with a pair trade with LEH. I may also cover and buy again lower. I made a huge profit on the run-up, but should have sold it all instead of keeping 30%. I am playing with the house's money, but I still hate giving it all back.

Buying the Dip

In true trader fashion today, I decided to buy the dip this afternoon and added back a significant number of AAPL call contracts and a few GS calls. The volume just doesn't suggest a distribution day, there is just some buyer exhaustion and the market is building a base. Failure to close the gap and clear resistance from the $145 area does weigh on my mind, but I am willing to put down a bet that the stock rebounds shortly.

The AAPL calls that I purchased are May150's.

Island Paradise or Island Reversal?

Anyone who has been to the north shore of Kauai (one of the main eight Hawaiian Islands) can attest to some of the most beautiful natural scenery in the world - a paradise worth seeing. However, the Napali Coast area of the North Shore also has some breathtaking cliffs that dramatically rise 4000 feet from the surf that, though beautiful, look very dangerous.

I digress from my Travel Channel plug to relate this story to the technical situation that AAPL finds itself in. The daily chart shows a gap from $146-$140 that occurred on January 22nd during the sell off. Today, we almost closed that gap (today's high was $145.74), a move that is very bullish for AAPL's future technically.

It is why I have stubbornly held onto my AAPL calls, even after they have more than doubled, and why I have sold no AAPL stock from my core position after it is up more than 16%. That gap has been like a magnet and filling this gap is what traders have been looking for.

However, Oracle's earnings this evening may stop this from happening tomorrow. Failure to close the gap (it doesn't HAVE to happen tomorrow) often leads to a negative island reversal, something that I don't think will happen, but we all should be aware of.

Once the gap is closed, a stock may often rest here before another leg up. This rest may provide me the opportunity to roll over my calls towards out-of-money strikes on weakness. What I see in that daily chart is a nice rounded bottom, something most of us can be very happy about.

If we see an island reversal, holding calls will be very expensive. The rest of the week should tell us a lot about AAPL. As for the general market, the "back and fill" work that I predicted is happening, but the volume is pretty low and the trend is still in favor of the bulls. A consolidation here is healthy with 1390 on the S&P a major goal.

Back and Fill Day

A flat day like today is exactly what the market needs. We need to continue to build that base and a little "back and fill" work was accomplished today. Today's McClellan Oscillator has a reading of 42, indicating a near over bought market in the short term, so I expect some selling to happen this week.

If not, then hedging my long positions will make sense. Watching the VIX, we are once again approaching that lower trend line where I either expect another bounce in volatility or a real rally in the market.

The market indexes took a great first step towards developing an uptrend by clearing their 50-day moving averages. The next hurdle that I see is $28 on the XLF and 1370 on the S&P.

I made no trades today. I had a sell order on some of my GS calls, but they didn't execute.

Skimming the Fat

I learn something every day. I was thinking that what I did today with the market was "skimming" the milk off the coffee, but when I did a search on skimming, all I came up with was a surf thing.

Today gave me the opportunity to sell a little into today's strength. I took half my AAPL calls off the table and keep my focus on the VIX. If it breaks 22+ then I am long for a while, but right now, we are closing in on some resistance that I will wait and see if we make progress.

Still making money and happy to be long today.

How Does This End?

A good landing or another bad fall? That is the question for the market as Thursday's Follow Through days gives the bulls a glimmer of hope that a bottom is in again.

A follow through day on higher volume is significant. Tuesday's rally didn't have the volume that strongly suggested that a new uptrend would begin, but Thursday's follow through removed any doubts in my mind that it is very possible to move up from here.

Caution, however, is still prudent. This is the area where it gets important. We need a good week next week or the struggle will continue. Those folks that are skeptical of technical analysis may suggest that Thursday's volume was up because it was an options expiration day, but they can not dismiss that there were a lot of buyers willing to stay long over the long weekend.

I am still holding some cash, especially after getting out of a bad MON call trade early on Thursday, and will not add to my long position until the markets signals some more bullishness.

Taking a Big Swing and Missing

I hate the feeling - being up at the plate and taking a called 3rd strike. Oh! If I could just take it back! Being that we are about two weeks away from opening day, I thought a little baseball analogy would best describe today.

Yesterday was one of my best days as an investor ever. Today was one of my worst. MON was a big reason for the screw up today. I believed in yesterdays rally and lacked the discipline to cover or sell my long position this morning and take profits. I simply spent moments of the day starring in disbelief that an agricultural commodity play would go down 12% on no news.

In hindsight, it appears to be really dumb, but being unfamiliar with the price action (it is a fairly new holding) caused me to stay with my call options. Holding options like you might a stock is a recipe for disaster. I know that, but broke the rules and paid for it.

I also did that on Monday with GS and it more than paid off yesterday for me when GS rocketed on positive news, but in that case I had a thesis about GS's earnings and how the Street and the stock would react. Here, with MON, I am holding because it a good investment play for a market sector that will continue to see demand and price increases and as a hedge against inflation. My plan was to hold the options for a month and exercise it to stock. Well, out-of-the-money options are worthless, so I need a better plan.

I don't know whether to be grateful that it closed above its lower trend line (Chart) or face reality that the chart looks less attractive this afternoon than it did this morning. So the question becomes: Was today profit taking or something different?

Something different means a multi-day move lower that I can't afford, even after today's losses. Profit taking means it may recover tomorrow. My pain threshold is now low and the position is one button click away from being sold. I can't sit on a mistake that is way past salvation, but this stock has recently demonstrated its ability to make sharp moves in both directions thereby stopping me from making a decision.

I took a big swing today expecting the rally to hold and MON to turn up. It didn't happen. I need to go to the batting cage.

GS Recovers

The Goldman tower in Jersey City may not fetch the real estate value that the BSC headquarters should fetch, but the foundation is a lot stronger according to the earnings chatter since GS posts earnings this morning.

The pre-market has GS trading above $164.00, putting my GS calls in good shape at open. So the question is do we take profits now, hedge for the 2:15 pm Fed announcement or let it ride a little because they are April call positions?

Well the CFO has been very upbeat, considering that the investment banking community has been shell shocked over the last week and quarter. They are even expecting to hire some in 2008. Their mortgage portfolio has fallen to $4 billion from $23 billion in the last quarter and their leveraged loans has fallen to $27 billion from $43 billion. This is a company that understands risk management.

I am therefore sticking with my position with the intent of potentially exercising the calls next month. Even if the market sells off after the Fed announcement, I think the market has ensured a ton and is still kicking, meaning that a bottom may have beed defined.

Pride Comes Before the Fall

I am glad I enjoyed the weekend, because my GS holdings look like a dumb trade at the moment. I have basically given back everything I gained with GS on Friday at the open. I sold my March calls into a mid-morning, mini-rally, figuring they are too out-of-the-money for a Thursday expiration at this point.

With GS and my April position, we will see what tomorrow's earnings brings us. It is not really the earnings that will move the stock, but what the company says about their holdings and outlook that is important.

I took this money and doubled my calls with MON.

What a Week!

I got this image from a friend who reads the blog more than a month ago, but I haven't had the chance to post it with a good enough week to celebrate a little. It is fairly "down market" and I apologize in advance to anyone sensitive to these kinds of images, but I figured that with what we all endured with "Client #9" this week that it was no longer "over the top".

What a day and what a week. I was able to double-up my GS calls three times today on every dip and sell the new position each time for about a 20% profit an hour later. I also got to work building a long portfolio. I purchased AAPL at $125.00 (average prices on each), GRMN at $57.45, BOLT at $15.75, and ANSS at $36.00. This deployed about 50% of my cash.

today) didn't take the market down technically. I have been closely watching the 1280 area on the S&P and every time that the market dropped there today a series of buy program went off. Mr. Market is clearly defending the double bottom put in on the S&P at that What am I thinking? Well, I am very bullish that a Fed move (like the one with BSCintraday low of 1270. My long positions are merely picking up some values at these levels.

I have also been watching the VIX (see charts - daily and weekly). You can clearly see that the market very often improves shortly after the VIX rises above 30. While this is also temporary in a lot of cases, the uptick that happens the following week is noticeable and significant enough for me to take a chance long.

Until today, most of my portfolio has been in cash. Most of my options plays were with only about 10% of my portfolio, but the out sized gains realized this week has been enough to basically overcome any February losses.

A trader's confidence goes in cycles and mine is coming back after hitting what I thought was a major low point for me in a couple of years last week when I had to cover my long positions only to be in cash when the Tuesday rally started. The point is that if you use discipline and stay in the game, you can often turn things around. Time to wander down to the wine cellar and pick out a good one for tonight.

A Lot Going On

Yesterday was a very busy day and, for once lately, I played it rather well. I covered those XLF puts shortly after open and then went long GS, AAPL, and MON calls when the market was down more than 200 points. Yesterday (or today) was going to be the follow-through day for the rally Tuesday in my mind and the bulls had not even started to fight for the ground they had lost between Tuesday's close and yesterday's open.

Just like Tuesday's rally seemed too far, too fast, yesterday's morning decline seemed too fast as well. In the early afternoon yesterday, the up/down volume went from 3:1 in favor of the bears to more than 2:1 in favor of the bulls. That was not all short covering.

The bulls have a little more to hang their hat on this morning with better CPI inflation numbers than what we have seen in recent months, so I think I will be shopping a little more today. Thus far, I am still more than 80% in cash and only really have some positions in some call options and a few defensive stocks that I have held through the turmoil. There is no point trying to be a hero as the market decides if a double bottom on the S&P intraday low will hold or not and be the base to move higher.

If the market gets a footing there will be plenty of time to go long in a big way, but I will deploy some cash on ANSS and potentially GRMN today if the market gives me a bid.

This Jet Takes a While to Take Off

Anyone who thought the market would go to da' moon based on yesterday's wide rally needs to think again. Going short, for me, was a little bit of a no-brainer. Very few good rallies take off on a V-bounce. Going short is simply playing the statistics.

Monday may have been an S&P double bottom on the January intraday low. I simply don't know at this point. What I do know is that the market did not have any capitulation. The evidence of major fear always gives technicians a little more confidence in a rally attempt after it happens.

What it did have was volume. That was very positive. It was not just the Shorts that were covering; institutions were buying. Will it hold? I am in the "let's wait and see" camp and just playing the statistics and I will take that 50% appreciation in my XLF puts today.

The timing is good for a new uptrend, but new uptrend start out fairly tentative. That is why the rally "event" will be retested. I will be in cash when it retests looking to buy long positions again in AAPL, GRMN, GS, and ANSS.

Took Profits and Went Short

In the final hour of the day, with the DJI up 330 points, I took profits by covering the QID puts and reacquired XLF puts. The market may go up again tomorrow but I still think the trend is down. This is an oversold bounce and some base work needs to be put in place before we move significantly higher.

I just don't see that with the Fed's move.

Full Contact Sport

The trading game is a full contact sport. This is not "Go Fish", (A game that my boys are currently begging me to play) it is a game of high-stakes Poker. Since buying XLF puts on Friday, I have been watching the markets and looking for some of that capitulation that the experts talk about to try to find a bottom.

This morning's open, just caused me to more than double my XLF puts and to also buy SDS calls. I did this because I thought this morning's open was suspect. The mid day volume and the fact that the rally has mostly held up has caused me to abandon all my short positions and switch teams once again. I covered my XLF and SDS positions and bought QID puts (betting that a short fund will decline).

The QID put position was established because the QID screen was up and getting into QLD or another ultra long position with options would have taken more button clicks. Hopefully, the lack of volume in these derivatives won't bite me.

I have no conviction in the rally at the moment. I am just riding the daily trend, expecting the market to close near or above it's opening high. I will probably go entirely back to cash at close, however, not yet willing to bet either way until some additional signals are given.

Buying Puts

I bought some XLF puts around the 11 am hour. There were no buyers to be seen after the initial burst around 10 am.

I also noticed that APPY received a downgrade from Oppenheimer today that I need to research. Talk about confusing. Oppenheimer is the underwriter and holds warrants with APPY. It is like shooting yourself in the foot. I guess that is what the Chinese Wall is for.

In Cash

Sold everything but APPY and ROCM. They are defensive stocks, small caps, and not really driven by economic news.

Time to Run for the Cave

I was wrong with the numbers. The jobs report was dismal. A recession is now almost assured. Time to get to the sidelines. Going to cash this morning.

The VIX Wedge

If the market is building a base from which to move higher (as opposed to moving lower), one chart worth considering in the Volatility Index. The VIX has had a rising lower trend that has been in place for a year. My feeling is that this trend line needs to be broken for the market to recover.

The trend line forms, in my opinion, a kind of bearish wedge with the 30% line (in this case, the bearish wedge for the VIX is good for the market). Although the 30 line is broken during brief periods of extreme fear and market uncertainty (it was broken 3 times over the last year for very short durations), it really does act as a resistance line for the purpose of technical analysis.

This is a trend line that will be broken (they always are). The question is when? Given that this wedge is giving the index less and less room to maneuver before hitting the 30-resistance line or the 22-support line, I expect the break to happen soon and that there will be some follow through. This means to me that a very good week for the market is coming.

My thesis continues to be contrarian. Sooner or later the "write-downs" will become write-ups" and the market will stop going down on bad news. I think we are almost there (certainly within the next 6-weeks). The negativity is prevalent with bloggers, money managers, and politicians. That usually means a bottom is in.

Getting off the Mat

You have to give the market credit. Everything that the bears have thrown at it have been repelled. This market, thus far, is Rocky. This leads me to continue to have a bullish slant to the way I trade.

Trust me, I have that sick feeling whenever the market goes south, knowing what we all know about the economy and the credit situation, however, I also know that the best trades often happen when you are going against the herd.

Yesterday, I closed out my TIE puts. It was a great trade, but time to move on. I also added GRMN calls (April). The price of this stock is just too cheap. Selling the puts have allowed to raise some cash again. This is cash I will careful with.

Need a Little Protection

Yesterday's downgrade of AAPL by two analysts caused me to declare defeat on my AAPL Mar135 calls. Even with what I think will be good news today and Thursday, it will be hard for AAPL to ascend in a negative tape and getting out early in yesterday's negative price action was worth about five points of downside.

My TIE puts also did not act as the hedge against the tape that I had hoped. The MM was defending the stock price yesterday while AAPL got crushed. I still have them and expect the stock to give a little more today.

So I need a little more protection. Maybe SDS calls or SPY puts. I have 45 minutes to think about it.

On another note, I have misread GRMN completely, letting a 25% profit go. It is now at my original buy point. I will hold unless it breaks $55.00. I will also add calls 90 days out if it bounces off this number. If it breaks $55, then I will be able to re-buy much lower.

Finally, I bought some GS calls yesterday. I may be a little early on this one, but I do not see GS going below $155.00 and will add more if the price gets cheaper. They are April calls.

Good trading.

A Perfect Storm

Similar to what happened in the movie, The Perfect Storm, a series of events conspired to make owning TIE puts on Friday the perfect trade. TIE was the "Andrea Gail" caught up in a weather pattern that was deadly. Warner Brothers produced a blockbuster movie that was a must-see classic with George Clooney and Marc Wahlberg while ole' Sneak conspired with some very savvy TIE Message Board posters to lay out a put position that netted a major 4-bagger in a day.

It really could not have gone any better. TIE reported earnings late Thursday that were much worse than analysts (and even me) were expecting. Once $0.08 of special charges and credits were removed, TIE earned an EPS of $0.25, while the Street was expecting $0.36 (even the lowest estimate was $0.28). The bad tape on Friday added to the pressure and the stock never recovered, closing near its low at $20.62. This almost 17% loss in the stock price on Friday translated into a huge windfall for my Mar25 and Mar22.5 puts.

Not meaning to be too greedy, I sold all my Mar25 puts and 70% of my Mar22.5 puts, leaving 30% to hedge my long positions in the event the tape continues to deteriorate on Monday.

I know a lot of folks are wringing their hands about the economy and this market. I too am disheartened by the market's performance on Friday, but I still see the market holding and not taking out the January S&P lows.

Only a fool would charge in with buy orders after Friday's showing, however. Caution is the word and I also feel that being short the market is more risky. So I am re-looking at my list and may pick at a stock or two if we have a big sell off at open tomorrow.

There will be bargain hunters. There always are. I will cautiously pick away at some stock that I am willing to keep as an investment and maybe a call or two on snap back rallies. The TIE puts that I have remaining will hopefully hedge my existing long positions and I also hope to take advantage in any additional seller motivation after dismal earnings on the part of TIE.

Even a Stopped Clock is Right Twice a Day

Maybe I have been a little hard on myself lately, but even a stopped clock gets the time right twice a day. AAPL is breaking out of their bottoming pattern today on good volume and those calls that I have beating myself up about are now back in play.

I have been waiting all day to write this into my blog (as a log), but was afraid the down tape may be a red tide that would even drag down AAPL's good news. Instead, it is looking like AAPL may close near its high near $132.00.

As reported by many, the COO gave some very bullish remarks at the GS Tech Conference yesterday that has enabled the stock to break out (see chart). The stock gapped above the downtrend at open and then recently cleared the only resistance hurdle I see at $131.00 on the way to $140.00.

Next week is Apple's stockholder meeting on Tuesday, followed by a Media Event for iPhone SDK. The buzz will be flying and my luck is turning. I expect a little momentum to be back into Apple over the next week.

Now, I just need horrible numbers from TIE tomorrow evening to make this a week to remember.

You’ve Got Mail

Next week is all about Apple. On March 4^th, AAPL has its annual stockholder’s meeting. Then, two days later, Apple is hosting a special media event to unveil the new iPhone SDK (software developer’s kit). Words like “enterprise” and “Outlook Exchange” are being bantered about within the media as we speak, but the press invitation (as I understand it) appears to be pretty cryptic as the company just mentions that the event will be about some “exciting new enterprise features”.

You have to give a hand to Apple; they sure know how to create a buzz. How this all plays out is going to be interesting and I am expecting some real volatility in the stock price next week.

The Shareholders Meeting should be interesting in that investors have seen a 40% decline in the company’s share price this year to date and they will want reassurance that the ship is in good shape. How the company handles this exchange will be very important.

Then on the 6^th, the media event, which I assume will be reported on CNBC will get the faithful blog believers in a frenzy driving a buzz of expectations that may be hard to top. However, providing meaningful business applications on the iPhone like Outlook opens a whole New World. RIM and Nokia are in Apple’s sights.

Therefore, I am holding those underwater AAPL calls hoping to make lemonade out what has simply been a very poor series of options trading on my part.

P.S. Steve Job's email to employees last month says it all: "I continue to believe that our fundamentals--our remarkable people, our clear and focused strategy, our new product pipeline, our 200+ retail stores, our $18 billion of cash in the bank with no debt, etc., will serve us well in the coming months and years....investors who stay with us will be rewarded as the market's confidence is restored over time. Hang in there."

Digging A Hole

Help me, I can't get out. Once again, I look like a rookie with my AAPL options call. Early again. Trying to anticipate the upturn out of the bull flag while the stock obviously still has more work to do.

So I am stuck with serious losses on my AAPL options as result of trading hope and not facts. What to do? Good question. The chart still has the same pattern with $125.00 as the new breakout point on volume, but what would be the catalyst to get that positive inflow?

At this point, I am going to hold on and try to be patient. The mistake has already been made. I am not afraid of taking the loss, but can afford to hold. Buying Mar135's at $0.60 today still looks like a good trade. I also picked up some Mar125's. We shall see.

On other news, GRMN has broken support as it undergoes a "sell-the-news" period. Consumer stocks are just getting crushed. It is an investment and I am holding for now. I don't need the money elsewhere and I see the investment paying off.

ANSS is rebounding well. Keep an eye on that stock. It is my number one play at the moment.

My TIE puts position is also underwater. News should be out on Friday (earnings) that is the reason for the trade.

Under Promise, Over Perform

Engineering simulation software developer Ansys (ANSS) once again beat consensus estimates for Q4 and guided higher for 2008. Not only did they blow out current estimates, they also exceeded Street expectations going forward. Their guidance included a Q1 prediction of revenue of $103-$106 million and earnings of $0.33-$0.34 per share.

They expect 2008 earnings to be in a range of $1.48 - $1.51 per share and revenue in the range of $442-$447 million. Considering that this is the 21st quarter in a row that the company has outperformed consensus estimates, I think that investors can hope for a little more.

With a somewhat consistent 30% year over year revenue growth and earnings that continue to accelerate, this stock is a screaming buy. One look at the weekly chart tells the story about the strength of this stock's performance and how management has effectively managed expectations for their investors.

Garmin Rocks Q4

Hundreds of articles are being written about Garmin's blowout quarter as a type so I won't spend a lot of time rehashing the financials, but the numbers and guidance does bring a smile to my face. Year over year, GRMN doubled revenue in Q4 and earnings increased by 70%.

What they made, they sold and the margins are holding up better than analysts expected. Their 2008 guidance sets expectations that revenue will exceed $4.5 billion and earnings per share will exceed $4.40. These are big numbers and the stock is technically set up to take off.

It was a screaming buy at $56.00 when I bought my shares, but it is still a buy today. I expect a double in this stock price in 2008 from here.

The consumer electronics market is alive and well for device makers that are willing to innovate and provide the "wow" factor. GRMN and AAPL both fit this category, but have been taken down with the rest of the sector.

Looking at the chart, the volume is there and buying above $74.00 could push this stock to $80.00 in the short term. A good base has been formed between $62 and $73 allowing this stock to efficiently move higher.

Adding with TIE Puts

The Golden Boy is in danger of losing his Fortune 400 Richest Person status as his fortune is at risk with TIE. The Golden Boy, of course, is Harold Simmons the Chairman of Titanium Metals. Today's RTI earnings data told the tale that confirmed to me that TIE will miss Q4 earnings, so I have added to my existing puts by doubling down on the position (Mar22.5).

I expect TIE to report $0.34/share when it reports sometime in the next 9 days, missing analyst expectations by $0.02 (which was already lowered significantly last quarter).

RTI exceeded their numbers for Q4 as reported by In-Play: 7:10AM RTI Intl Metals beats by $0.04, reports revs in-line; guides FY08 revs in-line (RTI) 54.23 : Reports Q4 (Dec) earnings of $1.08 per share, $0.04 better than the First Call consensus of $1.04; revenues rose 13.9% year/year to $163.8 mln vs the $164.1 mln consensus. Co issues in-line guidance for FY08, sees FY08 revs of $720-$752 mln vs. $731.70 mln consensus. For 2008, we expect mill product shipments to range between 17 - 18 mln pounds at an average realized price lower than that experienced in 2007. We also expect sales to increase 15 - 20% and operating income to increase 7 - 12% versus 2007."

The problem with this earnings release is that RTI's titanium pricing has a multi-quarter lag to TIE's titanium prices, providing little insight into TIE's numbers. However, with back channel chatter that TIE has completed its annual Long Term Pricing Agreements (LTA) with their major customers for 2008 at prices significantly below their 2007 prices and with the erosion of spot market pricing for sponge and scrap, last year's numbers will be unsustainable for 2008.

While the supply/demand imbalance problem may be short lived as the 787 finally ramps up in 2009, I think that 2008 will be the year that wasn't for TIE longs.

How do Options Daytraders Sleep?

This morning I spent a "day in the life" of an options daytrader. It was fairly obvious this morning (at least to me) that AAPL was not going to break back out like I thought yesterday afternoon.

I hate being wrong, so instead of selling near open to buy back lower, I decided to collar my AAPL long position with Feb puts. In this case, it was Feb125 puts due to expire tomorrow (effectively at 4 pm tonight). On top of that, the Feb puts were OTM.

I initially bought these puts this morning for $0.65 and watched the market and AAPL turn around for a moment and I quickly covered at $0.50. Not a good start.

I then noticed the absolute lack of buying in AAPL this morning so I started a position again at $0.53 about 30 minutes after I had previously covered. I ended up riding a downward slide of the stock below $125.00 when I covered in chunks between $0.90 and $1.35.

Overall, it was a great performance that will more than make up for any losses that I currently have today. The problem was that I was very, very lucky. It became apparent that I didn't have a comfort zone at all with this trade. I had no tool that would show greeks intraday. The puts were trading at about a $1.00 premium at open and slide to about $0.70 later in the morning before increased volatility after the stock broke $125 gave it a bump again. I kept thinking that the premium was going down to close to zero by the close.

In order for this trade to work (which was supposed to be a collar), the stock needed to go down and go down fast. It was like playing high stakes poker. At one point, I had 400 contracts in play and had to run to the bathroom and hurry so that I didn't miss any price action changes.

This was not investing and this is a reminder to myself that I need to avoid this stupidity in the future.

By the way, I bought more AAPL March long calls when the stock started to rebound at $124+. I have a little more time on that one and I think my downside is limited.

Better than poker. How do they sleep?

Adding Apple

The chart finally looks ready to break out. I added some more stock and calls today at close. It has a bullish pattern and, with some volume, should move higher. Added to the Mar35 calls and doubled my stock.

Happy Valentine's Day!

The charts are turning the corner and it is looking like investors are starting to dip their toe in the water again. Being that it is Valentine's Day, I finally decided to deploy a little more cash this morning.

First, I bought some TIE Mar22.5 puts. The stock is hitting its upper downward trend line and I am betting that it will provide some resistance in an otherwise upward moving market tape.

I also bought some APPY on this weakness. I am a little disappointed that the MM hasn't defended the stock price a little more than it appears, but the thesis is still intact and the price of under $6.00 will not be around long.

I also added some ANSS with earnings coming out next week.

Are we are Doomed to Repeat History?

Will history repeat itself? Since I began toying with the idea that the 2007 “slowdown” may look a lot like the 1990 recession for the stock market, I am still surprised by how the data is tracking. Let’s look at the data.

The S&P hit a peak in 1990 at 369.00 on July 17th. Then, just 13 trading days later, during the week of August 6th, the index was hit with the “death cross” when short term moving averages cross below longer term moving averages (in this case, I track the 10-week ema and the 40-week ema). You may recall that the Gulf War was hitting about this time and the markets were taking a queue from the oil pits. I mention this crossover event because the 80-week moving average was also broken this same week, suggesting a bear market.

After some initial attempts at a bottom (the 1st attempt at 306 was put in on August 23rd), it was finally reached on October 11th some 59 trading days after the top was put in. From top to bottom the index experienced a 20% loss. Following the official bottom being put in at 294.00, the market retested that bottom 13 trading days later on October 31st with an intraday low of 299.00.

So where are we with the current correction? Well the S&P index peaked on October 11th of last year at 1576.09. By the last week in December, it had similar moving average crossovers on the way to what is currently a bottom that was reached on January 23rd at 1270.05. Top to bottom, the index had experienced a 19.4% loss, slightly lower than the 20% experienced in 1990. It also took 68 trading days to reach a bottom as opposed to the 59 trading days mentioned above.

Is it pretty similar so far? It is to me. Now let’s look at a potential retest of the low. In 1990, the retest occurred 13 trading days later as described above while a current possible intraday low was reached for a 2008 retest on January 23rd (11 trading days after the bottom). Again, pretty darn close.

So if the theory holds (and this has always been a huge “if”), then the market will rise out of the ashes in 50 more trading days. In 1990, after some volatility (sound familiar?), the market stopped looking back on January 14, 1991 after hitting an intraday low of 309.00. That puts us on a course for the market to really pick up steam right around the 1st of May.

Hopefully, we will all enjoy this summer.

Disclaimer: Metrics have not been verified (I may be off by a trading day or two). This was a back-of-the-envelope exercise in which I am confident that the results will not materially change, but the details may be slightly off.

GRMN's Gap

A message board friend of mine tipped me off about an option put play for GRMN (thanks SP!). He saw this play from a free weekend newsletter put out by the Investment House Group. To paraphrase the newsletter, they were recommending building a put position using Mar65 strikes with a 41% profit target.

The technical reasoning for this play is that GRMN had a gap in their chart (most stocks revisit most of their gaps) that was tested last week by the stock and the gap failed to close. As a current investor, this play is very interesting to me. Someone has set up a trade, however, that is really not incompatible with my investment (see chart).

I say this because my time horizon is different and I actually would be happy if GRMN stayed here and built a base of support for a few more weeks before heading higher. The best moves are from a technical base. The newsletter also forced me to look at the chart more carefully and see that I should closely follow any breakdown below $62.00 and weigh whether I should lock in profits and buy back lower.

While I don't think that will happen, we should all have a worst case exit strategy. They report on 2/20/08 which may make this put strategy that the newsletter is suggesting problematic. If I where them, I would have bought the Feb puts expecting a move by Friday to avoid the earnings date and limit the premium loss. This is what makes a market.

I like my current GRMN position and expect a move higher in the next 30 days.

Watching the Banks

While the image is really about credit cards, I am sure that you see my point that it applys to banks in general. The banks are definitely being tested today. I find the opening tape to be interesting because the financials are being taken down, but not the entire tape. One look at the difference between the VIX and the VXN tells the tale (VIX is up, meaning volatility is huge on the S&P which is weighted heavily to the financials, while the VXN reflects volatility on the Nasdaq 100).

This brings me to the XLF. Since the credit crunch started, I have been tracking this ETF and occasionally have used the ETF as a hedge against my long positions. Today, it is being tested (See chart). It is down big, but may put in a reverse head and shoulders that could spell some positives for the market on this options expiration week. The conditions for this to happen are if the XLF holds $26.00 and reverses. It could also happen tomorrow as well, if it doesn’t happen today. If it fails, then it could test its lows.

I believe that what brought the market down originally (financials) will also lead us out from the bottom. That is why I am focused on the XLF.

P.S. As I was writing this, the market moved up suggesting a possible bounce here.

Love the Price Action

In the back of my mind, I can hear that CNBC Reporter named Dylan screaming "From the Nasdaq in Times Square, this is Fast Money...". Well today, the index has something to say.

While we still have an hour of trading left and anything can happen, today was a day when Mr. Market just said enough when it came to the technology-laden index. Mr. Market is saying enough of taking everything down on every sub-prime headline. Things are cheap and Mr. Market is looking outside the rope line for opportunities. Technology has put on a two day show since the CSCO debacle with the bulls saying enough!

The DJI and S&P are each down more than 0.75% while the Nasdaq is still positive (although barely). Not bad for a Friday when everyone is afraid to hold long positions over a weekend.

On the stock front:

Did anyone notice that Garmin received another upgrade this afternoon? This is the second upgrade in a week. The first was from Morgan Stanley (which they reiterated this week) and the second was this afternoon from DA Davidson. Morgan Stanley is saying that a valuation bounce through $80 is very possible. This is something that I will take a look at technically.

SIRO missed the Street's estimate on what I think was a very good quarter. The "one size fits all" Wall Street estimates model doesn't work well for thinly traded stocks. The revenue growth is there and the EPS improvement was also there (although not as high as some would like). Have they ever heard of lumpy earnings? It would seem not. I sold SIRO during the correction to raise cash but will re-enter when the timing looks good.

Speaking of lumpy, the ROCM results were just that. The CEO is sometimes a little less than inspiring, but he is basically saying that the private label sales that fell off a cliff is mostly an accounting thing (they booked the revenue late). I am willing to take this explanation because I am a long time investor in this category and not a trader. The conference call could provide a little color, however.

BioPharma is just getting killed. So much for defensive. APPY is way underwater and I am looking to add under $6.00 next week if the market tape gives us any life. Again, this is an investment so I am not looking to scalp something here.

That's all for now.

Closing the Deal

The bulls can close the deal on the perfect bottom and retest today (see image #1) or risk an ugly ending (see image #2). Yesterday's buying was great to watch. The sellers were not committed and the volume was good.

Bargain shopping was going on!

I am a little obsessed on finding a bottom here. The year has started out so poorly for the market (and especially me), that I am getting a little relucant with my trading. I seem to do best when I am fearless and not cautious.

I plan to do a post mordum on what went right and wrong for me over the last 90 days for future reference (maybe this weekend). I really had some good moments and some horrible ones that has cost me a couple hundred G's.


I am sticking with Apple as my main horse for now, but I am thinking about shorting TIE for a trade in the short term. The other long positions are solid and I just have to have major patience with them.

I am also looking for the next rocket sector to try to get in early, but the current tape is not conducive to this approach.

I want to put the last of my cash to work, but the bulls need to set up a positive next week this afternoon before I do.

Retest May be Today

The big boys may really be fighting the down tape for a reason. One look at the market indexes and you realize that the closing lows of each index was much higher than where they were at a certain point intraday on the day they bottomed. This is important in that many technical traders consider the closing price more significant technically than any intraday number.

That thought process means that the DJI basically needs to hold 12,000 or that the COMPQ needs to hold 2225. We are not far from that so fighting now instead of when the indexes get there may make more sense to someone.

While I am not an "invisible hand" conspiracy guy, I am also not naive enough to believe that trading floors don't talk to each other and telegraph their moves on purpose. What this means to me is that even though I have collared everything, the downside may be fairly limited if the market retests the closing lows today and it holds.

This is a slight change in thinking to the state of mind of where I was only an hour ago. I have been doing this a long time, but the emotional part of the process is now taking a toll.

I need to breathe.