In my article last night, I said,
"We should see some follow-throughs tomorrow morning, and then some fluctuations due to profit-taking, which will invite the some shorts back in, at least for a quick play."
That's pretty much what happened. The market was very strong in the morning, with some financials names pushing much higher. GS ended the day up +8.34%, while MS added another +8%. In the afternoon, the market dipped lower as profit-taking beckoned the shorts back in. Then, the market quickly regained its footing and ended basically flat. There were some losers in the financials too; for instance, HBS lost 12.73%. Techs were strong, led by GOOG +3.16% and AAPL +4.57%. PCLN, which had been essentially unaffected by the weak market environment thus far this year, fell 6.57% today, as competitor EXPE announced new promotions.
We locked profits early, and had a pretty good day:
March 11, 2009
11:26 | HappyTrading FCX ($34.80) Sold to Close FCXCF Mar 30 calls, at $5.25 +12%
11:18 | HappyTrading CME ($185.50) Sold to Close CMJCR Mar 190 calls, at $5.70 -23%
10:20 | HappyTrading CF ($68.00) Sold to Close CFCM Mar 65 calls, at $5.00 +52%
08:30 | HappyTrading FCX ($35.60) Sold to Close FCXCF Mar 30 calls, at $6.00 +28%
07:29 | HappyTrading CME ($198.00) Sold to Close CMJCR Mar 190 calls, at $12.00 +62%
We took most profits off of the table in the morning. As the market became volatile, we decided go mostly cash. Both FCX and CME still look strong. Depending on what the market conditions are like, we may go back in.
As the market ended little changed, we'll just take a quick look at SPX:
SPX added +1.76 points to close at 721.36. Its daily MAs slipped, but, the MACD went higher.
SPX managed to close in the green. But, it does seem like it is running out of steam. If it can hold above 710 (or, the 10-day MA) for most of the day tomorrow, it may be able to charge higher. Oil went lower today as inventories were high. This took away the energy sectors and slowed the market's sprint to a crawl. Nevertheless, the market needed a rest anyway. In this market, you have to take solid profits when you have them (at least partially), and, you cannot hurry back in. "Over-trading" is often a killer for traders. In a volatile market, it is very tempting to get out of one trade and jump into the next. But, sometimes the sideways volatility are precursors to big jumps. If you're caught on the wrong side, you can quickly wipe out your gains.
In this market, you might not need to trade everyday. The world around you may be swirling fast, but, you don't have to be. Stay centered and wait for the opportunities to come. I've been finding that focusing more on daily charts (or, even weekly charts) can be very helpful. The intraday charts will fluctuate quite a bit. You do need them to find good entry points, but, you don't have to focus on them every minute.
Trade Ideas
BIDU and SOHU from last night are working out well. ACH and CEO are slightly lower as commodity sectors sank with oil today.
GLD bounced a little bit today. Not necessarily a good re-entry point yet. But, if it gets above $90-$92 again, it should get interesting.
Agriculture stocks were very strong today. CF and MOS both have merger potentials and are both looking strong. We cashed out on the CF March 65 calls today, but, we may roll to April calls on a pullback.
PCLN's big drop today looked like people are cashing in on the recent gains. In this market, no one seems to want to hold gains for too long. This could have more room to fall tomorrow.
Good night and HappyTrading! ™
