Kab's  Instablog

Closed part of the short at $68.73

"Surrender to the reality that volatility exists or volatility will introduce you to the reality that surrender exists"      Jason Russell

It has been a while since I updated my last entry. It is unusual for me to write about the markets in coherent English. It has always been a notebook containing bits and pieces of information, observations and trades that went wrong. I made a promise to myself that I will try to update this blog at least once a week and talk about the different ideas swirling in my head.

After my last post, the market proved me wrong for some time and I was sitting on a 50 pts loss in the S&P and 10$ in crude. The situation has drastically improved since then. I am slightly ahead in the S&P but still down around 5$ in crude.

I never had the intention of holding the position indefinitely and bucking the trend forever. I had a game plan and was willing to stick with it. My pain threshhold  was around 1125 on the S&P (see attached chart), as for crude I was intending to cut the position once it broke above the 73-74 $ level (see attached chart), but failed to follow up on my decision and rode the position till 82 $, definitely a failure in risk management systems.



The steepness of the move since the lows of March, made it impossible for the index to trend meaningfully higher without correcting or at least going through a consolidation phase. This factor coupled with a myriad of overhead resistances and  deterioration in the momentum readings allowed me to initiate the short position.

to be continued......

I initiated a short MON position at 71.93 and bought MON Jan-10, 65 Puts @2.20.