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We all know that the market has been extremely volatile and not very easy to invest/trade. But, has the market gotten a little more “predictable”? Can you actually see where the market is going in an environment as chaotic as this? If you ask a mathematician, he/she would probably tell you “yes”! He/she would probably say that even “chaos” has patterns! Just read up on the “Chaos Theory“! Ha, Ha! All joking aside, we took profits in the morning when the market was high and watched the market slide soon after. Here were some of the comments made in our Trade Room:
HappyTrading
good morning!
GOOG
breaking out; got back into those 340 calls at $13, just cashed out at $20
HappyTrading
VIX
getting to the bottoms on intradays…
Bagger Vance two FAT baggers this am:
February 04, 2009
07:33 | Bagger Vance IBM ($94.50) Sold to Close IBMBR Feb 90 calls, at $5.50 +57%
07:30 | Bagger Vance FCX ($27.54) Sold to Close FCXCF Mar 30 calls, at $2.02 +68%
HappyTrading
SPX
850! let’s what the market does…
HappyTrading
SPX
got stopped at 850. now we wait…
Bagger Vance
time to buy some puts here
Our timing was nearly perfect. We saw that VIX was getting very low on intraday charts and was about to turn up; at the same time, SPX hit that pivot level, 850!! The market turned lower soon after. But, still, this volatile environment does make things harder. Yesterday, I got shaken out of those same GOOG 340 calls for a 11% loss:
10:06 | HappyTrading GOOG ($338.50) Sold to Close GGDBE Feb 340 calls, at $12.00 -11%
But, I knew that GOOG has a chance of breaking out today. So, I got back in before the market closed yesterday. This morning, I was able to cash out the trade at a +53.8% profit:
These options traded as high as $21.19 and closed at $13.8, nearly back to where I bought them yesterday, and I got out pretty close to the top. The smarter thing would have been just hold the position until this morning, but, I was being careful, and things eventually worked out.
After the market, CSCO reported better-than-expected earnings, but, its outlook was not so good. CSCO shares 4.36% lower in AH trading. V, on the other hand, jumped nearly +8% after beating its profit estimates. BBBB scored a solid quarter and sent its shares soaring up more than +9%. AKAM saw its quarterly profits rise +13%, which topped analysts’ views, and its shares traded +7% higher.
The Dow was down 121.7 points; SPX lost 6.28 points; Nasdaq slid 1.25 points:
VIX went slightly higher. GLD (gold) and GDX (gold miners) were higher today (mentioned in last night’s post). OIH (oil services) added +3.52% while USO (oil) lost 2.08%. XME (metals and mining) and XLE (energy) were slightly up. MOO (agriculture) bounced +2.37%. FXI (Chinese ADRs) advanced +2.55%
SPX
SPX lost 6.28 points to close at 832.23. It tested 850 and failed again. It closed below its 10-day MA. The MACD was flat.
Nasdaq
Nasdaq slid 1.25 points to close at 1515.05. It managed to stay above 1500. The MACD was up slightly.
CSCO’s earnings report is weighing on the market futures this evening. Techs were trading higher immediately after the report. But, when CSCO gave its outlook, techs turned lower. Unless there’s some positive news to drive the market in the morning, the market is still on very shaky grounds. So, has the market gotten more predictable? With VIX coming down from 90+ to now below 45 certainly helps. But, things are still “oscillating” very fast. Tools such as charts certainly help, and, when combined with some fundamentals, they can help you make more “educated” decisions. The market is in a dire need of some encouraging news. The daily MAs are starting to bunch up, which could be signaling bigger movements on the horizon (the market has been tightly range-bound since the beginning of the new year). It’ll have to get above the recent highs (SPX 875; Nasdaq 1550) soon, or else…
Good night and HappyTrading! ™
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