Wednesday, February 22, 2006

What We Are Doing

Interesting action in the Housing sector today. A few posts below I mentioned that Housing looked terrible on a monthly basis. I also said that we'd look for rallied to get short.

Well, today we have the rally. I am looking for selling call spreads on RYL, KBH, LEN and a few others. We may be running a bit ahead of the train here so my recommendation is to scale into the short position as the market tries higher.

While the SPX is attempting to post a multi-month high and the NDX-100 traded through my magical 1682 level (see below) I am looking for the market to keep the strength into the close before selling puts on the indices.

I guess my caution is due to the unconvincing action in the Semiconductors sector - I really would like to see a move lower followed by a stronger reversal than what we are seeing today.

Finally, the Oil sector is selling off and we're looking to add to our credit spreads on the call side on any uptick.

That's all for now folks!

Cheers,
/Dmitry

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