Tuesday, September 21, 2010

Mostly in cash

An interesting day on the street today where the markets moved around quite a bit and ultimately ended up going nowhere. Technically, the support and resistance levels remain the same as yesterday - 1130 is the nearest support and 1150 the resistance - so, I won't bother putting up the index charts today. Considering the kind of bullish up move I did yesterday, I think the markets did quite a good job today of digesting the gains. Nothing wrong with that. If I were bullish, which I am, the one thing that would concern me a tad is the financials. They are lagging behind the overall markets and like I said yesterday, I don't see the markets carrying on with this rally without the financials coming to the party. So, watch out for the 15 level on XLF. A break of this level could give a second wind to this rally. That said, I will continue to remain bullish unless we break 1130 on the S&P. The corresponding number to watch out for on Nasdaq is 2325.

Personally speaking, I had one of my best trading days of the year, thanks to the solar stocks. But first, let's get the disappointments out of the way. I got stepped out of MIPS at 8.60 for 2.3% gain. I know I got a decent profit out of this one but I had my stop too close on this and got stepped out close to the lows of the day. Oh well. Moving on, the regular readers of this blog know that I have been bullish on solar stocks, particularly JASO, for quite some time now. Well, it did break out today and I sold it at 7.98 for 8.5% gain. It ended the day quite strongly too. I might repent selling it but I would have repented it more had the breakout failed and I had missed cashing in on the profits. Plus, I have learnt from past experience not to get too greedy on these solar stocks and take my profits in them when I can. A case in point would be LDK which I sold at 8.43 for ~ 3.5% gain and saw it end the day at 8.25. I took a small starting position in SOLF at 12.18. It's not the best entry point but its a small position. I will consider adding on break of 12.30s.

I also made one other trade today. As the market went up quite a bit after the FED announcement, I wanted to short it as it approached 1150, the next resistance level as pointed earlier. Now, as you readers know, I have been bullish for quite a while lately, so didn't have a watchlist of short setups ready. I thought of going with FAZ but triple leveraged ETFs are not my thing. Then I thought of VXX. It was not down much and seemed relatively less volatile. I didn't bother charting this one as I don't believe technical analysis actually works on this one. I took a small position at 16.48 and will be looking to get rid of it at the first opportunity. It behaved rather well but I will be damned if I trust this and fall into the VXX trap. 

My biggest position is cash right now and I am quite comfortable with it. 

Take care and good luck.

No comments: