Thursday, May 24, 2007

May 24 Trade Summary $2,034




Priorities- That is what I need to work on.
I traded the first 4 hours, and now I'm going to work. When we have a selloff like we did today, you have to be trading the contract you know. Unfortunately my attention and assets were wrapped up in ZN and AAPL when the selloff started, so I had to manage those trades, and I was unable to trade ER2 during the selloff, which as a result caused me to lose a lot of potentially easy money to be made. Overall, I'm satistfied that I got a good trade in on ZN, considering I lack experience trading it, I did exit too soon though. (I bought bonds ahead of the selloff, unfortunantely I forgot to short equities at the top because most of my attention was spent on watching ZN and ZF.) I did get a few good scalps on YM, and I'm actually surprised that I traded so many contracts on YM and ER2. I had a downside target of 828 on ER2 today, I feel bad that I didn't make more money than I did considering the large range we had today. Overall, I need to stop wasting my time with AAPL, and I need to just work on ER2 and YM.

P/L= $2,034

Market observations-
Bond/stock inverse trade occured today, marking what looks to be the start of increased volatility for the markets and a possible correction for equities.(However we have memorial day coming up so people may be just be unloading positions before the 3 day weekend). ER2 caught up to YM today in terms where they trade relative to each other. I was actually buying YM and shorting ER2 today, the opposite of yesterday. It seems like everyone caught on to the buy small caps and short big caps pair trade by Tuesday. I looked at is a more of a blowoff top, where large short positions were being accumulated in small caps and ER2. Rick Santelli said last month that he expected SP500 to test the old highs before a market correction, he looks to be correct so far. Bob Pisani and most of the broadcasters at CNBC always tell you the news 1-2 days after its happened. Bob Pisani was saying yesterday, "Record short interest", "market is likely to continue higher and squeeze the shorts".What about all of last month, shorts were squeezed badly on all of the "good earnings news" like AMZN. Guess what happened, shorts were squeezed, covered near the top, we consolidated near the top for awhile, smart money came in an added shorts to all those "good earnings companies", and now we have a nice setup for a slow decline into the summertime. Time to sell some calendar calls.

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