A perfect trade

OEX 715 puts it was and a perfect day trade. Rebounded at S1 712 which was the time to close out. Now, where do we go from here? The market is overbought, VXO gave a sell signal and the buy sentiment was cut in half although the sellers were not out in full force. This is not a buy point. From past experience since this is up trend, shorting will be best served by day trading. Do not leave shorts overnight. But 707 is reachable. As long as it is below 715 short it. s1 is 712, s2 is 707. Close your shorts if it rebounds at 707 and remain short if it is below 707.

2c

All Out...

of OEX 710 calls with profits. My forecast target of OEX 720 may still be reached. But I was warned by one very reliable indicator this morning. The market will sell off as early as tomorrow or Monday. This inidcator has reached the high level equivalent to that of Aug 8, 24, Sept 4, 13 and there were sell-offs afterwards. Although this time, other indicators are not exactly in sync. But this is a tired bull. It is prudent to take off longs and position shorts. OEX Oct 715 puts are good.

2c

Breaking out or trying to at least

Got in OEX 710 Oct Calls finally when the market retraced and is still in the trade. If nothing bad (or nothing economically too good) happens in the next two days, an anticipated target will be OEX 720 by Friday. Keeping my fingers crossed.

2c

Early Buy

As planned, shorted from 711ish to 706ish with OEX OCT 715 puts with small gains. Now to go with the flow, the market is oversold is attempting to retest old highs. Tried to low bid OEX Oct 710 calls at the close but did not get filled. The way it closed today was interesting with an upsurge at the last minute. As long as it closes above 709 tomorrow, OEX Oct 710 calls look attractive.

2c

Sell signal out

If it does not close above 712 tomorrow expect one to two days of selling. Possible targets 705 then 697. In and out of 720 puts with profits. If the Fed were not trying to inflate their way out of this mess, I would have left my puts overnight. Will reenter again tomorrow especially when 712 fails.

2c

Outlook for Monday

It closed at 713 which is the pivot for Monday. Although, it can go either way, and perhaps eight points on either side, the odds favour the downside. Would not be surprised to see a test of 704 before further advance. At this stage OEX OCT 720 puts are still the best bet. Have a good weekend.

2c

Out

Closed the OEX 720 puts with a small profit. Although it closed below 714 today, other indicators point to the possibility of one more push to the upside. 30 minutes down channel is also bullish. Tomorrow is OE day. It is best to stand aside. Just too overbought to buy at this point but not overbought enough to get a good short. Need some news to push it either way.

2c

Day after Fed Day

The big rate cut from the Fed distorted the norm. Took a small short postion when it reached 716ish. The Oct 720 puts are so cheap. Could be early but expect at least a retracement to 710. If it does not close above 714 tomorrow, it will be lower into the weekend.

2c

Surprise, surprise...

The Fed rate cut of 50 basis points only signals that there is a serious problem with the underlying economy and that they missed the whole ball game. Only a month ago, they were saying the subprime problem was contained. However, the market only dwells on interest rate. Negative news do not mean much. Such a cut would only fuel rise in oil price and inflation. Tomorrow's CPI reading will be interesting but the Fed has already sided with issues other than inflation which is supposed to be their prime concern. In addition, a crumbling dollar would make foreign investment in the US equity market less attractive.

In any case, the forecast for a down Monday, an up Tuesday was on track. Is it going to be a down day after the Fed day tomorrow? The Fed move has drastically changed the technical picture and certainly one would expect continuous up trend. However, this does not exclude a pull back tomorrow especially with a 300 point rise in Dow. Watch 716 and 703 for actons. Would be tempted to short if it gets to 716 area or if CPI is bad tomorrow morning. It has to come back to reality.

2c

The all important Fed day tomorrow

If it were not for the Fed meeting tomorrow, one could short the market blind-folded. OEX closed below pivot 693 and right at S1 691. This does not bode well for the bulls tomorrow. By this time, the market should have rallied into Fed meeting. Somehow, the market is smart enough to sense what's coming ahead. Contrary to most beliefs of a 50 basis point rate cut, the market seems to tell us that either there will be no rate cut (as echoed by Mr. Greenspan) or only a 25 basis point cut. This will invoke a sell-off and if uptrend is to be maintained then it should halt at 685ish.

2c

Predictable

The market is getting to be too predictable and is scary. The pull back this morning stopped at exactly S1 690ish the upper ternd line and reversed from there. Could have pulled the trigger for a short last night and got out at 690 this morning for an almost 50% gain. But the Fed meeting complicated matters. Bought a few in-the-money calls for RIMM for a day trade for a small gain because of its upgrade.

Now OEX closed just above pivot 694 today, but it was not higher than yesterday's close and is "Hammerish". Besides the daily upward running channel is bearish. There is a more than 80% chance that Monday will be a down day. The VXO gave it away. If Monday is a down day, Tuesday's up and Wednesday is down. If Monday is up, then sell the news, Wednesday will be down. Either way you look at it there is a high probablity that retracement will start within 3 days.

2c

Scaled Out

OEX target was accomplished on time and was exceeded. All positions were scaled out. If it were not for the Fed meeting on Tuesday, scaling in some OEX puts would be in order. The way it pans out, slight pull back to sideway activities is expected, with Wednesday after the Feb meeting a perfect short opportunity. Though, bear in mind the trend has changed to up, with the majority of profits to be made on the long side.

2c

Pausing......

However, since it closed above 685, expect at least one more push to the upside tomorrow and your OEX options will be doubled in four days if you had bought on Sep 10.

2c

Trend Reversal

As long as OEX closes above 685 tomorrow the near term minimum target is 693ish. This is expected to be achieved within 2 to 3 days and by Friday the latest. The realization of this up leg will reverse the market into uptrend once again. If you have bought OEX in-the-money calls the last two days, you are in very good shape. Hold on and let the profits run.

2c

First Post

Some of you may have known my "2cents" from other sites. I have decided to try my own blog for a change. My trading style is mostly statistical. I only trade OEX options for they give you the most leverage for the buck. This is the first post and will evolve as time goes by.

I will keep it short for the first round. It is a buy tomorrow if OEX closes above 683 and more selling to come if it closes below 678. Since it is only 2 weeks to expiration, it is prudent to go for the in-the-money option such as OEYIO (Sep 675 call)

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