Quicknote on Hedge, Wheel-O's and Cramer Dividends

I'm going to be a little busy this week, as such I'll be posting less. I will however continue to Spit-twitt new trades live.

We have something of a pullback, so I'll take a minute and explain how I am hedging for it. First, Friday ended much better here than it began, capped-off in the after-mkt by two lovely set-ups courtesy of Dr. Cramer. I got short HBAN up in the nethersphere (as high as 13.5% above the closing price) and I also got to unload my largest long, TQNT, also in the exosphere (6.325, greater than 9% above the closing price).

So while ravaged, bloody and bitten early Friday (somewhat), I got back to the cave with dignity and well, grace. More Kisses for Cramer. That guy that keeps on giving.

I just let go the Chinese hedge (FXP) and from here I will look to hold my (4) Chinese growth names (CYOU reloaded again today). If tomorrow is down further and there is no sign yet of a bid in the market, I'd prefer to reduce exposure and the number of longs, instead of re-loading another FXP-hedge.

I'm still holding TWM and SRS. Given the severe negative breadth on the day (volume however, is relatively low). I increased TWM intraday, but I expect to back-off the additional shares near the close (sooner if the market catches and keeps a bid). So while I'm closer to flat at the moment, in terms of exposure, I'll go into the night leaning around 3-1 net-long, depending.

If the market still lives, then by tomorrow we'll see something resembling strength. If we are ugly still tomorrow, I'll reduce exposure by shrinking the number of long positions (holding winners first); let the remaining hedges go then according to the action, exposure-long, etc.

And certainly, I don't mean to suggest that the market cannot begin trending downward now (I just need to see it and respond before giving up the easier job of buying leadership in a good market instead). Who can blame me for that?

In fact, my go-to voodoo guy is spinning perpendicular right now and that has me a little nervous (not kidding). The illustrated chart above comes from TX Tornado's post The Wheel. Apparently, price, time and areas of Da Vinci influence are are all in harmony (my description). (SPX 950 was tested on 6/5 at a time/price which was 90 degrees from the 3/6 square and previous resistance).

I don't know what any of that means. Frankly though, I don't need to. When the universe lines up its ducks and starts playing Wheel-O with the markets, I keep my guard up.

Let's see what transpires.

Total Position: 3-to-1 net-long (plays 1.5-to-1 net-long considering levered TWM and SRS), 66% invested

Currently Long (according to size): ASIA (increased today, 6.3%), SWN (reloaded today, 4.7%, WFT (reloaded today, 4.6%), RAX (4.3%), ARST (4.3%), LFT (3.9%), MRVL (3.6%), PEET (3.5%), CYOU (reloaded today, 3.1%), SNDA (2.9%), AU (2.9%), JDSU (2.1%)

Currently Short (according to size): TWM-long (13.7%; Russell2k Dbl-short), SRS-long (2.7%; US Real Est. Dbl-short)
(Note: inverse-ETFs TWM and SRS represent being dbl-short the respective indices)

Futures Accounts: no current position

Fuzzy Bear Trap? (quicknote on the new week)

Action is further negative so far today, following Friday's reversal lower, but there is nothing yet overly concerning in either market internals or the behavior in leadership stocks.

I wouldn't suggest we're good to reverse higher today and things could deteriorate further certainly, but I am not against adding-back to longs on the weakness. Volume is declining from Friday's pace (constructive) and neither market breadth, Up-to-Down volume ratios, numbers of new 52-wk lows, or really anything else I am seeing point to an imminent rout. Certainly, the ever-bear camp of SKF/FAZ/SRS, etc. is not getting a ton of relief just yet. Tomorrow is another day; further weakness would cause me to increase defense; one step at a time; we'll see.

Easy game ;)

As far as hedges, I shifted from SDS to TWM (as the Russell2k is weakest of the majors on the session).

Total Position: 2.18-to-1 net-long (plays 1.40-to-1 net-long considering levered TWM); 56% invested
(Note: inverse-ETF TWM represents being dbl-short the Russell2k index)

Currently Long (according to size): TQNT (re-increased today, 4.8%), ASIA (4.5%), SWN (4.5%), RAX (4.2%), WFT (4.2%), PEET (3.8%), ARST (3.4%), SNDA (reloaded, 3.1%), AU (reloaded, 3.1%), CYOU (reloaded, 3%)

Currently Short (according to size): TWM-long (new, 9.9%; Russell2k Dbl-short), ONXX (4%), MYGN (3.9%)

Futures Accounts: covered 20% short Jun NDX, ave. 1476.50; from 1495.75 ave Friday

Nicole and Dimed (out of currency shorts)

I'm in a semi-conscious state. Body aches flaring, nasal-drip flowing, delirious, sleep-deprived eyes waxing, wincing.

You know where this is going. In spite of physical drudgery, I'm free now from Euro-slaps and British Poundings. I'm camping happy.

Once again I slept (sort of) near my machine, watching over my currency shorts like a mother giraffe watches the runt. Talk about a brain drain - all that attention just to try to keep one ugly duckling from not afloating.

I'm fresh, I'm clean, I'm out of that hell and chomping at my psyche bit once more.

Now that I'm not so stuck I've released my jaws from this beast (I told you throughout it wasn't worth it, but I'm a foolish fighter sometimes; capable of attacking great whites...until it hurts). The primary goal of the futures accounts traded here is to push index futures on days where the action is either all-good or all-hell-breaking-loose. Frankly, I'm a better trader at that sort of thing and this currency smack is the latest reminder (I'm a better player than I am a gambler). If you see me Twitting trades in currencies, it had better be a daytrade, and going with the direction of that day's strong momentum. Otherwise I give you permission to rip the sickly, Linton-esque giraffe fuzzflesh from my bony backside and feed it to my stronger brethren. Let someone else make the overnight money!

Equities? Oh yeah, that's going well - what's so interesting about that? Yesterday was the beginning of the much-expected and logical pullback that we all considered so logical and likely. Too bad for you it was over before the day was through, eh?

If you get your opportunity now I suspect you'll wish you hadn't. Which is the same as saying that when this market lets you in easy the move higher is done.

I've studied this pain thing for some thousand years. I do my best to step over the dead bodies of my trading past and prosper now instead. I'll step over you, if you let me; and if I'm really jamming I can step over myself and still be home in time for supper. You are shutting off CNBC because it is inane and annoying. But I am listening to Trish Regan as I write, because she speaks so inversely eloquent I could kiss her all under. Kind of like the big lady that married the really really rich guy who was like one or two hundred years old. She had nothing but smiles for him I'm sure.

You know how the story ends. Okay not that story. No oily dog's going to take my breath away.

-Beast out

Total Position: 100% net-long; 48% invested

Currently Long (according to size): AU (5.5%), CYOU (5.1%), TQNT (new yesterday, 4.7%), ASIA (4.6%), SWN (4.6%), PZZA (4.4%), WFT (4.4%), RAX (4.3%), PEET (3.8%), SNDA (3.3%), NTAP (3.1%)

Currently Short (according to size): no current positions

Futures Accounts: no current position (re-shorted both Euro and BR Pound last night and covered on the ECB news/non-news which hit those markets early this morning)