Slope Of Hope with Tim Knight

A Battle of Wits

This clip perfectly sums up how I think we're all feeling about trying to second-guess Congress.

Don't Take Any Wooden Arrows!

But, I don't want to push my chips forward and go out and meet something I don't understand. A man would have to put his soul at hazard. He'd have to say, "O.K., I'll be part of this world."

As you may recall, my planned strategy for this month was pretty straightforward.

1. Close out short/put positions that seemed to have fulfilled their potential, and tighten up stops on all the rest;
2. Go aggressively long issues that I felt would ultimately retrace to excellent shorting levels;
3. Once those levels were reached, reverse the positions and wind up making profit in both directions.

All that sounds marvelous, but the action in last night's market's has my confidence rattled. The Senate overwhelmingly passed the bill, and the markets fell. There's been a lot of commentary on this in last night's post, but I'm still surprised. I mean, if the House passes the bill, will the market fall even further? (And I think we all are pretty sure what will happen if the House rejects the bill again.............or are we?)

Setting all that aside, let us at least respect the sound judgment of our Senate. Out of a population of 300 million souls, these are the 100 wisest and most intelligent among us. Many commentators (including everyone's favorite, Jim Cramer) have said that there are times when the will of the people must be ignored, since the people don't really know what is best. Flexible democracy, if you will. Judging from what I've seen in the Senate, I'll trust my fate to them after all.

S.P.Q.R.

I am shocked (and kinda disappointed) that, in spite of an overwhelming approval by the Senate on the failout bill (wooden arrow makers.........unite!) the futures have dropped.

I was hoping to be a total pig and ride equities up to the retracement levels and then back down again to new lows. Ugh! Where's a rally when I need one?

Anyone, as comments are approaching the 200 level, I figured I'd do one comment cleaner post. I'm off to read books to my beloved chillun'.

Buy Curious

This will be the last post of the day. I am increasingly inclined to take that huge list of stocks I have which I believe will ultimately retrace and collapse and buy them. In other words, play both sides. Buy them now, ride them up, and then reverse the position. So if you see a lot of buying in the near future, don't worry. You're not on the wrong blog.

(Side note: congratulations to holds of ag-related puts; MOS is getting destroyed after-hours, and many other issues, like AGU and POT, are along for the ride).

Good night.

The Long and Short Of It

I have two accounts. In one, I have a good-sized SPX put position. In the other, I have a very substantial QLD position. So this is a "can't lose" and "can't win" situation. Both portfolios are very bearishly tilted, but just in case, I wanted to be in QLD. Strong arguments can be made for a very serious bounce higher at this point, and I'd at like to have at least one winner on my hands!

But this is more important........and I said this yesterday, but it bears repeating.........I have a huge, huge list of stocks that would be amazing shorts if they would retrace. For this reason, in a perverse way, I would love to see a tremendous rally. It's a tough thing to wish for for two reasons. First, I've already got many bearish positions, and obviously a big rally would be painful; and Two, I'm not the most patient chap on the planet, and waiting the amount of time required (weeks? months?) for these retracement levels would be pretty hard on me. I confess cash burns a hole in my pocket, and I've got a ton of it right now.

In any case, let's watch the Senate. I sure will be glad when this Congressional obsession is over. But we must live with it for now.

Money Honeys

Just a few favorite shorts right now.

Put Me In, Coach!

In spite of some gurus suggesting COH being a fantastic stock that was "on sale" when it was $50 per share (it's less than half that price now, about a year later..........), I think this is a dynamite short candidate. Look at the size of this head and shoulders pattern. Traditional measured targets would be, errr, about $0, but - - -we'll see.

May the Lord Safely Preserve Us

Things are going well. A bit too well.

I'm not sure if I saved a busload of nuns from disaster recently, but the Big Bear in the Sky is looking after me. Virtually every trade I am placing is almost perfectly timed. I'm buying puts when the stock is at a top. I'm selling them when things are about to reverse. And it's happening repeatedly. Even just today, I sold a huge SPX put position when the Dow was down 220, and then I bought an equally sized put position when the Dow was (briefly) in the green. Now the Dow is down 100 again. I feel like I'm surfing from Indonesia to Monterey without falling off the board once.

Anyway, keep an eye on my watch lists. That's the best place to see what I'm into. This Congressional nonsense is wearing on us all. It'll be nice when it is history. Please check out the NoBailout site to offer support to those opposing the horrible bailout legislation. Defeating this legislation is a vote for our democracy!

Hedging

Phew, I'm glad I got out of those SPX puts. The timing was almost perfect! I've identified a few interesting long (bullish) candidates with these contingent stops.

BA 54.20
CWEI 61.89
DST 52.85
EAC 36.84
MRK 30.34
SOHU 49.10

Exited S&P Put Position

My one and only index put (.SZPWE - SPX NOV 1225 Put), purchased yesterday, I have sold off. I usually don't have such a microscopic lens on every little wiggle in the market, but the fact is that this Congressional vote is sort of like monkeying around with the markets around a big Fed announcement - - fraught with risk!

I made a nice profit on my put, and although obviously I'll be disappointed if there's a surprise in the voting tonight and the S&P plunges tomorrow, I don't want to risk my money on guessing games like that. I don't feel very safe shorting broad indexes right now, nor do I feel safe going long them. I confess, I'm not the sort who does well with a ton of cash sitting around in his account yielding 1% annual interest, but there are times when it's best to just sit tight. I'm going to try......