Trade Alert: Time to get a little more aggressive
It’s fried-day and I sure know a lot of traders and investors who truly feel fried now. The markets are set up for another ugly open this morning and it looks like they’ll be opening at 3 month lows.
As you guys know I’ve been waiting to put much money back to work and I plan on putting some more orders in this morning, including getting more aggressive by using some call options in addition to stepping up the aggression in my common stock purchases too. To be sure, if you don’t want or know how to trade options, you can also just continue to scale into some more common stock but be a little more aggressive now than you have been in your scaling so far. If you were buying $10,000 of stock to tranche into it last week, maybe look at $15-20,000 in the trances you buy today. But again, we won’t nail the exact bottom and it’s a fool’s game to try, so stick with buying and selling in tranches (to further explain — a “tranche” in this sense means you were buying maybe 1/5 of how much you eventually want to own in each stock and since you’re looking to get more aggressive now as the sell off is giving your lower prices, you step it up to 1/3 of how much you eventually want to own).
Anyway, the point is that I am going to put some more money to work today. I’m going to start with buying some FFIV calls, dated out into January of 2013, with strike prices from $120 to $130 or so. I’m also going to add to my Nuance common stock this morning. The company reported earnings and guidance that were essentially in line to better than expected, and the most important element of last night’s report and guidance was the topline strength. I don’t care as much about earnings in an early-stage company at Nuance as we do at a later stage company like Google where you want to see the bottom line growing even faster than the topline. And I’m also buying some more ZNGA into the teeth of its continued sell off today. We’re down about a buck on the initial tranche we bought and I’m going to buy more now than I did then as part of the more aggressive stance I’m starting to make.
It sure feels panicky out there finally. Doesn’t mean the bottom is in. But you want to buy other people’s panic, just like we were selling other people’s greed back at the highs.
I’ll be back with at least three more posts today — headlines and latest positions and a summary of this week’s trades in later posts today.
