POT

Based on last three day's action, we may have a buying panic. So many people got burned so many times, they sell rally. But now, we have four days very strong market. People are panic to buy.

1. I added POT as my main tool to ride this market, also added SSRI, one of my long term play.
2. I also sold MOS and POT OTM puts, very low strike price to take the premium. I think it's relatively safe to do so.
3. I sold OTM calls against some of the POT and MOS I already have, add addtional protection.

Reason I choose POT is following:

1. Fed's action is inflationary in the long run, commodities will go up. Unless we have a great depression.
2. POT is the largest fertilizer company in the world, and potash has the best price due to tight supply. POT control 22% of world's potash reserve. POT is the best Ag play.
3. POT is close to the bottom price of 54, while others already bounced back 20 to 30%. So it's relatively cheap. It's mainly due to funds liquidation. I think people will add back in when new year starts.
4. I will reduce positions when S&P rally back over 900.

Fade any rally

I sold the stocks I bought Thursday afterhour (CHK,AGU and WFR) and sold them Friday for a decent profit. No, I didn't sell them at the closing high, I sold them way too early, when S&P around 760, not 800!

1. I'll continue to hold some of the stocks I didn't sell, mainly POT, MOS, MEE and KOL. I greatly reduced MOS and KOL, as a result, MEE I think is the biggest holding(which I sold leap calls to collect the premium), followed by MOS,POT and KOL. I think I may just hold to them and sell covered calls from time to time, specially when there is a rally.
2. Most are in cash. I will not move them all in like I did during Oct. I shall only move all in when market fall to 600 level or move too fast into one direction, then I will fade that direction.
3. So far this year, my quick trade are profitable, and my investment(buy and hold) is as bad as it gets! Therefore, trade this market is not a bad idea.
4. I will using some ETFs to bet long or short. Don't put in large positions.
5. Now is time to be careful.
6. Based on market's reaction to Obama's victory, I think this rally Friday on his economic team should fade away quickly. Yes, it's great we'll have change, but hope is a 4 letter word, don't bet on it.
7. Watch C, JPM, and commodities. These have to go up in order to long this market. From the price of C, JPM, USO, ^TNX, ^VIX, I can see what smart money is doing, they have no confidence in this market, therefore, every rally should be sold. Unless it's proved otherwise!
8. If we have a black week, down to 600 level, I will be aggressive buyer.
9. That's the plan. I will adjust according to what market is telling, not what my plan is or what my prediction is.

Recent trades and lessons:

1. I bought some EEV and puts on Thursday and sold them at the end of day, for a decent profit. I sold EEV at 126, and it closed at 95 on Friday. Very risky!
2. I bought some calls at the end of Thursday and then again on Friday, and I was panic at one point since market was down, sold some small positions at loss. Then, instead of selling at loss, I added more calls when market was against me, then when market finally took off, I sold at great profits. My best result in a few months. I still sold too early, when market was around 780, but a profit is a profit.
3. Now I think options can kill my account quickly, so only use it when it's extreme. Like Thursday's selloff and Oct.10th's sell off. Otherwise, it's unwise to use options. Just use 1x ETF. Then 2xETFs. Now we even have 3x ETFs. Turn aggressively when it's extreme.
4. I learned lot of things from poker too. It's better to play solid poker all the time. But you have to have gut to go all in to take a stand! In the end, it's the heart that defines a winner!

OEX day

Tomorrow is the OEX day, I'll play the market's big rally. That's my plan.

1. Since I sold most positions, I lost less by my action today.
2. Now it's time to pick up these beaten down stocks again, for a short term bounce. I will not hold on to them and turn them into losers again.
3. Will try to speculate a strong rally tomorrow. Hope we don't gap up too much tomorrow morning. I bought a few stocks afterhour, which I think will rally big tomorrow if we have a rally.

Lick my wound and sell more

I lick my wound and sell more positions at loss today. And that's a good decision so far. Since Sept. 2008, all my best decisions are selling the positions, all my bad decisions are purchase cheap stocks. That's the summary of this market.

1. Lot of people, me included, expect a bounce, a strong rally.
2. On the other hand, the descending triangle in major index, is near broken. We're sitting on the cliff, we can drop another 20% from current level.
3. I know there is a chance we'll have a 10% bounce tomorrow, but I rather have cash than seeing the positions drop another 20%.
4. If I buy them when it drops 20%, just come back to current level, I gain 25%.
5. I know it's late to sell now, but it's never too low to sell and it's never too high to buy.
6. On economic front, big three are begging; Warren Buffet lost over 10 Billion since he started to buy; and ^TNX is telling people, something even worse is happening.
7. There are lot of fear, and yet it's not the real panic. EEV and FXP, these two bear ETFs are less than 50% of their high; JPM "just" made new 52 week low today(which is great comparing to C, which repeating new lows everyday), while C closed at 6.4.
8. Think about this, if big three auto fail, and I am sure they had borrowed some loans from some big banks, that will cause another round of panic?
9. CMBS is the new word today. Another shoe to drop?
10. I sold most and still had a few positions. Wait to add when S&P is in 700. Another 10% or even 20% drop is not impossible now we're sitting on the cliff, can jump off anytime.
11. No one knows for sure how we get out of this mess we're in, but there are lot of things are not priced in yet. In 1929, Dow crashed from 400 to 200, and yet in 1932, the low is 40. We're in better position now than in 1929, but who is to say, now is the bottom and buy? Maybe the real bottom is in 2009?
12. When internet bubble crashed in 2000, the real bottom is not reached until 2002. And now we're first year in this unparalleled decline.
13. I have to add long term perspective. Wait to buy at lower price.

Raised cash

1. Sold some MOS and MOO today to raise cash, also sold all SSO calls(small positions).
2. We're on a critical support, at 850. We may start a new leg down. That's the reason I sold these positions. I'll add when there is another bloody crash, like the one on Oct.10th. If market rallies, then I'll use the chance to unload other positions.
3. It's not a bottom, it doesn't feel like it's Oct.10th or Nov.13th. This time, it feels different. When in doubt, get out. Let's see if it plays out correctly this time.
4. I'll use double or even triple ETFs if I think it's a true bottom.
5. I know this is not the bottom when two ultrashort ETFs are less than 50% of their highs, EEV and FXP. I think when true bottom hits, these two will be near the high.
6. Actually now it's time to add some small short ETFs to balance the overweight long positions.

Learn to take profit

1. I have to take profit in this market. I forgot again and let great profit in SSO gone in the last 30 minutes.
2. MOS is OK, I can hold for a long time.
3. Don't be overconfident, think this is the rally. Things always change.
4. On the other hand, buying at the close (the new low of the day) is not a bad idea. People are afraid of weekend, the G20 meeting, therefore sell into close. I should know better.
5. I should sell these positions and buy them back at the close. This pattern happened over and over again, with Thursday's big rally, and today's great comback, the odds are higher of a selloff into close.
6. Lick my wounds and will do better next time.

So far it's good

I added some MOS yesterday, and MEE and PCX. Too early. After today's rally, all these are in green.

Also added some SSO calls today.

Still looking for S&P500 to reach 1000 in Nov. I will reduce positions again when it reaches there.