Tuesday, July 1, 2008

Performance Update and Morning Thoughts

Here's a quick performance update since we are now embarking on the second half of the year. I was up 53.7% in my main account, down -2.2% in my IRA, and up 9.6% in my wife's IRA. It is definitely harder to make money in an IRA during a bear market as you are not allowed to short and having to wait for trades to clear makes it more difficult as well. I am happy with my main account, but I still look at the mistakes I made and the lack of patience I have shown in certain situations, and think I could be up much higher that 50%. I plan on doing a more in-depth review sometime this weekend - I think that is always a good idea to do so as to learn from your mistakes and hopefully avoid making those same mistakes in the future.

Things don't look very good this morning, as futures are down big and barring a major reversal here pre-market, we will break Friday's lows and be set to test the next areas of support on the Nasdaq and S&P 500. Those support levels are not far away, and on the Nasdaq, look to be right where it will open at. I will be focusing on whether the VIX spikes today - I still think a short-term rally has to be around the corner sometime soon with how stretched we are, but as I said last night, I don't know how oversold markets can get based on my experience. It looks like I am about to find out.

I am glad I took a few shorts last night - it would have been a lot easier to just hold onto the shorts I had last week, but can't do anything about that now. If the VIX spikes today, perhaps we are getting close to a selling climax or a capitulation type event. We haven't had anything like that yet, and part of me feels like that is what we are setting up for. We have to get some fear before that happens, however. I think the rate decision Thursday is going to be a difficult obstacle for this market to overcome in the short term, along with higher oil. I am not a great market historian, but I don't know if there has ever been a situation quite like we are facing with the higher oil prices that are likely to do nothing but rise higher holding this market hostage. We shall see. Be careful out there today.

S&P 500
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.


Gio said...

Good move with your shorts. I covered EXM already. I saw the spike in the Vix and shorted FXP when VIX =25.30. That was some turnaround, but believe it or not, I was expecting something better... like from -170 to +170. LoL!!


Mac said...

Wish I would have just covered this morning with DRYS - if I paid attention to the early put/call ratios, I may have, but who knows?

Today was good for the bulls, but I agree, not as impressive as it could have been. I think it tells you something about the market and how bad it is that a short covering bounce can only get the indices barely into positive territory. Back in January, these reversal rallies took them up much, much higher.

I am looking to short possibly at the end of tomorrow. We'll see how it goes.