Stock Trading Model Portfolio Update - 9/30/2009

Lot's of volatility today with a bunch of economic data, but markets managed to pare their losses. The markets reacted to the Chicago Purchasing Manager's Index (???) with a huge sell-off, signaling the jittery and fragile sentiment of investors. Remember that volatility is always a sign of temporary tops, as this indicates that there are some people who are already willing to liquidate their positions.

With regards the first trading day of our model portfolio, I did okay (down 0.13% net of commissions of $20-$30 per trade, versus S&P 500's down 0.33%). I could have been ahead for the day if I hadn't hedged my long positions with SDS (S&P 500 UltraShort ETF). But I'm willing to hold my SDS position given the divergences that are showing up on the index. Meanwhile, I limited my position size to $10,000 max (~10% of portfolio), with most positions worth under $5,000 each. I also did most of my buying after the market went down over 1% in the morning, that's why some of my long positions did well. My best performer was AU, it's now peeking above the pivot point. Hope we see something sustainable in AU tomorrow. I'd cut the rest of my long positions if I'm not ahead by the end of the first trading hour tomorrow.

FD: Author has no personal positions.