Key reversal day, and some good and bad with the strangles

Wow! Today would fully classify as a key reversal day in my mind. Now some people are saying this is just like a couple other key reversal days we've had in the last month. I would argue that this has a much better chance of not being a "dead cat bounce", and that the others didn't really qualify as a key reversal.

Let's take the S&P 500 as an example. If you notice first of all that today set a new low for the downtrend. Not only the latest downtrend, but the greater long-term downtrend. It closed above yesterday's close, and almost as the very top of the today's range. All this on significantly higher volume. For example the bounce on Oct 28th was a good bounce that came after a downtrend. However it did not set a new low, and it advanced under only slightly higher volume. It still managed to pull off a rally just past the 1000 mark.

Does this mean we're out of the woods and on to a bull market. LOL! No! It's possible yes, but most likely wishful thinking. Don't forget the looming credit card crisis on tap for next year. Though with Obama's bent for rewarding stupid people, maybe I should rack up some CC debit over Christmas so I can get bailed out ;-). Anyways, I think a rally to 1000 on the SPX would be reasonable. At that point it will depend if it can break resistance there or not. It's going to have the resistance line from the last two "rallys", and the 20-day moving average to fight.

Recent Activity

Sold SLB Jan 55 put to leg out - 2 contracts for $22.00

- Bought SLB Jan 55 put to cover - 2 contracts for $24.20

Sold AMZN Jan 40P to leg out - 1 contract for $4.95

- Entered OCO to buy back Jan40P if stock drops below 41.35, or sell Jan 65C @ $4.80

Updates
AMZN play went OK for me today. I legged out of the put after the markets turned around and headed sharply upward. Once AMZN moved above the open I sold the put, and then set an alert at the 100bar moving average on a 5 minute real-time chart. Thankfully it cooperated better than SLB and I never had to re-cover. I thought about going ahead and buying back the put so I wouldn't be single-sided in the play overnight. But AMZN closed ~$3.00 above where I legged out of the put and it very rarely ever gaps that much. So I put in an OCO to either re-cover by buying back the put if the stock falls, or to sell the call once the whole trade reaches 10% profit.

FDX is still sitting there channeling between ~62 and ~69. Hopefully this thing will break out of this channel soon, so I can get my money back. Expiration is 64 days out, so I've still got over 30 days.

MS was my total miss for the day today. I was watching it as the other stock and markets were turning around, but it was running flat. When it finally decided to move it blew above the open while I was busy actually working ;-). I'm still profitable on the put and looking at the chart now it bounced off the lower bollinger band quite nicely. I'm going to watch it closely at the open tomorrow and hopefully successfully pull off legging out. Watch my twitter feed tomorrow for updates.

SLB didn't do so well for me today. It started up in early trading so I sold the put in order to ride the call up. I set a market buy order to re-cover the position by buying back the put if the stock dropped below $45.50. As luck would have it the stock tanked to $44.00 shortly thereafter and I bought the put back for $1.20 more than I had sold it for. To pour salt on a wound the stock closed at $51.70 >:-(. Oh well, even looking back I don't know what I could have done differently. I set my entry and exit points and stuck with them, without letting emotions getting involved. And I waited until 15 minutes after market open to sell the put to let the markets pick a direction.