A Huge Market Move

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August 11, 2008

Well the indexes continued to move higher and significantly so today for my two favorites – the NDX and RUT. 1.5% for NDX and 4.5% for the RUT. The RUT / small caps continue to exhibit strength over other indexes. I didn’t participate in it though today because I thought we might selloff. Wrong.

The things that worked for me today were the restaurant stocks RT and CAKE had 10% and 8% in those trades today. I want to buy these back on any down days. If the market sells of any of this Russia news/oil bounce, then that will be an opportunity to buy it. I’m pretty sure between the oversold nature of oil, the Russia/Georgia conflict, and it being an options expiration week, that volatility will contract after a big move that happened all last week and today.

I also sold my LLNW which was good for 4% early this morning.

I still hold SNTS, MATK, and the two buys I made this morning: CALM, and HOGS (which were part of my restaurant/meat/dairy post).

I went short at the close today in the NDX and RUT with a medium position which is somewhere between heavy and lite for those that need it spelled out. This trade will be short lived as I want to buy the weakness I’m planning on happening at some point this week hopefully sooner rather than later.

You got the word that the US Dollar was going to rally last week right here. Yep on this blog. One week before Fast Money and CNBC jumped on the story.

Kohls/KSS is up 22% since I called it last week. In fact, every stock on that damn list ripped. Karen Finerman mentioned KSS tonight as being an unbelievable mover. You got it here last week. Thanks for the mention Karen – I wish. These stocks have been kicking tech’s ass in terms of performance.

Like the Fast Money crew, I was selling into the move, but a buy on weakness is my stance. Of course they might not run the way they are running in the last two weeks. They may moderate and walk up rather than run. Take the big hits, and look to build positions to the long side because the trend is good and the market will be higher for the next few weeks.


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  • Cole

    Yes, I agree with the long strategy. Also, I see what you mean about how the market will ignore over-sold conditions in a breakout situation, sometimes for days, so this is something to watch out for.

    The other thing to watch out for if you trade options is to try to buy near the lows of the day for your position, and make sure you ride your winners all the way through, and cut your losses fairly quickly. I hate when a exit a trade to early, and I know you have spoken of this. I am working on the discipline though.

    It will be interesting to see how things play out short term, especially given some of the resistance we are up against, and the Russain-Georgian conflict.

    My plan is to hold my SPY SEP 126 calls though any weakness we see in the next few days, and then look for a long entry into the SPY 132 calls. If the market just continues to bull up, then I will have to cut my losses and re-group for a chance to get long.

    I am forecasting though that some of the charts could break back down around SPY 127 before getting the legs to move back up. I guess we will just have to see.

    Great calls on the restraunts and retailers btw!! Trading for a living is fantastic if you can take the time to learn the right opportunities.

  • Cole

    Yes, I agree with the long strategy. Also, I see what you mean about how the market will ignore over-sold conditions in a breakout situation, sometimes for days, so this is something to watch out for.

    The other thing to watch out for if you trade options is to try to buy near the lows of the day for your position, and make sure you ride your winners all the way through, and cut your losses fairly quickly. I hate when a exit a trade to early, and I know you have spoken of this. I am working on the discipline though.

    It will be interesting to see how things play out short term, especially given some of the resistance we are up against, and the Russain-Georgian conflict.

    My plan is to hold my SPY SEP 126 calls though any weakness we see in the next few days, and then look for a long entry into the SPY 132 calls. If the market just continues to bull up, then I will have to cut my losses and re-group for a chance to get long.

    I am forecasting though that some of the charts could break back down around SPY 127 before getting the legs to move back up. I guess we will just have to see.

    Great calls on the restraunts and retailers btw!! Trading for a living is fantastic if you can take the time to learn the right opportunities.

  • Guest

    Jumped out of those SEP 126 puts on the weakness this morning and repositioned long into the SEP SPY 132′s near the lows of the day. The Market is just too strong right now to be short. Let’s see if this rally can regain its legs.

  • Cole

    Jumped out of those SEP 126 puts on the weakness this morning and repositioned long into the SEP SPY 132′s near the lows of the day. The Market is just too strong right now to be short. Let’s see if this rally can regain its legs.

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