Kelly: Playing the Market Flip

What a change in the winds Wednesday brings. The market felt like it was searching for a bottom this morning, and after we failed to decisively break Tuesday’s lows, I decided to cover the bulk of my put positions and begin inching in on the long side. After a stampede into the close, it appears that we have found the bottom in the short term, although I doubt that we are headed in a straight line upward. I summarize my moves below:

Sells:

S&P (SPY) Feb 130 puts–I sold the rest of my position at $4.25.

(EWZ) Mar 60 puts–I sold my position at $2.75.

(XLB) Mar 37 puts–I sold my position at $2.45.

Buys:

(SGR)–I bought a moderate position at $47.83

(BOLT)–I bought a small position at $26.33

(LGTY)–I bought a small position at $8.95

(CHCG.OB)–I increased my position by 130% at $3.11

(TLT)–I shorted a sizable position at $97.72

Overall, my trading Wednesday was very solid, and I have done an excellent job of managing risk and exposure over the market’s recent volatility. I am definitely net long going into tomorrow, although I could still put more money to work if I find interesting entry points. There are some interesting new developments in the market over the last 24 hours that I will discuss more in my daily market wrap, and they all point to a strong (although maybe temporary) rebound.