What fun this is!
Yesterday, in the morning post, I set our goal for the Dow at 11,340, which was the 5% move off the 10,800 line. That lined up right around with 1,200 on the S&P which, as you can see from Dave Fry’s chart, we popped through on that wild closing run but then failed again on that wild closing drop in a very, very silly last hour of trading.
Fortunately, at 3:50 in Member Chat, I put up 3 hedges using TZA, SDS and UUP but they were light hedges that are fully offset by bullish balances like shorting the RIMM Oct $26 puts for $1.30 or shorting EWG Oct $15 puts for .35 to cover the cost of the spread. That way, if the markets keep going up – the insurance is free. If the markets go down…. Well, you’d better REALLY want to be long on EWG or RIMM but, when we are "Cashy and Cautious" we’re always looking for some long-term opportunities so these protections are like killing two birds with one stone as they protect our bullish bets AND set us up for a new, cheap entry.
When you wake up in the morning and you’re not sure if you want the market to go up or down because you have some exciting gains to look forward to in either direction – you are well-balanced! At 2:06 we shorted TLT aggressively at $113 (still a good trade), at 1:53 we added very aggressive trade ideas on the Russell with the IWM Sept $70/71 bull call spread at .60, selling the $70 puts for $1, a net .40 credit which makes $1.40 (350%) if the Russell can hit 710 or more at tomorrow’s close. We also picked the TNA Sept $42/45 bull call spread at $1.45, selling RIMM (earnings tonight!) Sept $27.50 puts for $1 for a net .45 entry. In both of those trades, we will, of course, stop out if the Russell fails to hold yesterday’s goal of 700 and that’s all going to depend on whether or not the Dollar holds 77 today.
As noted above, our goal for Thursday it to take and hold S&P 1,200. We don’t need a big day, we just need consolidation up around these levels to prove we’re in the right place. The Financials are still our biggest…