Stop Order Alert for TMF

TMF cut through the mid-term uptrend yesterday, so I bought back my call and sold my shares for a total loss of $749.35 (including option premiums, commissions, and fees).  Ouch!

 

 

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Stop Loss Alert for ERX

ERX closed below my new short-term uptrend 3 of the last 4 trading days (it first breached the trend last Wednesday).  So I unwound my position for a total loss of 0.27 including commissions and fees.

The possibility still exists that ERX will reverse course, as the closing price was BARELY below the trendline (less than 0.5%!).  But better safe than sorry at this point.

That said, I have a feeling that some back testing is in order.  I’d like to know if I should institute a 3 strike policy before pulling the trigger on trades, or if I was just lucky this time and the bottom didn’t fall out before I got out.

Stop Loss Alert for TMF

TMF has struggled in August, but I had hoped the 80 dollar range would provide some support.

Yesterday’s price action triggered my trading stop, which meant it was time to buy back outstanding calls and liquidate the underlying position.  Unfortunately, TMF gaped down again this morning, adding insult to injury.

Looking back, TMF broke the trendline when it breached the $85 mark.  I probably should have sold at that time, but my trading program was still in buy territory.

 

 

Stop Loss Alert for DRN

DRN appeared to be weathering the storm, but even the strong can only handle so much.

Yesterday’s price action dropped DRN triggered a trading stop, which means it is time to buy back the outstanding calls and liquidate the underlying position.  It is a difficult thing to do, as today is option expiration, and I had planned to let my DRN calls expire and then sell them outright on Monday.

Maybe the markets will open strong, and I’ll be able to sell some in-the-money calls and generate a little cashflow on my way out.

 

Stop Loss Alert for FAS

When the markets enter a correction, I carefully watch all my existing positions for signs of weakness.  In the past that meant selling in the money calls.  These days, I am more cautious and just opt to sell out of my position and wait for things to recover.

Today’s price action dropped FAS below my program’s trading stop, which will cause me to buy back the outstanding calls tomorrow and liquidate the underlying position.  Without the ability to sell naked calls, this is the safest option for me right now.

On the bright side, option expiration is this week.  So my $97 calls are trading for $0.05 and I would have bought them back anyway.  I’ll watch the market open tomorrow.  An up day might allow me to save a percent or two.

Stop Loss Alert for EDC and ERX

I’ve had my eye on EDC and ERX for the past few weeks because both are having difficulty breaking a long term downtrend (one that I said was broken already – Whoops!).

Today’s price action dropped EDC and ERX below one of my program’s trading stops, causing a buy back on the calls and liquidation of the underlying positions.  Ideally, naked calls would be the order of the day, but I’m not there yet in terms of account balance.

Hopefully I’ve saved myself from larger losses, and not been forced out before a major move.  Time will tell.

Market Timing – The Thursday/Monday Syndrome Revisted

“That was some tsunami of selling today” quipped one of my friends. I guess I have some ‘splaining to do.

For those that missed the previous article (click here for the full post), the “Thursday/Monday Syndrome” takes hold with massive selling on Thursday, choppy trading on Friday, and then another massive sell off the following Monday.

Instead, the NYSE and S&P500 rose 2.5% and 2.3% respectively, while the NASDAQ put together a 1.3% gain. And these indexes closed near session highs, which is another sign of strength.

What gives?

A deeper look makes me think it was a lack of sellers, rather than a tsunami of buyers, that pushed the markets higher today.

The 2.5% gain in the NYSE was accompanied by a 26% drop in trading volume (lightest since 9/20). The NASDAQ was actually up 0.5%, but that is hardly a sign of strength. And either way, both indexes were under their average volume, which is not a sign of strength. Couple this with the fact that new 52-week lows outpaced new highs, and today’s rally is suspect.

I recorded the bid prices for the first in the money call on DRN, EDC, FAS, TMF, and compared them with the bid prices for the first in the money calls from last Monday. The bids for today (on a percentage basis) were higher than last week! EDC calls were paying out a 20% premium! This doesn’t seem like the stuff that rallies are made of…


Sources:
Catastrophic Success
John Mauldin | September 24, 2011
http://www.ritholtz.com/blog/2011/09/catastrophic-success/

Stocks Extend Rebound In Mixed Volume
Vincent Mao | September 26, 2011
http://www.investors.com/NewsAndAnalysis/Investing/BigPicture.aspx


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