Oh What A Day

(Ok it was What A Night by Frankie Valley and the Four Seasons circa 1975)

We had a lot of action right from the very beginning today.

It was fast a furious and felt like a high roller craps game in Vegas Baby. (I should know, we were sentenced there for 13 years.) let us start out with our trades today.

We felt good about the technical's on WY and bought some in the money Jan $16 calls for a 1.30 each. That is a new position.

We started new call option position by buying some January $40.00 call options on United Health UNH at $8.50.

On the 25th, when we were still figuring out these technical indicators we got antsy and bought some January $14 PUTS for ARO Aerospatle before we had a clean buying signal. We paid the price today by getting out with a 31% loss. Obviously the retailers had a couple of great days and it hurt the PUTS.

We started a new position on NGD, New Gold Inc by buying some January $9.00 Call Options at 2.25 cents each.

We added to a January $10.00 CALL option position on JEF Jefferies and we picked some up for several portfolios. The new lot cost $2.04 each bringing our average price to $2.16. The underlying stock was up 6% today and we think the stock could come up another 10-15 % in the next few days. These calls should double if I can be that patient.

We found a nice technical set up for UNFI Untied Natural Foods, but did not like the option options so we went long. We are up 3.81% today and see a possible 20% in a few weeks. We got in at $36.88.

Grainger took off on us and crushed our PUTs on the stock we bought on the 25th. We took a 57% loss and looking at it we deserve it. We bought into the drop way too late. Now that we know how to read the technical's better, we would have acquired the PUTs on the 14th of November and sold them on the 25th. We could have gotten in at about 2.14 and been out at $3.75.

On the 23rd of November we got in to some January GLD $160 options for 9.60 a contract. We sold out today at 12.00 a contract. A nice clean 25% gain on a sizeable position.

We also took profits on the KGC Kingcross Gold Corp January $12.50 options for a 37% gain.

And the big win of the day was the SWKS Skyworks Solution options we bought all the way back on Monday and mentioned here. We got in at $1.85 and got out at $2.60, a nice 44% gain.

SO WHY ARE THESE INDICATORS WORKING?

That is a great question. We have known about Bollinger Bands, MACD, Momentum, and RSI for years. Had we never put them together and noticed the extremely relevant buys and sell signals? That could be. Are these indicators flawless? No they are not flawless, but we are extremely impressed with the results. My assumption (Which I can not prove.) is that this set of indicators are working because of the extreme volatility of the market place. Underlying fundamentals mean nothing in many cases. (Though we will not ignore them.) Because there is so much sensitivity to news headlines and not the underlying fundamentals of a stock, sector, industry, or economy, large fund managers (Hedge and Mutual) are being pressured to make the month and the quarter by trading based upon what they assume might happen as a result of the news headlines. There's no wait for the next year, the next quarter patience. Managers are being judged by their monthly portfolio performance. That demands that they get in and out of stocks, ETFs and index fund in very very short windows of opportunity. That "pin action", to quote my buddy Cramer, triggers High Frequency Automated Trading. That is what drives these technically based buy and sell indicators.

The only game in town is try and figure them out and play the game or get out of the game.

We have chosen to play the game and like what we see.

According to my figures, the Main Account, The Salve Lucrum Portfolio is down 2.4% on the year. After today's 4.2% rally, the Dow is up 4% on the years so we are underperforming.

So What Really Happened Today?

To my surprise, most of the financial news outlets spent a fair amount of time talking about the easing of capital requirement amongst the regional banks in China.

My surprise is that when they were tightening these requirements over the last couple of years, the equivalent of tapping the breaks on their economy, except for Bloomberg and Barron's, you just didn't hear that much about it. That along with a global effort to increase liquidity made some of the big money folk notice that we were a bit oversold in our market and the frenzy started. There was good economic news out of the US today and it seemed to matter for a change