Bought HBC March puts

After seeing the news of massive March puts were bought in HBC, I added my own puts yesterday. Today, market is down 3% and HBC 8%. Tomorrow is a key day:

1. How will market react to JPM earning, Steve Jobs's medical leave?
2. Other economic data?
3. We know all these will be bad, but how market react to these is the key.
4. My plan is following:
5. If market drops hard, I may need to reduce my shorts; and when it rallies, add these shorts back on.
6. If market rallies from the get go, don't need to do anything, it will reverse to down soon.
7. And I think the Obama rally ended on Jan.2nd.
8. From now on, every rally should be sold. You can only be wrong for getting too early in short ETFs, i.e., you'll get too high an entry price. But eventually, you'll get it back when market touches new lows.
9. I think market will make a few new lows this year.

First trade of the year

Since I was burned lot of times last year, with longs and shorts, I decided to go slow this year.

1. Only one trade this year so far, sold SRS Feb 45 put at 4.7 yesterday.
   
2. Reason is I found the information that there was a SRS Jan 65 call block trade of 5000 yesterday. Today SRS is up almost 9%.
3. I have SRS (sold Dec 70 put and got assigned), and another Jan 75 put will likely be assigned, now SRS is 59. The cost of that SRS is not too bad, I sold the put for $10.5, plus the $4.5 I'll receive (SRS's distribution), make the cost of SRS at 60.
4. Again, I will likely to use selling of OTM put as ways to reduce risk in the future.
5. For the week, S&P is down about 5%.
   
6. Amazingly, I did well for the first week of the year, DXD, TWM, SRS, MZZ are all up due to a down week. My long holdings POT and MOS are up, MEE flat.
   
7. I'll continue to play short ETFs for short term, and use POT and MOS as a balance to play the upside, if there is one.
   

Be patient

1. I was too early to sell SRS put. Got assigned. But I sold SRS 70 put when it's 85 in Dec. It's far better than buy SRS at 85.
2. I was too early to get into DXD.
3. Now, I think the market is determined to push higher into Obama's inauguration.
4. Then, we'll have a sell off.
5. So it's wise to be patient to add at better price, better use OTM puts.
6. It's great I bought POT and MEE, and sold covered calls against these, I also sold POT and MOS OTM puts, all are at great profits. These balanced my error in entering short ETFs too early.

This is it

The global financial crisis is hitting the vicious cycle now, it will not end until all the bubbles burst.

1. Housing bubble in US starts this.
2. Housing bubble in UK, Spain and around the world are far from repriced.
3. Extreme leverages in US financial system is unwinding, but far from over.
4. All assets bubbles must reprice, it takes years, not months.
5. Economies around the world will contract, deflation is on the way.
6. Fed and governments around the world think they can cure this by spending.
7. Fed learned from great depression, and now try really hard to inflate the system and think this will get us out of the vicious cycle we're in.
8. US and countries around the world become bailout agents, print money to aid sick industries.
9. What if someone starts to shout "the empire has no clothes"? Then the hint of US debt may default will cause hyperinflation.
10. But before that, we'll have deflation and depression. Gold and PM will deflate just as other assets. Then gold will fly during hperinflation period.
11. This time, due to government intervention, we may have the potential to either get out of this mess early, due to "smart" intervention; or, get into long vicious depression even worse than 1929.
12. Don't bet on Fed.
13. Don't bet on this time is worse than 1929.
14. History will not simply repeat itself.
15. But stock market will tell me what's ahead.
16. First, try to have a stable income, from my job. Make sure I diversify, don't put cash under one mattress, put some in the crawl space; some in the basement; some in the attic.
17. Second, try to preserve cash and buy at extreme low price.
18. Third, follow the main trend, don't try to be a hero to pick a bottom or top.
19. Last, most importantly, follow the market's main trend, and play swing in between. Jump in early and don't chase a move; jump out early and don't try to catch the last move, greed will kill my account.
20. This is once a life time event, many people may never experience this again in their life time.
21. Time to do my best to survive this, and hopefully recover from early losses.
22. Don't be fooled by these traders and analysts on CNBC, Fed. They are usually late and wrong about what's going on.
23. Either they're not telling the truth, or they're lying. Another possibility, they don't have a clue what's going on. They explain things they don't know to the public, not only fool the public, they also successfully fool themselves.
24. This is the state we're in now.
25. Market can go up and down in a single day several times over, cover a month's action in one day. That's how crazy this market is in right now.
26. I need to work hard to survive.

Be calm, be patient, be strong

Have to be a better person in life in order to be a better trader.

1. Be calm. Don't be emotional. Cool head wins in the long run.
2. Be patient. Fast money is the worst way to make money, it makes you think you can achieve goal in one strike.
3. Be strong, specially when your trade is against you.
4. Be brave. When there are blood on wall street, it's time to be brave and go all in. But this happens rarely.
5. Be reasonable and be flexible, don't be too narrowly focused and put everything in one basket.
6. Be simple. If you can't explain why and have too many ideas, you really don't have any idea.

Once a lifetime event:2008

What we have right now, is a once a lifetime event. The only thing closes to this is 1929.

1. Therefore, continue to use the normal oversold and overbought indicators is not enough.
2. Have to follow the main trend, which is down. Therfore, fade every rally is the best way to trade this market.
3. Can go long only when it's extremely oversold. We had these feeling on Oct.10th and then Nov.20th. These are the times to be brave.
4. Market was down 9% today. A bounce tomorrow is normal, use that to sell longs and add some shorts.
5. Since I was bullish, I sold some OTM puts and some covered calls, so going shorts is necessary to reduce the long positions' risk.
6. Stop being too smart to catch every bounce, I will be burned.
7. Focus and trade less.

Sold POT and bought FXP

There is no need to argue with the market. Yes, POT is a great long term play, but I can pick it up at low 50s, 40s and even 30s.
Bought FXP to balance the remaining long positions.
Looks like the market does not even want to wait to sell again. Low volume is another sign of more bearishness, once the volume picks up, it will kill the current move, which is down. We may test Nov. low soon.
Amazing enough, FXP (59) is close to its 52 week low at 49 than high, which was 183.