PM Trades

Bought GLD June 111 calls at $111.5 or so; sold Dec 111 calls. GLD now $108.08.

I'm pretty sure YG will come to $1050 - 1060 or so. GLD to $104 or so.

Before that YG should rise to 1120 or so. GLD to 109.5 or so. Sell Jan 111s at Gold $109.5 or so.

Buy them back at GLD $105 or so.

Bought SLV April 16 calls at SLV $17.08. SLV now at $16.9 or so. SLV much stronger than GLD. Did not make new lows. Still hugging supporting trend line. Will probably go back up to $17.20 or so. Sell April or Jan 16s at that point.

Buy back April or Jan 16s at SLV $16.5?

However, SLV will likely go between $16 and $16.50, and maybe to $15.75. That would be a high probability trade.

Dollar is going to 80 minimum, after a pullback, perhaps. This will affect the PM trade. I see PMs as rangebound for 1-2 months.

1. SLV trade: Went in with 100% capital too soon. Only trade with 1/2 of capital. Only go all in when 110% sure.

2. SLV trade: Did not wait for trend line support to go long. WAIT. If it doesn't get there, don't take the trade. Don't take a low probability trade.

3. GLD trade: EVEN WHEN BUYING LT, wait to be sure about support and resistance. Buy when you feel and think it's a bottom, if you're sure about the next support/resistance level. Even with 7 month options, you're losing, because of not waiting for a bottom. What's the point? Only take the best trades.

10 year; 2 year; 6 month

10-year scenario

Big bull market coming in 1-2 years. Led by China, India, Australia, Brazil, Canada and then, later, U.S.

2-year scenario

Mortgage resets will peak in 2010 and then again in 2011, so fed has to keep rates low so economy doesn't crash.

Equities boomed because 1) short covering 2) commitment to low rate policy means they're the only game in town 3) Fed charged banks with buying 4) Dollar was crashing so big firms benefit from exports.

Now the Dollar is rising -- why? Dollar rising now in anticipation of correction in equities? Move away from risky assets at the end of the year? Still no correction in equities. Weird. But this sort of dollar move is big. We have never had this large of a move without continuation. That much is clear. A bell has rung. Listen to it.

Dollar hitting resistance now; dollar go will down for 1-5 days (end of year); Gold will pop. Equities will pop and end 2010 high.

Then for 2010, dollar will rise. There has never been such a large dollar move without continuation.

But why? Bonds are fucked. Where will the dollars go? They will go for safety, but not for long.

Fed will start talking about hiking rates when inflation comes. When market doesn't believe that Fed will hike rates. But Fed won't hike rates for now; maybe slow raise rates in end 2010.

Equities are over-valued.

Corporate profits will surprise to the upside for Q1 2010 and probably Q2.

6-month scenario

1. SPX and global equities should go down in 1-2 months.

2. SPX may hit 1145 or so before it goes down. Maybe 1200? Maybe not.

3. Blow off top in SPX and then GLD.

4. Should I short SPX or long GLD? For now, long GLD.

5. Buy LT (leap) Puts on SPX at 1140-45 or so?

6. China and India are in bull markets.

7. How can you buy LT Puts on the SPX? Why not buy Calls on Indo-Chin?

8. Why is BSE struggling?

9. Why is SSEC struggling?

10. The China guy won't short.

11. Great time for selling call options on equities.

Best-case scenario (in the Very ST)

Dollar rises 1 more day or falls Monday, 12/21; is at resistance.

Dollar falls. PMs rise; equities break out! (1120-1140). 1-3 last dollar down days.

1 week - 1 month out; Dollar rises, equities fall. Gold rises, but more slowly than before?

Leveraged ETFs

http://etf.stock-encyclopedia.com/category/leveraged-etfs.html

Ritholtz

Ritholtz is a rollicking debunker of market shibboleths. Do stocks reliably forecast the real economy? “Bull****. There is no consistent correlation,” says Ritholtz. Where are stocks headed from here? “The data and historical trends suggest the 2009 bull rally is about 75% played out. After that, the market will roll over and saw-tooth sideways for a few years.”

Nice!

LT picture

-- Rates are staying low in 2010.

-- Fed can't raise rates with mortgage resets (peak end 2011) looming and Commercial RE problems.

-- For the next year. Buy the dips in Gold and SPX.

-There will be dips. Buy only below 1040 SPX. Short at 1120-1140 at ST overbought SPX.

-Rangebound for 1 year.

-Look at Soybeans.

Will there be dips? What's the floor? Is there a floor?

Yes, there is a floor. At zero interest rates, I don't want to buy bonds. That means that there is a floor under risky assets like commodities, Gold and stocks. They're the only game in town. As soon as they start to go down, people will buy.

China has already declared that it will buy Gold at the rising trend line. This means Gold is a buy anywhere close to $1100. Buy 4-6 month call options and sell the rips will near-term calls.

Although the fed continues a zero rate policy through 2010, we will increasingly hear noise: fears of the fed raising. This is all it will be: "fears." These will drive the $ up and will be buying opportunities in stocks, commodities and gold.

People will buy the dips until they can't any more. Here's the issue: If interest rates stay zero, there will be liquidity that can't go anywhere except into stocks and commodities -- not into bonds, for instance -- and we will get a huge rise in the stock market led by commodities and gold stocks.

Short-run we may have more correction, but I believe we will stay range-bound. Problem for bulls is that Russell is really tired now. Profit taking by institutions may happen now, but I doubt that we will drop below 1020 or 1000 SPX at the lowest. If something extreme happens and we break that, there is a big floor at the 900-950 level.

Long-term we have begun a 40-year bull market.

Big Picture Economy Thoughts - Semis

The New Chip Cycle:

http://www.forbes.com/2009/10/13/whittington-apple-japan-intelligent-investing-electronics.html?partner=relatedstoriesbox

This post is a quote from the article at the link above:

SUMMARY:

This is the early phase of both a Tech Cycle and Global Economic Recovery.

Semiconductors have been underinvested in for nearly 10 years.

There are few new fabs under construction and the installed base is rapidly aging.

Semiconductor demand is coming from both Enterprise and Consumer customers.

New geographies have increased purchasing power, and tastes appear universal.

Pricing and margin degradation of the 2004-2007 time frame is over.

Electronics end markets are fueled by new product cycles.

Wireless spectrum swamped by broadband multimedia spurs infrastructure.

Smart Grid dictated by energy costs and demand for electricity to run the Internet.

Computer services are undergoing major consolidation and M&A activity.

The PC installed base has reached the obsolescence point.

Internet neutrality is a driving force for new electronics infrastructure.

Smart phones are a component-rich form factor displacing cellphones.

Mobile connectivity is an essential of the modern economy.

Windows 7 promises a viable upgrade path for Microsoft PCs lacking in Vista.

Apple software and applications drives constant upgrades within its ecosystem.

Applied technology infuses industrial, mechanical and vehicular applications.

U.S. companies have outsourced volume production but remain innovation leaders.

Software, system architecture and services remain American strong points.

Typical chip upturns see 4x-6x trough to peak share price returns.

Trading - LT and ST Timeframes

I would like to have two accounts or at least two time frames: the LT/ MT (2-4 months) and the ST. The ST can be high leverage trades which I can watch carefully. The LT/MT can be 3X leveraged ETFs. For instance, at 1090, where because of fundamental and technical reasons, I was expecting a selloff. it would be fine to buy FAZ or TWM or something similar.

But to play the e-minis, I would have to be around my screen and watching.

Setups and Economic Calendar - George Rahal

"Nothing epitomizes the novice mentality like the phrase "set-up." If your trading strategy is to wait for set-ups to emerge and to act upon, I believe you are bound to fail. Technicals, indicators, methodologies, set-ups, etc are all secondary. There is no holy grail-- the search for it frames the mentality that traps many novices. You primarily need an understanding of what the market's condition is, and have the technicals aid you. There are some important indicators that give you a picture of the market's condition, but they are also just aids, and subject to interpretation.

My best advice is to follow the market. Watch the market everyday. Also, know the economic calender, and read the detailed reports of their releases. That was the only advice my father gave me years ago.

Following the market is how you develop a feel for it-- what others call an edge. I think this edge can, in part, be learned. If you ignore the market as a whole and wait for technical patterns you studied to emerge, you will not develop a feel for it. I also believe that following others too closely can impede the internalization of your understanding of the market. One you have your own footing, feel free to assess others' opinions."

Conclusions:

1. This was and is my strategy -- waiting for the technical set up -- for the past few months. "There is no holy grail; you primarily need an understanding of what the market's condition is, and have the technicals aid you."

2. This was NOT my strategy for my most successful trading -- I did NOT rely on technicals. I just tried to understand the market.

3. Over the past few months, I was looking for certitude from Joe, Tim Night, Futia... I was looking for a helper. Not relying on my own work. My work meaning my understanding. Look at the post below; look at the prediction in bold. back in July, I had predicted 1000 by September. I bolded it then -- NOT now.

4. Other traders will always be wrong. Read Yahoo, read the Econ reports, understand the fundamentals of the economy.

JULY 15 Update

1. Bought August and September QQQQ and IYR Puts, sold July Puts against them but am losing money because market jumped much more than expected.

2. Last night, INTL blew earnings out of the water and upped guidance.  Real quality company and is a bellwether.  AAPL, GOOG, BIDU earnings still ahead.  Q's hard to predict -- will go up today.

3. Qs should rise to 36.5.  I will get out of my Qs August-July Put spread in the a.m. and look for a bounce to short with longer term Puts.

4. IWM and individual smaller Techs may be best shorts.  GDX may also be a good short as deflation will kick in after Tech earnings.  GDX daily chart looks terrible.  IWM, GDX, individual miners?

July 8 Update

1. Equities are in a LT downtrend. IT trend is also down.  ST downtrend.  VST uptrend up to 885 or so, may be 890.  BIDU shows massive negative daily RSI divergence.

2. Lower highs on the daily Qs.  H&S on all other indices.  Negative RSI divergence from previous low.

3. Qs daily RSI (14) has a buy signal today.  Qs still have RS relative to SPX and strong, up trending OBV.  SPX no buy signal on daily (14) RSI.

4.GOOG earnings 7/16; BIDU earnings July 20; Apple July 21.

5. AAPL and GOOG were strong all day today.

6. TLT should go up to 100 at least (38.2 percent retrace of fall from 120 to 87.5).  Short TLT via LT Puts at that level.

7. Near-term scenario is confusing, but we should get a nice bounce here.  TLT is already at 96.50 and had a high of 96.8 today.  I think this should go down to 94 or so.  Which means SP could come up to 890-900.

   

8. We may fuck around until earnings and fall dramatically after GOOG, AAPL, BIDU earnings, like Jan 2008.  

9. Semis getting lots of upgrades because of smart phone market.  LT picture no longer so bearish.  Administration is smart.  Soros is bullish.  666 - 950 - 866 - 900 ( HS negated - Goog, Aapl 7/22) - 820 - 1000 (September)?

  

We go up today and nice chance to buy Puts.  Sell QQQQ July Puts on fall tomorrow?

9. Most likely scenario is a lower high on the Qs ($35.50?) and a high around 885-890 on SPX.

10. Futures already at ES 883 (+10).  Alcoa earnings were not terrible.  Implies SPX 885.  Sell the open?

11. Joe says get bearish now, but real bearish around July 22.  The last Joe top was actually close to a bottom (July 7).  Implies that next bottom (July 22) might be a top?  Up until July 22?

12. Buy longer dated Puts  (Sept, Oct) on strength and forget about it.  Add on more strength or weakness.  

13. Puts on IWM, Qs are most liquid.  You can get more leverage by buying Puts on CROX, TQNT, etc., but not as liquid. 

14. Bonds will go down to 94-95 then up to 100 at least.  Deflation will win until November.  Short TBT at TLT on $94-95?