Premium Sucking Thursday Rub Down

I know I should listen to my own advice (see prior post) and not even look at those damn March puts, but someone needs to explain to me how exactly they lost 50% of their gains since SPX 1040 when we only rallied 8.5 handles since 995. Can’t be the VIX – we’re only down 1.8 points – and the bid/ask spread is wider but not that wide!

Anyway, enough of my bitching – but it comes to show that being a bear is one of the toughest hats to wear even in a secular bear market – or perhaps especially in a secular bear market as downside speculation is merely condoned but not encouraged (and eventually discouraged) by most market participants. You’ve got to have a thick coat to make it through an entire Primary wave – takes guts, discipline, smarts, and a lot of fortitude. That said – I am not selling – on the contrary – let them push down those premiums and run the tape higher – I’ll just keep buying. Which is why I kept another 20% of cash on the sidelines – just for that event.

Beautiful Zero signal again today – we even got a nice clean divergence in the afternoon, just before the final pop higher. Of course I grabbed some futures to ride along and soften the damage to my account. Otherwise, a pretty predictable day – as expected last night. Looks like we are done with the first motive to the downside and are now painting a second wave up before we embark on larger drop that will take out the August lows.

Program Trading Update

evil.rat/NQ: +3.75
resident.evil/ES: +2.5
resident.evil/NQ: +12
geronimo/ES: +5

Good day on the program trading front – no complaints.

Bonus Chart:

A little bird sent me that one today. Just like the BAA-TYX spread I’m watching (which yesterday closed at 6.28%) the spread between the 5 year treasury yield versus and the High Yield US Corp Index keeps narrowing. Appetite for risk is seemingly increasing, so don’t count out scenario Blue just yet. We might have to sit through a lot more pain before we see gains in of our long term puts. Being a bear takes is a tough racket – are you up to it?

Okay, got to run out now – will probably chime in later with some thoughts.

Cheers,

Mole