Well everyone, the chart says it all. Monday the market went nowhere, followed by a massive move up on Tuesday, and a continued grind upwards the rest of the week.
No reason to belabor the point on why the market moved up so much. Nor is it of any use to attempt any prediction of further movement. It did what it did and that’s it.
Here’s the status on our current trades:
GS (Goldman Sachs) we’re up a few bucks but nothing to get excited about. Next week, if GS hits 162.50 we’re out of this position. At that point we’ll be down about $500 which is about what we expect to gain on the trade.
GES (Guess? Inc.) We’re hurting on this position because we only recently put it on and time decay hasn’t been able to kick in. Also we were closer to the money when we put on the position. Right now we’re down about $300. Next week if GES hits 42.75 we’ll get out of this position. At that price we’ll have hit our maximum loss.
That’s how we manage the trades. We manage them as a risk manager would. We’re not trying to guess where the markets going. We’re not holding fast to any opinions. If our maximum loss is reached, we’re out of there… plain and simple!
One last note. We didn’t put on any new trades this week because we never got any signal. Yes SPX did bounce back into the zone. BUT it kept going!
Personally I would not be surprised to see a very choppy market in the near term. My opinion is simply based on the fact that we have had such a strong upward movement for many months. Looking at a weekly chart, it sure looks like things are slowing down and may very well roll over.
Since I think there’s a good case for higher volatility, we’ll probably go further out of the money in order to get a little extra wiggle room. That’s only IF we get a trade signal. It will take a strong move down in order to turn things around in the short term.
We’ll see what next week brings.
