Tuesday, March 2, 2010

Bookkeeping: Selling Some Index Positions

I sold some of the SPY calls and TNA ETF I bought yesterday morning in the 1112-1113 range here around 1119 (TNA sold this morning around that level, SPY calls just sold now).  There is nothing particularly concerning in the S&P 500 chart - other than lack of volume expansion -  but some sources I am reading say that there is resistance at S&P 1121.  I don't see it myself, but that seems to be where we are stalling so there must be some truth to it.

Of more concern are individual charts - many stocks I am interested in are up at a 45 degree angle the past 6-7 sessions and once more nowhere near any support level, even a 10 day moving average.  They need a breather.  That doesn't mean they will take that breather tomorrow, but if nothing else they need to go sideways for a day or two to let the moving averages catch up to the price.  I am also seeing the past 2 days the old fashioned small cap Chinese speculation - that can go on for weeks on end, but it generally indicates froth.  Also select biotech names are exploding higher - another sector I watch to see when Kool Aid is flowing hot and heavy.

These SPY calls are meant as very short term instruments and I really don't even like to hold them overnight so with the decent move in the S&P 500 in a day and a half I took 60% off the table and locked in the profit.  I used about 6% of the portfolio in the SPY calls, and should finish with about a 30% gain in what I just sold.  All it would take is a negative premarket (perish the thought) and the S&P 500 opening at 1112 and all my gains in the calls disappear in an instant.  If the S&P 500 falls below 1115 I'll dump the other 40% to lock in some profit rather than handing it back to the market.  In other words I still have about 2.5% allocated to SPY calls with trigger finger ready.

Since I am still underweight the market, I will keep the 40% remaining TNA unless/until 1109 is broken on the S&P 500.

Long SPY 113 March Calls, and TNA in fund; no personal position

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