Wednesday, November 28, 2007


Top chart is the daily. . .lower chart is the 5 minute.
We got the break I was musing about yesterday, and in a big way.
Today we had the biggest 2 day rally in 4 years, and on solid volume. Things must be (really) good! And this is based on expectations that the Fed is going to lower rates because economic conditions are so bad. Welcome to the bizarro world of Wall Street. The Qs opened at R2 (like much of the broader market) and never looked back, closing somewhere in the neighborhood of R5, which is pretty much regarded as uncharted territory. Tomorrow we may see how much of buying frenzy was short covering, which is the predominate mode of the big hedge funds these days. This may be a timing thing also. . end of the traditionally strongest month, beginning that ole Santa Claus rally, coming off an oversold base, etc. Unfortunately, I was gone most of the morning and therefore missed much of the exuberance. I also missed the head fakes designed to lure in the shorts (could have been me) and thus missed the opportunity to throw a few bucks away on a last 30 minute fade.


contrary canary said...

BZB - do you ever go long the Q's as a position trade - I mean for several weeks or months? I know it's a different sort of trading, but it seems like (perhaps in a seperate account) it would be a good way for you to capture some of the upside from big move days like today.

Also the XLK is a good long, ona fundmanental basis I'm thinking, if you believe in tech and high growth stocks in the long term.

I've got some March QQQQ calls - the 60's - and some Jan XLK 30's - and once I'm in I don't have to do much with it till it moves up, which it tends to do.

bzbtrader said...

Being an old guy, my trading plan aims at a modest annual projected ROI of 24-30% with very little drawdown. Hence my typical strategy is long stock (Qs), short calls, long puts (collar), which I adjust on a daytrading basis to squeeze out a few extra points. I also play expirations fairly heavily, by naked selling either OTM calls or puts, depending on the trend direction. I don't trade XLK, the spreads are often .25 compared with the Qs .01 and the XLK volume and liquidity are very thin. I'm looking for instant fills with .01 spreads when I want to make a move. I'm basically a daytrader/somethimes swingtrader, although I may hold a core Qs position for months to sell premium against. My trading philosophy aligns pretty closely with the Clueless Q Trader (see sidebar link) and Cucca is seldom shy about sharing his views.