Ooooh boy.  Let the fun begin.  I’m watching the 11am news conference by Hank Paulson.  More info once its released.

Update:  Here’s the shortened version of the story as I see it.  The government’s taking over Fannie and Freddie, removing the CEOs of both companies, and eliminating both preferred and common dividend.  By eliminating the dividends, I don’t think there’s any interest in holding the stock.  Does that mean that FRE and FNM are headed to zero Monday?  My guess would be yes but you never know.

The fallout from the takeover may result in a nice little pop come Monday.  But I’d have to agree with everyone else out in the blogging financial world.  The rally will give great opportunities to short the market and stocks in general, but I can’t see it lasting.  What the government’s done is effectively made the public foot the bill.  On top of everything else, I don’t see how the public can afford any more debt.  Just wish the public would assume my student loans…

Tomorrow should be a fun day.  Dow +300 tomorrow?  Nah.  I think the bears squash the rally tomorrow.  I’d even be inclined to say we fall hard the latter half of the trading day tomorrow.  But in a bear market, anything goes.

Personal update:  PhD qualifiers are Sept. 20th.  Once the 20th comes and goes, I’ll be back full time.  Hopefully in good spirits.

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!