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Thursday, March 7, 2013

Positioned to win BIG, or lose BIG


I can pretty much write a repeat of yesterday's post. It was again, very boring. SPY never went red today, and the SPX range was a whopping 4 points. Despite threatening to break out on top of this current break out, SPY $155 held. We have now experienced two back to back 'inside days'.


A few things, actually:

On the bullish side, the XLF was very strong, up 0.8%, the EUR/USD was very strong as well, up over 1% (right at fib entrancement levels, mind you). All indices again closed green, up about 0.25% or so. Volatility also took another slap, VXX finished down 2%. GS again ended off the highs, but still up by a very healthy 1.6%.

Bearish: The IYT was down 0.8% earlier in the day before recovering somewhat. The rising wedge pattern noted in the SPY below typically resolves to the downside - a first target would be $153. We have also had 2 straight closes outside of the upper Bollinger band, which historically speaking, is followed by a moderate decline within the next 1-2 weeks. We have also had 5 straight green days on the SPY.


Closed Trades:
SKUL +1%, BLOX scratch, DDD +2.6%, MTG +5.8%, BX +0.6% = total of 10%, very nice.

Open Trades:
SPXU -2.9% from $29.90 ave, BX flat from $19.04 short, CJES +.25% from $22.90 short,  VXX -1% from $22.1 ave, INTC -1.4% from 20.60 ave short, GS -1.9% from 153.62 ave short, LNG -1.9% from 21.85 ave short. About 9% loss on paper.

Ugh, I am doing well with my positions, but I really, really need a red SPY day. Just one red close. The SPY has been up 3% in 5 trading days, green every single day. I am loaded up fairly heavily short... a few are long term (1-3 month holds - like LNG and CJES), but about half of them, I'd like to get out soon (like SPXU). If I could cut those losses in half, I'd consider that a win - after all, my closed trades are +30% this month. A 5-10% loss would not be the end of the world.


I will hold my short positions until we see a mini sell-off. If we do not see that by Monday, I will likely cover half of my shorts (namely SPXU, INTC, and GS). This has been a tough market, as we are climbing the wall of worry. More and more headlines are talking about the all time highs, and DOW 20,000, so the contrarian in me wants to be even more short - but I am trying to be patient.

Til tomorrow, take care.


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