Thursday, February 19, 2009

Prey to Play (or else, wake me up Monday)

I traded heavily into the Nasdaq-100 double-short (QID) in the final 20 minutes, adding, adding, adding and then unloading all but a chirpy-chunk at the close. Face it, the last hour was plain-vanilla ugly and although I re-positioned my re-positioning in the course of the day, that last hour more than made up for any troubles.

If this market is capable of breaking hard, then tomorrow and following-through into Monday is a good setup. Old school, in a bear market it is the option-exp. Friday's and especially the Monday's following where bulls have to grab their nads and pray - while bears grab other's nads and prey.

While I am not super confident we're on the brink of serious drama just now, I think EW measurements should be shelved for tomorrow and instead just follow the conviction of the internals. If they become severe again, with 4 to 5-1 negative breadth+ on strong volume, there should not be any reversal Friday (bear markets don't bottom on Friday's) and targets other than the clock on the wall are ill-productive (since it will close on or near the lows in that case). If we bounce instead, then sharpen your pencils and let me know how far we'll retrace - you guys are geniuses.

We'll talk more about how Monday might be shaping up later tomorrow. We'll probably be falling asleep with boredom, but maybe not. If you see a bloody tape, if bovine bellies are floating upside down in barrels, then I'll be extremely active here, suited up in 3-piece rubber woot suits, harpooned-scissors in hand and Che Greenspan chanters here behind me.

Oh yeah - Cheers to Proctor Cramer for sending us AEM. I'm going to lean and lean on this one as long as we keep below the 200-day pivot (can you believe his favorite gold stock is now under the 200-day, the day after he plugged-it (again) - anyone else smell a rat?!)

Position: currently 2.85-to-1 Net Short
...
Currently Short (according to size): QID-long (SP500 Dbl-short), XEC, AEM, STRA, BBT, VNO, SIVB, PNC, LOPE (looking to bail here; big earnings after-close), HST, SGY
(Note, I am currently long inverse-ETF QID, but this represents being dbl-short the NDX)
Currenty long (according to size): AVAV, ATHN, OTEX (thin)

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