Quick Update: Market Notes and Couple of Trades

As I had mentioned in my last post, we did get a tradeable bottom. Today's action has been significant in the sense that there was institutional participation and the indices are making a higher low on the charts. It is still early to say whether the rally will go unimpeded because of major resistance in the soon to be higher planes, but as surmised before we had a tradeable bottom and we are continuing to exploit it. The VIX options trade is turning out to be profitable so far. I am keeping my VIX trade open for intermediate term. I have opened two new trades today:



(1) ISRG Call Options (If you are not an options trader, the trade would be ISRG stock): I bought April calls with a strike price of 310 for $18 per contract. I think ISRG has hit some good support area and looks at least until $325 as its next target within a month or two. This is assuming the market volatility won't shake this stock down. Remember when the indices suffer a lot, ISRG suffers simply because it is a member of NASDAQ 100, unless it is close to its earnings period, which is nowhere near. So I am also going to put a tight stop to take into account any unexpected volatile move down by the indices.



(2) POT Put Options (If you are not an options trader, the trade would be sell short POT stock): I bought April puts with a strike price of 145 for $10.40 per contract. Potash has had a very good run and in my opinion is nearing exhaustion. Couple that with the hit on commodities. I think commodities still have some way to go down. Many offer the argument that because India and China is still strong, commodities and ag stocks in general would do very well. Whether I agree with that argument or not, one thing is clear: nothing goes up in straight line. Besides the rich valuation of the stock worries me. Also take a look at the weekly charts. We have reached a double top on MACD with bearish downtrend initiating and Williams %R, one of my favorite momentum indicators has a downtrending slope that has still some room to go. Once again I will putting a tight stop to counter any major moves in unexpected direction.



Just like last year, I will soon be entering all my 2008 trades into a table and provide that hyper link for performance tracking.



Good luck

Krish

(ps would love to hear from readers on the comments section provided here)