What do you do About Good Feelings?

Yesterday was an all around good feeling day.


First, more book sales showed up in the daily reports. Secondly, I didn’t show up in this morning’s New York Times obituary pages.

So that’s already a pretty good day.

But what I really mean is that time specifically between 9:30 AM and 4 PM. Those times both ended by the ringing of bells. For a change, it wasn’t an opening or closing gong representing some kind of Chinese reverse merger company, either. Just real authentic opening and closing bells at The New York Stock Exchange, with lots of green in between.

You know that kind of good feeling. The kind where you just want to roll over and go to sleep, with a big contented smile plastered on your face.

Maybe a generation ago you would have lit up a cigarette.

I snuggled a bit with my LCD monitor as I took in the numbers. I watched “40 Year Old Virgin” once again the other night and decided that I would limit it to snuggling until we have 20 straight advancing sessions.

If that day comes, I’ll probably unplug the monitor just to be on the safe side.

By the time I looked at the closing numbers and entered the day’s data into one of my spreadsheets I wondered when was the last time I had such a good day. With the S&P 500 up about 1.4% today, my holdings were up a full 3%.

Before you get overly impressed, don’t be.

Fortunately, there’s no requirement that I tell you how much they were down over the past two weeks, but to give you some idea, my big movers were the likes of Mosaic, Williams Sonoma, British Petroleum and Rio TInto. And that doesn’t take into consideration some of the losers I shed in the last couple of days like Research in Motion and Hewlett Packard.

I think you get the idea. They were pretty hard hit over the past couple of weeks. And they definitely had a lot of energy stored up in them for a bounce or two. I could care less about dead cats, as long as the bounce is in one direction only. Had Newtown bothered to hang around long enough, he would have seen some of those apples rise.

Curiousity did get the best of me and I saw that the last time I had a day quite this good was May 27th, 2010. On that particular day, the Dow Jones was up 284 points (3%) and the S&P was up 3.1%. Interestingly, yesterday was yet another of those index disconnects, as the Dow was up by only 0.9%.

Just like Monday’s market.

I have no idea what the significance of that kind of pattern is, not that two days makes for a pattern, but it must mean something, like maybe Hewlett Packard continuing to underperform.

The problem during the course of this feel good day was that I really didn’t know what to do.

You know, do you stay the night? Do you leave a $20 on the night table and discretely slip out? Do you go through gut wrenching pangs of guilt because you made some money while Sally Struthers is still trying to raise some for Biafra?

But when you predominantly sell calls on your holdings you’re never quite sure what to do or how to feel.. Normally, whenever possible, I try to sell calls into a rally. There’s no better way to get an optimum premium and thereby provide a better cushion for the inevitable price retracement.

That’s the intellect part of me.

But some of the prices had fallen so much, instead of thinking about generating options premium and perhaps also getting some small stock capital gains and maybe a dividend or two, I really wanted to hit those home runs.

That’s the emotional part.

The call writing strategy is one of singles. Just lots of them. But we were so far behind after the last couple of weeks, I really wanted to get back into the game quickly.

It’s tough when your intellect and emotion start doing battle. You know which one usually wins. That actually explains why there are ugly babies in this world. Well, that and alcohol.

Did you love her or did you love the sex? That sort of conflict. And you can’t answer “Both”.

But that’s exactly what I did. I hedged my hedges. Okay, there may have been sex involved as well.

I started by methodically looking at my purchase prices, especially for those that had multiple entry points. Having holdings like that isn’t unusual for me during a down market if I think my shares are being unnecessarily beaten down. So I just chase them to a degree and average down.

For example, instead of writing 40 Textron contracrts, I only sold 13 at a $23 strike. I won’t mind losing those if that means I’ll be able to get a decent premium on $24 or above Textron contracts.

I also sold a split amount of contracts on JP Morgan. But as the afternoon progressed, word came out that there would be an announcement about JP Morgan and the SEC. Soo I watched the shares fall in response and just bought back the call contracts making a decent profit for a couplel fo hours.

After it became pretty clear that the $154 million fine was a meaningless slap on the wrists, I re-sold the contracts.

The emotional side resisted doing the same for Mosaic and William Sonoma, but the intellectual side totally overwhelmed everything else and sold contracts on all of my Freeport McMoran and Rio Tinto shares.

There were some General Electrics thrown in, as well.

Unfortunately, I wan’t able to take my own advice about picking up shares of Riverbed Technology, as I opted for Halliburton instead, as  brothers from different mothers. Halliburton has done well, but Riverbed busted out today with a 6% gain.

But still, I felt good. Imagine that, compromised on my beliefs and I felt pretty good.

Today was unmitigated joy, tempered with a little pessimism and topped with a sea of green.

Nothing brings joy more than green. Of course, if that dead cat continues its one way bounce, that will really be one for the books.

Here’s to erasing May 27th, 2010 from my history books and for defeating the laws of gravity.

Sorry Isaac, but if it will make you feel any better, tomorrow we debunk the laws of conservation of matter and energy.