We lost our danger levels one by one this morning, but luckily we hit our oil puts and our mattress plays or this could have been unfortunate.
There were several factors that took down the markets this morning aside from the ones I’ve been harping on. One strange one was the early adoption of daylight savings time, which kept the European markets open after 12 EST. Our markets ticked down on a report that mortgage delinquencies were on the rise and the still open Europe panicked and sold heavily into their close, knocking the DAX, CAC and FTSE right back down almost to their 3/5 lows. That was all the incentive our markets needed to sell off and momentum took care of the rest.
Of all our major indices, only the SOX did not fall even lower than the 3/5 close.
So that’s very, very bad - nothing more needs to be said…
Oil’s chart COULD have turned uglier - but they ran out of time! Crude closed at $57.93 and rests right on the 50 dma of $57.91 so any downward motion here is critical. We finally got some good motion down from the oil patch and that saved our short-term portfolio, which actually turned a very nice profit today (but we have 100 MS $75 puts to really thank for half of that!).
Gold pulled back ever so slightly, finishing just under $650 and the dollar laid flat at 83.72. What we got today was no bursting commodity bubble as the sell-off was right across the board, devastating all stocks in all sectors.
Amazingly, for a portfolio I was worried about being too long last week, we covered ourselves very well on our bearish calls on Friday. I’ll go more into detail on the weekly wrap-up but we made some truly spectacular gains both on put positions and on calls we sold against other positions. At 12:55, I did a quick review of the STP and we really had nothing to sell, even our calls weren’t getting hit that hard…
We did stop out of just two positions:
We also cashed 1/2 of our morning mattress plays near the close, as I said in comments, no point in being greedy as it turned out our portfolio really didn’t need that much protection:
• iShares Goldman Sachs Semiconductor (IGW) Apr $60 puts [IGWPL] for $1.75
• Opened $1.10 (don’t know why it was so off), closed $1.30 (up 30%)
• iShares Russell 2000 Index (IWM) May $77 puts [IOWQY] for $2.05
• Opened $2.17, closed $3 (up 38%)
• Diamonds Trust, Series 1 (DIA) Apr $122 puts [DAWPR] for $1.45
• Opened $1.50, closed $2.70 (up 80%)
All in all, it was an excellent terrible day - tune in tomorrow and we’ll discuss what to do if we drop another 250, as it’s still a loooooong way to 11,500!