Bad news over European sovereign debts during the Labor Day weekend (with European market down over 5%) caused a near 3% red gap this morning on an already oversold market. It imposed a dilemma on me: we are not at target but the gap down was too great to not do anything about it. So during the first hour I took 300 shares of SPXU off as a token profit taking – yes my position finally turned green after the last 2 sessions’ selloff! Again, it simply proved how bad my entries were.
The market proceeded to rally after the opening volatility. I was absent during the rally as it was the open house on my son’s first day of preschool. The bounce corrected a bit while I was taking a nap — I had a big headache all day. And finally the market rallied strongly into the close, almost negated the 3% red gap! The SPY finished just down .74%!!!
I am glad I missed most of the actions today because I might have done something foolish otherwise. I am now 40% short.
The MACD on the SPY daily barely budged during the sell-off in the last 2 sessions. Then we have the rally to the high of day in the last 30 minutes. Therefore, it looks like we may get a green gap tomorrow. Another round of battle may begin where I look to short more on strength. Hopefully it won’t be too painful.
Portfolio Value: $131,200