Next week 7/30-8/3

After last week's 4.9% drop in S&P500, and 1% of these in the last 30 minutes of trading on Friday, I expect a weak open on Monday, even a Black Monday (5% drop or more) is possible. But a 1% drop at some point of the trading on Monday is very likely. For next week, here is my plan (don't do this for your trade, it's very risky plan, and you may lose all):

1. My indicators are all strong buy here. So I'll trade based on these.
2. If the S&P500 opens lower, but stay above 1448(around 200MA), then I'll add a small size of call positions and SSO. I think this is the most likely case.
3. If the S&P breaks 1448, but above 1420, then I'll add a medium size of call positions. This is the second likely case.
4. If S&P breaks 1420, but above 1366(400MA), I'll add all in with calls gradually. I doubt this one, giving the extreme oversold conditions, but what do I know?
5. If S&P breaks 1366(400MA), I think I'll use margin to add calls. Maybe not, no need to borrow to trade.
6. If S&P breaks 1300 and lower, I'll sit there watching and crying.
7. On the other hand, when there is a bounce, when S&P close to 1490-1500, that's the area I'll unload all calls and SSO.
8. Considering we're off 100 points in 7 trading days. The 50MA is 1520, so bounce back to 1490-1500 is likely.
9. Also, buying some OTM puts is not a bad idea, in case we head straight down to hell. But these money should be considering gone, so be small.

Some of the indicators:

1. VIX, new high in 4 years. The VIX option is another tradeable way to play this market, buy Aug puts. Again a very risky play, I rather using SPY or IWM options.
2. NYSE new highs and new lows: 7:222.
3. Nasdaq new higs and new lows:16:167.
4. RSI(14) is 34. Not too bad for bears, still room to go.

There is alway tomorrow

This market is killing me. I thought I got good deal by buying the calls at bottom yesterday, and I didn't sell them for profit early today. Now I'm under the water, big time; and I added more calls today, not at the best price, to be sure, because I didn't see the big one per cent down in the last 30 minutes.

1. I have no idea what's going to happen on Monday, most likely gap down again.
2. And I have to take that as a short term bottom. If there is some big news related to credit crunch come out this weekend, I'm dead.
3. And I worried about this the last 7 to 8 months, when it finally comes, I'm fighting at the opposite side!
4. Enough for me.

Tomorrow's plan

1. If market opens lower, and heads to triple digits low in Dow within the first 30 minutes, I'll add more ultra ETFs (2x) to trade the idea that we'll have a decent bounce.
2. If the market opens flat or higher, and heads to a triple digit high in Dow within the first hour, I'll remove my calls and the SSO.
3. But if the bounce is due to good GDP number, then I may wait a while. Anyway, a very strong bounce (+2%) won't be good for bulls, keep this in mind.
4. I think we may have a decent bounce tomorrow, and early next week to recover most of today's loss, and then we'll retest the lows.
5. But this is crazy time, anything can happen. So use your brain and react to the market well, don't fix on one or two ideas. Open to anything.

Very lucky, very

Today market had a mini crash, at one point, Dow was down 450. At close, Dow down 311 to close at 13473, Nasdaq down 49 to close at 2599 and S&P500 down 35 to closed at 1482. I tried my best, didn't buy on bottom and sell on top, but that's OK. I recorded my day trades on http://simpleportfolio.blogspot.com/.

1. I thought we'll have another big up day today since AAPL and BIDU was on fire AH yesterday.


2. I was very lucky that I sold my calls yesterday, this morning, the market dropped from the beginning.


3. I was too afraid of the recent sell offs, thought we'd bounce back. This was a mistake.


4. Still, I started to add the puts after I watched the market for a while. I added QQQQ puts, then SPY puts and QQQQ puts again.


5. Since the market tried several rallies during the day, I was scared, lowered my limit order to sell these puts, otherwise, I could make a killing. Still, I got 40% on QQQQ puts and 14% on the SPY puts.


6. And I sat through some violent times when my SPY puts was 10% under water! So I was not that bad.


7. When market started to tank, I sold these puts, and set limit order to buy calls. And I got them!!! Hopefully we'll have a bounce.


8. I also added SSO late, but the price was not that good, I think the market maker screwed us, the price tanked AH, with SPY up AH. I don't know what's going on.


9. Now all my indicators show me a strong buy, that's what I did.


10. VIX was as high as 23.3 during the day, it closed at 20.74, up 15%. Today it's even stronger than Feb.27th, in VIX term.


11. And ISEE closed at 84, below 100. It's even stronger than Feb.27th.


12. The way market was closed (Dow was down 311, 140 off low; Nasdaq down 49, 33 points off low), I think the shorts are covering.


13. This market is short term oversold. We'll see a bounce soon.


14. Within two to three weeks, I see the market to test these lows set today. It may very well break these and we head lower.


15. But now, I'll only focus on short term. All my plays are very risky, I need to take profit when I got one.


16. And most of my funds are in cash, it's where it should be.

Lucky day

Today I was really lucky. The SPY, IWM calls and SSO I bought yesterday was very profitable when market opened, but I became greedy, think this maybe the big day for me to cash in. Then the market turned and Dow went from up 100 to down 40 points! I just wanted to cut these losses!

1. Remember my MDY calls on Monday, it was profitable at the open, then went down, still profitable, I didn't sell. I did the same thing again!
2. I didn't cut losses, hoping for a bounce, and just one hour before the market closed, I got the chance again, this time I took it and sold all my positions for a small profit. Now I'm all cash again.
3. I don't care if the market was oversold, or AAPL's earning, just want to be able to sleep one good night.
4. After the market closed, AAPL blew away the estimate again. And the stock took off again. So did BIDU. Looks like we'll have a great open again tomorrow.
5. On the other end, housing number was bad, CDO and subprime issues are getting worse by day. We may have a full blown credit crisis, just like 1998. If that indeed happens, I see at least 10-15% correction in S&P500.
6. But short term, we'll still likely to see a bounce. I'll be careful to use small positions if I want to chase it.
7. Over a few weeks, we may see if the end of this bull market is here.
8. After next week, with major earnings out, I think we'll likely to enter a correction phase of this bull market.
9. I'll do more day trade if my indicators give me signals.
10. And even with these signals, use them quickly, don't turn a trade into an investment.
11. As a trader, it's very hard to know what the news will be; and the charts can tell me different trades based on my view--bullish or bearish.
12. As a trader, it's better to know how to react than to predict. I think the trader who can react to the market moving events by making the right moves after facts, is a successful trader.
13. I need to work hard to make myself to be a trader who knows how to react.
14. I need to remove the element of analysis to be right, to be perfect, to be able to pick a top or bottom.
15. I need to reduce the risks if I'm not sure about the market by sitting on cash.
16. Since last Wednesday, I was lucky enough to be able to act correctly in most of my trades, and as a result, I made some money back. Keep it up!
17. VIX rose recently, indicating more volatile market ahead of us, it's a market for trader, not investor.

Down 2%

Today is the day I waited for a long time, S&P500 down 2%. Too bad I was pretty much in cash, and I was caught by the market holding two call options in IWM and MDY. And the indicators I developed recently gave me sell signals. I acted on my signals.

1. Sold MDY and IWM calls at losses. Both of them close to 43%.
2. Bought SPY, IWM puts, once there was a little bounce, I bought another set of SPY puts, and DIA puts. Bought DXD.
3. I set limited order to sell them. And all were triggered during the day when market accelerated the selling near the close. Too bad I left lot of money on the table.
4. Since my indicators switched to buy towards the end, I bought SPY calls and SSO, just before the close. Even though I didn't sell the puts at the high of the day, I did buy the calls and SSO close to the lows. So it's not too bad.
5. Let's see if the market can produce a bounce tomorrow, and I need to sell them tomorrow. My lessons on MDY and IWM, I could sell them at a small profit at Monday's open, I didn't. And I could sell them at a small loss before yesterday's close, and I didn't. Today I took the pain to sell them.
6. The market sold off hard today, all sectors were down, and it's short term oversold. I expect more down side in the future, but short term, a bounce is in order. Let's see if I can get it.
7. One thing new today, all the leading stocks got killed today, these "hot" stocks like AAPL, RIMM, GOOG,BIDU and AMZN. These are signs there are more to come.
8. After hour, AMZN got good earning, after 20% in AH, let's see if it can lift the market. But AMZN is not at the same league as AAPL and GOOG. And tomorrow we'll have AAPL earning. If there are some bulls left standing, they'll use these news to lift the market.
9. I think the big correction(10%+) is still ahead of us, maybe not in July or August, maybe in Sept. or Oct., since recent market actions are still very strong. That's why I'm playing two sides of the market now. Hopefully I won't get caught again.

A weaker market under the mask

Today on paper, we had a great market, Dow up 92 and S&P500 up 7, Nasdaq only up 0.1%, but it's worse than that, both my IWM and MDY calls went down hard at the end of the day. This tells me something.

1. It looks like the market is again showed weakness. Just like a few weeks back, in late June.
2. So I expect a pullback near term, just like late June, if not bigger.
3. Earnings will sure put more fire on the move, we should break the range (S&P500 1530-1554) soon, as early as tomorrow to the down side.
4. So my action should take the calls out today, and I didn't. But don't let one day mistake ruins my judgement.
5. This is very important, if I was wrong, just correct the mistake by selling the positions.
6. After that, I can decide what to do next, currently I'm leaning to short again.

Edit:

I checked, the last time we had a IWM down and S&P up, was in May, and finally the IWM and MDY caught up with SPY higher. So this is still a possibility. If this is not the end of this bull run, we'll have another push higher to new highs.

Next week

1. Need to monitor my positions daily.
2. Continue to develop my indicators and wait for them to trigger before I take trades.
3. These indicators are not 100% right, but the odds are in my favor if I trade when the indicators give me a buy or sell signal.
4. Watch how market reacts to news.

Beginner's luck

Today the market behaved much like Wed., headed down. This time it's due to GOOG and CAT's earning miss. I used my indicators and did some intraday trades, and hold some calls over the weekend. I keep the trades on the "Simple Portfolio & Trades" link. Maybe due to beginner's luck, these indicators I developed recently continued to give me good buy and sell signals over the general markets. I backdated these indicators to test them, so far, they're quite good. I'll keep working on them to refine them.

1. I shorted GS again this morning, and covered later for a profit.
2. I bought DXD again, and sold them for a profit.
3. Bought IWM puts (Aug 85) and sold them for a profit. The only mistake I made is, I didn't buy early on. I thought there was a bounce after the initial selling, it turned out to be wrong. Then I bought IWM calls(Aug 85) and sold for a profit.
4. Bought MDY puts (Aug 167) and sold them for a profit. The mistake here, I didn't use a good limit order, it's too high to sell them, and when the market turned, I got nervous and sold at lower price. It's a profit. And I used the same idea, bought and then sold MDY calls (Aug 167) for a profit.
5. Towards to the end of the market close, I bought IWM and MDY calls again.
6. There are reasons for holding them over the weekend:
7. Pro:
8. Market usually bounced back after a sell off;
9. We may have a MA Monday to push the market;
10. VST, market is a little oversold.
11. S&P500, 1533 areas were triple tops before it broke it last Thursday to 1547, so I expect it to be a strong support.
12. Con:
13. In general, this long running bull market will end badly somewhere.
14. CDO, subprime issues are not going away.

GOOG, CAT and OEX day:

1. Watching these two stocks and their options, whoever hold on to these puts were rewarded big today.
2. Whoever were greedy to hold on to these calls before the earning release, were crashing today.
3. Lessons to be learned.
4. Never hold big option positions on OEX day. It's more a gambling than trading.

Dow 14000 and after hour

Today the market took off again, Dow finally finished above 14000. And after hour GOOG missed. Let's see how the market reacts tomorrow.

1. I'll test water again tomorrow with puts and ultra shorts if tomorrow morning conditions are OK.
2. I'll check my indicators and stick to them, don't do intraday decision like the call on UNP yesterday was a mistake.
3. Again it's time to be really careful, can be burned with both side of the plays.

A small step

After I sold everything last week, today is the first day I traded. I executed based on last night's idea and it turned out to be great! Today we had a negative opening, market bounced back, then sold off to low, and then bounced back from 10MA off Nasdaq and S&P, closed almost at the high of the day, which is the routine of recent drops.

1. One of my indicators I developed recently gave me a signal to short very short term, that's what I did accordingly.
2. I bought 2/3 of IWM puts just after market opened, but it dropped quickly, and I added 1/3 more about 20 minutes later, almost at the bottom of the daily price, and two hours later when the market was in the bottom, I sold it at the high of the option's daily price.
3. This is my best daily operation for more than 30% gain. Yes, it's not big position, but it's a great first step. And the put option ended the day at the lowest daily price.
4. After the open, I also added DXD, when it dropped, I added again. And I sold them later when market started to rise, telling me another "buy on dip" coming. It's a small gain, but, it's a gain and now I'm back on cash.
5. If I hold them to the end of the day, they'd be losing position!
6. And I shorted GS today above 218, since I waited several minutes and saw it shot up quickly. I used a limit order to get it filled. I covered it above 213 when the market started to come back. From performance point of view, this is the second best daily operation.
7. Once the market started to come back, I found one stock that's very speculative, UNP, earning tomorrow and with good gain on a down market, I added some calls using the profit I got from IWM puts. Let's see if I can play both side of the market.
8. I still hold the position. There was a talk that a private equity group wanted to buy Canadian Pacific, so this maybe a good play if the market is on fire again from M&A news.

What I did right today:

1. Wait for the setup.
2. Take money off the table quickly.
3. Don't be greedy, this is the key. How many times I had great profit, but I held on to only lose big at the end because of my bearish view. Today I did the right thing, got the chance to short and covered it quickly.
4. I learn from the ruthless bulls! Thank you!

What's next:

1. My view is that we'll have another push higher tomorrow and maybe Friday, depends on earning news. IBM certainly helped bulls' view, and we have GOOG report tomorrow.
2. So I'll wait patiently for another setup, using these indicators I worked recently. I think the next big setup for trade is still on the down side. But before that, we may have a push higher.
3. And always keep cash and always exit quickly if that's short term trades.

Dow 14000 and after hour

Dow touched 14000 today and finished below that, with SMH and Nasdaq on fire again. But after hour, both INTC and YHOO dropped about 5%.

1. Considering the recent run, we may finally get a pull back tomorrow. And we touched 14000, so at least we can get this out of our way.
2. I'll test water to add some ultra short ETFs and puts again tomorrow. Maybe not, all depends tomorrow morning's conditions.
3. This maybe a bear trap again, so need to be nimble and exit quickly if it's not working.
4. Bear Stearns warned one of its hedge fund maybe worth nothing. Another play to consider. GS is the one I may try to short.

Consolidating

Looks like the Dow wanted to break 14000, but the rest of the market wanted to consolidate. So we had a mixed market today.

1. I started to work on my research on various indicators and see how they react to market events, hopefully these research can yield some useful buy and sell signals.
2. I think the market will continue to stay flat until there are other forces (earning news) to push it to new highs.
3. Since it's overbought in general term, I won't chase it to buy here, but may add on a pull back.
4. On the other hand, I may get better chance to short it first should it push too high too fast, which is very likely.
5. There are MA news and AA maybe a target, and there are lot of other MA activities, looks like the CDO issue and subprime is taking a backseat again. And too many shorts are trapped in a bad position, just like I did last week, I'm sure bulls want to run them over but we'll have a meaningful pullback.
6. So I'm still backdating my indicators and will wait patiently for my setup.

New low

I sold rest of my shorts and puts early yesterday morning, hoping the market would at least correct a little to get better exit price. After I sold them all, my heart was sinking to new low. I didn't feel free, I felt numbness and crashing defeat! I checked all my accounts' balance, this only enhanced the "new low" feeling, I just wanted to do something drastically. One reader added great comments in the previous post to share the thoughts and experience.

1. For me, the purpose of spending time and energy to research to be a trader is not to meet mutual fund performance or index performance, I can do that by using just a few ETFs with very low costs.
2. I want to beat the market and get better results. So yes, I'm far behind the market this year, but I learned a lot. I'll stick to trading and continue to change until I find one or two ways to outperform. Meanwhile, it's not a bad idea to set a portion of total funds in the index ETFs, like SPY,EWA, EWC and EEM, to name a few.
3. Don't doubt myself, no matter how many stupid mistakes I made in life.
4. I can't change the fact I made stupid mistakes, so I have to change my attitude towards these failures.
5. When tiger is in cage, he bows his head and waves his tail, begging for food! Pigs and rabbits are laughing at him and run happily around the cage. But my friends, a tiger is no pig nor rabbit, he can do far better thing in life.
6. So don't feel bad to be trapped in a very bad situation.
7. Jesse Livermore made a killing in 1907 and was a millionaire. Then he was broke, and actually, in debt.
8. Jesse Livermore waited a few years to make a come back. In 1915, he was only loaned to trade 500 shares of stocks, and he waited six weeks before he made a great trade, he knew it's his last trade if he failed. He made a great trade and never looked back. He made over 100 millions later.
9. I can't possibly compare myself to Jesse Livermore, I'm not there yet. I had my bright spots in trading, some due to luck and not skill, to be sure.
10. But I have a dream!
11. I'm not in debt, I still have a decent job and I have money to trade. I'm in far better position than Jesse Livermore in early 1915.
12. I can walk away, just invest in SPY and a few international ETFs and not worry about them any more. But I won't do that.
13. I know there is far better thing in trading.
14. I know there is far better thing in life.
15. I experienced countless turns and tribulations, by making lot of money and then giving them right back in 2006 and 2007, I owe it to myself to not give up!
16. I wished I could just sit on the market index ETFs after I made some money in early 2007, but I didn't. So don't regret things you did.
17. Lot of investors don't know the swing of option price between a small daily movement of the underlined stock; lot of investors don't know by just waiting a few more days, even with underlined stock price moving in your direction, the option price can go much lower; on the other hand, the option can go higher even with stock price moving to the wrong direction; all depends on the volatility and time premium. I experienced these, sometimes feel I was cheated by large operators in the market, but at least I know these.
18. These experience is worth nothing if I quit now. But it's a treasure for a trader, assume I learned from it.
19. If nothing else, I experienced new low in trading and life, I experienced glory and failure in trading and life.
20. I may wait a few more days, a few more weeks and even a few more months, to find a better setup to enter the market again.
21. Once you're successful, you can laugh at all these failures and tragedies; but if you fail again and again, then just chew the bitter taste of failure and your own stupidity.
22. Don't blame luck, don't blame manipulation, you make your own luck. You calculate all the risks, including unfairness for small traders in the market place.
23. Pick yourself up, like a man!
24. Don't cry foul, don't complain.
25. Don't think you find the magic of trading due to one or two successful trades, you always need to count the unknown, respect the obvious.
26. Because it's difficult to trade to make a living, because it's tough to trade, market is less crowded, so that you have your chance to be a successful trader. If it's easy, everyone can do it, you may not find your chance in the market.
27. So lucky me, I get my chance.
28. Now, use this chance well.

Clear mind

Today the market breaks out, with Dow leading the way, Nasdaq breaks out too. S&P 500 breaks out. Only Russell 2000 is within hair distance of break out. There is no use to argue the tape and the fundamentals. I sold all my positions except URZ and some puts and QID in my rollover IRA.

1. I'm out to have a clear mind, to be objective again.
2. I was bearish since last November, it costs me lot of money.
3. The only thing good about losing big in option trades is, today I didn't feel much pain to sell these ultra short ETFs: MZZ, QID, SDS and TWM.
4. I will honor my rules of cutting loss in the future.
5. I will not rush to get back to the market. I need time to clear my mind too.
6. Today, no question, the market breaks out. Now a small pull back will be bought again by bulls and shorts alike. Unless we have some very negative news to bring down the market.
7. Dow 14000 is only 140 points away, and Dow was up 280 today. You have to think S&P500 will break 1600 soon.
8. I will look for a better setup for shorts, if the market continues to push up another 2-5% without pullback.
9. Meanwhile, if the market pull back 1% or less, may add some longs.
10. This is a lesson I will never forget.

The bounce

Today we had the bounce. Let's see if we have a retest to 1490 in S&P500 soon. I noticed it's not as strong as the previous bounce after a sell off, and again with lighter volume on the bounce and heavier volume on the sell off. This kind of distribution indicates people are more interested in selling(taking profit) than buying, which forecast the end of this bull run ahead. It's been like this for months, and it has to end somewhere.

1. Nice comment from hlgold, you're right about me out of sync with the market. I'll adjust, that's what I tried to do the last few weeks.
2. The main fuel of this market: credit and liquidity are slowly be surely exiting the market, S&P and Moody have to cut the ratings of the bond backed by subprime mortgage; SLM may not be bought after all; BX again showed us it has trouble to maintain its IPO price. These are indication of trouble ahead.
3. You can check the financials recent performance, you know one of the pillars of the bull market is not participating.
4. Now the strength is in Nasdaq and tech, and MOT warned yet again after market, and I have to think we'll see a big correction down the road, at least 10%, if not more.
5. But likely it will push higher (to draw public in) before the correction, maybe in July, maybe in Sept. So it's still time to be cautious.
6. From TA point of view, we have lower highs in S&P and last two attempts to break to new high failed, this is very bearish sign unless it can break it.
7. I'll wait to let the market to tell me what's next, and I'm positioned in short to exit them if there is a correction (take profit) or market break to all time high (cut losses yet again).
8. Dollar is not forecast great rally for the market, like I said many times before, falling dollar will drive up the interest rates (in order to attract foreign buyers), and this won't be good for the market.
9. And oil, and terror attack, and Iraq, there are lot of risks out there.

It's killing me

This market is killing me today. Yesterday and last Friday, I took the pain to cut losses of IWM puts I added on Thursday, and today IWM down 2%. If I hold these puts, they are winners instead of losers. This market made me nervous. And if I hold these positions, I'm sure it will go higher on light volume again. But what does not kill me makes me stronger!

1. Yes, I added QID and MZZ today, and shorted FXI today. FXI is way extended, and if we do have a small pull back to test S&P500 1490, then I think FXI will give another 3-4 points back, if not more.
2. And like before, the market may have another bounce tomorrow, that's the pattern of lately, but these should be used as short opportunity.
3. I'll use these ultra ETFs to play the market more.
4. Back to the market action, I see it bounces a little, then goes down to test 1490 in S&P500, then it will go up again, maybe test all time high again.
5. ^VIX jumped today, but it's not over, maybe a two time wonder this time, I can feel the bears are getting stronger and bulls are getting weaker as we are heading into summer.
6. If the market get a lower low this time, then very likely this is the top of 2007 before year end.
7. The government talks about summer terrorists attacks, saying it's their preferred season; and we have dollar almost on the edge again, which is the first thing that got the Feb.27th mini crash started. So for people who long the market, they better take some profits.
8. On Feb.27th, it took one day to cut 3 months gain. So be careful and be prepared for a fall like that.

Bow low

Market was heading higher again with light volume, and I was dead wrong again predicting it would have a sell off. I sold all IWM puts today. I need to survive in order to continue to trade in the future. I need to bow low.

1. Trade less and small. Quick and risky trades won't make money back, but will lose more.
2. Focus on the market trend and follow the trend, don't predict what's going to happen next and then use TA or FA to support my view.
3. Read the market, follow the market, and if I feel strongly, and with great TA patterns, only then I trade. Otherwise, I should just sit there and watch and read the tape more.
4. I learned a lot recently, includes one important observation: risky trade will kill you quick than anything else.
5. Don't trade options for now. I keep the option to trade option open, but will likely not use it unless I find a sure bet. Missing chances are OK, they're better than losing again and again.
6. There is no quick way to make money, you have to continue to learn, to find your own touch; don't try to predict and catch every moves.
7. There is another trading day in the market, I'll start to follow sound money management rules, plus trade here and there to find better rewards.
8. FA is for long term, TA works until it is not working.
9. Traders like Jesse Livermore are the ones win in the market and make a fortune, most traders will be broke and move on.
10. All I learned are good, if I can control myself to trade less.

Reading the market:

1. It will head higher this week, and depends on reaction to the earning news and other news, it will either break higher to very overbought condition again, or get a sell off.
2. Until the market tells me what's next, now is not a time to bet huge against one or the other.
3. I'm still almost 100% on the short side, plus cash. I need to adjust my positions accordingly.

7-7-7 Live Earth

Cut losses again

Looks like I was early again to expect a drop of the market. As a result, I have to cut losses by selling half of the IWM puts at a loss.

1. Since I was so bad lately, I'll trade small from now on. Until I get my touch back.
2. And since wall streets were so worried about housing market, they lowered the earning estimates to grow by 5.9% for S&P500, as a result, companies likely will beat, and the market likely will rally. Sounds like emerging market's schema to get markets pop up.
3. And the more I worked on my trades and research, the more I realized that TA is better than FA, and street smart is better than TA. You have to be really good, really quick, and think at multiple angles.
4. And frankly I was slow, used old FA thinking, then using old TA thinking, and markets beat them all.
5. I'll use two TA patterns more in the future, fade the extremes and ride with momentum. These two are easily said but very difficult to do.

Tough to get this market down

It's really tough to get this market down, considering we have 10 year yield up, oil above $70, dollar under pressure, and yet the market, specially the speculative plays like RIMM, BIDU, AAPL continued to lead the Nasdaq to another multi-year record. This is the sign of the end of a bull run.

1. Unfortunately for me, I think it's very close to a sell off, but I don't know when.
2. Tomorrow if we have a very strong job number, should press the yield up more and may bring down the market.
3. Again today we had light volume, this is the only thing good for bears.
4. I added TWM and IWM puts again. If the market take a break, Russell 2000 will lead the decline.
5. The slow summer for market is here and Nasdaq is very overbought, I think either it's tomorrow, or it's next week, we'll have a pull back.
6. Yesterday RIMM, BIDU all took a hits, today they ran back up. And Chinese market dropped 5% yesterday. Again these are signs of a meaningful top for a market.
7. I have to wait patiently for the best entry, and so far I didn't do this right. I'm at least two days early. But the odds are in favor of shorts now. So that's how I positioned.
8. I won't touch speculative plays like RIMM, BIDU and AAPL. I'll short the general markets.

Short Tuesday

Today the market closed early, so it's a short Tuesday. Since the volume is small again today and market is up again, I used this to add a small IWM puts positions.

1. After July 4th, we will have more traders return to action. Hopefully the true color of the market will still be bearish.
2. The week after we'll have earnings, plus CDOs, 10 year yields, oil, subprime mortgage, all these "good stuff" will still be discussed more, if one of them could not hold up, we'll have some issues with the market.
3. We don't have a hurricane yet, and the oil is already above $71, there is lot of risks for oil to go higher.
4. Another major issue is the dollar, is this the real bottom or this is the start of another round of sell off. If the latter is true, then the yield in U.S. treasury has to go up in order to attract foreign buyers, that will put an end to the private buy out activities that fuels the market. If this cycle gets started, I don't see it will end pretty for the equity market.
5. So even with a flat or slightly up July 5th and July 6th, I'll hold my puts and short ETFs, may even consider add another small positions.
6. Have a great holiday and enjoy the fire works!

Bull's week

July 4th is a good day for bulls, the whole week usually is very strong for the bulls. And we had this today with Dow up 1% and Nasdaq up 1.2%. S&P broke above 50MA.

1. BIDU up 10% to a new record high 186 today.
2. RIMM up 7% to a new record high of 214 today.
3. Nasdaq up to a new record since 2000.
4. You can't find any weakness in the bulls. So it's very lucky that I sold my IWM puts last Friday.
5. I'll wait until tomorrow if I need to add some puts again tomorrow.
6. Think we may have a short term high tomorrow or on July 5th. So it's relatively safe to add a small puts if I think all my indicators are pointing to a sell signal.
7. If not, just wait for better entry prices.
8. In a few months, I'll still looking for a down market.