Well the shorts worked out great today. The RUT was good for 7%, and the NDX was for 4.7%. I like to eat whoppers and we got one in the market today.

Yesterday I posted about selling out of the ETF’s, I didn’t exactly sell everything. I had a small QID position as well as a large SMN position. Both of those were sold today before the extra slide that happened into the close. SMN trade was good for around 14% and the QID did I think 4%.

I also sold my index fund shorts wrapping up the gain from today and will look to redeploy capital on green days. I’m still a believer of shorting the strength right now. I think there is potential for a 2 day small range day type bounce before breaking to new lows.

With that theory in mind, I picked up some Oct 155 AAPL calls and Oct 100 RIMM calls. Both of these stocks as well as the NDX which is where these stocks lay are all oversold on my custom indicators. I also bought some QCOR today.

Now its not just that the NDX and certain stocks are oversold. There are a very large percentage of stocks that are very oversold right now that 1-2 days of up will relieve the vast majority of them. The second thing why I think we will get that bounce (and its going to be small and short lived) is that once again VIX was trading outside 2 standard deviations again today. A third reason is that the stocks that are moving up in relation to this move like a EFU or SMN are way outside their top bollinger bands as well. The total market is extended on both ends here. This is why I wrapped up my short trade for the time being.

Plus, Lehman has something to say tomorrow. This should offer some clarity on to why the market thought Lehman Brothers should be down 45% in one day. This news coupled with the favorable reaction to both TXN and FDX afterhours could give the bounce I’m looking for. However, to borrow a popular phrase from a popular dumbass, “Make No Mistake,” this will be an opportunity to short.

Thanks for reading

Want to know when I post again? Subscribe to the StockRake feed: .