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July 22, 2012 / redman59

Yesterday Confirms Down Trend

Yesterday confirmed the down move in the market. I mentioned in this post in that after Thursdays big distribution day, up days seem like a better shorting opportunity than anything else. This held true on Friday as we saw a nice run after 1300hrs but unfortunately yesterday saw further selling with the SPX falling 1.60%. This move further confirms the downtrend and I believe this 1300 level has to hold and if it doesn’t, I don’t see what would stop it from hitting 1280.

While I believe we are in a downtrend, I went from 100% cash yesterday and allocated some money to the long side through AAPL. This position compromises 4.9% of my account and I look to hold this just before earnings. I chose an upside calendar as AAPL IV is in the low range of its IV going back 30 days and looking back AAPL IV has increased into earnings. So with the IV bias, I also have an upside bias in AAPL into earnings, so the calendar seemed like the fitting strategy for my opinion to take advantage of IV and price.

Current Account:
Cash @ 95.1%%
Long bias @ 4.9%%:
-AAPL Call Calendar @ 4.9%
Short bias @ 0.0%:

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