I have exited my DIA puts and am recommending exit of the DXD trade based off short term negative extremes. I think it may work fine to hold this longer, but my goal with using this short term model on this blog is to present a method of high probability investment growth with little drawdown (negative swings) in the overall scheme. So I think it best to wait a bit to see if another better opportunity presents itself.
DXD is currently at 57.01 up from 52.98 at entry for a 7.6% gain.
The DIA puts are 6.50 up from at 3.40 entry for a 91% gain.
Past Trades:
QLD 4/9/08-4/16/08 = 2.87% gain
QLD 5/6/08-5/12/08 = 2.73% gain
QID 5/15/2008-5/22/2008 = 2.46% gain
QLD 5/27/08-5/29/08 = 6.40% gain
DXD 6/5/08-6/11/08= 7.6% gain
Closed Option Trades on the Blog:
MTH: -42%
GME: -34%
AGU: 11%
NEM: 54%
NKE: -33%
PAAS: -27%
WFC: -28%
DIA: 91%
Pete
Wednesday, June 11, 2008
Tuesday, June 10, 2008
New Link to Telechart
I have added a link in the Favorite Sites section to www.worden.com.
This is the website for Telechart software which is the best technical analysis software I have used and is affordable. It allows you to sort all stocks by many different parameters. I like this software mainly because I can program sort criteria to search for specfic candlestick patterns at the end of each day. Then I can filter through these candles and narrow the list by using Bollinger bands and stochastics or RSI, etc.
This is only useful for technically minded investors/traders.
Pete
This is the website for Telechart software which is the best technical analysis software I have used and is affordable. It allows you to sort all stocks by many different parameters. I like this software mainly because I can program sort criteria to search for specfic candlestick patterns at the end of each day. Then I can filter through these candles and narrow the list by using Bollinger bands and stochastics or RSI, etc.
This is only useful for technically minded investors/traders.
Pete
Trade Updates
The SRS trade was triggered at 90.00. Move the stop loss order to 82.00
I exited the WFC option for 2.25 for 28% loss.
Closed Option Trades on the Blog:
MTH: -42%
GME: -34%
AGU: 11%
NEM: 54%
NKE: -33%
PAAS: -27%
WFC: -28%
Open Option Trades:
OSG puts
DIA puts
Pete
I exited the WFC option for 2.25 for 28% loss.
Closed Option Trades on the Blog:
MTH: -42%
GME: -34%
AGU: 11%
NEM: 54%
NKE: -33%
PAAS: -27%
WFC: -28%
Open Option Trades:
OSG puts
DIA puts
Pete
Monday, June 9, 2008
DXD Trade Update
If you traded DXD, move the stop loss to 52.00. I will let this trade ride a while if not stopped out. Also, I will continue to monitor for new entries as short-term conditions present themselves.
Pete
Pete
Index and Sector ETFs
ETFs stand for exchange traded funds. They are like mutual funds in a sense, but they trade like a stock on the exchange throughout the day.
Proshares is a company that has a number of these ETF and has also inverse ETFs that will rise as the underlying sector or index falls. When markets decline, these inverse ETFs give a way to profit without having to sell short or use options. This can be done in retirement accounts as well because the ETF trade just like a stock.
The first recommendation I have here is on SRS. SRS is the ultra short (double inverse) of the real estate sector ETF. If real estate related stocks decline, SRS will rise.
Recommendation:
Buy SRS using a "Buy Stop" order of 90.00. Then place a stop loss order at 79.00 after entry.
Once a trade that I post here is entered, I will periodically post adjusted stop loss levels, and at times suggest an immediate exit instead of waiting for the stop loss to trigger.
http://stockcharts.com/h-sc/ui?s=SRS&p=D&yr=1&mn=0&dy=0&id=p98025001157
Pete
Proshares is a company that has a number of these ETF and has also inverse ETFs that will rise as the underlying sector or index falls. When markets decline, these inverse ETFs give a way to profit without having to sell short or use options. This can be done in retirement accounts as well because the ETF trade just like a stock.
The first recommendation I have here is on SRS. SRS is the ultra short (double inverse) of the real estate sector ETF. If real estate related stocks decline, SRS will rise.
Recommendation:
Buy SRS using a "Buy Stop" order of 90.00. Then place a stop loss order at 79.00 after entry.
Once a trade that I post here is entered, I will periodically post adjusted stop loss levels, and at times suggest an immediate exit instead of waiting for the stop loss to trigger.
http://stockcharts.com/h-sc/ui?s=SRS&p=D&yr=1&mn=0&dy=0&id=p98025001157
Pete
Thursday, June 5, 2008
New DXD Trade
Today the Nasdaq very nearly made a new high realative to last months high, and the QQQQ ETF which tracks the Nasdaq did make a new high. Despite this, there is a divergence in the markets because the Dow and S&P are well off their high from last month. This situation seems similar to mid October of last year.
Also, the short term model moved right up to "too high" area today. Based off this I am suggesting a trade on DXD which is the 2X inverse ETF of the Dow/DIA fund. This will profit if the market declines. The current price is 52.98 which is what I will use to track the trade.
I did buy July 127 Puts on DIA to try to profit from any downward move in the markets.
New Trade:
Buy DXD at a limit of 53.00 6/6/2008
Pete
Also, the short term model moved right up to "too high" area today. Based off this I am suggesting a trade on DXD which is the 2X inverse ETF of the Dow/DIA fund. This will profit if the market declines. The current price is 52.98 which is what I will use to track the trade.
I did buy July 127 Puts on DIA to try to profit from any downward move in the markets.
New Trade:
Buy DXD at a limit of 53.00 6/6/2008
Pete
Banking index and WFC option trade
I just bought a July 25 call option on WFC for 3.14. Sentimentrader.com posted a comment yesterday detailing the banking index and shows that on comparable declines in the past there has been a 2 week gain of around 6% on average for the index. WFC is Wells Fargo Bank. There was a doji candlestick yesterday, which today has gapped up to form a morning star reversal pattern.
Also, the short interest has been skyrocketing in recent months as the stock bounces around above $25, which is the point of peak put open interest in June and July. Heavy out of the money put open interest can act as a floor for the decline, and if a rally occurs, I think it will be sharp because a short covering rally is likely to occur as the stock moves above the breakeven point for the cumulative short interest in the stock.
If this trade takes off, then I think it would be OK to hold till expiration, but I am planning on just a quick trade of a few days hopefully to get a nice bounce until the slow stochastics get overbought. The stop is 26.20 on a closing basis. I would anticipate about 50% or more return if successful.
The stock is cuurently around 27.35. Breakeven is 28.20 area.
Pete
Also, the short interest has been skyrocketing in recent months as the stock bounces around above $25, which is the point of peak put open interest in June and July. Heavy out of the money put open interest can act as a floor for the decline, and if a rally occurs, I think it will be sharp because a short covering rally is likely to occur as the stock moves above the breakeven point for the cumulative short interest in the stock.
If this trade takes off, then I think it would be OK to hold till expiration, but I am planning on just a quick trade of a few days hopefully to get a nice bounce until the slow stochastics get overbought. The stop is 26.20 on a closing basis. I would anticipate about 50% or more return if successful.
The stock is cuurently around 27.35. Breakeven is 28.20 area.
Pete
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