Patience is a Virtue... Even With The Stock Market

And we were so close. From now on, you may just want to save yourself the time and only turn on your computer to check the status of the stock market between 12:50 and 1:00pm (PST), because lately the last ten minutes we have seen this market move anywhere from 3-5%. We enjoyed a majority of the day in the green and saw, for a brief time, increases in gold, oil, Rim, and Apple. However, that was quickly wiped out the last five minutes of the market. Don't worry, all is not lost.

On the bright side, we saw FXP hit $184, wow. So for all who heeded the call at my $92 buy in, has now doubled their investment on that stock in 1 week. No need to thank me, I'm riding the wave with you. Although it looks as if this stock will never be halted, I found it time to unload a majority of my position. I mean how greedy can we get. We may see it creep close to $200, depending on the market the next few days, but I don't want to roll the dice.

One dilemma this puts me in, is now I am not in a short position to cover my longs. Sure, I still have a minor stake FXP, but nothing that will hedge my longs. The good news is, all of my long purchases were option contracts, so there is a maximum to my downside risk.

So why go long in this market? Do I think that we have reached the bottom? NO! But I believe there is enough news in the next two weeks to encourage a healthy 1000+ rally and it could happen on any day. What are these reasons?

  • Fed is meeting to discuss and is expected to make another cut to the rate. Historically, this has been a great way to stimulate the market. Depending, on how big the cut is, the market could really take off. It could take off tomorrow just in anticipation for it. If they cut it 50+ basis points, watch out.
  • Elections. Historically, the market always slows prior to an election, but than usually gets a healthy bump afterwords. As it looks as though Mr. Obama will be elected, that can easily stimulate a run.
  • Hedge fund redemptions expire Mid November. It is in their best interest to have the market as high as possible for these redemptions, so look for maybe a manipulated run in that regard.
I feel this will be temporarily, very temporarily. I plan on turning for a quick 20-30% profits, because by Mid November, I plan to be free from a majority of my long positions. Take a hard look at picking up some options with either DIG, UYG, RIMM, or GDX. All expiring in Jan. Do not be frustrated by days like today, because when the wave comes, I believe there will be no stopping it. Tomorrow should be an interesting day, we'll see you then.

1 comments:

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