The Fed has no market sense. Their strike was preemptive, and futile at best.
If it were me, I would have let the market die a slow death for a few hours. I would have enjoyed my lunch while trading was halted at the NASDAQ and NYSE. Then nonchalantly, via text messages with my committee, make the decision to lower interest rates. While in my mind knowing that this action was not a permanent answer, I would have provided some temporary relief after allowing the market to digest all unhealthy matters in one bone crushing trading session.
In any event, I am looking at this day as a rally; even if we finish 300 points lower.
Why, you ask?
Because the Dow should have closed down 700 points, and would have had we not tampered with interest rates. Unless the market starts producing amazing earnings, we will make up those points here fairly quickly. In the meantime; we have the most unlikely groups leading the way today: financials and retail. Both of which I plan to short tomorrow.
Speaking of shorts, I like higher prices here because in enables me to short stocks and buy puts at much better prices. However, with the VIX taking out 52 week highs, gapping higher by 25%...I am being cautious with how I buy options. A move like this in the VIX is a black swan, and if you buy options here, prepare to watch time premiums evaporate to realistic levels. Consider selling strategies, especially today...but make sure your risk is defined. If there is one thing I can't stand it is setting up a trade that allows me to potentially lose more than I stand to make, regardless of probabilities.
Anyway, I followed through with my game plan at the open by cutting off every long position except GLD. In fact, I actually bought more shares a few minutes ago. I have closed down or taken 50% or more profits on every put/short position I own. Ths includes...WFMI, JLL, LNC, CNA, USG, REG, SYNT, SINA, MNST, BHI, GS, ATI, ROP, CYT, TSCO, XL, ABK, MBI and GES.
I feel exposed and very vulnerable at the moment. I am breaking my I will not be taking any more trades today, unless I find a compelling reason...but will spend the rest of the day shopping. This means that a watchlist will probably grace my blog tomorrow morning. I couldn't put it out there on a day like today.
Until then, I am following through on the most important part of my suggested game plan today...
I'm having sushi.
