Joined Oct 26, 2011
153 Blog Posts

hattery buy ERX calls

BOT ERX APR calls. It has strong support with it resting near it’s strongest price level of support measured by volume profile, with it’s weakest resistance above with a big volume pocket should things heat up. Individually, there are a few bearish looking chart patterns in energy. Those who wish to hedge may look at a BP put.

Since I am buying AT support… If we aren’t higher by¬† end of day Thursday, I will probably sell on Monday(no trading Friday).

Good job for those that followed along with the SLV trade. Comments timestamped.

Since the method I have discussed looks to reduce positions into oversold conditions, In order to keep up with returns of a roaring bull market that we have been in, occasionally I will make a few option trades with a small portion of the portfolio.

I’ve read the following stats:

* In hyperinflations (rises of some hundreds of percentage points each year) no one is able to beat buy-and-hold for a year or longer.
* In monster bull markets (annual advances of 25-50%) less than 1% of the market participants beat buy-and-hold.
* In powerful bull markets (annual rises about +20%) only about 1-3% of all market timers beat buy-and-hold.
* In average bull markets (annual rise about +15%) about 3-5% of all market participants are able to beat buy-and-hold
* In weak bull markets (annual advance about +10%) about 10% of all market participants are able to beat buy-and-hold.
* In sideways markets (+/- 5% per year) 20-50% of all market participants are able to beat buy-and-hold.
* In bear markets (losses of 10-20% or more per year) 80% or more of all market participants beat buy-and-hold.

I believe “market timers” refers to those that hold a % of cash trying to pick the top.

So this is why I felt that I must amend the strategy a bit. If the vix drops below a level, (say 20), I think it’s time to use a bit of capital in leveraged options when the timing is right to make sure we can make an effort to keep up with the market. Particularly when the M&A arbitrage premium has gotten squeezed out much more than it has before. It makes a bit more sense to me to try to play commodity related names like silver and gold, and perhaps other names that have a more mild correlation. If we are able to merely break even in strong bull markets with less cash once oversold, it is a win since we will have more cash and be able to more aggressively buy the oversold conditions
Although we certainly could hold here in Gold and Silver, the precious metals market is very vulnerable right now and so I am going to refrain from buying the dip in precious metals and may even go so far as to selling a bounce in gold from 1630 up to 1645. We appear to potentially have broken longer term trend-line support in gold, depending on how strictly you draw your line. With a forgiving trend-line, we still hold above 1600. Volume pocket below.

Gold remains bullish over the long term (measured in years). It may be biding it’s time before a longer term move up over the next few years, but give it some time as for now it is neutral to bearish over the intermediate term(measured in month), even though it could swing higher here (measured in days). I would say Gold will trend lower in April and perhaps find support in May, and perhaps retest the breakdown in June.

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