Lessons

1. If VIX is under 26, buy the dip. If VIX is over 26, sell the rip.

2. Always trade in the direction of the larger trend. Find the strongest trend in your time period.

3. Nothing as bearish as a failed breakout. Nothing as bullish as a failed break down.

4. Don't worry about the last dollar. Take your money and go to the beach!

5. No more than four positions at a time. Preferably 2-4. Scope out others. Pick the strongest.

6. Buy the strongest; sell (short) the weakest.

7. Nothing is guaranteed. Nothing.

Sunday, January 1, 2012

GOOG morning. Would you like an AAPL? (Part 2)

Two charts:

http://stockcharts.com/h-sc/ui?s=TLT&p=D&b=3&g=0&id=p80692211972&a=252396788

http://stockcharts.com/h-sc/ui?s=GOOG&p=W&b=2&g=0&id=p62059694909&a=252396628

1) TLT shows negative RSI divergence across the recent tops. This often presages a downside break and I think it will this time as well.

2) Goog shows potential of a big upside break from a long time range, with a possible LT Head and Shoulders. With the right catalyst, this guy could rock to 800 in 2 months. AAPL has also been in a range for a while and if it breaks the range, it could rock to 480 very soon.

Combining the two suggests that we are in for a big move up in equities. I think we will see a low around Jan 10-14, which I plan to use to load up long equities.

The problem with buying GOOG and AAPL calls is that they are hugely earnings dependent. Nevertheless, I plan to buy some March or probably May calls and load up on TQQQ and TSL. I will probably sell most (maybe all) calls right before earnings around Jan 18-20, when the earnings pump (also called IV - Inflated Volatility) will have inflated their value.
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