I am off to Turkey for three weeks, so may be out of the loop here. I do hear they have 80 cent an hour internet cafes, so I may be able to touch base on occasion. Odd time to do this, but I've just been glued to computer screens too much and for too long, and need to get "a life". Here's a few parting notes:
Bob Hoye has been calling for a steep decline lasting 30-35 days from the initial March 7th top.
stockcharts.com[l,a]daclniay[pd20,2!b34][vc60][iUc20!Lf]&pref=G
If you look at initial market breaks going way back, you will see this pattern. It's then followed by a sloppy choppy recovery. Hoye states it's "commonly an A-B-C rally of 3-4 weeks", capped around the 34 day moving average. A-B-C definition, simply reverse the chart:
traders.com
I think this may be a workable trading model. Friday marked the 29th day of the decline. So the last hour Friday may have been the interim bottom, or early next week as the SP hits a major support at 1135-1138. If it's Black Monday we will know soon enough. There is also a 12.0 repo that needs to be replaced, so the Fed may signal it's intent early in the session.
As Friday rout rolled on, I noticed the IVs (implied volatility) were expanding. The SPY IV went to 15 in the last hour, and I wrote the May 114 puts then, as a hedge against my long May 119 puts. Did basically the same thing on my QQQQ May 37 puts, using the May 35 put write. I had XLY April 35 puts, and I just sold them in the last fifteen minutes Friday, and didn't replace. I just let all my naked April call writes expire without replacing, and sold my April puts. Those were SPY, ANF, CCL, CME, COF, GOOG, GS, MBI (wrote covered 50 puts against a short position), MGG, MTG, APOL, RIMM, AAPL, GMR. I also covered an outright short on YELL. I base buying versus naked writes on IV, and theta, selling high theta, buying low theta. I had a great NEW short (from 60) with April 45 puts (extremely high IV and theta) written against them, which I just let them take away. Same on TOL April 75, which I wrote against half a position. I had written May 80 calls naked when it was near 80. My short exposure has probably been reduced in half but from a very aggressive level, but I still have a various assortment of naked calls, outright puts, and bear spreads for May in AN, BAC, GOOG, GS, PEP, ACF, SONC, GTRC, MBI, MDC, PVH, TOL, SPY, QQQQ, FXI, HHH. If we open down Monday, and trade to the support zone, I will write covered puts on HHH, MBI (48 IV, 3.8 theta).
If the Hoye model unfolds, I'm not going to wait too long to reload. There are a lot of damaged charts, and stocks with big overhead caps. Many have barely begun their descents. Think we just look for weak vol rallies, towards those resistance levels, and 50 day moving averages. In addition to the ones I've already mentioned or posted, a couple new ones, both Bully lifestyle stocks.
STZ: only 3.0% short interest, four recent insider sales of $19.3 million. 9 analysts: 5 buys, 4 mkt performs. May qt expecting 59-50, so this one may have the chance to hit the heart of the March-May consumer slowdown I've been alluding to. Put IV and thetas may favor a bear spread strategy. Climatic top:
stockcharts.com[l,a]daclniay[pd20,2!b50][vc60][iUc20!Lf]&pref=G
TTC: only 4.55% SI, two recent insider sales for $6.9 million. 2 analysts, both mkt perform. May 24 earnings for Feb-April, expecting 1.18-92. IV on put is 21, 1.5 theta, favoring buyers.
stockcharts.com[l,a]daclniay[pd20,2!b50][vc60][iUc20!Lf]&pref=G |
