Other activities kept me from looking for new ideas tonight. I did want to do a journal entry rather than posting nothing at this late hour.
I posted in the comments section this morning in the pre-market that I was taking down a large short position in IWM to hedge out my portfolio. I mentioned yesterday that we had strong resistance at 850 on the S&P (85 SPY) which made me quite nervous. The weakness this morning in BAC after the bad economic data came out was enough for me to hedge. This worked quite well. The plan was to buy the hedge with a fairly tight stop. If we started moving higher, I would let it get stopped out and become long again. If went lower like we did today, perhaps I could sell of the hedge for a profit (or part of it).
I sold off half my large short (10% position) in IWM throughout the day. I felt especially good about it when ESI rallied on earnings right up to 128 (near the 130 all time high). I was a little nervous to enter because I saw DV breaking out on the news. I was skeptical whether the DV breakout would hold. I saw DV getting weaker and I took down a 2% short position in ESI. ESI later rallied up to 130 (perfect entry point) and I took down another 2%.
In short, I was able to cover half my IWM hedge at a profit and replace it with the ESI short. I did send a twit out when I did my initial entry into ESI for those following.
Other than that, I did move up my stop on my long IYT at the opening and I was stopped out at about 54. I still am hoping to enter IYT at 51 or 52. I didn’t see any reason to sell IYT other than trying to get my portfolio quickly delta neutral. This combined with the IWM short accomplished the goal really quickly.
Today was a success. I was able to keep my profits from yesterday’s rally.
I am tired as hell but I am going to try to get a quick plan ready for tomorrow. Note that the LQD, HYG, JNK trade worked well today. HYG and JNK looked pretty strong most of the day compared to LQD. My little pairs trade is working nicely thus far.
I also almost forgot to mention that I took down a small long position in ICE after reading a post from Zstock. There is strong support at 50 and lots of upside potential and it is easy manage to risk. If this sucker breaks 50 on the downside, it could become a good short. Certainly an action point here.
Dow futures are currently down about 60. It looks like we could be heading back down to 80 on SPY. See you in the morning.
