A wild day and a few big bets against the best

What a wild day it was today in the market. Things only got nuttier as the day went on and I had a riot watching everything unravel. AAPL ended up rallying four and a half points, making me wonder why I didn’t hold my 500 shares from yesterday. The big mover was XLE, a spider that replicates the energy select sector of the S & P 500. It fell hard early on, and ended up closing at $47.66, down about a buck and a quarter. The big thing to note here though is that one of the contestants in our trading contest was betting such a fall, controlling 70,000 shares in puts that have a $45 target price slapped on them. Needless to say the puts ran up almost 50% today, and he is now sitting in 1st place out of 64 contestants.

I did fairly well today overall, selling my one share of Berkshire Hathaway (this is all simulator activity), and making an intra-day play on MWRK for a quick $3k. Most of my trades for next week though are bigger bets against the oil and gas US explorations Industry group. The Industry group is currently number one overall (there are 197), but everything and I mean everything in the sector got hit hard today. I went through every stock at the end of the day looking for anything that was “holding up”, and bet against it. I bought puts on ABP, KUG, QQW, and shorted 3,000 shares of NGAS and 3,500 shares of ARD. Out of 88 stocks in the group, these were some of the last still trading above their 50 Moving Averages (50 MA), and I don’t forsee them there too much longer. All of the leaders got hit extra hard today, and it only seems that the trend will continue. In my case I hope it does, for if I am right I should be able to push my portfolio 5 to 10% higher.

Beyond the bearish calls in the leading industry group, I am still trying to get a grasp on what is going on in the market. October apparently is always a rough time of the year, almost always a sell off month because of a crash in the past. But, even with history playing into the equation, it still seems to be tough to figure out. I think most of the sentiment is being drawn from the Feds expecting to hike rates a possible half point next meeting, since the economy is still growing and needs to be slowed down. But, hiking rates is and has never been liked by the market, and I think we are seeing that right now.

Even though things have been rough, I have loved the game even more. Finally understanding margin and betting against the market, I feel confident in my abilities to make gains in these troublesome times. With my success in the simulators, I sold my Dad on letting me manage part of his portfolio to trade options with. I don’t have margin approval in my APEX account, and after my last disappointing trade this week, I am comfortable sitting in mostly cash. The only stock I hold now is NXXI, which I doubled my portfolio on a while ago after its leading drug obtained FDA approval (I bought it at $.69 and sold at $.95 and $1.32).

Time will tell where I end up here in this market, but I still say let the good times roll. With the ability to make money when the market is going up and down, I feel ready for anything. I am sitting in 3rd place in our trading contest, still trying to catch my partner Mark and now Ailun for the lead. The whole environment is just awesome, and the forums have been getting more and more exciting every day. I leave for a camping trip tomorrow morning, so I won’t be posting again till Sunday or Monday. Let the bearish trends continue tomorrow and next week.

To the future,