Markets made up their mind early in the day as they hit the skids early following some more negatives from Europe. Couple that with some hot inflation numbers and very poor philly Fed numbers and you had a strange brew forming. The breadth was as bad as I’ve ever seen it – nearly 29–1 negative and the VIX up to high levels again, that pointed toward big losses. Early in the session saw the Dow drop to -500 but then recover some but it finished right at the 11K marker. This market is under some severe pressure and distribution, but many are hanging on. The sentiment numbers actually showed an increase in bulls this week – imagine that! Gold was up strong while oil tanked, it’s looking for the 70’s now with the world in a major slowdown. Euro banks were hit hard, Morgan Stanley came out with some dour forecasts on the economy.
We added some weekly spy and qqq puts later in the day, but at the open we bought some dia puts for Sept and a spy wide vertical spread. We did add puts yesterday as well, we are trying to gain the upper hand and protect the positions we have in the short term – where volatility has just exploded. The CRM strangle was a decent win and certainly holding thru today would have been ideal. Strangling the NTAP and JDSU mostly resulted in a breakeven on both trades. I realize we are getting hammered on the call plays here in the interim – we’ll look to make some adjustments as we work the puts, too.
I’ll have a recap of open positions over the weekend.