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Dancing To Market's Rhythm: SPX, Nasdaq, ONXX, GOOG, GLD, WYNN, GS, MCP, CLF, WLT, BTU

|Includes: BTU, CLF, GLD, GOOG, ONYX Pharmaceuticals, Inc. (ONXX), WLT, WYNN

Well, just when people started to think that this market will finally rally out of the recent trading range, the market fell again.  Late yesterday, I commented in our Trading Room that this market needed a pause and consolidate...

December 27, 2011 12:35 PM
need to at least consolidate a bit...

Right after I made that comment, the market took a bit of a dip just before the close.  Fortunately, we locked in profits on some of our long side trades, including the rest of our ONXX calls for a +104% gain:

  • December 27, 2011
  • 12:49 | Ecstatic Plays GOOG ($641.80) Sold to Close 1230C640 Dec 640 calls, at $6.10 +22%
  • 12:29 | Ecstatic Plays GOOG ($642.70) Sold to Close 1230C640 Dec 40 calls, at $6.60 +32%
  • 12:11 | HappyTrading ONXX ($44.50) Sold to Close 01C40 Jan 40 calls, at $4.70 +104%

Yesterday, we took notice that gold was falling again:
December 27, 2011 7:11 AM
down again...

So, today, when gold and silver gapped lower at open, we jumped on GLD puts.  A few hours later, we came away with a quick double.  Besides GLD, we also traded on GS and WYNN puts:

  • December 28, 2011
  • 12:56 | HappyTrading GS ($90.17) Sold to Close 01P90 Jan 90 put, at $3.55 +4%
  • 12:53 | Ecstatic Plays WYNN ($109.30) Sold to Close 1230[110 Dec 110 put, at $1.80 +23%
  • 12:03 | Ecstatic Plays GLD ($151.20) Sold to Close 1230P153 Dec 153 put, at $2.25 +92%
  • 11:42 | Ecstatic Plays GLD ($151.50) Sold to Close 1230P153 Dec 153 put, at $2.06 +76%

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Mining stocks were really weak today.  MCP slumped more than 14% today as China raised its quota on exporting rare earth metals.  Coals sank lower:  CLF -4.62%; WLT -4.48%; BTU -3.09%.

The Dow was down 139.94 points; SPX dropped 15.79 points; Nasdaq fell 35.22 points:

XME (metals and mining) tumbled 3.72%.  Both SLV (silver) and GLD (gold) were down (gold is back down to $1550/ounce!).  USO (oil) slipped 1.84%.  XLF (financials) lost 1.61%, back down below $13.


SPX dropped 15.79 points to close at 1249.64.  It managed to stay above its daily MAs, but, the MACD flattened.


Nasdaq fell 35.22 points to close at 2589.98.  It closed just above its 30-day MA.  The MACD was flat.

This market is volatile.  Yes!  This market moves fast, when it moves.  Yes!  This market is still caught within a range.  Still yes!  This is not much of a "buy-and-hold" market.  No!  But, it still has a rhythm, even though, at times, the rhythm is so chaotic that it is probably just better to hold cash!  Trading this market is kind of like dancing.  There are steps; there are counts; and, there are pauses (Yes, that is me in the picture above!).  Pauses are sometimes the most difficult things to do, but, they can be very rewarding.  In the last 2 weeks, we took some pauses and didn't trade much.  This week, in the first 2 days, we already made more plays than we did all of last week!  When the market is too chaotic, trading can become too stressful and you'll probably lose money.  It is better to keep the cash and save your energy so you can focus and make easier trades when the market conditions are better.  This is true for me as well.  We can probably all learn to take better pauses.

In our "HappyTrading" trades, I am going to aim to keep the slower trades.  I will keep the intraday and overnight trades with the new services under "Ecstatic Plays".  I will also start to make even better "pauses".  After reviewing my trading for the past couple of months, I want to make some adjustments to my trading, and these adjustments will require restricter rules on trading conditions, which will likely translate to more "holding on to cash as a position".

By the end of the day today, we were back to mostly cash.  This market may need sometime to consolidate, as I have mentioned in our Trading Room.  SPX closed below 1250 today and could test 1240 tomorrow.  Nasdaq had a hard time keeping its altitude today and closed below its 20-day MA.  Dollar rose against the Euro again.  These are not very bullish signals.  We'll have to see what comes out of Europe this week.  At least for the US market, it does seem that buyers are trying very hard to drive this market higher, to break out.  But, Europe keeps dragging us back.  Things should get clearer soon though, as the daily MAs keep getting pinched closer together.

Good night and HappyTrading! ™

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