One down, two to go. Today's session behaved just as anticipated: a narrow-range day with short tails. If we see similar action tomorrow, I'll be ready to load up on the short side for a Friday sell-off, as outlined in yesterday's post.
Of course, big sell-offs frequently occur in conjunction with "unexpected" news, so I wonder what shoe will drop if my read is correct. Total rejection of the bailout package? Iran says it has a nuke? President Bush pulls off a proper pronunciation of a multi-syllabic word? Who knows?
One of the trading ideas posed over the weekend was the purchase of an at-the-money December straddle on gold. At the time, this straddle cost $115, and I suggested some thumb-twiddling so that a few less-volatile sessions could pass and deflate the pricey premium. Today this ATM straddle carries a price tag of $104. So far, so good, but I'm not quite ready to pull the trigger on this idea. Something in the $80 range... preferably with gold sitting near $850 support... would draw me in.
Given the dearth of material as we await the fate of gobs of taxpayer money, I decided to mull through my watch lists and post some observations on a few equities. Keep in mind I rarely play individual equities, but I do watch them for signals I can incorporate into my overall thinking.