I Actually Did Some Buying Today.

The market sold off in another spectacular fashion today, once again reiterating that the BEARS are in firm control of this market. There is much chatter of gloom and doom and of the proverbial "Black Monday". Yes, the sub prime market is a concern and the implications from this soon to be fall out will reverberate throughout the country and possibly the world. But we aren't there yet. There is too much chatter and noise of the death of this economy, and many prognostications that next will be the week that all "hell" breaks loose, one for the history books. Well, if only the markets were that obvious. The market will determine the right place and time, when it is time, if at all for the Armageddon like crash of the US and possibly global equity markets. It is interesting to see how quickly people have become negative on the market that just one week before, was humming at unprescedented levels.

My take is that we will have volatility along the way. Clearly, it is increasingly clear that this is not a one week wonder "correction". I think Jim Cramer is prognosticating that Thursday and Friday's market behavior was the "whoosh" or the "Crescendo bottom". I think that he is way too premature in declaring that. The fact is no one knows what this market will do next. It is clear that we have broken all reasonable technical levels and are establishing a down trend. But it is too early to call a down trend based on one singular week. Perhaps Cramer is right. I tend to disagree with his position.

I do not think that we will get the "Black Monday" that all the bears are hoping for, including myself (though I am not a bear at heart). I tend to believe that in extreme volatile market conditions, we are more apt to get contrary events, sending the market participants running for the hills in panic. This type of market has the tendency to do that. So what did I do today? I bought, yes I BOUGHT CALLS to play the market opening on Monday. I noticed that Google was extremely weak today and is now technically oversold. For whatever that's worth, I think that we can expect a little "dead cat bounce" next week in the market and in Google.

For the intermediate term, we will experience intense volatility and whipsaw like trading environment. Only the bravest and quickest need to stick around and profit from this environment. As I have said before, just about the only thing that will work as a trade is day trading both the long and short side or going short with puts with at least 3 months of time built into the options.

Google is close to filling the gap at $429. It closed today at $438.68. I believe that as this correction continues, the stock will eventually fill that gap and possible bounce from that level. But my bet on Monday is that it will regain some of the losses encurred on Friday. Easy does it. I have 10 contracts of March $450 calls which I will close by Wednesday if no profit can be obtained. If the market players who are on the sidelines feel that it is safe to once again press to the upside, we should be able to rally past $450 level one more time, before descending to close the gap at $429 level.

I would advise staying in cash however but if you must trade, please trade the long dated puts in your favorite fast movers of the previous bull market run. The basic but not so easy to tenet in this bear market is: SELL THE STRENGTH and BUY THE WEAKNESS and KEEP YOUR TIME FRAME ULTRA SHORT.

I hope everyone is safe and did not incur too much losses this week. It's just been hell.