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MARKET DIRECTION CALLS
August 2 2011 - Selling Intensifies
August 1 2011 - Bear Returns
July 28 2011 - Before The Open
July 27 2011 - Down But Are We Out?
July 20 2011 - Stock Market Volatility
July 18 2011 - Investors' Nervousness
July 15 2011 - Earnings VS Bleak Data
July 14 2011 - Below 1310
July 13 2011 - Ugly Looking Chart
July 12 2011 - Razor's Edge
July 8 2011 - Nasdaq Leads The Way
July 5 2011 - Expected Weakness
July 1 2011 - Overbought
Jun 28 2011 - July Rally?
Jun 27 2011 - Mixed Signals 
Jun 21 2011 - Bottom Or Bounce?
Jun 16 2011 - Raising Cash
Jun 15 2011 - More Downside To Come?
Jun 14 2011 - Bounce or Bottom?
Jun 12 2011 - Batten Down The Hatches
Jun 6 2011 - Bounce Sometime Soon?
Jun 2 2011 - Sell Signals and Warnings Everywhere
Jun 1 2011 - How Bad Could The Selling Get
Jun 1 2011 - Tread Carefully - Markets Remains Overvalued
May 31 2011 - Success - 100 Day Moving Average Tested
May 17 2011 - Be Careful Out There
Apri 18 2011 - Two Bears Compared
Apr 13 2011 - Why I Bought Puts Today
Apr 4 2011 - Breaking The February Highs
Mar 16 2011 - The Art Of Being Wrong
Mar 15 2011 - Market Remains Resilient
Mar 11 2011 - Trend Is Down
Feb 25 2011 - Trend Turning Bearish
Feb 11 2011 - Still Up - But Watch For June
Jan 3 2011 - Trend Remains Positive
 

MARKET DIRECTION CALL S&P 500

June 16 2011 - Raising Cash

Tomorrow is options expiry for June. I have a number of put options expiring tomorrow. I will be raising additional cash after tomorrow as I will not be selling as many naked puts. Unless tomorrow should see a major pullback, many of my positions will expire. I will not place additional trades. Instead I want to raise capital in case the market pulls back a lot further. The Greek Debt Crisis could end up pummeling stocks more than investors realize. I read a very good article today on www.marketwatch.com that agreed with my article that any default is definitely not "baked" into the markets.

People who are holding stocks really might want to consider buying protective puts. By going out to January and staying out of the money, put premiums are still reasonable. Shortly they may not be. The chance of this market rallying back and setting new highs this summer, I believe are probably 1 in a 1000. I guess if investors believe otherwise, then going naked without some put insurance is fine.

Here is today's chart on the SPY. I marked when I bought my SPY Sept 17 $126 puts for $3.90. The Oscillator showed a very good reading but remember, this reading is just for the day at that time. Meanwhile the MACD Divergence remained negative throughout the day.

SPY June 16 2011

Below is yesterday's SPY chart. Look at how negative the Ultimate Oscillator reading and MACD are. This type of reading does not turn positive overnight. Because of yesterday (June 15) I waited for a rally and then bought near the top. It is not a tough thing to step in and buy spy puts because I have the confidence that the market is moving lower. If I am wrong, I have the cash cushion already built up to withstand a few losses. My hope is that the market doesn't fall apart, that Europe gets its act together, Congress gets its act together, oil prices stabilize, housing prices stabilize and unemployment falls. Now you can see how tough it is going to be for the market to climb this major "wall of worry."

SUMMARY

For myself, I am raising cash. I believe this market has not seen the lows yet. I hope I am wrong, but even today's action continues to look bearish. The market was up but by mid-afternoon the market fell apart before rallying back near the end. I bought more spy puts again today. I have my fingers crossed but I have to go with the technicals on this one and they are very bearish. One good thing though, there are a lot more bears now, than earlier this month.

 

Disclaimer: There are considerable risks involved in all investment strategies. Trade at your own risk.
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