The way things are going I expect to be stopped out of more short exposure, and I've taken a chunk of cash and moved it into index longs that I'll be out of if we break back below he 200 day moving average (936). Otherwise I drink Kool Aid... a lot of it. I'll make hay when we can, but ready to bail if necessary. I thought today would be a churn day which we did from 9:30 AM to 2 PM, but now we're trending and HAL9000s from across the land all honed to channel "technical analysis" will swarm. Will they be trapped by false signals? Who knows. When we trend I go in, since we almost never reverse anymore intraday. I'll leave the overnight risk (and reward) with the indexes to someone else - more than enough fruit during the middle of the day once we get going in 1 direction.Not sure yet what I'll do before the bevy of earnings reports - I expect IBM (IBM) to beat tonight, they are like GE (GE) in terms of having so many levers to pull to "make the number" except they don't have the weight of the financial division; I expect Google (GOOG) to be fine. Then tomorrow morning it appears we have Bank of America (BAC) and Citigroup (C). Citi is a lost cause and should be run off so who knows what is going on there, but Bank of America has a monster amount of refinancing activity coming through Countrywide... not sure if their investment banking via Merrill will be as good as JPMorgan or Goldman Sachs (doubt it) but banks of this size are simply black boxes and even the analysts are completely guessing.
If all 4 of these companies deliver tomorrow could be an explosive day and we'll challenge (surpass) highs of the year. On the close S&P high for year is 946.2, intraday 956.2. Current S&P 939.
That gap at 906 will be filled, timing when will be tricky but it will make us a lot of money when it happens... waiting, and watching. Unlike gaps in individual charts, gaps in indexes don't take long to fill (usually weeks at most) - except if you are talking once in a lifetime eras like 1999 NASDAQ. Notice the gap in early June around S&P 920, took about 10 sessions (under 3 weeks) to fill.
I'll update/edit this post with any stop out on the 3 remaining major short positions; some are looking close to executing out.
EDIT 3:20 PM - stopped out of both RIMM and WGOV shorts for 4.5% losses each as indicated in game plan yesterday. Pretty much all long at this point other than ProLogis (PLD) short. Kool Aid runneth (sic) over the market.
EDIT 3:55 PM - I exited index longs and some calls I put on early this afternoon, going to the sidelines with anything related to the index ahead of this bevy of knee jerk reaction data. While I am unhappy I got stopped out of so many positions on the short side I was able to make up for it all, and more just in that surge the past 3 hrs. If we gap up again tomorrow so be it, made the cake; will enjoy eating it. If we gap down, I have a lot less exposure at risk. Frankly I see so many stops being taken out on so many individual charts, a lot of people have lost their 'protection' - so it would be a perfect time for the market to reverse. But that's how it used to work ... still adjusting to this new world where trends persist so strongly intraday and there is no memory from day to day. The movement intraday is almost too obvious and too easy to believe it can continue week after week in the exact same pattern. But it's been a big winner for us the past month, so until someone stops the gravy train we'll keep playing it.
p.s. I just wish Hank Paulson would do a You Can't Handle the Truth moment...
