Based off of the near overbought short-term readings and the stalling action today, I think that I will end up posting an inverse ETF trade next week. I have used QID before which is double inverse of QQQQ (Nasdaq). I may suggest DXD next week which is the double inverse of DIA (Dow 30). The Dow is in the weakest technical position, though it tends to be a bit less volatile than the Nasdaq. I like volatility for short term trades, but usually it is best to play the laggards when expecting downside.
If if play this, it will probably be by buying puts on the DIA ETF.
Pete
Friday, May 30, 2008
Thursday, May 29, 2008
Exit QLD Trade
The short term model is not quite "too high" yet, but it is close and I think that the risk of holding the trade longer could outweigh the reward as we near the highs from early last week.
QLD is at 89.75 as I write this, up from the entry at 84.35 on Tuesday, for another nice gain of 6.4%.
So far that is 4 for 4 on the trades using the short term model.
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
Pete
QLD is at 89.75 as I write this, up from the entry at 84.35 on Tuesday, for another nice gain of 6.4%.
So far that is 4 for 4 on the trades using the short term model.
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
Pete
Wednesday, May 28, 2008
Exit PAAS
Today I exited PAAS for 4.80 which is a 27% loss. I have a basic rule that I follow where if an option is not profitable after 5 days, and does not seem to be doing what I wanted/expected, then I exit the option. This saves me from just playing guessing games. Better to stay in trades that do what you expect, and leave the others.
As a side note, if tomorrow is an up day in the markets, I will likely suggest exiting QLD.
Pete
As a side note, if tomorrow is an up day in the markets, I will likely suggest exiting QLD.
Pete
Tuesday, May 27, 2008
QLD Trade Update and PAAS
QLD opened at 84.35 today, so that is the price for entry that I will use for tracking it.
Also, depending on the next day or two, I may need to exit PAAS. The entry wasn't a real low risk point which is the way I usually trade. It hasn't broken the pattern I traded it for yet, but on a percentage basis it has lost about all I am typically comfortable with. However, the short term indicators like fast stochastic lines are basically oversold, so I will probably just wait to see what the next bounce looks like, if the patterns does not get broken before that.
Pete
Also, depending on the next day or two, I may need to exit PAAS. The entry wasn't a real low risk point which is the way I usually trade. It hasn't broken the pattern I traded it for yet, but on a percentage basis it has lost about all I am typically comfortable with. However, the short term indicators like fast stochastic lines are basically oversold, so I will probably just wait to see what the next bounce looks like, if the patterns does not get broken before that.
Pete
Sunday, May 25, 2008
New QLD Trade
The short term model is oversold again after a pretty harsh week.
My feeling is that the uptrending environment we were in the last couple months may turn into choppy going or possibly continued hard selling for a fews weeks or months. I am going to make some judgement of which signals to act on and which to leave go. I try to do this by trading in the direction of a 50 day moving average, but some more judgement is needed around potential trend change points. The oversold reading was bad enough that I think there is a good chance of a quick bounce, so I will suggest a trade on QLD.
New Trade:
Enter QLD at the market open on Tuesday. Price is currently around 84.00.
Pete
My feeling is that the uptrending environment we were in the last couple months may turn into choppy going or possibly continued hard selling for a fews weeks or months. I am going to make some judgement of which signals to act on and which to leave go. I try to do this by trading in the direction of a 50 day moving average, but some more judgement is needed around potential trend change points. The oversold reading was bad enough that I think there is a good chance of a quick bounce, so I will suggest a trade on QLD.
New Trade:
Enter QLD at the market open on Tuesday. Price is currently around 84.00.
Pete
Thursday, May 22, 2008
Trade Exits
Today I exited my trade on NEM for 7.08 which is 53.58% gain. There is plenty of time to expiration, but it (and some other gold stocks) showed bearish candle patterns at their upper Bollinger Band. So it seems like a short term pause is likely. I would be very inclined to look for another entry on a controlled price pullback.
I exited the NKE trade today for 1.80 which is 33% loss. The trade started out well, but then it hasn't been able to make the push up above resistance, and then it closed below its 50 day moving average yesterday. In the past, when a trade like this doesn't make the breakout I expect, it rarely turns out well. So, the key here is to minimize loss.
Also, the last trade on QID should be exited. The entry was 38.97 on the 15th, and the price now is 39.93. That is 2.46% gain. So that's the 3rd winner in a row on the QLD/QID short-term model.
Closed Option Trades on the Blog:
MTH: -42%
GME: -35%, -33%
AGU: 11%
NEM: 54%
NKE: -33%
I exited the NKE trade today for 1.80 which is 33% loss. The trade started out well, but then it hasn't been able to make the push up above resistance, and then it closed below its 50 day moving average yesterday. In the past, when a trade like this doesn't make the breakout I expect, it rarely turns out well. So, the key here is to minimize loss.
Also, the last trade on QID should be exited. The entry was 38.97 on the 15th, and the price now is 39.93. That is 2.46% gain. So that's the 3rd winner in a row on the QLD/QID short-term model.
Closed Option Trades on the Blog:
MTH: -42%
GME: -35%, -33%
AGU: 11%
NEM: 54%
NKE: -33%
Tuesday, May 20, 2008
OSG and PAAS
I bought a couple options today.
My order on OSG got filled at 7.00. That is a July 85 Put option. OSG is Overseas Shipholding Group. The shipping sector formed bearish engulfing and shooting star candles yesterday and I think a decline is likely.
I also bought a July 30 Call on PAAS which is Pan American Silver Corp. Entry price was 6.70. I already have an option on NEM which is a gold company. Precious metals futures and the mining stocks all tend to move together. The silver stocks are showing similar patterns to the gold stocks. This stock is moving up off a hammer candlestick reversal. The stock is currently at 36.00 so this is an in-the-money option that does not have to move a lot to breakeven. The precious metals group performed well in the fall and winter market declines. They are more driven by inflation issues, and have less correlation (especially recently) with the broader equity markets. So even if the markets decline, I think gold and silver will do OK or great.
Pete
My order on OSG got filled at 7.00. That is a July 85 Put option. OSG is Overseas Shipholding Group. The shipping sector formed bearish engulfing and shooting star candles yesterday and I think a decline is likely.
I also bought a July 30 Call on PAAS which is Pan American Silver Corp. Entry price was 6.70. I already have an option on NEM which is a gold company. Precious metals futures and the mining stocks all tend to move together. The silver stocks are showing similar patterns to the gold stocks. This stock is moving up off a hammer candlestick reversal. The stock is currently at 36.00 so this is an in-the-money option that does not have to move a lot to breakeven. The precious metals group performed well in the fall and winter market declines. They are more driven by inflation issues, and have less correlation (especially recently) with the broader equity markets. So even if the markets decline, I think gold and silver will do OK or great.
Pete
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