Well we can try it again....I have gone to a 70% cash position, 16% Long (Mostly China), 14% short (using the usuals) and have opened up december volatility strips on the s&p 500 and Russell 2000....The strips are 3:1 ratio instead of the normal 2:1....
My bias is to the downside and I'm looking to take advanage of a spike in volatility as well as a falling market....
I left some money on the table this month, but the market looks to be getting irrational for the longs and I'm having trouble finding undervalued stocks with significant upside that is not allready priced in...
FROM A PREVIOUS POST
11-17-06 03:00 PM
Personally I would be selling all spikes and resistance levels for your personal stocks.....We are not in some crazy bull market where everything is moving up... ANYMORE....In fact I can show you about half of the s&p 1500 stocks (Large, Mid and Small) hitting resistance and pulling back over the last month....The pull backs have not been strong and hence the market index goes higher, but they have found tops and only rally on the extremely strong days.....Some broad market indicators suggest that the market has actually begun to correct over the past three trading sessions and I personally have continued to sell into this rally....The profit taking only makes sense to people who were buying in June and July, because they have incredible gains over the past few months...All the while the sheep are pushing their luck still hoping for the incredible gains in stocks that have moved straight up, but forgetting the fundamentals of this 4 year move...Personally I think the smart money manager are slowly getting out of positions at these levels and selling a minority of their positions to the sheep....Bottom line "If you are buying right now and plan on holding the position as an investment and your stock just hit a 26 week high over the last 20 days and is a small to mid cap stock that can't capitalize on a weakening dollar in 2007....Your upside is 12% for a six month holding period and your downside is 35%....Dumb statement I know, but looking at the broad market is the only way to get a grasp of what is going on....DOW @ 13000 is good only if you own some of the 30 companies in the DOW....s&p 500 @ 1400 is great, but what if you just got overweight small cap tech and software right now....Kind of missed the boat if you get my drift...Kind of missed the boat in most sectors if you get what I'm saying....Just be careful out there and own companies that can handle a real downturn in the market....Remember the PONZI story....It will come and it will be just as painful as May and June.....WHY? Global market will tell the tale again.....IE) India, China, Hong Kong, Brazil, Europe, etc....Money Managers are not idiots and having an index move in one direction since JUNE will bring in the profit taking at some point and hear me "loud and clear" when the money starts to flow out of global indexes it will be another panic selling situation across the globe...Some indexes are moving above a 40 degree angle...Can you say bubble?....Anyone who knows anything about index history will say the same story when index's move at this angle "BOOM TO BUST"....If we go another 3 month's top at this rate without any medium size correction....Then BUST some global event will cause this....Good luck getting out the day it happens...
Of course once again this is a place where everyone is in and out all day long and nobody cares about longterm outlooks...Most people won't even hold overnight and I understand why...RISK TOLERANCE....It's actually quite smart at this point in the bull market....So go long, go short and follow the trend, but remember paper profits are just paper...Don't spend like it's real until it's realized...
$COSTAverageMAN
11-17-06 03:16 PM
Think about the big boys? Who sold the NOV. 1400 straddle....Can you say ca-ching....Or manipulation....
Vix near all time low, Monday we go lower is my best guess as they dump out of their positions and start working on their new Dec 1400 straddles (strips would be easier to make profitable) long that they bought for dirt cheap today and it's easy to get the VIX climbing and the market falling when you are dumping stock...I mean Tuesday one Man bought S&P 500 futures with 500 million and a 10:1 leverage and moved the index 14 points by himself....I know he drove it to a level where buy programs kicked in at 1389 but what does that say about efficient markets...
edit: 1399.95 @ 3:35pm....Can you say greed!!!
$COSTAverageMAN
My bias is to the downside and I'm looking to take advanage of a spike in volatility as well as a falling market....
I left some money on the table this month, but the market looks to be getting irrational for the longs and I'm having trouble finding undervalued stocks with significant upside that is not allready priced in...
FROM A PREVIOUS POST
11-17-06 03:00 PM
Personally I would be selling all spikes and resistance levels for your personal stocks.....We are not in some crazy bull market where everything is moving up... ANYMORE....In fact I can show you about half of the s&p 1500 stocks (Large, Mid and Small) hitting resistance and pulling back over the last month....The pull backs have not been strong and hence the market index goes higher, but they have found tops and only rally on the extremely strong days.....Some broad market indicators suggest that the market has actually begun to correct over the past three trading sessions and I personally have continued to sell into this rally....The profit taking only makes sense to people who were buying in June and July, because they have incredible gains over the past few months...All the while the sheep are pushing their luck still hoping for the incredible gains in stocks that have moved straight up, but forgetting the fundamentals of this 4 year move...Personally I think the smart money manager are slowly getting out of positions at these levels and selling a minority of their positions to the sheep....Bottom line "If you are buying right now and plan on holding the position as an investment and your stock just hit a 26 week high over the last 20 days and is a small to mid cap stock that can't capitalize on a weakening dollar in 2007....Your upside is 12% for a six month holding period and your downside is 35%....Dumb statement I know, but looking at the broad market is the only way to get a grasp of what is going on....DOW @ 13000 is good only if you own some of the 30 companies in the DOW....s&p 500 @ 1400 is great, but what if you just got overweight small cap tech and software right now....Kind of missed the boat if you get my drift...Kind of missed the boat in most sectors if you get what I'm saying....Just be careful out there and own companies that can handle a real downturn in the market....Remember the PONZI story....It will come and it will be just as painful as May and June.....WHY? Global market will tell the tale again.....IE) India, China, Hong Kong, Brazil, Europe, etc....Money Managers are not idiots and having an index move in one direction since JUNE will bring in the profit taking at some point and hear me "loud and clear" when the money starts to flow out of global indexes it will be another panic selling situation across the globe...Some indexes are moving above a 40 degree angle...Can you say bubble?....Anyone who knows anything about index history will say the same story when index's move at this angle "BOOM TO BUST"....If we go another 3 month's top at this rate without any medium size correction....Then BUST some global event will cause this....Good luck getting out the day it happens...
Of course once again this is a place where everyone is in and out all day long and nobody cares about longterm outlooks...Most people won't even hold overnight and I understand why...RISK TOLERANCE....It's actually quite smart at this point in the bull market....So go long, go short and follow the trend, but remember paper profits are just paper...Don't spend like it's real until it's realized...
$COSTAverageMAN
11-17-06 03:16 PM
Think about the big boys? Who sold the NOV. 1400 straddle....Can you say ca-ching....Or manipulation....
Vix near all time low, Monday we go lower is my best guess as they dump out of their positions and start working on their new Dec 1400 straddles (strips would be easier to make profitable) long that they bought for dirt cheap today and it's easy to get the VIX climbing and the market falling when you are dumping stock...I mean Tuesday one Man bought S&P 500 futures with 500 million and a 10:1 leverage and moved the index 14 points by himself....I know he drove it to a level where buy programs kicked in at 1389 but what does that say about efficient markets...
edit: 1399.95 @ 3:35pm....Can you say greed!!!
$COSTAverageMAN
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