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stock watch, stock market today
[Weekend Summary]
Dear Member:
Today looked more like the capitulation that I have been suggesting is due, but I still am not sure that we are there. The major averages fell fairly dramatically today on strong volume but my best guess is that we will see further downside and at least a testing of the intra-day lows in January before a return to the bull. At times like these I believe that there is even more reason to be aware of the risk control and risk aversion techniques set out in my book "Trade Your Way to Wealth." Those who know and use some of those strategies are less likely to suffer the significant losses of principal such as those experienced by so many in the 2000 crash and aftermath when the tech bubble burst.
This week, I bought some puts on Comphania Siderugica Nacional SA (SID), a Brazilian iron and steel company. The stock was down today, but I am making a small high risk play based on my sense that this stock may be set up for an island reversal. The overall risk isn't very high since my position is small and an island reversal could yield a handsome profit.
The Blackstone Group (BX) bounced back down off the downtrend line making my short Mar call position (covered by my '10 LEAPS) look fairly comfortable for the moment at least. I am looking for the stock to test recent lows before I expect a return to the bullish side.
My Lehman Bros. (LEH) is still OK, but is reaching the point where I have to watch to see whether the bullish put side of the condor may need an adjustment.
The dropping market means I now have a little profit in the short call leg of my calendar spread on SPY. I'll continue to work it as the market dictates.
The Sirius Satellite Radio (SIRI) spread may also soon reach the point where I can take profit in the short call leg and then, hopefully, repeat the process of selling other calls against the long call leg.
Have a great weekend and thank you for helping to make "Trade Your Way to Wealth" so successful.
Bill
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