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.
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.
