I turned on the screen this morning and couldn’t believe if it was real – a 3% red gap on SPY! Greece wanted a referendum of the bailout deal, essentially unraveling the rescue plan drawn by the EU leaders last week, putting the veil of uncertainty back over the global market yet again.
But the pre-market was already the climax of the day. The rest of day was quite grueling as my 9% overnight gains on my SPXU core positions performed their disappearing acts. The open already undid some of the pre-market drop and then the bulls relentlessly bought back a full 50% of the gap. It was stressful enough deciding how much of my SPXU shares to unload on this eye-popping gap. Doing it while the overnight gains steadily evaporated was especially nerve racking. The possibility of the market completely filling the gap was a constant fear and a true nightmare in the back of my mind all day.
At 1:30 pm, a rumor about the Greek referendum being “basically dead” instantaneously rallied the Dow by 100 points (and eventually 133 points). SPY rallied to the HOD as a result. It was gut wrenching. I wonder if anyone can be charged for fraud if he spread a financial rumor. I recall seeing the movie “Inside Job” but I don’t remember anyone getting charged. One can profit enormously by doing so for sure.
Anyways, it would be totally irresponsible not to take anything off the table on a 9% overnight gain. I exited 300 shares of SPXU in my trading account, and another 500 shares of SDS in my IRA account, leaving 3,900 and 2,500 shares remaining, respectively. I was trying to not repeat my frequented cardinal sin of exiting too early. I hope I was not being overcompensating this time around. I was trying to restore more faith on the long term down signal at the same time. It’s a balancing act for sure.
SPY essentially oscillated between the 20 day EMA (white line) and 20 day SMA (not shown in chart) all day, and ended in a doji. Tomorrow will be a gap for sure. But what color will the gap be? Well, SPY rallied .90% immediately after the bell. Hopefully that will reverse by tomorrow. I am hoping at least the 50 day EMA (yellow line) can be tested on this leg down before a bounce.
Portfolio Value: $129,500