Why I Sold My Calls This Morning

Market sentiment changed dramatically since I pondered about the latest rally (the bottom or just another bear market sucker's rally?) just as few days ago. After yesterday's (3/19/09) close, with the S&P 500 up around 18% in a week's worth of trading, the bulls seemed to outnumber the bears and other skeptical investors. The screaming and yelling Fast Money guys seemed particularly bullish last night. More importantly, I feel bullish and think there's no reason for the market to go lower (bearish sign).

Another thing that drove me to sell my calls (for a not so bad profit, but I wish I had bought them later than I did--and they're on theSPY if you've been wondering which calls I keep talking about; and as always, I try to update my trades on the bottom sidebar of my blog) was a video by TheStreet.com's James Altucher. (In the video he's the Sideshow Bob looking guy who is sleeping on the sidewalk and talks like he drinks too much coffee.) He says, "the bull is back." This coming from Altucher, who advises debt free homeowners to take out a mortgage because "cash is king" (genius!) is a bearish signal for me. He's been a frequent guest on Yahoo!'s Tech Ticker, and each time proclaimed that stocks are incredibly cheap or were great over the longer term just as they peaked before a leg down. November 4, 2008, July 10, 2008, December 2007. Maybe it's just poor timing of his appearances, as he'd probably say the same thing on March 9 as he's saying now (and would seem smart today). And I'm sure he's made some good calls in the past (I haven't found any), but I sell when this guy says buy.

I'm not buying puts yet, and maybe I'm a bit early in selling, but I think we're due for at least a small pullback.

Comments

[blonde molly:]

i knew a man once who traded by feel; he was a futures trader. he listened to no one, and moved only by feel, or "by the seat of his britches," as he called it.

he was a successful trader for fifty years. i've always thought he was one in a million, but perhaps not.

Mar 20 09:00 AM

[Fabien Hug:]

well, that was a smart move

Mar 20 01:34 PM

[Urbane Gori...:]

An applicable excerpt from "Pinball Wizard" By The Who:


Well, he ain't got no distractions,
Can't hear no buzzers and bells.
Don't see lights a-flashing,
He plays by sense of smell.
Always has a replay,
Never tilts at all,
That deaf, dumb and blind kid
Sure plays a mean pinball.

Don't listen to CNBC! ;-)


On Mar 20 09:00 AM blonde molly wrote:

> i knew a man once who traded by feel; he was a futures trader. he
> listened to no one, and moved only by feel, or "by the seat of his
> britches," as he called it.
>
> he was a successful trader for fifty years. i've always thought he
> was one in a million, but perhaps not.

Mar 20 04:21 PM

[Hmm?!:]

I share the general sentiment below and the technicals appear to be confirming the end of short bear market rally.

But just like large bubbles it can get risky to bet on the end of something that should not have happened in the first place. You are effectively saying the illogical event shall logically conclude today.

Tulip bulbs on sale tomorrow.


On Mar 20 04:21 PM Urbane Gorilla! wrote:

> An applicable excerpt from "Pinball Wizard" By The Who:
>
>
> Well, he ain't got no distractions,
> Can't hear no buzzers and bells.
> Don't see lights a-flashing,
> He plays by sense of smell.
> Always has a replay,
> Never tilts at all,
> That deaf, dumb and blind kid
> Sure plays a mean pinball.
>
> Don't listen to CNBC! ;-)

Mar 21 01:12 AM