Week review

Market, the start of the correction?

1. For the week, Nasdaq lost 5.9%, Dow dropped 4.2% and S&P 500 fell 4.4%. Most of them are from Tuesday's big and sudden drop.
2. I think this is the start of the correction, the beginning, not the ending of it. I expect another 5-15% in the next few months, bottom is summer time.
3. As I said in last week's Market Trend section, there are too many risks not priced in the market, and this week, people started to price these risks in.
4. There was a worry about black Monday, which caused the sell off again on Friday. If you check the history about Oct.19, 1987, the black Monday as we know it, there is a sudden 4% drop the previous Wed., before the black Monday. This time, we have a sudden drop on Tuesday. Lot of similarity between now and then. So another big drop can't be discounted.

PM and Uranium dropped hard:

1. GDX dropped from 41.83 to 37.80 this week, 10% drop. ^HUI fell from 357 to 323, 10%. That's just the index. I think this is due to the gain in PM stocks, and people start to protect profit, just like in any big sell off, PM goes with the market, not against the market, initially. Last May and June, we had the same behavior, I learned this time.
2. AEM, IAG, SSRI, PAAS, SLW, GG, AUY, GRS, all the PM stocks I monitored dropped like a rock. Here goes the hedge against market drop by PM shares.
3. FRG, URZ,EMU and CCJ lost more then 10%, some cases, 20%. There is no place to hide.

The actions this week:

1. I did great this week, one of my best weeks. Not because of I knew this is coming, but because my quick action on Tuesday to liquidate.
2. I sold almost all the positions on Tuesday, including PM shares, and add short ETFs and QQQQ options on Tuesday, great move.
3. I sold rest of the PM and uranium shares on Wednesday.
4. I added QID and SDS on Thursday and again on Friday.

RIMM's price movement:

1. It's down to 136 from 140 a week ago.
2. This is mainly due to the upgrade on Monday, which pushed the price from 140 to 147. Actually, one comment on this blog said the peak for RIMM is 147. I hope you caught a big fish!!!
3. RIMM dropped 5 to 136 on Friday. Puts premium jumped in front of the Monday news release.
4. I think RIMM will catch the market and drop big next few weeks.

What's next:

1. I'm looking for another 5% drop for the market. So I'll view any strength and rally as selling opportunity, not buying opportunity.
2. And there is a small chance we indeed have a black Monday (larger than 5% drop). If it does happen, then we may enter a full recession.
3. And I will add PM shares if there are way oversold. Now it's not there yet.
4. So mainly ultra short ETFs, plus QQQQ puts and RIMM puts.
5. Will monitor and manage my risky RIMM puts, hopefully it will turn around just like my QID and QQQQ puts.