We’re getting close to where the 50 day SMA will cross the 200 day SMA on the S&P. This will be a bullish signal and probably trigger buying in the quant funds. I don’t think we’ll get to 1265 before that happens, so 1306 may be our near term support level and buy point.
I’m not going to chase AAPL right now and give back the gains I have recently. There’s a gap between 326 and roughly 347, so that will most likely be filled. I’m not bearish, so I’m not buying puts, but I’m more attracted to the stock at the 326 level than up here at 346, just a 5% decline, so nothing ridiculous.
I pared back on my position in SLB at 76.15. This is a bit below a resistance level at 77.4, but the market is tanking and I wanted to trim exposure to this position that has run quite a bit from the bottom. I’m selling this at a net loss, but it doesn’t matter where I bought it, only where I think it’s headed in the future.
As part of my cash raising efforts I trimmed positions in CAT at 111.75, FCX at 47.28, and LULU at 63.72. I overweighted these names last fall in the precipitous decline and am now locking in those profits and going slightly underweight in all my positions, because I think we’re nearing a near term market top.
I rolled out of my deep in the money WYNN Feb 95 call and opened a position in the Feb 120 calls to cut off my downside and lock in profits. This will capture their earnings report on the afternoon of February 8th. I may further cut off the downside by shifting into the weekly options when they price on Thursday, February 2nd.
I rolled out of my deep in the money CF May 140 call and opened a position in the Feb 170 calls to cut off my downside and lock in profits. This will capture their earnings report on the morning of February 13th.
I started trimming positions as the market turned downwards. I now have over 40% cash and that’s the highest level I’ve had since the blow up in August. Most of my changes were trimming of positions that I loaded up on last fall and also rolling calls to higher strikes to cut off my downside and lock in profits.
I covered my short position in the AAPL Jan 28th 445 calls at 3.95. I missed the absolute bottom at 2.5, but did better than I would have if I had closed the position at the open when I sold off the long calls. If I had covered this morning, it would have been closer to 7, so I made another 3 bucks per contract by waiting until now to close.
At the end of the trade, I bought the 430 calls for 10.75 per contract and sold them for 20, for a gain of 9.25. I shorted the 445 calls at 5 per contract and covered at 3.95, for a gain of 1.05. The net gain on this 430/445 bull call spread was 10.3 per contract. Not bad for a week’s work.
I may pick up a fraction of my target in the AAPL March 440 long calls, but I won’t be putting on a bull call spread right now. I think the stock is in the middle of support and resistance right now, so I think I can buy the long calls at a lower price and I think I can sell the short calls at a higher price. There’s just no need to put on the whole position today.
The Fed said today that it will lock interest rates in at these levels until the end of 2014. It had previously said that it would keep them at these near 0 levels until mid-2013, so this is even more dovish than the previous statements.
Markets are on a tear as a result, because it will force money into equities (bonds will have pitiful yields) and borrowing will be affordable.