Friday, December 15, 2006

Burying the Week

This was one of those days that the market went up but my all-short portfolio actually went up too. I guess I can make a good decision now and then.

I tossed out a 'Second Life' reference a couple of times, but hardly anyone said anything. Maybe I'll just give it a miss. Here's my avatar in case you happen to see me. No surprise, eh?

The market exploded higher earlier in the day, but a lot of those gains melted off. The market was still up (in most cases), but most indices are sporting a nice shooting star.

I've been short gold for a couple of weeks, and that seems to be heading in the right direction finally (as viewed via the $XAU).

I've taken a few stabs at Black & Decker (BDK). Finally it took a tumble! Just look at the volume today, too.

I remain long puts on Capital One. It's only inching down slowly, but I still really like this pattern.

I entered a new position on CSX today (buying puts).

GOOG is a bit of a fascination of mine. It's getting a little weaker every day. They will be reporting earnings in January. Obviously a disappointment there (as happened a year before) is the only thing that could really take the wind out of this stock's sails.

I'm also still short Goldman (GS), my favorite investment bank pick now.

HYDL is starting to behave well to the downside.

RIMM gives quarterly guidance next week on the 21st. The past couple of days gave RIMM some upside, but today's shooting star pattern gives me some comfort. It seems the market is saying, "oh, no you don't" to any sustained strength here.

I see a lot of quitters in the comments section. That's totally your decision, of course. Just try not to be rude on your way out the door. You may be back!


One Way Stox said...

With all the M&A talk in the brokers and investment bankers, do you really think it's a good idea to be short GS?

Louis said...

It seems that you casually hold quite a few positions of directional bets. If you don't mind giving me a lesson..., I have read several articles & books saying that because of such large spread bt. bid & offer, turning on dime(minimizing loss) isn't so simple, therefore it is sucker's game, and only winners are large smart money sellers. Your thoughts on that, please?

Leisa said...

Today my DIA/SPY (purchased in APR) puts went ka-put! Stupid me, I was up 150% in June/July and let it fritter away waiting for the REAL ride down. Hah!

Tim, I'll launch this request again, and I hope that someone responds. Specifically, I'm interested in the time frame that you generally use on your puts. I don't ask this so much for my APR/DEC spy/dia, but rather for specific stocks where you are anticipating a downturn (due to technical reason), what time frame do you use? Perhaps just stating which puts you purchased of CSX would easily answer my question.

Thanks in advance.

Chris said...

stay away from those puts leisa .... they are a hard game. sure when you can hit it you can hit it big but the big boys know how to work everyone over. just my 2 cents. if you use the double ETFs your doing yourself a big favor. what i am saying is dont take a long term directional biased because the market dictates what ever it wants to do and if you have a biased you will not listen ! trust me i learned the hard way.

Anonymous said...


I agree with Chris for the most part. I play alot of Long Calls (heh! heh!) in short term up strong trending stocks and Long Puts in short term strong down trending stocks. I am mainly a Swing Trader looking for really strong bounces with 3+ point moves predicted from the pattern or trend. I play ATM or ITM Calls or Puts that have good volume and open interest with narrow Bid/Ask spreads (no more than 0.20 max). I always want 4-10 weeks until expiration and will always exit much sooner than that but will never be in the trade with less than 4-10 days left on the option. I keep pretty tight stops on the trade and take profits at reasonable levels.

I find that spreads are really good for sideways markets and Indexes and ETFs because of their high volume.

Hope that helps?


Anonymous said...

Anonymous, I am interested in what patterns you swing trade. Looks like you are doing well with your 4-10 week options and quick exits. Congrats. I have been trying to swing trade but for 2006 I am about even after many trades. I don't seem to have a good system/pattern to look for. Any help/websites appreciated. thanks kate

Anonymous said...

Citicorp is kicking my ass as I sit on leaps purchased just before Thanksgiving. I ain't dumping them just yet, and may even add some more after this month. Thank you sir, may I have some more!

I have complete confidence that this blow off in the senior averages, and that is what it is, a blowoff, will end badly. Blowoffs alway do, and the six months and counting divergence between the Dow and Transports is a harbinger of doom. What's more sentiment bells are just now beginning to ring, and will become deafening before this run is through. Hold tight my ursine friends.

z-stock said...

I bought the Lstr Jan 35 call @ 4.30. (38.73) I’m virtually all alone on it. Volume has been 2 past 3 days. Me and somebody else. Which says to me, and the other guy. May have entered Lstr way too soon. But who cares? It’s 200 day is at $44.

Anonymous said...


I would suggest that you visit a newly formed blog at:

Not looking to take any bear from this great technical site by Tim for he is the king of charting! BTW: I am a charting only user. No other service beats his features.

Warning for all "political agenda focused grumblers" - no need in visiting the blog. We dop not allow you to post anything other than Options related comments. It is also NOT a phishing site for those wanting mindless trade picks. None are posted. We discuss the methods and processes. No anonymous posting either - quality not quantity.

Most of us visit Tim's site for a really good take on the overall market and to learn from his vast knowledge of charting.

We are pure technical/trend traders NOT fundamentalist so no need looking here for that kind of information either. Oh and BTW - no advertising - that is right NONE. Our rule is simple - K.I.S.S. for those that are inyerested in learning more about the mysterious world of Options Trading has it can be applied to simple technical/trending stocks.

Thanks Tim for this awesome site and for keeping most of the freeworld in check with a balanced look at the market. BTW: Your "New Look" in 2nd Life really fits you!!!


Leisa said...

Chris and JJ...Thanks for your feedback. I agree that options are risky--both puts and calls. I've had mixed results--some great, some AARRGGH. I'm very familiar with the reg and double inverse ETF's.

With any of it...discipline, discipline and taking personal responsibility for the good, the bad and the ugly of one's investment decisions. Some of the negativity expressed here and in other sites is surprising to me. I don't consider myself a trader, but that's a profession, just as any other. And folks who fingerpoint and say you said this, I did that and I lost money you so and so, I just bristle.

Anonymous said...

JJ - many thanks for your pointers. I will spend some hours today checking out that site and others. Have a good weekend! - kate

Anonymous said...

This run is on fumes now, my friends. Leardership is faltering, microcaps are tracing out parabolic patterns, spx has pushed to 3 symmetrical peaks, Dec expiration distortions are behind us, vix is falling below the bottom of the chart, and bears are running away from their positions at a furious pace. It all has the look and feel of the top in May, but bigger. Perhaps for the first time in 4 years, the sentiment is finally "you've got to be loony to be short." Should be fun. Jeff

Tim Knight said...

Leisa et. al.

I don't have any hard and fast rule about how far out the puts are. They certainly are not the 'front month' - - I'd typically like to be 2 to 3 months out, if not more. But I'm more interested in where the volume and open interest are concentrated.

Not as scientific as using greeks, I know, but I'm a simple soul

Anonymous said...


Glad it helped. Look forward to you participating.


Do you buy OTM, ATM or ITM's?



Chris said...

long term options are mostly used by the boys to hedge. with the very low vol the insurace is so cheap. only in a crazy world where risk is growing leaps and bounds on wall st that the insurance to hedge is coming down in cost! so i have spy/dia long and i hedge for 100% for about 6-8 months at like 2%. its a no brainer. if you are really bullish hedge with calls as well. otm cheap. one or the other will be worthless. but it is a protection. imho of course.

Jan said...

Thanks Tim for this article; I referenced it in my blog article 'It's A Shooting Star Finale' where I relate: Today's high may very well be the finale of the age of fiat wealth, that is, an age where wealth has been garnered by the use of fiat investments such as stocks and bonds.

Thus, today may manifest as 'peak stock wealth': a pivot point, where we have passed from an 'age of prosperity' into an 'age of financial ruin'.

In my blog, I recommend against short selling as I believe there are reasons for investing in gold.

To find the details along with many, many charts, simply enter prosperingbear in the Google Search engine to arrive at my blog site.

z-stock said...

Tim, I hope the Csx position works out for you. It’s a bit too early for me to tell. If I see a triple top @ 38, That looks like it should work. I hesitate because Fdx (10% weight/Iyt) reports (Wed) Dec 20 (should be bmo). Making $Trans (iyt) too (potentially) volatile for me.

Anonymous said...

Hey Tim!

How much did that avatar cost you?

Second Life is a good concept, but get it away from the jews!!! The current mofo's charge for EVERYTHING!!!


Anonymous said...

Stock futures way up again.

Big surprise.

Anonymous said...

I think selling has been banned by the SEC!

Anonymous said...

Bear day will come soon.

starting tommorrow.

Anonymous said...

Like the avitar. Can you showing it eating wall street or at least ripping a few guys on the street? Like the claws. Wish it had some blood on the claws then I will sell. Heh, heh!

Notice more bears on down days???