Follow-Up on Yesterday’s Action and Trading

Yesterday, I went fishing. We caught five fish, including Martin’s 7.6 kilo Lake Trout (shown) and my 4 kilo wild Salmon.  More pics coming soon.

While we were fishing, I got filled on a QQQQ limit order around the 52-week low ($42.10 fill). The day before (at the close) I went long the Select Sector SPDR: Financial Select Sector SPDR Fund (XLF).

When I got home from fishing at 9:40 and saw the market action I took the following actions:

  1. Closed both of those positions (for nice gains) to take some chips off the table and generate some “house money.”
  2. Went long some QQQQ calls (leverage), since option volatility crashed from the prior day’s high, which was the same as we hit at the August low.
  3. Went long the iShares: Sweden (EWD). Why? Because the guys I was fishing with are client money managers at SEB (one of the large banks in Sweden) and they said that clients were heavily stressed about the current conditions, especially recent action and the fact that the Swedish equity market is down 35% from its most recent highs. That kind of loss in an index means much heavier losses in some individual shares. It also means you need a 55% rally just to get back to the highs. That leaves a lot of room for the Swedish market to rally, even if this is a bear market (see below).

I will probably close those trades quickly, however, even though the bounce may have some legs. I will then probably look to short if/when the bounce technically fails. Why? Because I do not think this is the bear market low. I do, however, think it is probably the low of the first leg of the bear market. And, if history is a guide, the bear should have around 3-5 legs down over a number of months.

Cheers!

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