Turn around Tuesday?

There are quite a few idioms used by Wall Street. Today the one everyone’s lips was the term turn around Tuesday. Usually this applies to a strong Tuesday rebound from a deep Monday sell off. This rebound does happen frequently enough to warrant the idiom. But was it a true turn around today? Not really. In fact it was remarkably undecided day. We were up, then down, then up and it looked like it would be positive into the close (which would have been a good signal for the bulls). But in the last ten minutes, there was a sell off and we generally ended up where we started. So was it a good day for the bulls or the bears? The answer is neither.

Tomorrow afternoon around 2pm the Fed will have a press conference. A lot of people are waiting to see 1: if they announce a tapering timeline and then 2: will the market react to it. I believe this is a large part of why the market seems so undecided today, it is more of the ‘just wait and see’ mentality that is defining this September. To make matters more unsettled, tomorrow is the fall equinox. Believe or not, this date has frequently been a pivotal one for markets. Market old timers think this is to due to harvests changing hands around this period, the original markets. Others think it is tied up in the overall seasonality of the market. Not sure about either of those but a lot of market watchers are superstitious, so tomorrow could be interesting. Quad witching last Friday may have contributed to this weeks decline, so who is to say the equinox will not be in play tomorrow? I think the Fed will announce a taper timeline, but pushed into into next year. That will result in a minor market hiccup. And then back to normal.

You may be asking, do you have to know all these market idioms and superstitions, key economic events and history to make money in the market? The quick answer is no. But knowing them helps to inform your view as to possible market direction and overall sentiment. And honestly, sentiment seems to move the market more than reality, especially in times of market stress. Sentiment moves stocks.

So given this uncertainty, how does it effect my trading? Given that there is no way to know what direction we are headed in, I hedge my bets and try and have trades that will work either way the market breaks. I have calls options to close if we drop and puts options to close if we rise. About equal number of each. I avoid buying anything unless it is down more than 10%. I trim stocks to raise money if the shoot up. And I wait. I don’t sell.

Market Today: Market opened up which made it easy to offload the Albelmarle (ALB), Chevron (CVX) and Coinstar (COIN) puts I sold yesterday at the close. I quickly wrote calls on (BioNtech) BNTX and Zoom (ZM), which I own, and got to close the calls profitably later in the day when the market slipped and then resold them. I sold three puts into the close, betting on FedEx who reported lousy earnings (which means my put will be very negative tomorrow). I also bought puts on DIS (which dropped today on poor subscriber predictions) and Crowdsource (CRWD). All up, I only did 13 trades, all options. The shares I bought yesterday were positive today. Any day I do less than 20 trades is a slow day, and so it was. Tomorrow may be a make or break day. Good to have money on the side…