Tuesday, November 10, 2009

Bookkeeping: Selling All of Friday's Index Long Exposure

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As we sold our SPY call options off in parcels yesterday I was using a mental stop loss that i was moving up as the S&P 500 raced higher.  By the end of the day I said I'd sell out around S&P 1085 to protect large gains generated by buying in the 1060s Friday morning.  We're around 1088 so I am going to make the move now; the S&P has put on a tremendous move in 6 sessions... normally you'd expect some back filling and consolidation after such a hectic move, but nothing is normal anymore. All it takes is someone attacking the US peso for a few hours and every asset on the globe must rally per HAL9000 decree.... we can add 10 S&P points in a blink of an eye.

Might be giving some upside away but I am going to sell all those index longs; the last 1/4th of the SPY calls (up roughly 60% in this last batch), and our entire TNA position which had been a 5% allocation and has rallied 4-6% in a session and a half.  I sold about a third of the TNA first thing this morning north of 6% gains and the rest will exit now around 3.75-4.0% gains.  So a melded average of under 5% for the entire stake of TNA ETF. (by the way TNA is simply a Small Cap index ETF, levered 3x its normal movement) 

I don't plan on doing anything index related while the S&P is in 1090s; I'll let others deal with that stress - the "easy kill" has been made.  The next transactions with the indexes will either be on a new breakout over the "double top" (north of S&P 1100) or on a more substantial pullback.  Since we are in an uptrend and above all key moving averages we'll simply use our core equity positions as long exposure and buttress any downfalls with a good stash of cash.  Frankly I'd like to begin focusing on individual stocks again rather than indexes, but this stupid sophisticated dollar trade is the only thing that matters anymore.  Shorting remains unAmerican (source: Ben Bernanke) - one day "the resistance" shall emerge from the underground and short to their hearts content.

Period "12" is only in its 2nd day but we could effectively drink fruity colored beverages on a deserted beach by going to 100% cash for the next 3.5 weeks, with the realized gains in the first 2 sessions.   But than the blog would be full of posts about the real economy, and I don't want to overwhelm readers with mental anguish joy in regards to the incredible P-cubed (paper printing prosperity) economic recovery. 

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