Infuriating Trades

I watched the market closely today leading up to the sell-off that I expected in the last hour of trading, which arrived right on time. Unfortunately, none of my trades executed. Especially infuriating was my buy order on EWZ at $31.50. The ETF hit that price, but my trade didn't execute, and EWZ was trading at $33.00 a mere fifteen minutes later. In other words, I missed out on an almost 5% gain.

What did execute for me was RIO at $11.25. Then I remembered that it is "earnings season" and found out that RIO reports tomorrow. That's not a game I like to play with a large position, so I immediately closed RIO with a very small gain.

The next two days leading into the weekend will be very interesting. I still believe the best play in this sort of market is to sell puts on companies that you would like to own. That way I either get to buy stocks at long-term bargain prices or rake the unreasonably high volatility premium and walk away at expiration. The stocks I am looking at right now are RIO, EWZ, MCD, JNJ, GE, T, HNZ, USB, and GS.

A one month chart of the Dow shows that we are in a descending triangle, with a low of about 7,900 achieved on October 10th. Pay attention as the Dow approaches that line again. If it breaks downward out of the triangle, we could go much lower. If we hit the line and bounce up, that's called a retest of support and it indicates that it might be time to go long. Whether you go long or short, set tight stops on equity positions and pay attention. This volatility can be dangerous.