Sell and Sell Short...Maybe?

The market sold off hard today and the move happened on higher than average volume...this is significant. Several things happened for me as a result of today's action. First, I got stopped out of my TBT trade, which is not a big deal as taking losses is part of trading.

Second thing that happened is that I cashed in on my single biggest one day percentage gainer ever. Yesterday I bought some Vix call options (May 10 with a 19 strike). Today those call options were up over 200%...I rang the register at the 100% mark. This was a good trade but I must admit, I got lucky on the timing. I thought that the Vix might spike between now and May 10 (obviously b/c I bought some calls) but I did not expect the Vix to spike 30% in one day! This trade more than made up for the small TBT loss.

Last but not least, I established a short in financials yesterday via SKF. This trade is showing some potential as it's already up a decent amount and I've moved my stop up to above break even. Once again, I lucked out on timing on this one too. The big question now is, "Will we see any follow through to the downside?" Dip buyers have been coming into the market over the past few months and this dip might just be another buying opportunity for them. I have a feeling that we might see a little more of a correction on this round, but you never know.

There are a couple of things that I track every day, some proprietary indicators that I've been tracking and they are looking bearish. The first indicator is called the TLT Oscillator. It's just an oscillator that represents the general market. It ranges between -60 and +60 with 60 being a raging bull market and -60 being a major bear signal. Here's the chart showing the values from March 1, 2010:As you can see, today's reading was a +8...not terribly bearish. The thing that caught my eye is the drop...it dropped 20 points from yesterday (+28 to +8). The big sell short signal will be a drop below zero, so until then, shorting will be done in a more cautious manner and very stock/sector specific.

So I've determined that I want to be stock/sector specific and I've already mentioned that I'm short financials..how did I determine financials? Because I track buy and sell signals on the daily, hourly, and 15 minute time frames for 10 sectors and 30 stocks (3 stocks per sector) every day and financials are where the weakness is at. Here's a look at today's trend sheet for the sectors and stocks..note the sell signals in financials:I've got a couple of other indicators that I'd like to share but it's late and I've got to go to bed. We'll get to some others later but for now..be careful with the longs but don't get too aggressive on the short side either.

Hope everyone's having a great week so far.

TLT