19 March 2008

Dow Surges 420 Points on Fed Rate Cut and Earnings

Yes, the above headline appeared on the New York Times website earlier today.

Good day for the long positions, and the Dow rose a nice round number that will linger in memory long after I've shifted over to shorting the market, and back.

Speaking of long positions, since I blogged last, I added to my ultra-long NASDAQ position (QLD) on March 10 at a price of $63.46. March 10 was a very good day to pick up some long positions. March 10 is represented on the chart below by the mostly dark green column.

I closed out that portion of my QLD position today, selling at $68.50, for a gain of 7.9%. I'm still holding the QLD position I mentioned in a previous post with a basis of $65.73, as well as some shares bought at the end of '07 and beginning of '08. While that 7.9% return looks gaudy, my remaining position now has a cost basis of $72.79, so unless the NASDAQ goes on another tear, I'll be glad to sell out the remaining position (hopefully tomorrow) at a small loss.

Also closed out the ultra-long Dow position (DDM) today, selling at $72.855 from a basis of $69.90, for a return of 4.2%.

My chart shows a progression from green to pink/red. It filters out/obscures the wild market moves of the last few days.

I am happy to take these profits from today's upward surge. But the overall trend is still bearish in my view. The annotated chart below offers the pudding for those of you who want more than some words for proof. From my reading of the chart, plus my reading of The Big Picture, the Times, the Economist, etc., I am more comfortable on the short side of this market, and will look to build up those positions tomorrow via QID, DXD, and FXP.

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