Market Updates

I apologize that that I have not written for about 2 weeks.

Meanwhile, a lot has happened in the precious metal market. I had written on Jan 5th 201 comments that I had gone short term bearish and thus collaring all my holdings in precious metals.

This short-term  correction could last a few weeks to a maximum of 2 months. Gold can bottom at 1320 to 13230 and if it does not hold, it can drop to 1270. 

My best bet now is that there may be a short-term rally. But the intermediate term is still down. Thus upon this rally, I am maintaining my put and rolling down my SC taking some profit and at the same time adding more protection for another month.

The overall market is getting nervous this week. Because the expectations are so high, any slight miss on earnings or revenue or any bad news, the stock can take a beating. Examples of these are CREE and FFIV. Also, for GOOG and APPLE, the stocks fell after delivering extremely stellar results because of news of their CEOs leaving the job. The market is clearly look for reasons to sell off.

As I said, after going up so much since August 2010, there WILL be a correction.

I got out of 90% of my junior minors and 50% of my precious metal big caps at the beginning of this year. It was a great move but it was not entirely that I foresaw the correction so clearly but because by coincident I was moving my old account to a new account. For the remaining of the big caps, it is now fully collared.

Be patient. The fundamentals are still overwhelmingly sound. Upon bottoming, the upside could be explosive this year. It is my belief that both gold and silver will reach new high in 2011. I am looking forward to get back in the game of PM again but not before a bullish signal is given

A few updates on my trades. I closed my double diagonals trades. I make some money all the trade but it is too slow for my style. Also, the WMT trade was assigned twice when it goes ITM.  Apparently, someone is watching WMT very closely to take assignment of options that went ITM just before expiration or just before dividends.

For AEP, I got out with a profit. I did a very bearish write-up. But recently, there are some developments and merger that make the utility segment bullish. Technically, AEP is issuing a bullish signal. But because I am not convinced on the fundamentals financially, I am not getting into this trade.

XEC continues to perform strongly. I got onto the trade twice with a covered call.  Unfortunately, I got out and did not get back to a new trade again. I am waiting for the right opportunity to get back again. The overall oil segment is still bullish.

The BYD trade is not doing well. I still believe in the long term fundamentals. Although the stock has dropped 25% since I bought but I am losing only 7% because of my hedge. My cost position is greatly reduced. I am waiting for the right opportunity to average up on my shares.

Through this period, I have collected many thoughts on my trading process. I had written it here in a separate posting. In addition, there are some trades, which I will post this week.

Watch out for the new posts.