Friday, November 6, 2009

Bookkeeping: Adding Some Index Longs on Morning Pullback

Since we broke back north of the 20 day moving average yesterday on the S&P 500 I reluctantly must stash the bear costume and temporarily change course; I used this morning's selloff to cut one of my 2 hedges (I was short the TNA ETF) for about a 5% loss; we had about  a  4% allocation coming into the morning.  We still hold that long term insurance policy (January SPY puts) that we added early in the week, which already is looking like the Titanic. ;)

I've replaced the TNA short with a 5%ish allocation of TNA long and 5% exposure to SPY calls (November 106s) SWGKC which I will hold as long as 1060ish is held on the S&P 500.

Again, I am not really being facetious when I say "bad things" could actually be good news for the speculators of the US of A.  More money printing, more stimulus, more handouts, more programs, more anything and everything.  All these things hurt the dollar and until these relationships change and people begin to ask at what point does firing a great many of our consumers matter - I guess we "celebrate" by buying anything denominated in dollars.

If you are newer to the stock market, there is a reason a stock surges when mass layoffs are announced.  Lower costs, higher profits.  Effectively we are doing mass layoffs to the entire US economy - as we saw yesterday productivity is surging as fewer people do the same work.  Since the government has effectively turned into "the consumer", employers don't really need the "people" to consumer organically.  The people can just take money from government and spend... the corporation still gets the revenue and does not even have to have workers.  We all win here. Ahem.  That's basically where we are in America. 

To repeat, a break of the 20 day moving average on the S&P 500 and I'll reverse course.

Let's keep an eye on the much broader Russell 2000 as well as it has been a laggard...massive resistance just ahead as both the 20 and 50 day moving averages converge.  If "RUT" breaks over that level, it would be very bullish.

Long both names mentioned in fund; long TNA in personal account

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