Bouncing around the room…

Yesterday, Mole said that it is often the day or two after an ungodly rally (or drop, but moreso rally) that really paints the picture.  As we all know, the $NDX opened up, but was looking down immediately and has been dropping since it’s opening peak.

As Mole said yesterday, breadth was hugely bullish yesterday, but the whole   900+ point move was done on very low volume, compared to the previous selling days.  I maintain that for going long, stock picking is the way to go.  I would NOT buy call options here, unless the individual IV is very low, and that has been rare.

Just to show you that buying stock can work, I will detail my latest BX trade…I grabbed 100 shares @ $8 on 10/10 as BX closed at a spike support.  Today, when BX pushed up to 11.50, I was thinking about selling.  After I saw the $NDX head to the toilet after having too much sugar yesterday, I decided to sell of my 100 BX @ 11.25.  That’s a gain of $3.25 on $8, or about 41%.  Take commissions out, and I will be looking at about a 40% gain in 4 days, and 2 of those were weekends.  MTW, OI, and CCC worked out also if you were able to catch an entry.

With a $16 drop in $VIX, call options could have gained yesterday, but the easiest way to bank coin was grabbing some cheap, beaten stocks.  Since I don’t expect the $VIX to take a  real break anytime soon, I maintain that this is one of the safest, easiest ways to trade when option prices have exploded.

Right now, I think lower is still the name of the game.  We have hit appropriate retracement levels, and the $NDX has been kind enough to fill its gap, which is one of the reasons I added to my tech shorts this morning.

Hopefully I will be back in later to add a few more quips, but if not, I will be doing the update tonight, and we will discuss today’s action.

Skål!