Play the Downside 2Day?

[Arnold Kameda]

Did anyone play the downside today? Mark, did you do that with the Q's? I was anticipating the market moving down today after this week's great upside rally, but by the time I awoke (4:30pm) the market was already trending down and I thought it was too late to put in a bearish trade. Can't wait until daylight savings is over, 3:30am is just too early for me since I also have a day job. Hence I just watched the action and made a few conservative covered calls. I thought the market would just continue a mild slide downward, but I didn't expect to be as bearish as it was at the end of the day, especially the Nasdaq (which was down the most at 2.63%). The Q's were down just 1.88%, Mark's right about them been less volatile.

March 31, 2009 Monday - End of Quarter
Since this coming Monday is the end of the 1st Quarter for 2009, we may see more sell-off. Commentaries that I've been listening to have indicated that since it's the end of quarter, money managers may want to sell off profitable securities to lock-in their gains for their "End of Quarter Reports" that they are beholden to. So keep an eye out for this possibility on Monday.

Mark was mentioning he'd like to get into Covered Calls, which is a good conservative strategy for volatile markets. Attached is a exurb from a short training module on options that talks about covered calls for the Q's.  Please don't distribute this outside our group.

Keep up the diligent Trading (paper or real)!
Arn

[Mark Politi]

Aloha gang,

 

Arn, I'm getting up each day at 3:15 to catch the market's open so by the time it's afternoon here, I'm kinda bushed already.  Come 31 May, I'm going to REALLY miss living here after loving life in Paradise since 2002, but waking up in the same time zone as the market does have its advantages.  : )  

 

I stayed on the sidelines today still waiting for second day confirmation to the downside on the Q's.  We had a great turnover, however, it could be the result of a couple of things, expected profit taking and economic reports  

 

QUOTE FROM DEDICATED TRADER:  February personal income declined -0.2%, while spending increased 0.2%. Both were in stride with estimates. However, real disposable income declined 0.4%, which doesn't bode well for real disposable income. Real PCE, which is the main component in GDP forecasts, declined 0.2%.  END QUOTE

 

The Q's will be interesting to watch on Monday and they are soooooooo ripe to turn over to retrace or reverse after a two week nose-bleed climb up to resistance.  Of course a lot can happen between now and Monday and the way Obama comes out with his sunshine reports, it wouldn't surprise me if news hit again to extend this last leg of the "W" up even further.  Nonetheless, Darlene's rules are extremely valid absent news so if we do get a second day confirmation on Monday it will be time to at least consider a bearish trade.  If the market fails to give a second day confirmation to the downside, then I'll just wait it out.  The higher it rises, the more it could fall, and the puts will be cheaper to buy.

 

Keep in mind that you don't have to be in the market every single day.  Sometimes it makes more sense and "cents" to sit on the sidelines and just wait for the better entry points.  Also, if you've had a few too many bad trades, it's always a good idea to take a breather and review those trades to figure out what went wrong and make notes of what to do or not to do next time.  Then make a few paper trades to work out the kinks before getting back in with funded trades.

 

Hey Arn, mahalo for sharing the .pdf on the covered calls.   Good stuff my friend.  Nice thing about covered calls is you collect the premium up front.  Bob Eldridge resigned from his job as an Air Traffic Controller after two months of writing covered calls.  I read his book last year before I ever heard about Better Trades.  How ironic to find out he's associated with BT.  It's a really good read if anyone is interested.  I read it like a text book with sticky tabs and highlighter.  The book is entitled, "Making A Living In the Stock Market."  It's only 175 pages and an easy read.  I still refer to certain parts of the book from time to time.  Plus, he's a very decent human being.

 

Have an outstanding weekend, everyone.

 

Aloha for now,

Mark

[Al Clark]

Hey Arnold just got back in country. When is our next get together?

 

ac

[Arnold Kameda]

Hey AC!
Was worried about U. Thought you got kidnapped & disappeared; didn't know U were out escapading in other parts of the World! Forgot that U are also a travel agent as well as a Prof. How about next week Tue or Wed or the following week Tue, wed or Thr?
Arn

--
I am a "Pro-Active Investor". I personally and actively steward the financial assets provided to me by our Father and do not wish to rely on professional money managers or the government to support me in my twilight years.

Preserve our Earth and its resources; it is the only planet that we and our children and future generations can live on.

Arnold K. Kameda

[Al Clark]

I will look into scheduling as requested.

 

AC