I’ve closed my FXP(36.29 +0.28), SDS(32.57 +0.32), and SRS(23.84 +0.45) positions.  I’ve opened an SSO(36.73 -0.36) call position for January as well.

As expected, it appears that President Bush is going to tap the TARP money to bailout the auto industry.  I’ve taken advantage of the low open this morning and scalped a bit of profit.  I set my initial sell orders a bit too high and missed out on some nice profits.  However, a quick 15% overnight scalp is not too shabby.

My portfolio is positioned all using the markets money right now with SSO(36.73 -0.36) and QLD(57.77 -0.76) as my two biggest positions.  I’m banking on a Christmas Rally in the next few days/weeks.

This was a crazy week in the stock markets!  We opened the week with the world markets tanking while the U.S. markets were closed for the Martin Luther King holiday.

On Tuesday morning, Big Ben and Co. cut interest rates a record 75 basis points!  The markets opened down dramatically, then bounced back to recover most of the early morning losses. Wednesday and Thursday proved to be up days in the market and Friday again brought us back down a bit.

It has been a rough, wild ride!  Wednesday brought more than 600 points of movement on the DJI(10493.87 -4.01) – UN-FREAKING-REAL! I don’t expect this sort of action to stop anytime soon – so buckle up and enjoy it.

On Wednesday morning, I called a bottom – at least a temporary one.  I firmly believe that we will see the fed cut rates again at their meeting next week and that will continue to buoy the markets for a few more weeks.

We very well may see some additional movement down over the next quarter or so, but I’m still a firm believer that the markets will be up by the end of 2008.  The global economy has some serious issues right now, however I think we are working through them and that we will be able to come out ahead.

The credit markets are beginning to show some easing, and the government is getting ready to throw money into the hands of the public.  While I think the stimulus package, as it stands now, misses the mark – it will help somewhat.

In my opinion, it is a great time to buy! Financial stocks are very attractively priced, and with the recent crash in the NASDAQ(2263.25 -1.31) techs are looking good as well.  This year should prove to be a great one for MSFT(26.24 +0.29) and other tech companies.  We’ll see how it all goes!

Well, good luck!  Make sure all of your analysis is solid before putting on trades in this marketplace.  Vast sums of money can be won, and lost, in a very short time with these big market moves.  Trade smart!

Somebody grab the band-aids, we need to stop the bleeding!

Wow, today just sucked.  I had been checking in now and again throughout the day to see how things were going and things looked great.  The bulls had started to rally again and it looked like we were ready for a nice bounce back up… Then the CEO of AT&T blabbed…

Ouch, it was rough.  The Dow was down 238, the RUT 19, NASDAQ 59 and the S&P 500 down 26!  Holy sea of red. Well, now it is time to take a good solid look at what is happening.  This sort of downward movement is unnerving.  The markets have pushed into truly bearish territory.  I’m still a long term bull on this market, I think that 2008 will end higher than it started, however given the current crushing drop through all technical supports it is time to start playing it safe.

The markets have been closed for about 2 hours and the current after market data is showing the S&OP futures up.  Ideally, tomorrow has a bit of a relief rally following today’s dramatic sell off.

Okay… so lets talk about the RUT(649.00 -1.76).

The RUT is a small cap index.  Small caps get hurt when the economy gets hurt. The rumor mill around Countrywide and the comments today by AT&T sent stocks tumbling, and small caps tumble really, really fast.  It must have to do with some arcane law of gravity or something…  Okay, it likely has to do with fundamentals and the stuff that drives stock values.

So, now that the RUT has busted through support at 730 and then followed that by a critical breakdown past 705, what do we do? Today – nothing. I’m going to sit tight for a few more sessions and watch.  670 is still a long way away.  I’m not saying that it isn’t possible.  In fact, according to my trusty tools from thinkorswim, there is approximately a 15.96% change that the RUT will expire at or below my break-even price.

So, this is quite a jump up from the 6ish percentage chance we’ve been looking at.  Personally, I’d agree that the chances have doubled.  We have just come crashing down, a long way down.  Let’s not forget to look at how far it can go in one drop!

The plan

First of all, I’m not going to break the rules.  If the RUT comes crashing down through 680, I’ll start to unroll my positions – quickly.

Ideally, the RUT moves up nicely and we can let time decay work in our favor.  If the index is able to get a strong move to the upside, and I can unravel the position for about $0.15 or so I’m going to.  In fact, I’m going to go ahead and put an order out today to buy back the position for $0.15.  I don’t expect that I will get filled anytime soon, however it will be there if the swing comes my way.

If the RUT rockets back upwards 40 points or so (un-likely) I’ll cancel my buy order before it is filled and let time work for me.

Basically, it is a little bit of wait and see.  I think there is still money to be had here, but it is definitely time to pay attention!  Figures… I’m traveling next week.

Good luck!

For those of you tracking the PaperMoney Russell 2000 RUT(649.00 -1.76) position, things are looking pretty darn good!

As they days continue to tick away the trade looks like it is going to hold up nicely. As I type this the RUT is making a run away from the session lows, pushing up above the 726 mark. It really looks to me like the index has hit a temporary bottom.

I pulled up a quick chart on prophet today in my thinkorswim tools, take a look.

You can see that the RUT has dropped below the lower acceleration band, however it has not continued its movement down. The RSI is still hovering around 25 indicating a very oversold situation. I expect that the RUT will rebound up back into the 730+ range today or over the next few days.

Heck, even Tim Knight is going long the RUT! (If you don’t read his blog Slope of Hope with Time Knight, you really should)

Given that we are just about a week and a half from expiration, time is on our side. The value of these options is going to start very rapid time decay and we should end up sitting pretty, walking to the bank. I do have this trade open in my personal account so I’ll be walking to the bank as well!

Anyhow, good luck out there. Things are looking pretty choppy and the VIX(23.96 -0.29) is going to be our friend for a while!

Update

Ouch… That turned around quickly. It looks like the bottom fell out for whatever reason on the RUT took a dive. The whole market actually took a bit of a dive so we’ll have to figure that one out. I’m still feeling pretty good about the whole situation as we still have a 35 point cushion. I will be watching closely this week and will have to determine the course of action as the days move ahead. Another 5% drop in the index seems too dramatic, however if the Bears really get a hold of things, it is possible.

Remember, the markets always drop faster than they rise!