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Thursday, December 31, 2009

Market Thought... fear too soon

The players are selling before the new year. We saw the initial hint of fear earlier this week w/the VIX up as the SP500 was up. The current move continues to takes us off the market's overbought position, and IMO, sets us up for a new year rally.

I still think the Vix breaks down, and that complacency should drive protection. The SP500 is just not at that point yet. I covered my call protections with this weakness.

If market weakness is seen on Jan 4th, I will probably be a buyer into the weakness. If we rally (and I think we rally come Jan 4th) I will be a seller of Jan calls for GS, COST and look to buy SP500 put protection.

Also, a toast to a great 2010. Have a very happy New Year everyone.

1 comment:

  1. Could you clarify your next to last paragraph? You say you'll probably buy into weakness tomorrow; what would determine whether you would or wouldn't? And you say if the market is up tomorrow, you would be looking for downside protection. Immediately, or just relatively soon? Why is tomorrow's action in particular so crucially important?

    I'd very much appreciate a response. And congratulations and very best wishes to you on your engagement.