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Saturday, January 7, 2012

Weekend Thoughts (01-07-2012)

It was a terrible week for me as I couldn't get my drug so frequently to satisfy my addiction (the stock market). Turns out I had to go to London, Ontario for work and I spent the week in meetings and sitting at a desk with no privacy at all!! And it really sucks when you can't take a peek at the markets from time to time. Every 15 minutes I was pretending someone was texting me or something so I turned on the phone and looked at how the major indexes were doing without anybody noticing. Man it really sucks to be trapped in the 9 to 5pm working stiff! Other than that London was great, the crew over there was awesome (never seen people drinking more than those guys. These Canadians are insane) and the projects we are working on are pretty interesting too, so it was not that bad after all. I love this awesome nation!

Now, the markets...
Last week I thought the markets should go down. I was mistaken, they didn't. But they didn't sky rocket either and I didn't open new positions so there was no harm. Now, when I think about it, The Santa Claus rally was kind of weak, and this week the markets didn't move up strong in spite of the strong US economic data. I can't be a wizard, if I were I wouldn't have this site and would probably be at some beach in the Caribbean now :p, but I think the upside potential looks limited now. Bellow is a chart of the number of stocks above their 20 Day Simple Moving Average. Anything above 80% is considered extreme, notice we're close to that level. By the way I pulled it from$MMTW

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Now, the SPX index:
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Looks like there's some bearish divergence doesn't it? There's also resistance in the 1290 area which is still to be broken.

Moving on to the VIX:
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Touching base down there in support.

Portfolio beta-weighted:
(Click on image to enlarge)

Still pretty comfortable with profitability between SPX 1111 and 1352 in the next 13 days. I would have liked to close the QQQ Bear Put spread but commissions just piss me off too much ($1.50 per contract). These Abusive brokers with Canadian bastards!! And it doesn't get much better than that when it comes to commissions up here. Guess I gotta move down to the US.

The plan for the week
On Monday we will be 39 days away from the February expiration cycle. That's my sweet spot. I will try to find an opportunity selling calls this week, and I would really love it if the markets went up a bit, so calls get a bit more juicy. I think it is possible as the week is going to be heavy in news and also earnings season just getting started, some people start to enter the markets in anticipation. If on the other hand, there is a sell off right from the beginning of the week, then so be it, I will probably do nothing.

Have fun my friends and have a solid weekend, if that is even possible (solid weekend? Jeeeezz) As a non-native English speaker I get to combine uncommon adjective and nouns. They sound funny at times, other times they make me look stupid. What the hell!! you got the point!

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