Wednesday, May 6, 2009

05/06/09 Market Recap

Another wild day in the markets, saw some huge intra-day swings, the SPX showed strength all day and ended up +1.74% while the Nasdaq lagged behind up only +0.28%. Among the sectors financials led the way again up +7.96% (got a nice pop from the stress test news) and the only sector which ended the day down was health care which lost -0.60%.

My short positions took it on the chin today but my lottery longs had another fantastic day and more than made up for it. My AHD position went up another +35% and the lottery long play(ARM) which I posted a chart about in yesterdays post shot up +65%. I sold 1/3 of my position in AHD, I like to let my long positions run but when you're up over 100% in a position it would be stupid not to take some off. These moves we are seeing in the market like the move in ARM today is not normal, this is not a healthy market and although these are very profitable moves they must be taken with caution. Risk management is key when it comes to taking a position, for me each equity positions=10% of my portfolio, options=%2, higher risk equity position=5%. For my level of risk tolerance this seems to work out well.

People keep trying to pick the top of this market and the shorts keep getting proven wrong, believe what you see in the charts not the news. We are clearly still in an uptrend and until proven wrong (lower lows, lower highs) there is no need to play the short side. ES is looking very bullish as we broke out of the top of the channel today, could see a bit of a retracement back down into the channel but the uptrend is still in full effect. NQ is looking slightly bearish as it is making a lower high, but still in up channel.

Current Long, BID: (little resistance above and is consolidating on lower volume after a big up move on high volume)
















Great example of using volume to predict a stock movement, FTK:

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