Weekly Wrap-Up

Oh great, I lost the weekly wrap-up!

I was having trouble this weekend and it just isn’t there so I’m just going to say it wasn’t a great week but we called it early on so that was fine with us!  We lost the nice V that we were looking for in last week’s wrap-up but by Wednesday I decided we were just too darn bearish in light of what I consider to be decent earnings and guidance, especially by the multinationals.

That didn’t stop us from being cautious into the weekend but we opened a lot of new positions and we are pretty bullish in our virtual portfolios, not following our covers lower but, on the other hand, not removing them either.  Are we done going down?  We’ll find out next week but Cramer said not to buy tech so we are betting on a tech rally to lead us out of this mess – not just because Jim’s been way off his game since Thanksgiving but because the stars really are lined up for a SOX-led Nasdaq rally.

We still need oil to behave itself but the sub-prime issue is reaching it’s crescendo and we’ll see what kind of mood Asia is in next week, certainly they have some catching up to do to the downside.  Our S&P is down 9.3% for the year and we’ve already tested the 10% line and passed that one so I’m more looking forward to an upside test of 1,350, which is a real 10% line off the highs of 1,500 (throwing out the spikes).  If we can punch through that, we’re going to be in a buying mood but, as with last week, we’re going to let the market tell us what to do and not try to move the markets all by ourselves.

It was a very rough week for our portfolis as we did our best to hang on through the 500-point drop.  We moved to more than 1/2 cash across the board because, despite my persistent bullishness, we’re ready to bet negative if my levels don’t hold up:

Our Short-Term Virtual Portfolio was (as is usual in a downturn) our star, gaining 12% for the week as our DIA index puts made most excellent protection for the week.  We cut back to "just" 370 DIA puts over the weekend and hopefully we’ll have reason to cut back further in the week ahead but they serve to protect our bullish positions very well, which is important as our Feb covers deteriorate in value and no longer provide the protection they used to.

The Long-Term Virtual Portfolio suffered from a collapse in long-term volatility as our leaps lost a lot of value and the virtual portfolio lost 5% on the week, finishing up 32% for the year with 17 positions open and 25 covered.  As rough as our week was, it was a far rougher week for our callers and we still have plenty of cash to deploy once we are more confident we are really seeing some bargains.

Our $10,000 Virtual Portfolio stands at $22,838, down $399 for the week and we have an aggressive position on SNDK as well as NDAQ as we take a shot at our $25,000 goal for the month but either way we’re going to be shutting down this virtual portfolio on Friday as our $10KP players are ready to graduate to our new $25,000 portflio and our $25KP players already had what most people consider a good year in just one month!

$45,030 is our current total in the $25,000 Virtual Portfolio, down $690 for the week but still up 80% since its inception on 1/22.  We are well covered on our remaining positions and sitting on some cash but we will be moving the open positions to the STP and starting a brand new $25KP on Friday – the fastest we’ve ever done that!

The Bargain Basement Virtual Portfolio gained 1% on the week as we committed a little more capital on our bottom-fishing expedition.  Also started on 1/21, the BBP is up just shy of 10% for the month.  This is a longer-term virtual portfolio with very low levels of activity but on a shorter time frame than the LTP.

Stocks are still up 26% for the year and we are back in our MRBs as they hit our buy price again at $4.80 and we finally picked up the MUs we’ve had our ehe on but we’re still 2/3 cash and looking for some good puts to sell.

Our Complex Spreads Virtual Portfolio held up well, gaining 2% on the week, which is as well as can possibly be expected for a virtual portfolio that is almost entirely Apple and Google.  If not for their little turnaround at the end of the week, this one would have been ugly and we’re not out of the woods yet but I chanced both of those positions naked into the weekend as we had more STP put protection than we needed covering the other virtual portfolios.

So it wasn’t a great week but it wasn’t a disaster and we have cash and things are cheaper – this is how we’re supposed to be playing the markets, ride out the rough patches and be ready to sieze the opportunities as the present themselves.  As I said on Friday, I am excited about the markets – I love the panic that’s putting so many great stocks on sale and I’m excited about the year ahead.  Now if only I can get the rest of the investment community to agree with me, we could have a nice little rally on our hands!

We took a lot of winners off the table, closing 69 positions with a 97% average gain but the gain on cash was just 37% as it always distorts our numbers when we have a lot of callers that get wiped out.  Still it was mission accomplished as we cashed about 20% of our positions, moving us to more than 1/2 cash overall, effectively ready for anything in the week ahead – and that’s a very good thing as it’s an expiration week where anything often can and does happen!