I am feeling very much in sync with the market this week. Monday did as expected as did today, although the dive at the end was a bit surprising. Either way, I held all of my positions anticipating more buying going into the "faux" news knows as M2M easing.
The VIX fell just below the 20dma which is not surprising since yesterdays action did not get far enough above the 20dma to call for a continued downtrend in the market. I was anticipating the VIX to fall slightly which is what it did. It really should have gone a lot lower with the market going up significantly during the day. But it held and that is starting to create a bit of stress on the ViX
I like this action. No, I love this action. If I am in tune with the market as I say I am right now, I see potentially a market dip in the morning followed by a significant move up during mid-day. If you are a bear, do not chase the early down movement. It is a trap. Let it go. Bulls will win tomorrow. Let them win. If all goes well, the VIX will close at about 42 on a market which may go up 2%. What this means is the VIX is being set like a spring, waiting to be released and jump much higher. The action yesterday, today and tomorrow have been setting up this spring. Yesterday it showed that the VIX wants to spring but it wasn't loaded enough. Today and tomorrow will show the spring loaded heavy and ready to jump. There is no momentum for the VIX to move higher tomorrow. And it won't (at the EOD) and thus the market is free to move higher. If we can get the VIX to 42 and the PCR at a low number (sub .25), its time to go all in short.
This also matches the upcoming news events. While tomorrow may not be a great day to play shorts, it may be a great day to enter short positions very late in the day in anticipation of the upcoming breakdown in the market.
Earnings season is just around the corner. The market can withstand some bad news but there will be some major misses by some major companies that will drive the market lower. TA experts claim that we may fall down to 743 or so then jump to 900. I don't see it. Market sentiment is positive right now in general but I see that reversing quickly on any significant bad news.
I am still holding my SRS and haven't flinched. Again, I am not day trading it and while I probably should be playing the swings outside of my core position, I am just letting it ride.
I am still riding the call side of my FAS straddle. I sold my put side yesterday at a very nice profit so my call side if it goes any higher will result in a nice net profit. I am also sitting on some calls on some specific banks, namely BAC and STT. They will be sold mid-day tomorrow, but wow, nice day today on those. I will be buying BAC May puts on Thursday ready for the ride down to sub $1.
Here are a couple of shorts you really should be considering. VMW and AAI. VMW will miss. Mark it down. they will hit new 52 week lows. May puts are still cheap.
AAI has some big news coming out in about 2 weeks. Just trust me on this one. April puts are a good play. Too bad AAI is not a $25 stock. It is also too bad because AAI is running a good ship right now. But the news will hit them hard.