Reentrenchment of the bears took place today. If I’m wrong, we have one more week of selling. If I’m right, bears got suckered today.

I’m back from my vacation and I was buying like a banshee this morning. Was considering taking gains on some individual stock trades like CHINA, TCK, RINO this morning when they were there around 10am. However, I have a thesis that I’m a holder till Friday. Therefore I left everything on. These oversold trades always have carryover from the previous week (which was down) and then have a lag before they perform. Which is why I’ve said on this blog (too myself) LET THE TRADE DEVELOP.

I’m glad I was at Disney today, because I likely would have been shaken out of much of what I own.

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Many stocks are showing up on my lists. I picked out some based on volume as well as previous big runner small/mid caps.

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So here I am at Epcot, and I had just gotten off the Mission to Space “intense” version simulator and am not feeling well at all. Simulator rides tend to make me nauseous. I went on the “less intense” version about 30 minutes before this one and it was fine, but wow the “more intense” version is barf buster.

I didn’t throw up, but it was touch and go. Meanwhile I see its 3:20pm when I checked my phone (Dow -120) and I knew I had start making trades because I can’t wait till the last minute when trading from my blackberry. I use iStockManager, which I love btw. However, I started wrestling with this sickness at the wrong time. As we walk to Mexico, I’m checking quotes of the things I planned to buy, never looking up, and navigating the crowds by looking at the feet in front of me (Dow -80). We make it to Mexico, 3:30pm (NDX positive! Shit I better act!), and I ask my wife to get me some chips and guac as I sit on the steps to the entrance still checking my phone.

I’m eating the chips and guac, while trying to buy SPY calls, Dow is down probably 40-50 pts at this point, and I know that hammer is coming I gotta get these CALLS! However, the new symbols for options is proving a problem on iStockManager for placing an order. In the old version I can navigate through the option chain and pick what I want. However, in the new version I have to enter the underlying symbol, select the option, and it doesn’t say in the order form that I’m set to buy the option, its set to buy the SPY. At this point I don’t even check quotes, I know my weekly signal will be on for a long eod.

So as I chow down these chips trying to get some salt into my system, I’m on the phone with Ameritrade, trying to get a broker on the phone. Then it starts to rain. The crowds rush Mexico. Its packed inside.

If you have ever been, its a pyramid, with tile floors, its really loud inside. I go outside and find a sliver of dryness against the pyramid walls. Standing there on the phone with the broker, still sick, eating a plate of guac and chips perched on the pyramid walls, we try to get an order of SPY calls going. For some reason the dude was slow, as my back catches the rain.

Finally the order is ready to process, wrong account. Ok switch accounts, and process same order. Oh you want market? Yeh GIVE ME THE MARKET the spread is friggin two cents go go go (In my head)! Finally done. Now from here I know that I can order way faster on the phone, and I just decide to forget any more option trades and buy ETFs from the phone.

In the rain, down to the last of my guac and the last few chips, I buy SSO, QLD, TNA, UYM, FAS, BRF and went long over at Rydex 2x funds NDX, RUT – had to call in that order too. UWM (was purchased actually before I left room in the morning around 10:30 with the Dow down about -90 as a test position to make sure my phone would work with the PIN/password method). Some of these positions were bought multiple times for different accounts, like SSO, and UWM.

It was frantic to say the least. My wife and I went on the boat ride inside and while “cruising” I executed my last trade; a little more TNA. I reach back put my arm around my wife as if I was piloting this puppy not caring if anyone is in the row behind me (there wasn’t – we were in the front).

I’ve had my fair share of times rushing home to make a trade with 5 minutes to go, as I’m sure everyone has, but this was probably the wildest 30 minute trading experience of my life.

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I won today, but it doesn’t matter.

What matters is good trading behavior.

Yesterday I pointed out some important items that proved fruitful for today’s move see charts from yesterday’s post. Let me first say I did not think we would see a -268 Dow print today. I was expecting what we got in the morning which was -80/-100. That is where I sold my USO puts, FAZ, SRS, SPY puts, V calls and CSCO puts.

I screwed up the V calls because I sold them at market early in the day and got the shittiest price ever for them. Shouldn’t have even been a loss – just dumb. It was small though as the position was small.

CSCO – I just decided to eat the loss. If I held all day which was the right plan, I would have lost very little, instead it was a 67% loss on these puts. Position was larger than V, but way smaller than any of my short trades. I trade larger with the trend and take small shots at counter trend.

USO – puts would have been a 82% gain, but I got 2.2%. So dumb.

I have somewhat of an excuse – I’m traveling.

The SPY 60min chart was so money yesterday…

The daily charts are oversold again, I don’t know what to expect tomorrow. Either way we are most likely to setup now another buy at the close Friday into Monday. Probably tomorrow we gap lower and fill the gap to consolidate at the bottom of the deep candle made today. Tuesday or Wednesday next week should be higher maybe even half into today’s candle by then. Similar pattern as last Friday and move higher to test the 50 and 21 dma’s. That is the bullish scenario.

The bearish scenario would require a relief rally tomorrow. Enough of a move to relieve daily oversold conditions from yesterday and remove weekly oversold conditions. This would setup a nice down move next week.

IMO, the bullish scenario is more probable and not because most people don’t think it will happen.

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The morning started out right and tight. I woke up late about 9:45, the overnight shorts started to work and I pressed my positions with SDS calls, SSO puts, IWM puts, TZA, and DTO/USO puts. Everything except the crude shorts were profitable when I cashed out around 10:30ish (BZQ, FAZ, etc). The crude related shorts were small losses. I also sold out of VLO – I literally have no patience or tolerance for swing loss drawdown. VLO was barely down and these June calls were getting crushed.

Then I took off and had to get my drivers license reinstated, long story. I’m there and see the indexes are off the lows and when I get home they are even further off the lows. My thesis for today was that we close near the lows we touched early in the day. So I jumped my signals (they were flashing anyways) and went back into SRS, SRS calls, SPY puts, FAZ then the market broke.

Later in the day I decided to trade some setups and some jumping of signals. It was a bad move and contributed to over trading. My morning profits eventually whittled away. Mostly due to the losing trades being larger positions. Well I’m talking about my trading accounts here. If I factor in the gain over at Rydex it was a profitable more towards break even.

At the close I sold my 2x index shorts for 1% each in both the RUT and SPX. I had no NDX position and am heavy in cash.

At the close I’m long FAZ, SPY puts, CSCO puts which will get crushed, V calls which hopefully even the situation out (smaller position compared to CSCO), and USO puts.

All my signals/charts are saying short on USO, so I’m just following along. Dennis Gartman on Fast Money supported the trade as he has a similar trade on.

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I started out long PBR calls, VLO calls, DRYS, IYZ calls, CSCO calls. I unwound my IYZ call position for a small gain roughly 6% it was a little risky this trade due to the lack of volume. However, it was a near guarantee trade due to how bashed up it was.

I unwound my CSCO calls. Reason is posted in market charts. I think we are in for a 1 day down move. I want to buy the same CSCO calls on a red day. These calls were very sensitive to slightest moves of the stock and I just wanted to take it when it was there. I don’t want to get married to long trades here. Small potatoes gain, but still good. 7% in the March 22s, 5% in the March 23s, and 4% loss in March 24s. One note is the size of the position was considerably heavier in the 22s, then 23s, and 24s position was 1/10th the size of the 22s.

DRYS gained less than 1% on the overnight hold. I had high hopes for a gap up, but I’m done with the shippers, they are acting so crapily.

Based on some of these charts I’m taking a shot on the short side. I went heavy short the 2x funds, bought FAZ, SRS calls, and bought BZQ.

What looks interesting:
SWHC, RGR have held both recently and dumped them before and during the dump. Possibly setting up.

PHM interesting potential bo.

MBT and BX. These 5 stocks are based on a certain stock scan I run. I’m looking for turn ups off deep lows so you see well defined descending trendlines, and the potential for them to break is there. I’m only interested in these stocks if the market trend turns back up.

Looking at other crap too, but gotta get this post out because its 1:20 am already.

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The bounce move up is not over, but tomorrow may look sketchy. What I’m looking for is a possible gap up and then a selloff.

Often when these oversold bounces occur you get a nice bounce day (today), then you get an equal move or consolidating move of today’s move. However, after either move there is a slight trickle upwards. We didn’t move up enough today and as a collective, many stocks are still in oversold zone. A big “however,” is that there was some major relief to these conditions and if (lets just say) 70% of stocks relieved the condition that sets up this down move day to re-entrench bears and screw over longs that bought today’s close. Easy example:
Market is down tomorrow, and dicks around Wednesday, then roars back upward Thursday when CSCO reports after the bell on Wednesday to new intra-week highs. Disclosure: I am long CSCO calls.

Now what I’m looking for by the close of this week is a “potential” change back to trend up. I think its highly unlikely, but its completely possible. Less people expect it, the fear has shown its hand already. Let me show you in chart form what I mean. See SPX charts..

What I Did Today

I sold my TYH, EWZ 31%/20%, and VALE calls for very nice over the weekend gain of 44% on first half and 50% on the other. I also sold my TYH for gains, and bought intraday on the morning open PCX calls (sold for 18%), and throughout the morning QQQQ calls, IWM calls, DRYS, VLO calls, and PBR calls. I forgot that I sold out of both my PBR and VLO last week. I would have totally forgotten about it if not for a few tweets I noticed of other traders mentioning them talking their book.

What I’m Looking For Tomorrow

I would be a buyer of some of the same sectors if we see red days Tuesday and Wednesday. Mining – steel, gold, silver, coal.

Retail stocks seem to be hanging in there. Oil stocks also play into what I mentioned above. Semiconductors – we may have had a major fakeout to the downside in this sector, its too early to tell, but if this sector starts to rise I would want to be a buyer. Again if this sector starts to tick up, this could be used as the reason we see either a test of or new highs in the market indexes. Something I can’t rule out yet.

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