I really don’t like days like this, or for that matter the last couple days. All action is at the open and then chop, chop, chop. I bought TNA in the last half-hour of the day to take advantage of a perceived run-up…got in at 40.04 and got out at 40.34…it took about 45 seconds. I could have stayed longer and made another 20 cents, but Options expiration is all politics, psychology and luck….no technical setups to be had. Tomorrow may be even crazier….no economic news scheduled. So take profits, and small losses, quickly!
According to the Stock Trader’s Almanac, November Option Expiration has been up 4 straight years and 6 out of the last 7. And remember last year? The Dow was up 494 points or 6.5%….now wouldn’t that be something!
The Advance/Decline issues and volumes were very negative today, even though the markets did recover off their lows. The small caps were hardest hit as the Russell had 1630 declining issues with a negative volume of over -11:1. Those are some bearish numbers and on higher volume than yesterday.
Tomorrow may be a dull day, even though it is OpEx. It’s Friday, no eco data, no big earnings reports….I guess the options players will be closing positions just to get on their way.
Here’s a crazy one….Yesterday it was announced that this property, built in 1975 at a cost of $75 million, with a replacement cost today of $750 million, was sold at auction: Silverdome. The price $583,000. Yes, 583 thousand dollars. If this is the state of commercial property we’re all in big trouble. I just don’t understand why SRS isn’t doing better. Maybe it doesn’t know yet. 
Some sort of magical moment I guess when the Dow crosses 10,000. But why? Is the economy really that good? Who is going to buy all the products and services produced by all the companies when 10% of the population is out of work? Besides, it has crossed that threshold 50 times in the past 10 years. Anything to talk about on TV I guess.
You have got to admit the market was strong for the bulls today. I took advantage with the ES e-mini futures. But with that last power push up near the end of the day, I closed my futures positions and started to accumulate TZA for overnite and looking for a dip tomorrow…..and/or Friday. October options expiration day has been a down day for 4 years in a row and 5 out of the last 6. And don’t forget the 22nd anniversary of the Great Crash of 1987 is coming up next week….something’s got to give. 
Futures are pretty tame, so far, this evening, but Asian markets have been goosed up 1 to 2%. We’ll see if it continues through Europe and back into the U.S.
Now for some interesting reading, especially for you teetotalers out there, Why Nondrinkers May Be More Depressed.
Well the plan for holding BGZ overnite worked great….sort of. I exited half the position in the premarket for a nice 8% just “knowing” the other half will double that in today’s crash. I mean Asia and Europe dumped….we would do that also, wouldn’t we? Duh! No! The markets gapped down at the open and trickled up the rest of the day. I let go of the other half of BGZ for about a 3% gain….still nice, but not what I was envisioning in the morning. 
That is one of those psychological hurdles I’m still wrestling with. Rather than be happy with a trade that provided me a profit, I mope about what I could of had if I had closed the entire position near the top. A variation of that is when I close a position that has hit my profit target and then watch it continue up. The burn keeps getting hotter as it continues to go up. AXL is a good example of that this week. It actually doubled after I got out. But I digress. You don’t need my personal demons.
After letting go of BGZ, I played some scalps with TZA and BGU, yeah the opposite of BGZ. I got in and out of both with some cash in hand and then finished the day grabbing some more TZA to hold overnite. I’m really testing fate now…I’m 3 for 3 on my overnite holdings and going for 4. My chances are decreasing, but I don’t know if China is done dumping. If not, we go down. If yes, well I’ll be correcting myself in the morning.
Another big tell in the morning will be Initial Jobless Claims. Remember last week when they were a bit worse than expected? Yes the day ended up, but only after a bunch of down. Oh, and of course, it’s the day before OpEx. Wild is in the cards!
Happy Trading 
Although the markets didn’t do much but consolidate some more last week, I kept the pressure on to the short side and it worked out fairly well…the markets did close lower finally for the week. I opened a position in BGZ near the close on Friday, and so far this evening, the futures are cooperating 
With earnings season for the 2nd quarter pretty much over and a fairly light economic report week, we do have to contend with options expiration. Well I guess we do have PPI reports to look at and the weekly initial jobless claims report, so the week may get a little wild. Remember, options expiration is designed to take as much money from as many people as money managers can.
I’m still looking for that correction because I still think the markets are overbought. Of course I’ve been thinking that for a month now. But, I’m adding in a high bullish sentiment into the mix which indicates a bearish tendency to the market.
For some interesting reading, head over to Minyanville and read: Why the “Economic Recovery” Is a Trap.
Happy trading y’all….and keep those futures heading down. 
I worked around the office today and didn’t trade except for one futures short play ESU9 from 917.50 and covered at 913.50….4 points, can’t complain. The day started out strong, but soon began to waiver. When the trends conflict, it’s best to lay low and not trade aggressively or actively. Price action was all over the place and each of my indicators were pointing in different directions. And I’ve also learned not to be too aggressive on Thursday and Friday of OpEx week.
Some of the things that are conflicting to me: Philly Fed Report indicated a slowing in the decrease of manufacturing. It’s still decreasing, but just not as fast. This is good news? Continuing unemployment claims were down almost 150,000 people. Sounds good, but what if all those people have lost their benefits and removed from the rolls? And then this “supposedly” good news can’t keep the market up. Looking shaky to me.
RIMM’s report today was taken as bad news and really sunk the stock after hours…but eventually recovered. I wonder how the markets take it on Opex Friday? I may not do much tomorrow, but if I do, it will probably be getting ready for a downside move next week.
Looks like the worse the news the better the market performs. WMT did not have great earnings, first time unemployment claims increased, producer prices increased 3 times more than expected, and the car industry did not really give us good news announcing dealership closings. But did the markets care? Hell no…up, up, and away!
My underwater QLD turned a bright green during the day…several times. It was a definite “buy the dips, sell the rips” kind of day….getting in and getting out frequently with small profits. I used the 2x and 3x ETFs. I was left holding small positions in QLD and BGU overnight. And remember, Friday is the last day to trade May options. Options expiration day….ooooh….fun
It’s just starting to feel toppy and overbought….isn’t it? So, near the end of the day, I lightened up on the longs and got into a couple shorts through QID and some QQQQ puts. GOOG had a good earnings report, but so did GS a few days ago, and after the initial pop, it started to come back. I’ll have to see how things are looking in the morning. But even if the markets do not rollover on Friday, they should be getting close.
Early Asian returns are showing a follow-through to the U.S. run-up and futures are staying close to breakeven…for now. Tomorrow’s action will depend a lot on what C and GE have to say….and don’t forget, it’s OpEx Friday…last year the markets were up 1.8% and the year before that they were up 1.2%
