In on Shorts

As good as today's bounce looked I am still think this market is guilty until proven innocent. I locked in a small gain today, way too early, by closing out of my TNA shares around $47.40. I flipped to the shorts on SPX options, by buying puts at 1330. As long as the SPX stays below 1330 for the remainder of the week I will make a gain. I do not see much Europe is willing to do and technical charts shows there can be more downside to come. I feel better to short here than to go long so that is why I changed position, however I do not have much in the market after selling out of my TNA.

Ahead I am looking for commodities stocks and specifically ones related to silver, but for now will hold cash awaiting for a further drop to get in cheaper. My focus is on AG and EXK.

Good luck tomorrow.

Dow Going Down

A quick update, I closed out of my SDS trade at $16.71 early today around 10. I wish I had stuck around for the additional fall that came up to noon time where the SDS hit around $16.90. So do I think the market has more to fall or is this a flush? In simple terms this was a fast move down and a bounce should be expected. I am not always right and most of the time am wrong so I will stick with stock plays instead of going into options.

I have flipped and gone on the buy side with TNA. I have the commodities such as gold and silver going up which should mean risk on. Furthermore TNA has been flagged oversold by my favorite indicators form friendly THE FLY.

Good luck to all.

Down Day

I positioned myself too early by going short on SDS on Monday morning. An aggressive bet that is setting up to be a small gain. Yet I have not closed out the position so until then its still not a real gain. I may keep my shorts over the weekend, but considering how this market is affected by government interventions I may play it safe and close out my position.

On another note today the market panned out in favor of the shorts. This is probably the best day I have seen for shorts in two years. There simply was no bid on the tape and it want down just like a water slide. Nothing steep so no wash out but yet it was continuing down. This is dread awful due in part by reality of how the global economy growth is slowing.

Its amazing to so how many inverse short etfs have gained so much today.

SKF 46.25 +1.93‎ (4.35%‎) 
TZA 20.82 +1.39 (7.15%)
TYP 11.19 +0.83 (8.01%)

BGZ 23.15 +1.48 (6.83%)
MWN 25.37 +1.75 (7.43%)

It is very tempting to want to get into trades inverse ETFs and vise-versa with all this tremendous daily gains, but in truth these are terrible vehicles to invest in. Why? The funds are based on daily changes and in general the daily market does not move +/2% such as today:

S&P 500

1,325.51

-30.18

(-2.23%)

The gains I can achieve in one day by correctly timing the daily changes are like buying lottery tickets. The odds are not in my favor either. That is why I now do my best to avoid trading in these funds unless I trade in and out of them within the same day.

Good luck tomorrow.

A quick update on my position: I closed out all my FCX position with in the call options, but left 20 shares on the table. I profited about $300 for the overall trade but really did not want to get out of the stock. I had sold calls that expired on Friday and rather buying them back for a small gain I left them out and during the final hour the stock finally started pulling up. FCX has been creating a bottom the past week and even on Friday the barely +1% gain was very weak compare to other commodity stocks.

The performance of FCX for the past week leads me to believe we are actually in for some more downside in the near future. I hope I am wrong but as I screen through several hundred stocks today I have noticed that a lot of them are near overbought rating.

I am too tempted to get into the market again come Monday, but I have to hold my ground and see what unfolds. With Greek elections over the weekend, Monday can't come any sooner. I have no strong picks to go long other than ABX. ABX has been lagging a lot in relation to gold mining stocks. The overall gold miners seem be hitting near overbought hence even now I am hesitant to go long. If come Monday the market shoots up from positive news I will search for shorts but if the market cracks I will wait and see.

Lost while going short

So on monday I went in with my shorts and today I closed out with over -$4,000 lost. I can not even describe how stupid I feel about this trade. I went short on CMG options call spread right when the market started spiraling down on Monday but thats when shit hit the fan and market popped. I had told myself to maintain my losses to a minimum but due to small volume of CMG, averaging 550k shares/day, I had a lot of difficulty buying back my options for a lost. In the end I go home with more lose this month than what I gain in all of May. Back to stocks shares only.

I am long in FCX for the weekend at 33.80. I believe we will pop on Monday before anything else. Wednesday was a solid up day and the past two days have been decent consolidation. I am looking for some upward gains on commodities and resources.

Good Luck to all on Monday.

Reactive and Proactive

Yesterday ECB decided to keep interest rates unchanged, even though they know there is a problem with Greece and Spain's balance sheets. Today Fed's chairman Bernanke shows reluctance to provide more momentary stimulus to the US economy based on the fact that it has not deteriorated. However the Chinese overnight came in and lower their interest rates by 25 basis points to 6.31 at a time where the global economies are very fragile. The Chinese taking action before the first world economies? Say it ain't so.

There has to be something within China's numbers that has made their government concern and willing to take action, but everyone knows Europe is in trouble and America's economic growth has slowed than why not the US and Europe take action?

What I do not get is that ECB and the Fed know that the economy at present time is not better off than where it was last year and they are still reluctant to take any course of action to do anything. The mentality of wait and see before taking any actions is exactly how America got itself into trouble in 2008. Bernanke ignored the warning signs then and when it was too late the Fed had to take dramatic steps to saving the US economy.

Since 2008 it has been the extra spending provided my the world's governments that has held the global economy from the brink of collapse. The only reason why stocks go up this pass few days is the hope for more stimulus to support the economy. No action taken at the moment will only led to devastating consequences later.

If inflation is a fear for the governments then consider which is better; deflation? Stop reacting to the situation and start being proactive.

Are we really in Cross Roads or More of the Same

In 2008 when the markets started to go lower I remember the feeling of excitement and great opportunities created for me. I invested in companies such as Citi Group and MF Global. The share values back then for Citi Group I remember very vividly was at $27. I had over a thousand shares and within one day the stock turned into $21. I left a lost at $23 and from that day on I never got back to break even in all my days investing in the market. (Note the Citi Group share values were before 10:1 reverse split. The stock stabilized around $3 when the reverse split occurred.)

When Obama went into office he was able to pass a stimulus program that would boost America's economy. That was sometime in February 2009. Right before the "so call" most important congress vote for a stimulus bill the stock market had already fallen from its peak. I remember reading and hearing about the news everyday and night about what the stimulus bill would do for the economy, but with all the optimism and hopium for a "necessary" stimulus once the bill was passed the markets plunged. The markets continue to plunge for the next year. The rest is history but it has left mental and emotions scares on me for life.

In less than two weeks Greece with have an election that is now called the election that will seal the fate of Europe. There is hope from everyone that all would be well after this vote. G-20 meeting a day after the vote. Such importance leds me to believe we are about to head lower in the markets.

I see this as a full repeat of 2008-09 because we haven't changed. Simply to put it what ever happens in Greece vote will not change the underlining problem, debt. Rather going into a rant and being negative I simply just want to put out my position in the present market. I am anticipating on shorting the indexes sometime before the vote to be ready for a big hit to the downside. Of course I can be totally wrong hence I need to determine my risks before I enter a trade.

The simple fact is we can go either way here. The Fed could possibly save the day by expressing QE 3 or they could fold their hands and see how Europe unfolds. This is my biggest concern for being a bear, but if I manage my risk properly I should be safe. I will report back next week on my outcome.

Falling of a Cliff

At the start of today's trading I was anxious to get out of my long AG. Little did I know gold, silver, and miners would mostly go up A LOT on what is the biggest down day for stocks in 2012 to date. AG ended the day with +6.74% at $14.73. I was out of the stock at $14.00. Missed out on the leg up, but scored a bit on selling call option spreads in CMG and PCLN. All in all I had a decent day and recovered all my loses of last week in one stupid NDX trade. I am far from recovering all my losts for the year and now is not a time to buy into the market with so many negative news around the world and unknowns as to what if any interventions in Europe.

The miners seem to continue on a solid upward swing but with today's significant gains on such a devastating down day on Wall Street I am somewhat hesitant to go long in them. Yet over the weekend I will screen through stocks that I see opportunity.

On a side note the VIX ended today at 26.66 which is still much lower from its peaks in 2008-09 and 2011 down days on wall street. If by Monday there is no change in sentiment I will lean toward shorting the general market through my favorite and less loved index options.