Slope Of Hope with Tim Knight

Truth vs. Utter Crap

Jumping Back In

My decision to exit my puts this morning turned out to be spot-on. IWM's pause at Fibonacci support was a picture-perfect exit.

However, we have traversed all the way from the 50% line to the 61.8% line, so I'm comfortable getting back in again. My other 65 positions have been happily sitting there. But once the IWM got to about 69.10 I felt it was safe to get back into the water. The graph below shows where I got out (the green circle) and where I re-entered (the red circle).

The New Adventures of SuperWimp

This morning, I closed my index puts on $NDX and $SPX. The profits were nice, and I don't have any concrete reason for doubting those profits might increase, but the notion of a consolidation and breakout from these levels worries me too much.

I haven't had any time to check my charts out this morning, but I'll let my stops do their work. By the way, one gent asked if, based on my "no activity in first 30 minutes of the day" rule, if I canceled all my stops each morning and re-established them half an hour into the open. The answer is an emphatic "no!" By "no activity" I mean for a goober like me to be messing around. I am perfectly happy to let my stops stand sentry day and night. That's what they are there for.

Weekend Review

Happy weekend, everyone. I had a terrific trading week, and although I'm still concerned that we're between a rock and a hard place in the markets (in the middle, uncertain what is coming next), there's nothing I can do to change it, so I'm just doing the best I'm able.

The task before us is plain (again, not that we can do anything about it): push beneath the "shelf of support" ranging from 645 to 680. Do that, and it's an all-clear for the bears.

The problem is that you can look at the activity on the IWM and construct a bullish or a bearish argument out of it. One could take the past 60 days of the IWM and plausibly state that we've just done a retracement back to a cup with handle breakout, and it's ready to blast higher to new highs for 2008.

Yet one could take the exact same graph and say that the broad downtrend is still very much intact (the red line below shows resistance) and the brief rally has been broken, retraced, and has now failed (the green line).

I lightened up quite a bit on index holdings due to this uncertainty and am more weighted to sectors I think are more cleanly ripe for a fall, such as oil services.

I've mentioned Apple a few times (all of the following are stocks on which I own put options). The resistance level is super clean.

ACL seems to be wrapping up a nice topping pattern.

I've had ANF for a little while, and on Friday it finally started moving.

APA is a higher risk play, due to its strength, but any weakness in oil could make for a juicy 20 point drop (and thus a huge jump in the option value).

Ah, our old friend Chipotle is back. I haven't played this in a while, but I'm ready to rumble again.

I haven't done anything with GENZ in years, but I've got puts on this since the pattern is mildly interesting.

Lastly, CEPH really has me intrigued. The neckline isn't straight across, but that doesn't bother me. I have big hopes for this one!

We've got a new puppy in the house, so I'd better go romp some more. See you Monday. 

Fantastic Retracement!

Gorgeous! Sensational! Astounding!

The IWM fell today, magnificently nailing its 50% retracement level (smack dab in the middle of the two big Fibs). Breathtaking!

I sold my RUT puts near the end of the day, but I'm still holding onto my NDX and SPX puts. Like a total coward, I sold a block of IWM puts earlier today (at a profit, but a profit that would have been three times larger had I not wussed out). Anyway, it was a great day, and I'll do a post late tonight with my musings.

The Shelf of Support

For a while, I mentioned the "rectangle of resistance" on the IWM. That rectangle was half-penetrated early this week, and although the market has softened up a bit, now the bulls have something equally formidable in their favor - - a "shelf of support" (I'm in a phrase-coining mood this morning). So we're between the proverbial rock and a hard place at this point; it's going to take some serious buying by the bulls to push above resistance, but it's going to take even more dramatic selling by the market by melt through all this support. It's a tough call.

On a shorter-term, positive note, I got out of my APOL puts this morning for a profit of about 120%. Given the 20% plunge in price, that's not a huge profit, but my option plans tend to be relatively conservative (in the money, several months out). So it's not the multi-hundred percent gain I'm sure others had. What's particularly nasty about these deep in the money puts is that the market is barely willing to pay intrinsic value for them, and sometimes the bid is even less! Oh, well. I'm out and I took a nice profit, so how can I complain?

Apollo 13

Heading Home......

After a few days at Prophet North, I'm heading back to my beloved Palo Alto. Thus, my post will be quite late today.

But what a day it was! I think God heard (or read - - He has good taste) my bellyaching about the market and His Divine Trading Account intervened with massive selling. So I ended up wayyyyyyyyyy in the green today.

I trust my beloved readers did well too. I'll write to you again tonight from the Silicon Valley. Oh, and by the way, I've gone back to the original Disqus settings. Too many people remarking about quirkiness, so I'd rather keep the user experience superb.

Drumming Fingers

If I were a true day trader, I would have been smart enough to bounce out of all my indexes when the IWM kisses its lower retracement level. But I'm more of a swing trader, and hence my big fat green profit swung to a big fat red loss. So here we wait, ad nauseum, for a level to be broken. To the downside, God willing.

A Chance at Topping Out?

The IWM is starting to look more encouraging. We've got to break the Fib level at 69.05, though.