It was a terrific day. But I've said that before, and what often happens is that the giant bag of money that goes into my account one day exits the next. We need a trend; a good, steady trend that lasts more than, oh, say, one day. So I'm not shopping for Lear jets just yet.
I pointed out in this morning's post that there are two schools of thought as to what's next (school 1: July 15 was the low; school 2: we're about to enter a gigantic wave 3 that plunges us into much lower levels). Today's action helps the second postulate to some degree. And Tuesday morning's important economic reports will provide some more direction. But hear this: until we break below 1261 on the S&P 500, we're just flap-jawwing.
I was interested to see FXP had a strong up day. I haven't had a position in China for a while, but looking at $CZH, it looks like the post-Olympic bear market might be shaping up. Do you remember what I was writing back when the Shanghai index was above 6,000? I was talking about how the new, naive middle class was going to get their heads handed to them. Well, that's what happened. But I think there could be lots more heads to come.
The Dow's 180 point drop today helped the bear case. We need to push below the dark red line you see below, though. The good news is that the ascending wedge was busted. The 7/15 uptrend is no longer intact.
I still think the Euro is going to bounce pretty strongly, but I'm not inclined to take a position. I don't trade FOREX anymore, but this graph merits watching, since it will have a direct impact on oil, gold, and (to a lesser degree) equities.
I say again: S&P below 1261. Required.
I've gone a bit diamond-happy lately. I love my ANR puts, takeover efforts be damned.
The DV diamond I pointed out just a few days ago has already paid off handsomely.
And another similar one that perhaps I didn't mention yet is AMT.
You can just picture all the malodorous brokers pushing LVS when it was "on sale" at $30, compelling the bulls to double its price. The downtrend now resumes.
Lastly, on IWM, I sold about 40% of my puts when we hit the retracement level today. The real key is to bust beneath that dotted red line you see at about the 71.70 level. All the same, my index puts did really well today, moving about 35% higher.
I'll do a quick post in the morning after the big economic releases. I hope to God I don't have to hand this giant sack of money back. I'm sick of doing so. I'd rather keep it, thanks very much.
