The Day After A Big Rally

Both the 1193.89 gap and 1208.47, the 8/17 highs, were exceeded yesterday. Advancers over Decliners, the A/D line, was very strong all day. And the NYSE TICK index was strong too. It was probably not the best day to jump in front of the stampede, but I did because it was part of my trading plan. I bought SPY puts and hedged them with SSO longs. Very glad I did.

I dumped the lowest strike puts (119s) when it appeared they would end up too far out of the money. I'm still holding 120s. The SSO hedge position more than paid for the loss on BOTH tranches of puts.

Today I'll have to reassess. With futures down but not down hard, I'm inclined to dump the 120s unless the S&P can quickly get under 1181.23, a spot I mentioned yesterday as being problematic for further bullish scenarios.

Supposedly the futures are down because the Fed minutes are coming out today. That's just news. I saw the rally as just another low volume rise. It could even go higher. 1213-1218 is another zone as well as 1228.