October’s Overbought Eight – Expiration Check-Up (Members Only)
by phil - October 15th, 2010 6:12 pm
Up and up the markets go, where they stop – only Ben knows!
We actually initiated the October 8 picks on Thurs, Sept 30th, when we had that crazy Dow spike to 10,950. As it was the last day of the month we got an instant winner on the NFLX play and some other good ones as we plunged to 10,700 that Monday. In between, when I wrote the post on Sunday, Oct 3rd, I said "I hate to go short."
We were still very bullish in our virtual portfolios (see September's Dozen, Turning $10K to $50K, Defending with Dividends, 9 Fabulous Dow Plays and the June 26th Buy List) since the June bottom (and we were early on that call too) but we felt is was time to start covering with some bearish plays as we completed our projected 12.5% run back 11,000. These 8 trade ideas were to get the ball rolling in October. Since then we have flown up to 11,062 on the Dow, slightly over our projected top, much the way 9,650 was slightly below our projected bottom in July. The rally still has not retraced enough to cause us to give up on our long-term longs so this is a BALANCING move on an expected pullback, not an overall long-term bearish posture – always be clear about that! We've been bullish since the beginning of July as this point it pays to diversify.
Like July, we can take advantage of the the spike out of our range to scale into positions and to roll and adjust the trades and, like July, we looked at some bullish covers along the way – just in case we are even earlier than we thought. I'm not going to get into the whole macro thing here – I did that all week but everything old is new again, as you can see from this chart:
I don't know how well you can see this but I copied the current rally and lined up the bottom with the Feb rally. It's hard to see because the movement is VIRTUALLY IDENTICAL. That's right, Lloyd is either too lazy or too cheap to even bother to change the Bots he uses to gooses…