Tuesday, October 28, 2008

Bear Market Rally - Dow Up 889 pts

If I am going to be taking *snapshots* of this volatile market, I may as well memorialize today's levitation.

The Dow was up about 400 pts today when I:

1) Posted this comment on Rich Karlgaard's blog (timestamp is Pacific Coast Time) -

2) Left my computer to take my kids to the library.

Obviously, in that last hour or so the market rallied another 400+ points.

Regarding 1) - Monday the market sold off a few hundred points - into the close. It was violent and had to be extremely discouraging for the bulls. Every time the market has tried to rally it's gotten kicked back on its tail. Yesterday proved to be the capitulating capitulation. Any long who got shaken out on Monday just HAS TO BE pissed seeing Tuesday's 900 pt rally.

Now as for today...

Once the folks (and traders) saw the market firming up, they all stampeded to add to their mutual funds. Since mutual funds give their investors the closing price, all the sheeple ended up buying the market at 9,065 - a full 10% higher than they could have owned it had they bought in a day earlier!

Meticulous readers are aware that CaptiousNut got long on Thursday at good prices. This rally wasn't at all hard to predict; BUT it was hard to plan for.

In one of my better stretches (mentally anyway) I haven't gotten long ANYTHING in quite some time. In fact, I could very easily have bought a whole lot more than I did last week - as my gun was *fully loaded*. This is how I *planned* to capture today's rally. More *premature* traders, like Mark Cuban, were just getting back to even today.

Late last week, I got long the NASDAQ-100, the QQQQ, at 28.39, 29.04, and 29.15 with sells at 30.00, 31.81, and 31.80. The last two sales were at 5pm today. Cha-ching.

On Friday I also doubled my OIH position, adding an 83.00 buy to my 85.32 stock.

Today I also *covered* my 11.83 DELL stock with November 13 calls - sold for 92 cents.

I hope the market opens or trades up big tomorrow - I'll short the bejesus out of it!


Taylor Conant said...

Yeah, I jumped the gun on DXD, QID and SDS so I'll be watching the miraculous tumble from these new highs and wishing I was making profits instead of getting back to even.

I have bad timing. Teach me!

Anonymous said...

Mutual funds should be going the way of the DO-Do bird. This coming from an employee of a very large mutual fund company. ETFs will take market share from the actively managed funds. Once more disclosure on fund expenses come down from Washington, people will actually see what they are paying for and run for the exits.

CaptiousNut said...