We were looking for 810 to the downside and have been riding Index doubler shorts down since yesterday afternoon in our trading portfolios. We make changes to our investment portfolio only a few times each year.
Now we are buying some long positions to offset those shorts since we approach a possible support area.
The longs are individual stocks, precious metal miners and oil producers with strong cashflows and/or dividends, and some of the long index funds.
Please note that these longs are MORE than offset by the remaining short positions. This is a hedged play to take some short profits off the table without necessarily selling them. If we get a rally from here it will be relatively easy to reduce the three short positions. The longs are more diversified so obviously there are many more positions, but less in total dollar and leverage value. We are trading without margin.
We'll have to see how we close and what happens as we approach 800 if we do. If we go lower tomorrow we can adjust the long-short balance in the portfolio to take advantage of the decline.
Recall that we are in an option expiry week, and we have expiry in some of the commodity futures as well.
We offer the occasional example of how we might be trading a market not for specific examples or 'calls' but rather to reflect the style and money management we are using to match the character of a particular market. This one needs a whip and chair. Use of uni-directional positions and leverage are particularly dangerous since even in a bear downtrend, there is room for enormous swings even intraday.
Today did seem a little 'climactic' but it is too soon to tell.
Have a pleasant evening.
