Monday, August 24, 2009

MOnday a.m.

I don't capitulate much (as my husband would tell you), but I dumped my UNG.

The light blue shading is where I thought the bottom was--"How many more sellers could there be?" I asked naively! I guess everyone who thought that they found the bottom when I did.

It's been a while since I've had options expire worthless, that's more a function of my not dabbling in options than my prowess in them. I had EDZ calls and PRA puts expire. Fortunately, I had a monster win (4x) in RX calls and a nice win (2x) in SSL calls. I sold 1/2 of my SSL Sep 40 calls. I'll keep the rest, though I realize it may be a volatile ride.

I did quite a bit of flipping through charts. It seems to me that there is an airpocket of volume in the S&P. I was looking at it against the Nikkei:

Also, there seems to be some long term distribution patterns in some of the bio-pharma stalwarts.

But I'm seeing some interesting things, too. MF is one. I have a Jan 7.5 call position.

If you are wondering what types of charts these are, they are Renko. I find these charts helpful in getting rid of some of the noise. I will never be able to figure out Point and Figure charts...the element of time is important to me. I prefer to see Renko with the volume bars. To be fhair., there is likely a heck of alotof overhang on this stock....but the price action will tell.

Many are commenting on the disconnect between the market and 'fundamentals'. I'd offer this that "hell hath no fury like a trapped short (or an underperformig fund manager)". It's constructive to think about a few things about this disconnect:

  • Money has to go somewhere
  • Short covering can provide the most delicious of all rallies
  • Fear of missing a move is one of the most powerful (and dangerous) of emotions
  • Volume is low, so intraday action driven by momentum traders can explain much
A rally is a rally. I've not participated fully. But, I didn't lose any money in the down draft. As individual money stewards, we are not subject to relative performance ratings. Where losing 'less' money than others in a bear market is okay for them, it is not okay for this money steward. Making prudent entries into volatile markets or choosing to stay on the sidelines is fine. If you've lost 50% of your money, you need a 100% rebound to be even.

I'm really liking the term "money steward". It removes lots of the connotations that go with the label investor or trader or speculator.