Friday, July 16, 2010

Bookkeeping: Sold Direxion Small Cap Bull 3x (TNA)

With a break of yesterday's intraday lows I am selling the TNA I put on late yesterday after I got a vampire squid contact high.  Thankfully it was a modest position put on, realizing the market has no memory from day to day and the glee that happens one day at 3:57 PM means nothing by 9:37 AM the next.  My loss will be roughly 7%.

The market is back to its old tricks the past 24 hours and I respect that.  Short term bears pointing at "death crosses" and a rejection at S&P 1100 were booted out of positions late yesterday as traders got contact highs from a combo of oil wells being plugged and squid taken off of a roasting fire.  Eager bulls took their place with visions of S&P 2000+, and those folks were promptly face planted today.  I love a market where everyone is made a fool of!

Thus far earnings season has been a case where almost every company ("shockingly") beats (lowball) estimates, but in most cases it has been a sell the news reaction.  Nothing earth shattering there.  What has been interesting is this has come despite a lack of weaker guidance.  Guidance was going to be the key this earnings season and thus far companies seem to believe everything will be ok.  That said, company CEOs almost always tell a good tale and completely missed the coming slowdown in summer and fall 2007, as they told us great tales of future victory.

You have 2 forces facing off - very good multinational profits versus a quickly degrading economic future.  One is forward looking, one is backwards looking ... the market seems to focusing on macro events the past 3-4 days even in the heart of earnings season.

Technically, we are still in the range of S&P 1070 to 1100.  I will focus more on hedging/shorting on a break of 1070.  Until then it is far too easy to get whipsawed as the past 24 hours has shown.  That said, the chart below certainly looks like a 'rejection' at resistance.

As I said coming into the week, the "easy trade" has been made on the long side.  Now it gets more tricky which is why directional bets have been pulled back (no option plays this week) as I expected it to get choppy.  It has.  Per the game plan we took a lot of profits as the market ran into resistance, and now we await the next major intermediate move.

No positions


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