Market Price actions

Instead of putting my reply to Joseph on the comments page, I think the reply deserves a posting by itself.

Joseph, it was nice hearing from you.

I was on vacation for more than 2 months in Europe and USA. Also, traveling a lot the month prior to that. I went to Singapore and also to the Orlando OA Summit. I was on low key actions for more than 3 months.

I will be writing again since I am back and more or less settle down for the next few months.

To me the underlying internal price actions are strong in the market. This is probably driven by the fall of US dollars and good earnings. Much of the earnings are driven by growth in Asia. China looks hot.

Nevertheless, the underlying fundamentals are terrible. Besides all the negative data stated in my previous posts, we have potential risks of Europe Sovereign Crisis erupting again. Italy, Spain and Portugal are all in dire state. Employment figures were terrible. Fed is talking about further quantitative easing. Liberal Government trying to get Freddie and Fannie to forgive more debt.

I think there will be a top soon. Looking at Friday's action, the market may have more steam for 1-2 weeks. ITM Covered calls for August will work fine but for positions that are making money, I am adding cheap puts this month anticipating any downturns. I will share my experience on using puts in a new posts especially after a long period of vacation and low level access to the market. I will also give an updates to all my previous positions. So far, so good - thank God!

Longer term, the market can still be bullish as earnings are good although fundamental economics conditions are bad. But a correction is certainly imminent. Whether it is a free fall or another 5 to 10% sending the DOW to 9800 is still a question. My expectation is that it will be a correction. A lower dollar will raise the asset prices of stock especially those with good exposure to business in Asia. Thus, market may continue to rise and the US$ continue to fall.

One thing I am sure. I am not giving up my positions on gold and silver. These metals are overbought now. There may be one further dip and then resumes to all time high before the end of this year. Nice trend to sell OTM calls to protect and definitely sell puts when it dips and hit support again.