Feb. 13, 2007

Alcoa takeover bid caused the market to look unusually strong this morning. I had a target to short at least 5 pts above lows, i.e. 1440. But thank G-D, I didn't!

Instead, I shorted 1442, figuring in this market a retracement was likely. Also, we had a signal 2, so a some sort of re-test was the call. The market quickly ran up to 1445. I knew I was toast. The news was a take-out bid for Alcoa. Big stuff.

So when it re-tested 1442, I pulled up my bid from 1440, and covered it at 1442.25 for a 1 tick loss. My 1430 puts were showing a nice profit, and my bad trade was simply a distraction.

The market then went to print a high of 1447!

My expectation is that we'll return to the S1 regime sure enough, and that I'll be able to bleed the puts a bit more. My target is 1450.

We'll see!