Well, that options hangover did happen, but it lasted the whole of about an hour. We were strong right out of the gate today, faded in the morning, but then proceeded to rally hard into the close. We have some big reports coming up tonight and tomorrow morning, so we've got a lot of cross-currents at play here. Today was one of those days where we see some performance anxiety setting in. Since the market has run so far and so fast, there is a lot of chasing going on in the desperate bid to gain long exposure, as there is significant fear of being left behind.
It's not my style to chase these kinds of moves. I'm perfectly content to wait for the stocks I want to pull back and offer up lower-risk entries. They usually come back, and if not, I missed the trade. So what? It's not like there aren't thousands of other stocks out there or anything. :-p It's also not my style to aggressively short this kind of strength, despite the large number of shorts on my watchlist and my strong desire to get some shorts. DFS is painful enough, thank you very much. :-p
Short-term bias: bearish (we've had a very powerful rally the past few days, but I believe resistance will kick in and drag us lower, as the big range between 875 and 950 remains intact on the $SPX for now and we are at the upper end of that range now)
Intermediate-term bias: bearish (I still think this correction will take us lower, perhaps to 800 on the $SPX and I don't think we're ready to power higher quite yet)
Long-term bias: bullish (I believe we put in meaningful, long-term bottoms in March, and would use the aforementioned correction to increase long exposure)
Pick updates:
The bulls continue to take the market higher, and I'm not going to get in their way. So, ALVR, BKC, BNI, CSX, DELL, FCX, MDR, PPG, RIG, and SGR proceed to melt higher without me. We'll see some weakness eventually in these names, which will present a lower-risk short entry in the shorts and will begin to set up lower-risk buying opportunities for the longs.
AIG and NOK continue to struggle. I still believe both present good shorts, but AIG is still very volatile.
DFS keeps dragging me higher, kicking and screaming. This is what happens when you make a plan with a stop loss and you don't take your stop loss when it gets hit. Basically, I screwed up, and am now looking for a pullback to allow me to escape the position with less pain than I would've had if I had just taken my original stop loss.
PALM didn't do much today. I still like it on the long side and it's still buyable with a tight stop.
Postions: long DFS August $12.50 puts, PALM November $12.50 calls, and $SPX index fund and UTX in 401k
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