I called it Testy Tuesday this morning and we certainly passed.
At 9:37 I said: "Holding 13,700 is a must for the Dow, 2,650 for the Nas and 1,510 for the S&P otherwise we go back to 1,505 and that’s a test we MUST NOT fail." and by 9:42 we were making bullish plays. At that time I gave the oil plan for the day: "Oil puts, hard to risk tomorrow’s inventory, the whole sector may turn up this afternoon if oil holds $79 Remember if you doubled down or rolled losses then you should be keeping razor thin stops to get yourself out even and thank God it worked. We can always use cash to reposition for the next round down but there’s always a Nigerian ready to kidnap on call!"
So we got out of what oil puts we could (others are pretty hopeless) and bought back our XLE callers at a huge loss (for them) as oil held $79, which I considered a bad sign (plus it's inventory day tomorrow and we're still in September, where they shorted us 12M barrels at the NYMEX).
By 10:44 we were bullish and I said: "VERY strong recovery which you have to respect on top of all that bad news. People are just determined to buy no matter what and that’s not something you want to get in front of. I said yesterday to keep an eye on YRCW for signs of an actual economic recovery – look at them now!"
You simply can't fight the market when it's this determined to go up. We've been chatting about our 1999 market stories and this has very much of that feel: We had the Y2K "bug" that was going to throw us back to the stone age on Jan 1st, there had been terrorist attacks (al-Qaeda) on our Embassies in Kenya and Tanzania, and oil had gone up from $15 to $20 and Asia was having a financial crisis that looked much like the one we're having now.
Despite all those concerns in 1999, we had decided to party like it was 1899 (we didn't have the 1999 song back then), just before the market crash of 1901 but they also had two good years of partying before the market slipped 46% in a 2-year correction, quite a bit worse than the 38% sell-off we had in 200-2002.
So we are officially switching off our brains and swimming upstream until we get eaten by a grizzly bear. We stopped out of calls on Monday and puts today and the Short-Term Virtual Portfolio is back to 73% cash as we get ready to deploy a little capital. Sure we might hedge – in fact, pretty much every position we have left is hedged, but we're going to get a little aggressive in technology as we look for signs that confirm some real rotation.
Maybe we'll even pick up a few builders. I'm looking at TOL March $20s at $3.10, which we can spread against 3/4 the Oct $20s if they fall down to $1 but hopefully we can get $1.50 for them. Why not? It's a party and everyone's invited! Let's just make sure we get past the EOQ mark-ups before we go too crazy…
|
Description |
Basis |
Open |
Sale Price |
Sold |
Gain/Loss |
% |
| 40 OCT 40.00 ABX CALL (ABXJH) | $ 5,010 | 9/19 | $ 7,590 | 9/24 | $ 2,580 | 52% |
| 20 OCT 55.00 AMGN CALL (YAAJK) | $ 2,410 | 9/12 | $ 3,310 | 9/25 | $ 900 | 37% |
| 10 OCT 45.00 BBY CALL (BBYJI) | $ 1,310 | 8/27 | $ 1,790 | 9/25 | $ 480 | 37% |
| 100 DEC 15.00 BEAS CALL (BUCLC) | $ 5,010 | 9/14 | $ 5,490 | 9/24 | $ 480 | 10% |
| 50 OCT 30.00 CAL PUT (CALVF) | $ 7,010 | 9/14 | $ 8,990 | 9/24 | $ 1,980 | 28% |
| 20 OCT 35.00 CHK CALL (CHKJG) | $ 1,610 | 9/12 | $ 1,790 | 9/25 | $ 180 | 11% |
| 20 OCT 60.00 CROX CALL (CQJJL) | $ 10,010 | 9/24 | $ 7,190 | 9/25 | $ (2,820) | -28% |
| 10 OCT 32.50 CSCO CALL (CYQJT) | $ 630 | 9/25 | $ 790 | 9/25 | $ 160 | 25% |
| 100 OCT 133.00 DIA CALL (DAWJC) | $ 40,510 | 9/12 | $ 56,990 | 9/25 | $ 16,480 | 41% |
| 300 OCT 138.00 DIA CALL (DAZJH) | $ 84,020 | 9/19 | $ 79,490 | 9/24 | $ (4,530) | -5% |
| 10 OCT 60.00 EDU CALL (EDUJL) | $ 3,430 | 8/29 | $ 1,790 | 9/25 | $ (1,640) | -48% |
| 20 OCT 105.00 FSLR CALL (QHBJA) | $ 9,510 | 9/17 | $ 31,490 | 9/24 | $ 21,980 | 231% |
| 40 JAN 30.00 GG CALL (GGAF) | $ 9,010 | 9/19 | $ 11,990 | 9/24 | $ 2,980 | 33% |
| 40 OCT 30.00 GG CALL (GGJF) | $ 4,010 | 9/19 | $ 5,990 | 9/24 | $ 1,980 | 49% |
| 5 NOV 52.50 GSK CALL (GSKKX) | $ 885 | 6/1 | $ 1,215 | 9/24 | $ 330 | 37% |
| 5 OCT 52.50 GSK CALL (GSKJX) | $ 1,010 | 8/27 | $ 865 | 9/24 | $ (145) | -14% |
| 20 NOV 80.00 IWM PUT (IOWWB) | $ 9,700 | 9/14 | $ 5,990 | 9/25 | $ (3,710) | -38% |
| 10 NOV 77.00 IWM PUT (IOWWY) | $ 2,860 | 9/14 | $ 1,990 | 9/25 | $ (870) | -30% |
| 10 OCT 20.00 KNOT CALL (BQCJD) | $ 2,010 | 4/4 | $ 1,990 | 9/24 | $ (20) | -1% |
| 10 OCT 135.00 MA PUT (MALVG) | $ 3,260 | 9/13 | $ 4,240 | 9/24 | $ 980 | 30% |
| 8000 METALLICA RESOURCES (MRB) | $ 30,410 | 5/23 | $ 36,790 | 9/24 | $ 6,380 | 21% |
| 500 Northern Dynasty Minerals Ltd. (NAK) | $ 5,135 | 8/22 | $ 5,990 | 9/24 | $ 855 | 17% |
| 50 OCT 30.00 SBUX CALL (SQXJF) | $ 1,010 | 7/19 | $ 490 | 9/25 | $ (520) | -52% |
| 10 JAN 140.00 SHLD CALL (YQHAW) | $ 27,010 | 9/10 | $ 28,990 | 9/24 | $ 1,980 | 7% |
| 20 OCT 135.00 SHLD CALL (KTQJX) | $ 10,770 | 6/3 | $ 6,990 | 9/24 | $ (3,780) | -35% |
| 25 OCT 70.00 VLO PUT (ZPYVN) | $ 4,710 | 9/19 | $ 6,490 | 9/25 | $ 1,780 | 38% |
| 5 OCT 135.00 WYNN PUT (UWYVV) | $ 3,150 | 9/12 | $ 1,190 | 9/24 | $ (1,960) | -62% |
| 15 OCT 135.00 WYNN PUT (UWYVV) | $ 6,460 | 9/12 | $ 3,590 | 9/24 | $ (2,870) | -44% |
| 10 JAN 105.00 X CALL (XAA) | $ 5,660 | 7/30 | $ 10,990 | 9/24 | $ 5,330 | 94% |
| 100 SEP 76.00 XLE CALL (HGHIX) | $ 2,010 | 9/21 | $ 2,490 | 9/25 | $ 480 | 24% |
| 200 SEP 76.00 XLE CALL (HGHIX) | $ 4,010 | 9/14 | $ 6,990 | 9/25 | $ 2,980 | 74% |
| 10 OCT 74.00 XLE CALL (XBTJV) | $ 2,060 | 9/14 | $ 3,090 | 9/24 | $ 1,030 | 50% |
| 10 SEP 76.00 XLE CALL (HGHIX) | $ 510 | 9/14 | $ 340 | 9/24 | $ (170) | -33% |
| 200 OCT 90.00 XOM PUT (XOMVR) | $ 30,010 | 9/19 | $ 38,990 | 9/25 | $ 8,980 | 30% |
| 30 OCT 85.00 XOM PUT (XOMVQ) | $ 100 | 9/12 | $ 2,090 | 9/25 | $ 1,990 | 1990% |
| 200 OCT 95.00 XOM CALL (XOMJS) | $ 15,010 | 9/25 | $ 18,990 | 9/25 | $ 3,980 | 27% |
| 120 OCT 85.00 XOM PUT (XOMVQ) | $ 19,930 | 9/12 | $ 7,790 | 9/25 | $ (12,140) | -61% |
