Today’s Trading Update – Wednesday, May 24, 2001
Today we came short DIGL (Digital Lightwave) from 54.08 and XOM (Exxon Mobil) from 87.65. The market gapped up slightly, but we trailed stops on the positions and ended up with a windfall gain on DIGL (our average cover price was $48.50; some took profits in pieces).
Our long Dow (DJX) puts moved deeper into the money early in the session, and also gained due to expanding volatility but closed flat on the day; we tightened our stop. After an early whipsaw with the S&P's rallying strongly, we cautioned that the futures were rallying into yesterday’s resistance bands and used the strength as an intraday shorting opportunity rather than going long. We scalped QCOM short twice for a point, and entered JBL short as an overnight swing play. We stopped out of CORR for a scratch, and ONIS long for a 0.30 loss. We also shorted EXTR for a 1 point gain. The Oil sector turned back up after a three-day pullback, stopping us out of XOM for a 0.45 loss. We probably should have avoided entering a slow-moving short on the second day of a pullback in the sector, but we kept the loss small. We were suprised by the strength in the Biotech sector today, which opened flat and rallied back 4% today, gaining back 2/3 of yesterday's losses.
All in all, a solid day with 8 points onto the board net. We were anticipating a possible intraday recovery in the Nasdaq and normally would have been more aggressive on the long side, but the Bond market was selling off today, with the Long Bond Futures closing down almost a full point (29/32). Generally that will result in pressure on stocks after the Bonds close at 3PM Eastern, due to automated equity allocation maneuvering money in the big portfolios out of stocks and into safer, higher-yielding fixed-income instruments. However, today it didn’t happen as the Naz Futures broke above their resistance point (~2250 on the $COMPX; top of the upper channel on their downtrend) closing on their highs which appears to signal the end of this pullback (stay tuned, mileage on Nasdaq recoveries may vary ;).
Into the close, with the Software sector stronger acting the strongest (up 4%) and the Naz Futures pressing their session highs, we went long MSFT as an overnight play. We also took the opportunity to sell a few June 75 'Donut Calls' (Krispy Creme) short, nailing the intraday top – we went out up almost a point on those. The plan is to either trail a contingent stop off the underlying, or spread off any risk on that trade with some long calls tomorrow to create a Bearish credit spread.
Steve Bell
General Partner
Intraday Investments
www.intradayinvestments.com |
