Okay.. my head hurts from today’s action.  Luckily, my hedges kicked in.  Something tells me Monday’s going to be a big day, one way or another.

Yesterday’s action consisted of 2 contracts sold for a profit of $268.  I think the contracts I sold were WFR.  Probably.  Yeah I’m almost sure.

Today’s action?  Well after the wild swings and rumormongering, I decided to take a big chunk of profits off the table, even if their trends hadn’t broken.  This may or may not play out in my favor but if the Fed is bailing out FRE and FNM, I don’t care to take chances on the short side with financials.

Today’s action consisted of 10 contracts sold:  Remaining LM contracts, remaining WFR contracts, and my entire TIF lot.   I may re-enter TIF Monday or Tuesday but I’m not entirely sure yet.  I had a decent gain on TIF and since I’d prefer to have the cash on hand I’ll take the profits.  No reason not to take profits, right?

Profits for today:  $1,229.  That’s right, I took $1,229 from the market today.  And yes, my account once again has hit a new high.

In all honesty, I think the past two-three weeks has been fairly easy to trade.  If this continues, I should hit 10k by the end of the month.  However, a couple of things to note.  First, I think the run on the financial sector’s done for now.  If the Fed is bailing out FRE and FNM, I’m expecting a modest rally in the XLF.  Second, my risk has remained the same since I went on this winning streak.  According to the rules I have in place, I should be trading about twice the position size per position with the run up in my account.  That being said, I haven’t increased my risk due to the fact that we are in a bear market.  I’ve been so delta negative I was not about to risk losing everything.  The new risk rules will go into effect at the start of August.  Just gotta make sure I haven’t lost my account by then!

So for now, I’m running at a reduced position size for the rest of the month.  I’m currently 2:1 short with some DIA/SPY puts in place as a hedge.  The Investing Adventures’ account is now at a new high.  Total return on investment since I started last year is about 62.5%.  It can be done.  You can survive in the stock market!

I’m off to Pittsburgh Monday for a conference.  I’ll be bored trading over there.  Enjoy the weekend!

Earlier this morning, crude oil finally rose above $115 a barrel (CLK8).  With oil rising at a rapid pace once again, commodities are soon to follow.  Some analysts such as the Option Addict feel commodities will push higher as it did about two months ago.  In anticipation of a potential breakout, I’ve jumped into the bandwagon with a small position in DBA, the PowerShares DB Agriculture Fund.  Note the level of support around $39.  Here’s how I’m playing the ag game.  I’m currently in DBA May 40 Calls with a stop right under $39 and a price target of $42.  The two bottoming tail hammers also bode well for a bullish position.

With oil, gold, gasoline, commodities, and everything else rising at a rapid pace, perhaps it’s the best time to jump into the oils such as Exxon (XOM) and others?  Actually, I may have found a stock to short.  Take a look at Petroleo Brasileiro, also known as PetroBras (PBR).  For those keeping up with recent news, PBR may have found new patches of

drillable crude in Brazil and as a result spiked about $12 Monday.  But take a look at the chart.  Note the action from the past couple of months.  It appears that a double top may be in the works on PBR.  A double top is normally a major reversal pattern that’s found after a extended run up.  In order to confirm, PBR would need to bounce off the $125 resistance and break $97.50.  However, working in that channel alone can net about 25 points.  It’s an interesting play and something I’ll be keeping an eye on over the next few days.

*We’re currently away on vacation but will return soon. Enjoy!

A couple of months ago, I began compiling a list of commonly used ETFs and what they represented. Today’s a good day to go back and revisit those ETFs I’ve had a chance to explain to myself, as well as the readers. Enjoy!

• Powershares QQQ (QQQQ)
• SPDR Trust (SPY)
• CBOE Volatility Index (VIX)
• iShares Russell 2000 Index (IWM)
• Financial Select SPDR (XLF)
• Oil Service HOLDRs (OIH)

I’m currently reading Murphy’s textbook on Technical Analysis of the Financial Markets. If I were a day trader, I would really enjoy the SPY setup we had today. Although I’m still learning, it looks as if the SPY today showed signs of textbook H&S trend reversals. If only I were a day trader… well maybe not. I see how hard Bubs has it. I couldn’t stomach that … yet. Tomorrow’s another day!

The FOMC decided on Tuesday to cut both the Federal Funds Rate and the Discount Rate by a quarter point. The key in the decision was not the rate cuts but the statement still holding inflation as a key element to their decision. As a result, you saw the bottom from the markets come out, especially in the XLF (the Select Financial Sector Fund). Here are a couple of graphs showing you what happened intra-day. Note how the S&P has completely blown through support.

I may pick up on some SPY puts in the near term. I don’t expect the market to recover for at least a couple of days while they digest the FOMC statements. We may be retesting the lows we saw in August and November if the statement isn’t well received. Be careful. We may have a bear market on our hands.