Monday, June 22, 2009

S&P Futures Shorts Bring in Big Profits; June 22, 2009

If you shorted the S&P futures at the top (952) where I thought we had a nice reversal and a high probability of a top in place then you'd be in the profit $3,200 per contract right now! I personally put in a sell stop at 919 so I'm currently $1,550 in the profit per contract right now on top of my current ETF and bear spread option positions. I've eliminated over 4 weeks of losses in only 6 trading days, and more profits should come for the shorts in the near term from what I can see. As I said in my previous post on the cash S&P index, the selloff was broad-based and very strong, no bulls were really in the market and with 5 wave declines and choppy rallies accompanying that it's quite clear the bears are in full control.

Wave structure suggests we're probably in a 5th wave of smaller degree so a near term bounce may come soon. With my projected target area of 880 only 10 points away, I'm planning on a further decline tomorrow morning to that 880 level where we may see a corrective rally take place. So I will be taking some more profits off the table if the market opens down 5 or more S&P points tomorrow in preparation of that bounce. But the rally should be short lived (depending on its structure) and it will just give me another opportunity to reshort the market again. I do feel we have further declines to go and this could very well be the beginning of the major wave 3 down I've been calling for that sends us into a full blown depression. So I'm on high alert for signs that may be occuring. With that in mind, I don't want to get too cute buying and selling too large of positions on short term moves. The larger trend is clearly down at this point so I want the majority of my position short for the longer term. I am merely playing little pieces of my portfolio on short term moves.

I remain short the Septermber S&P futures, a bear spread on the SPY, and covered call options strategy on the SDS. So I am still heavily short the S&P at this point.


Michael K. said...

Hey Todd, this is why I put all my money on FAZ.

The BKX index looks exactly the same as it did back in Dec. , but it didn't turn out as I hope it would. =(

I am putting a stop loss on my FAZ now at $4.80. The last 2 week was painful for me knowing I had no stop. =0

Todd S said...

Yeah, it's nerve racking with no stop. Yesterday was a good day for you though wasn't it? Financials got clobbered so FAZ should have rocked.