Weekly Recap

We have been fighting the storm all week and I had great success holding the water back until Friday. With fingers in the dike and sandbags across the levee, I was feeling pretty good and started thinking that the storm had passed on Wednesday night. Unfortunately, we were just briefly within the eye of the hurricane with another encounter with the eyewall to occur.


Enough of the metaphor. Monday started out well. With the market in decline, and my portfolio mostly in cash, I dipped my toe into the water and added to my EGY and APPY long positions. At the same time I also added to my AMZN puts. APPY and EGY are defensive stocks that had moved below my buy point and Monday seemed like a good opportunity to get some more, however I remained convinced that the downturn would continue and adding to the short side was still safe.


Tuesday gave me some daytrading opportunities. I both bought and sold AMZN puts and AAPL calls when each stock gyrated wildly with the market. From a traders perspective, the changing intraday trends were easy to see on Tuesday. I ended the day where I started, with respect to my portfolio positions, but had a little more cash on-hand from the scalps scored during the day.


Wednesday morning started out ugly for the tape again. I started to unload some of my AMZN puts for a good profit thinking that this down move was getting long in the teeth. The oscillators were suggesting a near term bottom (either on Wednesday or Thursday) and it was getting too risky to stay short. I was also noticing throughout the day that some sectors (and some stocks) were bottoming sooner than others.


I have posted on numerous occasions that I was looking for another cheap entry for GRMN. Wednesday gave me that opportunity when an analyst downgraded the stock in a negative tape. When the stock went down intraday by more than 12%, I nibbled at some Feb75 calls. Later in the day, I also nibbled at some AAPL calls (thinking that the oversold condition was finally here) to begin a trade that attempts to play off MacWorld next week and Apple's earnings shortly after.


Wednesday saw that bounce and Thursday saw some follow through. Things were looking up although Thursday seemed touch and go for a while. I actually got head faked intraday and collared my AAPL call position with cheap January AAPL puts, only to have to cover this position for a small loss when the market turned up again. My GRMN position, however, more than made up for this mistake and portfolio looked great for the week.


I should have just sold everything then and there and taken a 3-day weekend, after being up 5.8% YTD within my trading account. Instead, I pressed the issue and bought another round of AAPL calls near close on Thursday to begin to set up the MacWorld trade, expecting a positive Friday from Apple even if the tape was soft.


I didn't expect the AMEX news and the negativity associated with it. I also kept my calls instead of covering at open thinking that the market was not yet ready to retest the low it just set on Wednesday. The levee broke and water from the storm went everywhere.


The good news is that I haven't yet lost the house. The portfolio is just under about where we started the week. The AAPL trade may still turn out. If not, then it was another major learning experience about greed.