Courtesy of Phil’s Stock World
What a wild week we are having!
We dumped our shorts as planned yesterday morning, getting a very nice dip at the open and my 9:36 Alert to Members was even titled “Take Those Short Profits!” and our upside targets were set (as they were in the morning post) at: Dow 10,087, S&P 1,096, Nasdaq 2,173, NYSE 7,204 and Russell 623. Where did we finish? Dow 1,081, S&P 1,092, Nasdaq 2,165, NYSE 7,182 and Russell 613 – so a bit short of all of our targets but not bad considering we were opening 167 points below that on the Dow so perhaps I can be forgiven for a 6-point miss…
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Even our free PSW Report readers would have done great just following the trades we had in last week’s Wrap-Up (Report subscribers get to read our articles without the 48-hour delay). We had GS Nov $210s shorted at .87, now .35 (up 60%), CERN short $85 calls at $4.15, now $3.10 (up 25%), ISRG Apr puts and calls sold for $39.20, now $36 (up 8%), PARD at $6.87, now $7.35 (up 7%), NTRI at $18.60, now $19.15 (up 3%)…
We had other trades that are still in progress. ICE notably burned us so far, but we rolled them up and shorted them some more yesterday (now $106.56). We’ve had a wild mix of short and long trades this week as we TRY to get more bullish on the markets but yesterday’s run-up had us reloading Thursday’s successful short plays as that set made 20% or more across the board in less than a day. Note on David Fry’s chart, that we bounced off resistance but a test of the 50 dma on the S&P still seems likely.
We have plenty of long plays we like if we cross our breakout levels but our goal is to keep the emotions out of the trade and just play our levels. That’s why we pretty much sat on our hands through most of yesterday’s trading. We took a long position on SRS as we feel the REITs are way overpriced and we added more bullish TBT plays as that is our second favorite long-term play. We did go long on TASR and short on COF (bad idea!) and POT (good idea!) and a BMY hedged play caught our eye at 2:30 but at 3pm we realoaded short plays on the DIA, FSLR, MS, AAPL and longs on SRS, TZA and CAL as the run seemed way overdone.
At 3:22 we looked at 8 earnings plays and we’ll see how they work out in the Weekend Wrap-Up. Thank goodness we hedged AMZN and it will be interesting to see how the 5 Jan $100s at $4.80 /4 Nov $95 at $4.55 spread will work out. I very much regret not taking our short AMZN play off the table in the $100KP and that is going to require some serious adjusting but, if we don’t break over our watch levels today – I don’t think I’m going to be worried about the spike up with 4 weeks to go until option expiration day.
AMZN did indeed have amazing numbers and this $100 stock is well on its way to earning $2 a share this year – Booya! In fact, if all goes well next year, AMZN thinks they may make $2.50 per now $107 share. Wow! That’s an ROI of 2.3%, almost as much as you can get from a 12-month CD in the bank. As I ranted last Monday, the concept of Risk has gone completely out of this market – as evidenced by the VIX dropping to 20 this week despite the fact that this has been the most volatilie week in the market in quite some time as we went from 9,940 on the Dow Monday to 10,100 Tuesday, back to 10,000 Wednesday, down to 9,940 again on Wednesday and then opening at 9,920 on Thursday morning before running all the way back to 10,100. And we used to make fun of the Chinese markets!
