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A Wild Market Week

|Includes: BlackBerry Ltd. (BBRY), MMR

That was quite the rollercoaster ride this week!  Something for everyone...bulls and bears.  Feasting on the run that started the week, bulls pulled in their horns in advance of Friday's job report, and while today ended nearly flat that certainly wasn't the case.  A loss of 20K jobs and some very heavy margin selling took the indices down a dark path early, and only some short-covering managed to swing the indices higher.  For the week, the SPX finished down .4%, but at different times was up 3%(tues) and down 3%(fri).  These swings are indicative of a jumpy VIX, and I had pointed this out on an earlier blog today.   

Bonds were strong as the safety trade was on, the dollar also surging as well.  The greenback is up three straight weeks as the problems in europe plague that zone.  Financials were mostly weaker as was tech, naturally the commodities were blasted as the dollar got stronger.  Gold had a very poor week as Thursday was a debacle.  Oil was on a ride today as the selling became quite intense. 

What was behind today's selloff?  We've seen this happen many times after a puke session like Thursday...MARGIN SELLING.  Traders/investors on margin get their positions blown out because of margin calls.   Looking at an intraday chart shows you clearly where this was occurring, as the dam broke.  Nobody raises a flag to say it's time to sell...but when it happens you know it.  These margin selling events don't last long, today was typical...about 3 hrs worth of distribution.  Perhaps these levels provide some support, without any bad news over the weekend we may find ourselves on the long side next week.

For us, we booked TWO solid gains:

  • February 04, 2010
  • 06:45 | Bagger Vance RIMM ($68.60) Sold to Close RFY03202010 70 C Mar 70 calls, at $2.95 +61%
  • February 03, 2010
  • 06:39 | Bagger Vance MMR ($16.75) Sold to Close MMRBC Feb 15 calls, at $1.90 +90%

    Hopefully we'll see some trending action that we can take advantage of in the weeks to come.  This back n' forth trading with increased volatility makes for a very tricky environment.  Some good earnings news on tap next week, perhaps we can forget about Washington DC for a bit and get down to some good trading!

    Have a nice weekend, hit 'em straight!

    Bagger



Disclosure: positions: none