April 7th

I am a theif. Twas Tuesday and I burned with a nervous type of energy. That night I barely slept. Wednesday felt like a druggie coming off of a high. You know, that initial let down. That bled into today, which was the hangover.

My performance discrepancy between the first half and the now back half of this week reflects my mood swings. I average 5 trades daily, and make about 1200 trades per year. Today and yesterday combined I initiated 4 trades. Not to mention I obsessed over one OIH trade. I must have thought that one through for several hours. A creeping worry swept over my overall portfolio, second guessing, wondering what could go wrong. A strong dose of pessimism-which was the exact antithesis to Monday and Tuesday.

I am a moody person. Am somewhat aware of this, usually in retrospect. It is so tempting to get caught up in the moment, to lose perspective. Today, for example, I can not shake a malaise, a feeling of flatness. It affects my entire outlook, and that definitely correlates to my trading results.

Within an hour after the opening bell I knew I just didn't have it. Good awareness=in this case=defensive trading. Really picking my spots. It was too easy to talk myself out of putting on risk-so I didn't.

The markets reversed, which is the new norm. But there is listlessness to it. There are pockets of momentum stocks, which the past two days have acquired a type of bi-polar disorder. Two of my favorites, by that I mean ones I feel comfortable with the stock story, SINA and MCP, traded strongly higher. Reversing yesterdays reversal. Shorts beware - or at least be quick to take profits. FOR NOW.

Finished the day long 5 MCP June Calls. Got filled by an impatient amateur who hit me on the bid after putting out an offer 10 cents above what was a 40 cent wide spread. Telltale signs of his status-he hit me with less than 30 seconds to go. Just wanted out I suppose. I love trading less frequently purchased options, nice big spreads to buy and sell into.

Looking to flip this into strong Friday momentum. Plan on being out before the first hour. Caveat Emptor, man plans and God laughs.

Wednesday-April 6th

Good strong open. I turned my focus towards oil and the OIH ETF. I was excited and believed there would be a market break out towards S&P 1360.

After quickly perusing the OIH chart, I decided it was going to move on out past 167. My trading plan was to wait until the DOE 10:30 release, and buy the dip on the storage capacity issues. I reasoned that oil is trading on a relative basis, and that outside of the US there must be shortages-or we are in another bubble? I put out a bid for the July 170 Calls.

The ETF traded toward the upper end of its range, 167, before pulling in, in a stair step pattern towards 165, by 10:30. Then the report was released and I turned to observe the price movement of oil. It barely moved, downticking less than a 1/4 of a point; the OIH continued downward and my bid got hit around 10:35.

The OIH ETF immediately reversed from 165 and I believed that my thesis was going to play out. I did not bother to put a stop in, as I worried that something akin to the Febuary option shakeout would occur. The price stabbed down through 165 again, and didn't stop until it hit 163. I quickly panicked as the ETF lurched towards a low and sold April 170's against the July options I had previously bought. It is a small hedge, as the options reside 4 percent out of their strike with 7 trading days to go until expiry.

The overall markets which I watch are showing some classic topping signs. Narrowing of the new highs, lots of money pouring into story stocks-which reversed hard today. Stocks are churning near the old highs, and the Nasdaq continues to churn 3 percent off its old high. Only the small caps look out and out bullish to me. Though they are in need of hard shake as they churn near their all time highs of 2007.

All in all - I give this day a -3 on a scale of -10 to 10. My one saving grace is that I am still playing small until we get a little volume and confirmation that we are busting through and continuing upward past the old SPY high of 134.5 or 1345 S&P 500.

Diary of a Trader - April 5th, 2011

Another dull day in dullsville. Is it too much to ask for a little action, a little reverse of a reverse, followed with another reversal? Everyone on their toes, never a dull moment...

But the more mundane reality is that stocks barely move. Think about this: the first quarter saw a gain of 6 percent. Divide that 6 percent by 60 trading days in the quarter, and we averaged a 1/10 of a percent daily gain. And the bulk of the gains came on the first and last days of each month. So not only can I fall asleep between 10:30 and 3 o clock daily, I can take off from the 3rd to the 27th of every month, and miss practically nothing.

Enough spitting in the wind for now. Onto todays bull/bear dichotomy.

Bears: I hate double BB's helicopter like dollar dropping. Bulls: I love paying 3.50 for a gallon of gas if I am up 20 percent in my portfolio. Funny thing about this is that we had the same type of inflation in 08 without QE, and the volatility was even lower than it is today. The bears are clueless.

Anyway, this utterly dull dichotomy seemingly has gone on forever, or at least can be traced back to the trading low of triple 6's, back in March of 09. I think it is a giant red herring.

As for me, I would say my day was 70 percent angst- having missed a short squeeze or two or three; 20 percent frustration with the lack of volatility and 10 percent relief at having gotten out of a wrong way position with a profit.

I am seeing too many short squeezes, these are usually terminal moves, but god knows just when they will end. I guess options are way to play, but once these plays pop, you are not recouping your money. The big caps are going nowhere slowly, and there is zero action there. That leaves us with the small caps and there endless bid. All in all a rather odd assortment to pick from and trade, and my answer is too be conservative and play small. I'd rather limit my losses, and take small gains.