Friday, February 29, 2008

Rollercoaster ride continues

I've been flat for some time now. The rally off last Friday's low fizzled, but it was a relatively big move as trading rallies go. Again, the hindsight traders have a field day, buying at the lows, getting out at the top, in hindsight that is, not in real life.

IBM looks like a tempting long with their announced buy back. However, I think it has plenty of room lower before they get aggressive on the buy side.

Silver nears $20. Gold continues to make new highs. It is foolish to try and call top when the bullish momentum remains strong. It would also be foolish to try and jump on the moving train on the long side. Long termers should be looking to add to positions on pullbacks. My opinion is that it is still early in the bull market. Some other commodities have out performed the metals. Gold in particular hasn't done all that well considering what oil has done. Gold and oil have a strong historical correlation.

Again, for me, the temptation is to try and time each of these short lived swings, and over trade. I resist the temptation and continue to wait for my pitch. Right now, most markets are too wild and wooly for my taste. I couldn't pull the trigger going long bonds early this week (TLT). In hindsight, a missed opportunity.

Sunday, February 24, 2008

Bond chart at Barron's

Article on the bond market over at Barron's (link). The headline is "Bad News for Bonds." Actually, the short term looks like a rally is due. Interesting.

Also in this week's Barron's is a cautionary article about options training (link). There are a good many folks offering expensive training for trading options. Unfortunately, in most cases, those that sign up for the classes lose their shirts. Options can be used conservatively for hedging. They can also be used for speculating in a high risk fashion. Sadly, many newbies are taught to take on high risk positions. A tiny fraction will make good returns and those folks are used to recruit the next class

Friday, February 22, 2008

Oil Refiners

Jeff Kohler at OptionAddict is taking a look at some refining stocks (article). WNR, HES, TSO are the three stocks mentioned.

On the other side are major oil stocks such as XOM, PBR that to me look toppy. Again, not much that I am saying other than oil stocks might go up, might go down.

This week saw wide intraday swings almost every day. Friday was another rollercoaster. If the rumored bailout doesn't pan out, the carnival ride might go down. It continues to be a tough market for position traders because it is easy to get stopped out, trends last a few hours instead of days and weeks.

Still flat with no positions.

Wednesday, February 20, 2008

Inflation

Today the market opens lower, then rallies strong. The mirror opposite of yesterday. I am tempted by some trades, but do not pull the trigger.

Gold makes an all time high. I continue to believe that it is early in the bull market for gold. Inflation hasn't even shown up yet. I hear some isolated reports about gasoline, college tuition, or healthcare or inflation numbers that factor in the huge increase in home prices over the past decade. Will these inflation figures now show deflation now that home prices are going down? I doubt it, that doesn't sell newsletters.

The Treasuries tell the tale of the inflation tape. Some will argue that this is being distorted by heavy foreign buying. That may be true to an extent, but a person can't buy bonds or options on these made up figures that people float on the Internet. A person can buy Treasuries, or sell them short. With the 30 year bond under 5%, I have a very hard time believing that inflation is running at 8% to 10%. No rational person would buy bonds if the real inflation rate was 10% and bonds are paying 4.5%.

Tuesday, February 19, 2008

Apocalypse now?

Peter Brimelow reports on Harry Schultz (link). Unlike many doom and gloomers Schultz has an audited track record (up 6.4% over the past 12 months).

Schultz writes on gold:
"Exposure to gold shares and bullion should be a minimum of 35-45% of your total portfolio, with at least 10% in physical gold bullion and coins (preferably held in boxes outside of U.S.) ... If not already done so, use the current U.S. dollar mini-rebound to exit U.S. dollars and/or hedge dollar-denominated assets via futures and/or bank forward contracts."
>>

Readers know that I have been and continue to be long term bullish on gold. I have suggested a 3% allocation to gold for average folks. Those that want more than that need to know what they are doing, and shouldn't be reliant on newsletters as the main source of their financial decisions making.

Friday, February 15, 2008

Platinum $2000

Platinum confirms the move above $2000. The chart looks like a rocket ship. Gold is lagging and is actually down today. The platinum run is fueled by supply concerns and electricity cutbacks in South Africa.

The stock market looks tempting to buy into. However, I have the nagging feeling that a lot more shoes are going to drop. Calendar seasonality points to the likelihood of more down days in late February. The caveat is that seasonality hasn't been worth much during this bear phase. All the puts I have sold and then bought back for Feb expiration look like they would all have expired out of the money today. In hindsight, I would have done better keeping all the positions, instead of closing them out for tiny profits. Trading is always easy in hindsight.

No open positions in my trading account.

Tuesday, February 12, 2008

Is the bottom in?

Is the bottom in? That is the question on most trader's minds. Today's strong Buffet induced rally, then fizzle makes one wonder. I don't have a strong opinion either way. Buying at a retest of the lows seems the high percentage play. Of course we might not get that retest. Selling naked puts at strike prices at the lows is one way to do an equivalent. Though if the market does drop to retest, those puts will mean a big paper loss. So far I haven't said much, other than the market might go up, might go down, might be unchanged. Sometimes the best thing to do is nothing. I took a look at one-year charts for each of the 30 Dow stocks and none of them look compelling short or long.

Gold had a bad day. The conspiracy folks will blame the IMF authorizing a sale gold. The central banks have less and less of the gold in play, so with each passing year, are less of an influence. Gold chart, and gold stock charts look terrible, and if I weren't a long term bull, I would be tempted to try to play the weakness.

Friday, February 08, 2008

Sell SHLD (buy back puts)

Sell SHLD buy back short SHLD Feb 85 puts
Stock not acting well. I am taking my tiny profit while it is there. This calendar year, my winners have all been tiny minnows, and with my one loser on GDX out weighing all the winners after factoring in commissions. This isn't exactly a recipe for long term success, however, with this turbulent market, it isn't bad.

>> Oops, Thursday's buy for SHLD didn't seem to make the blog. I opened the SHLD position yesterday. Getting out in one day with a guppy-size profit.

Wednesday, February 06, 2008

The Pink Elephant

At Marketwatch (link)
Philadelphia Federal Reserve President Charles Plosser spoke against overly aggressive rate cuts, with the talk dampening a rebound from the market's largest single-day plunge in nearly a year.

When the Fed did its .75 emergency rate cut, I commented that there are worse fates for the U. S. economy than a mild recession (blog entry). It isn't as if all those Fed members don't understand that, but Bernanke got them all to do the cuts anyway.

The market continues to be treacherous. Last week's huge gains, and Tuesday's huge dip and then today's whipsaw action show the double edged nature of the market for position traders. Jack be nimble, Jack be quick, for anyone that wants in this game.

Gold has had similarly wild swings. I continue to opine that gold is in a secular bull market and the thing to do is buy the dips. Traders can continue to look for low risk entry points. Right now, there is plenty of risk, so best to stand aside.


Monday, February 04, 2008

Sell SNE (buy back puts)

Sell SNE, buy back short Feb 40 puts
Sony earnings disappoint, especially on profit margin. Tape action is not good either. On the positive side, SNE is at support around the 45, however, in a bear market, support doesn't count for much.

No positions in my trading account.