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Daily Stock Market Equity and Options Trading Commentary

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Saturday, February 28, 2009

Party Like it's 1996!

With the S&P closing the week at the lowest close since December 1996, I had to cover a lot of my short positions. I think we could go lower still maybe to S&P 600 because this market is being totally irrational. Once analysts are out saying S&P 600 it is almost a sure shot it will get there. I have about 30% of my portfolio short right now, and I have made the decision that for every 10 points lower we go on the S&P I am covering 10% of my overall short positions. Of course with my long portfolio sinking and my short portfolio growing (assuming we go lower) 30% could become 50% and so on. If we do hit S&P 600 I will cover every short position I have and buy back every PUT I have in place. I don't think we'll get that low, but all it takes is a couple analysts to get it another 135 points lower.

It feels like a rally is due, but I have been saying that for 5 trading days now. I am sure we will get a rally soon enough- we are just way too oversold! It is too easy shorting the market! I bought SDS Thursday at less than $88 a share, and flipped it after hours Friday for $99 a share. That was the easiest 12.5% I have made in this market (trading securities that is; with options I have made bigger gains easier). I am by no means bullish going forward, but we have been too oversold and the market will need to adjust on a short-term basis!


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