I made the mistake of buying a few $45 puts the other day. Luckily, they were offset by my sale of a $46 call. Overall, I made a little money, even after losing out on the puts. However, with war in Russia/Georgia and (apparently a BP pipeline getting bombed that controlled 1% of the world's oil supply), and jobless claims at six year high...I felt like it was a good idea to buy a couple of $47 puts on the QQQQ on Friday. I bought them when the QQQQ was at $47.38, and after hours the Q was down, so I'm already in the money on them. The puts expire in a few days, but with the Q going straight up for the last few days....I mean, from a low of $44.33 on Monday (8/5/08) to a close of $47.32 on Friday (8/8/08), that's what.... a 6% or 7% gain last week? --I just don't think the Q can maintain that kind of upswing this week. I figure we're going to see some profit taking. If the market freaks out tomorrow morning over the fighting and pipeline bombing in Russia, I can almost guarantee the market is going downhill, at least temporarily.
I've said it before, but my general feeling is that the market "wants" to go up, but we're busy trudging through a summer of bad news (high oil prices, financials meltdowns, etc). The media keeps talking gloom and doom, but many companies are still putting out good earnings results. So far as gas prices go, more international turmoil could make them go higher again (like the current conflict in Russia/Georgia), especially later this year if the Iran/Israeli problems get worse, but I'm not sure that U.S. demand for oil is going to bounce back very quickly. Even though gas has fallen from $3.99 to $3.61 in my city, my wife and I are still trying out best to conserve gas. We've gotten into the habit of it, and even with summer winding down, I feel like the "save gas money" urge is still with us. We just don't "trust" the drop in gas prices to last for too long. In fact, it's inspired us to try and save more money in general (oops, I guess we're contributing to the slowdown).
Anyways, there's a few "gut feeling" thoughts on the market. We'll see how my $47 QQQQ puts do tomorrow morning. --Really, after this, I might start shorting the DIA. The Q seems much stronger than the DIA.
edit: the Q did eventually go down below $47 again, but it held at above $47 a few more days that I expected. Like I said, it's probably better to short the DIA. Q seems strong.
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For those of you who were keeping up with my schooling this summer, I passed with all A's and B's. I only had B's in Accounting, which was very difficult. I come out with like an 89.2B in the first accounting class. The A was in Quantitative Methods.
