S&P is up 50+ points today. We gapped up at the open, stayed in a trading range for the day, then slowly rose up in the last hour, but only to lose a small chunk and settled at 850, again. The volume has been low throughout the day and the internals didn't look too good. That's what prompted me to unload about half my positions in the last 45 minutes. The recent beating in my account certainly is making me being very cautious now. I'd rather save my ammo to enter higher later when we get confirmation for a rally than wait for one with bloated bullish positions.
Looking at the S&P 500, TICK, and Advance-Decline line. Aside from the open gap up peak, both the TICK and A-D line failed to impress throughout the day. Actually, it was lack of strength in the numerous 840 tests and the weak 850 breakout about 3:20 that worried me. Notice the lower lows in both the TICK and A-D line at the 840 and 850 breakouts in the chart below.
[caption id="attachment_886" align="aligncenter" width="500" caption="S&P 500 internals"][/caption]
The first to go was -90 DELL @ 9.90 at 3:25pm for about a 50% loss. I bought DELL at the beginning of October for \$16.49 and it has been underperforming throughout the two months. There's been little volume since I bought, up or down. Even with the exuberant buying on the market today, DELL failed to break above \$10 (it did close at \$10.14). Most important reason for me selling this long term holding now is that there's very little volume even on this up day when everyone's expecting a real bear rally.
[caption id="attachment_887" align="aligncenter" width="500" caption="DELL"][/caption]
Next up, I sold my C calls from the strangle placed Friday. As I said earlier in the day, the news that the FED is bailing out Citigroup has rocketed its share price from \$3.17 at my time of purchase to \$6.50 on the morning rush. However, C share price eased down throughout the day and failed to break \$6 with high volume. I sold at about \$6.05. I purchased the +2 Dec 5 calls for \$0.79 and sold them for \$1.77. This was a speculative play and I didn't want to be greedy. So I sold when C share price showed it's lacking steam to continue to move up ahead.
[caption id="attachment_888" align="aligncenter" width="500" caption="Citigroup"][/caption]
Lastly, I sold my +2 ABB Dec 10 calls purchased at \$1.55 for \$1.70. A breakeven trade after commission. The drawdown was humongous in this trade since I have missed some previous stops. The ABB share price action is a lot like DELL today, a lot of fireworks but no real substance. Yes, the price is up a lot today, but there's no volume from it. In particular, in the last 15 minute, ABB dived back down to its major pivot point of \$11.10. I quickly unloaded my calls then.
[caption id="attachment_889" align="aligncenter" width="500" caption="ABB"][/caption]
Like everyone else, I am really hoping for a good bear rally. It would do everyone, both bears and bulls, some good at this point. The thinking is, after so many fake rallies lately, this one has to be it, right? However, having learned my lesson in bottom picking in this bear market, I'm putting my hope/logic aside and interpret what I see in front of me. From today's price and volume movement, this rally doesn't seem like it will follow through.
I do hope I'm wrong though, if we can hold the 845/840 level on the S&P500 tomorrow. Then I would be looking to add to my already 60% long holdings.
: http://traderpau.files.wordpress.com/2008/11/2008-11-24-spxintra.png : http://traderpau.files.wordpress.com/2008/11/2008-11-24-dell.png : http://traderpau.files.wordpress.com/2008/11/2008-11-24-c.png : http://traderpau.files.wordpress.com/2008/11/2008-11-24-abb.png