Well there we go… the SPX(1105.73 -0.40) appears to be getting off to a late Christmas rally.  I was really hoping this would materialize before Christmas and into the new year as my positions are heavely into 2X products that get killed by whipsaw.

Here is a six month SPX(1105.73 -0.40) chart that shows our current move, and that resistance is somewhere around 950. If we can continue to push through the 923 level we will be in good shape I think.  I’m expecting this to push forward towards 950 and take my profits at that point.

Right now, my _FPX position is just getting killed both in my personal and papermoney accounts.  Papermoney has a bunch of SSO(36.90 -0.19) and QLD(58.25 -0.28) as well that I added a week or two ago.  I’ll be putting in the conginent sale orders as we step up in that account as well.

This rally will likey not last, I’m expecting this to be a simple wave 4 of the major Elliot Wave pattern we are currently in.  This could rally up to the 1,000 level on the SPX but I wouldn’t bet the farm on it.  For me, 950 is the get the heck out mark.  I’ll re-evalutate at that point and possibly beging to get some longer term puts in place to pull down additional profits.

My goal this year is to trade a little less often, during the last three months of this year I placed litterely hundres of orders that were filled.  For a guy that typically places about 50 orders a year, that volume in Oct, Nov and Dec was just nuts.  Trading swings and trends in my wheelhouse, and I need to get back into that mode.

2008 was a great year with my personal account being up almost 100%.  I am down quite a bit from my peak in 2008, but still a great year.  I expect to have a great start to 2009 as well.

These past few months have been extremely difficult to trade.  The swings have been violent, and if you haven’t been on the right side of the moves, the draw downs can be staggering.  I’ve been fortunate and have been able to mitigate a lot of the nasty losses a market like this can bring about.

As you can see from the chart below, we have started to see daily volatility subside a bit and it looks like the indicators are beginning to point to a slight bullish bias. My personal belief, and that of my trading accounts positions, is that we are in for a Christmas rally.  Take a look at the chart…

S&P 500 - December 15 Daily Chart

You can see that the MACD is just about completely positive, and today’s close puts us just above the three DMA’s.  Give that, and the generally light holiday volume, I would not be suprised to see a slight drift up for the next few weeks.

This week in particular is going to be a harsh one.  With the two-day fed meeting, the possiblity of an auto bailout, options experation and a host of new bites… we are in for some serious movement.  That of course is compounded by low volume and the ability of the few big-boys left in town to do some serious market manipulation.  Just look at a daily chart for the /ES today to see what I’m talking about.

Anyhow, the holiday spirit is abounding and I’m thinking we drift higher.  My post a few days ago indicates that I’m heavy into 2x Bullish ETF options right now.  I’ve also hedged the papermoney account with a largish position short China as I firmly belive that we are going to be in for much more bad news come 2009.

Indeed!  Tonight I placed an order for my first papermoney trade in a long, long time.  So here is the trade:

• With FXP(36.14 +0.13) at ~35.10
• Bought 30 FXP March 2009 40 Calls for 9.9
  • Debit $29,700
  • Commissions $(54.95)
  • Margin Hold $0

Why, well my market disposition is that we are going to go up a bit during December, and then get just slammed in January and Feburary dropping to new lows in the SPX(1105.73 -0.40) and other major indexes.  Now, FXP is a double short China index, once that bad boy gets moving, it should run hard up when China starts to show its true colors.

This is a long term trade.  Once this order is filled, I’m going to place an order to sell for $55 per contract.  I’ll review that as the days move forward and potentially adjust.  We’ll see how it goes, but I expect this to do really well.

EDIT: The order was filled for 9.9.  Acutal market activity today was at 9.7 so this fill is very much in line with what could be done in the real world.  The sell order for 55 is in. I’d expect this trade to be around for quite some time, so that order should fill sometime in Jan or Feb.

I’ve closed my FXP(36.14 +0.13), SDS(32.42 +0.17), and SRS(23.61 +0.22) positions.  I’ve opened an SSO(36.90 -0.19) 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(36.90 -0.19) and QLD(58.25 -0.28) as my two biggest positions.  I’m banking on a Christmas Rally in the next few days/weeks.

Well look at that.  Senator Reid decided to make a few comments this evening and the futures market seems to have absolutely fallen apart.

Today I closed out the majority of my longs and went into the following positions in my personal account

January Calls on FXP(36.14 +0.13), SDS(32.42 +0.17), SRS(23.61 +0.22) and a QLD(58.25 -0.28) hedge. 

It looks like my QLD hedge is going to get absolutely killed in the open if this after hours activity continues.  848/850 on the SPX(1105.73 -0.40) is a key level, and the /ES futures have just crushed through that over night.  I would not be suprised if we open close to limit down if this continues over night.

The prospects for the United States economy are pretty bleak right now, a bankruptcy filing in the auto industry won’t help that out very much. Personaly, I think it is the right thing and the only way that these broken companies can become healthy.  This is just going to be a very painful experience.

From a trading perspective, on a weekly timeline 810 and 757 appear to be the big support points.  If we penetrate 757, look out below we may be going down into the 600’s quickly on the SPX. 

The key thing to think about in this sort of a market is that you must be able to adjust quickly.  I’ll post updates on what I do with these positions.  I’m going to take a look early tomorrow morning to see what the markets have done overnight.  If we go LIMIT DOWN again on the ES, I’ll likely have a few trailing stops put into place on these options to capture some of the profits that are likely to come when the market rockets down in the AM.