why bearish?

Why (was) am I so bearish?

Finally I decided to withdraw CAD10000 from my IB account, partly because my wife pressured to take over trading rights, while mainly because I saw the picture of poor girl whose parents are lack of money. Life is very short. My kids are much more valuable than any other things. What if I lose this incremental 10000 again after incredible “betting” syndrom?

I have to admit that I was very upset with recent failing to keep my profit after last Thursday (Oct 19, 06, one day before Oct OE ) morning. On the morning of last Thursday, the market opened lower continuing down momentum. When I logged in my account and station on 10:00AM after I sent Jerry to school, I saw $48000 because my QQQQ 42PUT over tripled ($0.5-0.55) and my QQQQ 43PUT over doubled (2.35 times). How I wish to make my account over $50000 which is the milestone and I can return my profit to borrowed account.

After last Friday, I have 41500, not so bad. With my strategy of selling both side near the money options, I gained my account to 43000 at the end of Tuesday. Then when I saw others mentioning time spread strategy ( Sell near term OTM option and buy longer term same hit price OTM option), I developed this idea to sell 2 months(Nov&Dec) of near the money same striking price options. (If I keep this strategy, I won’t lost more)

Since I noticed yesterday (Monday)’s option record shows there was a huge transaction of OTM put (Nov 27.5), I was convinced that someone was betting big down. When I posted my notice on the DQ, I got many appraisal plus technical charts which made me more assured it will drop big. Last Friday’s bi-directional selling option play gave me almost 0-sum after unexpected SNDK 20% drop. I wanted to play single pro-sell side. At that time, I was actually given the warning by that fact that the prices of both direction of PUT and CALL went up in the afternoon. This didn’t make sense in a neutral market. One DQ guy posted an article warning people not to short. These are the two messages I ignored.

19m profit for a 14b market share company? 5 cents per share (beat 2 cents). It is so easy to manipulate. It closed at 33.7-33.8 and went up immediately to 38 without any rest when clock hit 4:00PM. I added some short position at above $38.

I was so scared on Tuesday evening. With the position of 1600 AMZN (300 of which were shorted above $38) and average cost of short was $34.39. Plus 4 Nov 35 Call Sell and 6 Dec 35 Call Sell ( can be deducted somehow by 2 Dec 35 Put Sell). The potential lose (at $38) will be
Stock: $3.61 * 1600 = 5776
Call Sell: $2 * 1000 = 2000
Deduct Put Sell $1 * 200 = -200
Total: $7576

What a bad day for single side option selling and short!!! I didn’t have a nice sleep on Tuesday (Oct 24).

Next day (today) .when I woke up and open the PC and TV, I saw AMZN traded above $38 in the pre-market. I didn’t cover in the pre-market since I believe it will swing someway due to its unconvincing and manipulation like Q3 report. After I sent Jerry and got to office desk at 9:27AM, I logged in and saw it dropped to $37.20, then I wait it dropping to 36.50 then I bought most of 1600 back (1500) and 100 back at $36.10. I should have bought more at 36.1-36.40 later it went up back to $37.8 level. Anyhow I recovered part of lose, and the balance was at 38500 when AMZN dropped to 36.20.

The Fed meeting didn’t give out any news bear like. The rate is unchanged to 5.25%. And quite a number of SP500 companies (at least 50% from what I feel) are reporting positive ER. Big drop is unlikely.

Something is wrong here that from middle July till now, I still have a deep bear sentiment which I saw any jump or bump will be followed by big correction drop. No, I didn’t see big drop. Some forces are manipulating the market in a way that to push most of markets up to let people happy. This is what we called election effect??? It could be and it should be.

Why bear?
1) It could be my investment history from 2000-2002 that I bought continuously to average down NT. I lost C$70000 at the time of Sep 2002.
All NTES/SINA/SOHU dropped to 10% of original value
2) Telecom industry is still under pressure that price of NT continuesly drop from 4.00 (2004 FALL) to 2.00 (2006 FALL), no salary increase from 2001 to 2004.
3) My personal/family income doesn’t show up momemtum.
4) Suspicious on GOOG/TZOO/NVDA/RIMM/SNDK/AAPL new economy.

Now what could happen if my wife (always buy bull) jump in at this moment when I still think most of these stocks are over values. Let god bless my family.