[Weekend Summary]
Dear Member:
The major indices have gotten a little wilder this week. Volatilities are up and each of the major indices dropped for the week. Today, the Dow 30 Industrials broke down through the 18 day moving average and settled around the 40 day. The broader SP-500 closed below the 40 day and settled just above the 50. The Nasdaq also closed beneath the 18 day. In my view, this market has been due for at least a retracement and that now seems to be underway.
As the markets give more bearish signals, I got out of my LEAPS calls on Tesoro (TSO) for an 83 cent a share gain before commission in just 19 days. That works out to an acceptable 6% in less than 3 weeks.
My leanings are turning more bearish and I added a put position on Silicon Laboratories (SLAB) when I bought the Jan 35 (just in the money) puts today.
It is volatile times like these when I am happy to be in spreads for the protection they afford. I am satisfied with each of the spreads in Sirius Satellite Radio (SIRI), QQQQ, Citigroup (C), and SPY. If the markets stay bearish, each of these spreads affords the opportunity to adjust legs if appropriate and thereby attempt to maintain measured risk.
Have a great weekend.
Bill
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