The market open today had the S&P flirting with its 800 support level. GE released a bad earnings report and that gave traders an opportunity to move the market down to support. I came into the market heavily long. A tough decision was presented. Buy at support or hedge things back to neutral and wait to go short if the market breaks support.
I decided to hedge things square using IWM in the pre-market. I watched both BAC and C to try to get a feel on the market. I felt confident that the market would not break 800 on the S&P unless the financial stocks continued to tank. C was actually up in the morning and BAC was hanging in there.
I played it by taking advantage in the dip in ICE back to support and added to my long position. I kept working my trading plan. I saw financials moving and figured any kind of rally would need oil involved. My DXO position was light and I added to it.
The market then started to reverse. Even with my large hedge in place, my longs started to build a nice profit and I unloaded 1/3 of my hedge purchased in the pre-market at a loss. Highlights on the long side were MBI (+ 17.49%) and DXO (+ 12.55%).
My shorts did a good job staying in check as well. AZO and ESI both were in negative territory almost the entire day and closed flat. Southwest Airlines (LUV) was down almost 20% late in the day and close to support. I added a .5% position.
I was up huge on the long side and didn’t get beat up on the short side.
Today ended up being a day for the traders. By managing risk, I was able to walk away with a nice profit while still being protected and ready if we had plunged through the critical 800 level on the S&P.
I plan on posting many new ideas this weekend. Stay tuned.
