Running in place

What a weird day. It had a little of this and a little of that. Sure, at least one eff-up by me, too.

• After taking two tiny losses on VXX trades yesterday, I gave it another shot this morning right after the opening bell. (I usually don't mess with anything that close to the open.) The trade fizzled and I got out with a small loss. The market wasn't quite rebounding just yet, but VXX offered an omen, dipping from a gap up to minus territory. I got in at 26.35 and out at 25.95. I left it alone then, realizing that it works far better as a pure hedge than a pure trade.

• I bought more AAPL at mid-day, but I didn't enter at 255. My intuition said get in, but the market was still negative (slightly) and I saw no indicators that worked at that price and time. Sure enough, AAPL went up and up. I didn't chase. Yet.

Later, I got shares at 259.65, close to the top. [Note: Horrible to an extent; had I relied on my usual Fibonacci retrace levels (based on today's gain), I would've waited until the price returned to 256.29 (38%), 255.18 (50%) or 254.06 (62%). AAPL later traded at 255 in after hours.]

I decided to get out with a $1 loss (per), but it wasn't a hard stop-loss. The plumbers arrived to fix the broken stuff in my place, I left the computers and AAPL dropped to a $1.50 loss almost instantly. So I decided to hold out at a $2-loss range, which would still be a small loss. There were buyers, but they couldn't overcome the selling pressure; AAPL was 225 just two trading sessions ago.

So I sold at 257.70, or so I thought. A minute later, I was in stunned silence. Instead of registering a small loss, my account showed a sizable profit. Yep. I accidentally sold my long shares that were bought at 214.40 in January instead of the new shares. I planned to hold those January shares for at least a year mainly to prove to myself that I can mix things up. (And to see how effective buy-and-hold can be in doses.) It had been my best decision so far this year, to hold those shares.

Mixed feelings, for sure. I had to adjust and realize that my new shares were now underwater. I held out, but AAPL kept sliding slowly. I decided to hold them, just as I'd held the previous shares. It was time to use the strategy I employed on Friday: use VXX as a hedge.

I had opportunities to get shares at 25.50, but I didn't pull the trigger. VXX went quickly to 25.75 as the market (and AAPL) sold off. Impressive. Then the directions changed and VXX returned to 25.50.

I decided to wait until afterhours or maybe tomorrow morning, when VXX sometimes is much cheaper. In AH, VXX slowly creeped higher and I put in a limit buy at 25.40. Long shot, but worth the try. By the close, VXX was in the 25.80-25.90 range. I wanted it cheaper, but I realized by then that the price on VXX has less to do with anything than just having it as a hedge. It will (normally) run opposite of AAPL in such an efficient way, like they were born for each other. I opened a position in VXX at 25.83, well off today's high of 26.60 and the low of 24.58.

Why hedge? It's insurance. Great insurance. I don't expect a turbulent day tomorrow, but if anything should hit the fan, I'll be ready. I'll also have a better understanding; last Friday, VXX peaked a couple of times and I didn't get out with a good profit either time. It's simple, but not easy to execute: AAPL dips, VXX rises; AAPL reverses, sell VXX for a tidy profit; AAPL tops out, VXX is cheap again, buy back in. Rinse and repeat. Easier said than done, no question.

If the market remains range-bound, this is not the worst plan in the world. I could've stay away from both and just bought gold, but at this point, it may be getting toppy and overbought. As several analysts have mentioned, gold may get sold off as hedge funds start to deleverage out of losing positions by selling their profitable lots of gold.

So, for now, I'm 44% short-term trading (AAPL), 18% hedged (VXX) and the rest (38%) is cash. Might add more VXX (or AAPL, or sell both) depending on what transpires in the morning. By tomorrow afternoon, I'll have a conclusion (maybe) about whether to step away for the rest of the week or not. For all my trying, I'm just running in place. Trying too hard, typical guy behavior, as opposed to being content to really pick and choose my spots as I did in February.