Thursday, September 10, 2009

S&P 1040 Breached; In Come the Computers

You know what time it is right?

I've joined HAL9000 with some more SPY calls (you can hear the microchips whirring in NYC and Greenwich, CT from here).... will hold them unless the S&P breaks below 1038 or so.

Every time we do this (break out of a double top) I say "in the old days something this obvious would lead to a trap and reversal, snaring complacent bulls" but why bother anymore. One day it will be correct again but that one day has not been anytime in 2009.

It's all good, and the Fed will keep pumping money in until nirvana is reached. Mmmm... Kool Aid. At this point it's all just become a game of serial bubble building so we have no choice but to play along until we have another bursting, maybe today is June 1998, June 1999, or March 2000 - who knows. What Bernanke is doing now is making what Greenspan did after Long Term Capital Management and before Year 2K look like child's play. It always ends bad (and suddenly), but until then... Party on Garth.

EDIT 2 PM: if interested I had Sept 104 SPY calls SWGIZ yesterday, to which I added Sept 105 SPY calls SWGIA on the breakout today - these expire in a week, but the 104s are already up 40% since yesterday, err make it 50%

EDIT 2:30 PM: For posterity's sake in case I get rid of these before Friday 4 PM and they don't show up on the weekend summary. (5% allocation into each of the 2 SPY call buckets - with parachute ready to deploy if we sell off)

[click to enlarge]

EDIT 3:30 PM: Sold the SPY 105s about 10 minutes ago, keeping the SPY 104s until/unless we fall back below 1038 as mentioned above. Hard for me to hold things I have no belief in :) At this point everyone is buying only because everyone else is buying. That's great, until the music stops. I am very ready to switch allegiances to the dark side but I have Bernanke throwing kerosene on a fire... hard to be a firefighter these days.

Bulls started their end of day rally 60 minutes earlier than usual, but now we quickly approach 3:30 PM. Should be interesting.

EDIT 3:59 PM: Sold the SPY 104s as well in the last minute - these expire in a 6 days so they will begin to suffer from time decay (lose value) even if the market goes sideways. I'll find something in October to replace them with if need be. A 55-60% gain in 1 session is good enough; helps to make our 4 week "period".

Poor bears.

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