Covered SLW, FRO, and WFC short puts

[caption id="attachment_672" align="aligncenter" width="500" caption="S&P"][S&P][][/caption]

[caption id="attachment_673" align="aligncenter" width="500" caption="S&P intraday"][S&P intraday][][/caption]

The market broke my intraday support line today (pink line, first graph). What appeared to be a good Monday turned out to be very disappointing. I cleared the last of my short puts (i.e. long) about 5 seconds before the close when the market gained some footing. These plays are purely for risk management purposes, each individual stock looks ok to me to be accumulating at this level. But I'm in for the swing trade and it haven't worked out. So I'm selling them all mainly because the overall market looks weak.

To illustrate, today's intraday market data looked particularly bad. I thought the market would turnaround after the TICK retested a -1200 low for the day at noon on lower price, but the price continued to drift down afterward. Then the 2pm rally didn't even break 930 (resistance from yesterday) too. That was the last draw for me and I decided to exit all risky positions from then on to minimize my risk. So I covered all my options into the close.

The first of which was Dec SLW 5 put at 15:48 for \$1.70, which I bought at \$1.55. I still have my 166 shares of SLW, so it's an obvious choice for me to unload the options. I don't want to be too heavy on precious metal for now. SLW is still holding the \$3.4 level and marked a higher low in the afternoon. So it's actually looking good.

[caption id="attachment_674" align="aligncenter" width="500" caption="Silver Wheaton"][Silver Wheaton][][/caption]

Next I sold FRO at 15:59:27. The low of today looks like a test of a daily trendline, pink line below on the right daily graph (Update: I forgot to attach the graph. I added it a day later below). I normally would have only sold if it breaks it, but again, the market looks bad. So a retest of \$30 (highest volume in recent months) seems possible. I covered the FRO short puts bought at \$7.90 for \$8.00. On another note, I mistakenly placed a sell order on the put rather than a buy (to cover) at \$8.10. So I quickly covered that accidental trade at \$8.30 regardless of that fact that FRO was moving up at that time. I've learned my lesson in accidental orders and would cover immediately regardless. I won't try to convince myself like my CAF trade.

[caption id="attachment_686" align="aligncenter" width="500" caption="Frontline Ltd."][Frontline Ltd.][][/caption]

[caption id="attachment_675" align="aligncenter" width="500" caption="Wells Fargo"][Wells Fargo][][/caption]

I covered my Nov WFC short put bought at \$3.60 for \$3.00 at 15:59:55. Fee \$7.50.

I almost didn't want to give up my WFC position. It was the strongest and the one most profitable of my Friday's swing trades. In particular, last Friday's turnaround has by far the most volume in several months. The \$28.0 support looks almost impenetrable. Indeed, today's low of \$28.04 looks safe and we only tested it at very low volume. Indeed, I really don't think we'll see this low again in the short term. Looking at this more carefully now, maybe I should leave it open ... Oh well, I can always get back in.

[S&P]: http://traderpau.files.wordpress.com/2008/11/2008-11-10-spy.png [S&P intraday]: http://traderpau.files.wordpress.com/2008/11/2008-11-10-spxintra.png [Silver Wheaton]: http://traderpau.files.wordpress.com/2008/11/2008-11-10-slw.png [Frontline Ltd.]: http://traderpau.files.wordpress.com/2008/11/2008-11-11-fro1.png [Wells Fargo]: http://traderpau.files.wordpress.com/2008/11/2008-11-10-wfc.png

SOLD -1 WFC 100 NOV 08 31 PUT @3.60

[caption id="attachment_642" align="aligncenter" width="500" caption="Wells Fargo"][Wells Fargo][][/caption]

Wrote a put on Nov WFC strike 31 for \$3.60. Fee \$7.5 as usual for options. WFC tested the critical \$27 support level today with a gap down. The price gradually recovered with increasing volume. On the daily chart, the overarching trend is still up from the 200 dma. But there's some wild swings over the last few months, including the capitulation this week from \$35 to \$27. We have tested the \$27 level today with strong intraday action.

In particular, the S&P is holding on the 910-915 level. In particular, the 3:15pm test of 915 occurred at the all-day TICK low. Note the middle graph of the NYSE TICK, we bounced at 915 right when the TICK reached a new intraday low. This is a significant show of strength and it leads me to believe the retracement from the rally has ended. We'll probably be continuing the uptrend next week.

[caption id="attachment_644" align="aligncenter" width="500" caption="S&P intraday"][S&P intraday][][/caption]

Upside: As explained above, looks like a rally in the broad market. The financials should be winners since they dropped the most and this is a bear rally. WFC is a strong contender in the financials, so I picked it to ride this wave. Bought this mostly based on the technical analysis, the \$27 test looked good.

Resistance: \$31.3, top of the gap down open from yesterday.

Downside: Stock tanked in last 3 days, from \$35 to \$27.

Support: \$27.

Bottom line: I'm just choosing to ride the strongest bull I could find in an expected rally. I chose the 31 strike because of the gap down open (\$31.3 - \$31.0) yesterday. We should fill it if this were to go up. WFC was just below \$28 when I bought this, it has closed at \$29.50 on a multi-day 15 min high volume. This is a short term play only, I'll let it go when everyone else are smiling next week or two.

[Wells Fargo]: http://traderpau.files.wordpress.com/2008/11/2008-11-07-wfc.png [S&P intraday]: http://traderpau.files.wordpress.com/2008/11/2008-11-07-spxintra.png