Thursday, November 26, 2009

Happy Thanksgiving

A happy Thanksgiving to all the readers.

Gold continues to run, SPY continues to be strong, dollar is weak.

Adam Warner mentions that GLD option premiums are high (link). GLD options usually have the opposite skew of SPY options. GLD out of the money calls tend to have a higher implied volatility than the otm puts. SPY skews the other way.

With VIX going lower and lower, I am tempted to take a shot at the short side with a January SPY bear put spread. For now it is just an idea.

As for GLD, it continues to power higher. Though sentiment and technicals make it a high risk trade for both bulls and bears. However, the trend remains unmistakeably bullish.

No trading positions

Friday, November 20, 2009

2-1-1 for November expiration

Two winners, one loser, one break even trade for the November cycle. Unfortunately, the winners were small fish in SPY and GLD, and the loser a bigger fish, AAPL, another GLD trade was closed near break even.

My prediction of gold $1150 by December came a few weeks early. GLD still looks higher. SPY looks higher too, despite a bit of selling this week.

Barrons has an interesting article about record low 2-year Treasury yields (link). What this means for other markets isn't so easy. The straight answer is that low rates are a positive for stocks. The inverted yield curve is when it becomes dangerous for stocks. As for gold, the cost of carry is low, but it also means low inflation expectations.

Blogging and trading will remain light for November and December. Good luck to all the readers.

No positions

Sunday, November 15, 2009

Cliches for the week

"A trend continues until it ends."

"Just because two markets are correlated it doesn't mean they will be correlated each and every day."

As plain as these cliches are, this week another legion of traders continued to try and time the tops in SPY and GLD. So many aren't even tracking the "lead dog," the US dollar. So many traders continue to lose money on open positions or have their stops run. Some folks are just stubborn and want to bask in the thrill of calling "top."

As have writing from the beginning of this blog now over three years ago, calling top is an entertaining game, but tends to be a low percentage play. For the majority of traders, it is a money losing game. I ain't saying that I'm all that, because readers can see the track record and see that I'm not. However, at least I get this part.

Long GLD, SPY both expiring 11/20/09

Wednesday, November 11, 2009

Saturday, November 07, 2009

This week: SPY up, record high for GLD

This week gold futures touched a new record high $1100. The stock market went up about 3%. I mostly sat this one out.

Looking back, it is a bit stomach turning to have sold near the lows both for AAPL and GLD. It is more stomach turning to let a single trade turn into an account buster. Stubborn I am not. The other side? Well, that may be accurate.

At least for this week, congrats to the longs. Enjoy.

Looking ahead, for gold, the path of least resistance remains higher. $1150 by December was the initial target from the $950 breakout, and that looks to be another good call given months ago here on this blog. SPY 1100 looks to be resistance. I waver on whether it is strong resistance or just another minor local high on the long rally road that began in March. It may be worth a shot at the short side of SPY as the rally nears 110. As always, only in hindsight will we be able to say for sure.

As I wrote earlier, I'll have less time for blogging and trading during November and December. I will still chime in when time permits. Hopefully I will offer up some more good calls, such as calling the SPY top at 110 to the exact day, and the breakout for gold from $950.

Long SPY, GLD

Tuesday, November 03, 2009

Buy SPY (sell puts)

Buy SPY via selling Nov 86 puts, SPY @103.7. Stock market could move lower, but 86 is below several support levels, so to get to SPY 86 would take a major crash.

Long SPY, GLD