Friday, July 9, 2010

Bookkeeping: Jumping Back into Direxion Small Cap Bull 3x (TNA)

Yesterday's stick save in the closing 45 minutes (another "vertical" move) was a big help to the bulls.  Rather than a rejection of S&P 1070 and some close in the lower 1060s the S&P 500 finished right at resistance, which allowed the market a nice area to open at today.  It is a very sleepy Friday and they say don't short a quiet market.  With the random movement every day in the closing 30 minutes I am not sure if that holds anymore but whatever the case we have made mince meat of both the 1040 and 1070 resistance areas.  They only held for 1 session before being sliced through.

Therefore, I'd consider the stretch objective of "1100" (in this case about 1094) to be very much in play.  Since I've sold some individual equity exposure the past day, I am going to replace that with Direxion Small Cap Bull 3x (TNA) - a more modest 4%ish exposure simply to keep the portfolio pointed long.   I'll be relatively aggressive with this and not sell it unless the S&P 500 breaks S&P 1066 or so.


I've been hoping for a move to 1100"ish" (i.e. the top of the two month long range) to give us much lower risk short entry points so it seems quite plausible this is going to happen.  I have no idea if we are going to make minced meat out of 1094 just as we have 1040 and 1070 - anything is possible, but with the 2 most important moving averages standing together in 1 spot, it would seem like a much stronger wall.   If indeed 1094 is broken the next objective to the upside is the highs from mid June i.e. that 1 day that started the huge selloff when we hit 1130 and then reversed.

So a quite simple game plan from here - drink Kool Aid in great quantities for about another 20-25 S&P points. Take profits in individual equities as offered and selloff much of what was bought between S&P 1010 and 1025 as we approach 1100.  If it works out that perfectly, we should have a bevy of short opportunities as many broken charts should have run into resistance.  At that point we get our short knife out.

Once (when and if) we are at S&P 1094 we leave it into the hands of the market (or PPT).  We'll either be "wrong" (stopped out of the shorts and forced to scramble remount a long campaign) or be "right" (the market rolls over and our shorts make us money).   I don't have a clue what the outcome is - but we'll adjust whatever the case.

Long TNA in fund; no personal position


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