RiskReturnOptimizer

Why Gold Could Hit $1,300 This Year

Gold at $1300 would mean >4.0% yield on 10-year bond ... long TBT as there is less overhead resistance until $60 (roughly 20% upside).

Where to Next: S&P 900 or 1100?

Odd favor SPY 900 vs. 1050 (big resistance point) ... suggest taking profits on SPY or long SDS covered calls until August expiration.

Momentum Thrust Leaves Some Traders in the Dust

38.2% retracement of March low to August high will take up to around SPY 880, a great support line for long term bull market retry point.

Risk-return model favors shorting SPY when you incorporate probability of upside of 1050 vs. downside of 880. Almost 2:1 odds favoring lower SPY.

Perhaps a covered call on SDS for August could be great way to play the market consolidation for the next few weeks.

Time to Sell?

Another way is to sell SPY 1000 call options to take in some premium while you wait for the market to break up / down.

S&P 500 Target Reached

38.2% retracement from March low to August high will take SPY back to around 880, a firm support that can set up a multi-year bull market ... if the unemployment rate peaks below 10.4% and consumer spending stabilizes to avoid a double dip recession ... best timing for long term bull entry point is October-November period, roughly 6 months before peak unemployment rate.

Market Outlook: New Highs, New Month, New Reality

FXI looks like it wants to rally to $50 in the next few weeks ... personally, I would not short it here as the momentum is too strong ... the parabolic move is typically of the last stage of a bull cycle, but it could take a while for local investors (very emotional) to stop chasing performance ... suggest taking some profits on each increment up ... with most of the money out by $60-$70 as the double-top (2009 and 2007) will be very hard to overcome in the medium term.

China Purchasing Managers Index Expands Again: Why Is Anyone Surprised?

Long FXI until up to $50 for near-term top, then expect some consolidation of 10%-15%, setting up for year-end rally to $60-$70 ultimate target.

Q2 Sector Earnings Growth

As economy gets out of recession, expect "earnings to regress to the mean" ... XLE (Energy ETF) is best bet going forward.

Soaring Stocks: The Return of the Ten Bagger

Owning these stocks requires a VC type approach ... pick 10 names, expect 9 to go to zero, and 1 to get to 20x ... overall return will be 100%.

Federal agents raid an Orlando, Fla., branch of Colonial BancGroup (CNB) Monday amid the bank's capitalization problems and warnings about its ability to continue as a going concern. Shares down 14.3% to $0.42.

With regulators this vigilant on monitoring capital ratios, it's finally safe to own bank shares (that have not been raided). Personally, I like the Texas banks as the economy is much stronger than rest of US, and crude oil over $70 does hurt TX at all!!

New Bullish Signals Emerge

Are you suggesting short the SPY through SDS or another vehicle? or simply sell SPY to raise cash?


On Aug 03 06:03 PM Archman Investor wrote:

> As a follow up to my post above see this "pump monkey" article the
> author wrote only a few weeks ago using almost the same exact charts:
>
> seekingalpha.com/artic...
>
>
> The author has not been "wrong". No. But for average americans who
> are only "now" getting in the market or worse just starting to think
> about it: They do not need some asset gatherer getting them excited
> after a 45% run.
>
> Where was the author or other asset gatherers like him when the S
> & P was at 700?? Why werent they pumping out articles everyday
> telling people to "buy when no one wants them?"

Dollar now in freefall. Euro +1%. Pound +1.1%.

Long DBV. Goldman came out with G10 Trading recommendations, essentially shorting Yen, long Aussie, Kiwi, and Krone.

Bond Expert: Monday Outlook

Commodities offer better risk reward than US equities, especially DBA which has a long way to go before reaching pre-Lehman levels.

New Bullish Signals Emerge

Great article. For the more conservative investors, to really confirm bull market, you can wait for 50 day EMA to cross 200 day EMA, and positive sloping 200 day EMA ... the risk-adjusted return is more attractive as you have fewer "false positives" ...

Why LEAP Options Help

LEAPs on sector ETFs can offer even better risk-reward. For example, for SPY to rally significantly from there, we need cotinued leadership from from Tech and more evidence of reflation trade.

Buying QQQQ and XLE, and selling LEAP call options for 2010 will provide 10%-15% "margin of safety" (depending on when you execute the trade -- personally, I wait for VIX is spike to 120% of 20 day moving average).