Haha, before you ask my advice, just know that I started with about 4500 in my play account last October/Novemberish and touched 3000 late last week before I was convinced that the pain being wrought on the market and especially the financials had to abate before too long and jumped back into FAS. On paper, I am at about $5500 right now (could have been about $7000 had I played my options right).

As far as how much of a leg this thing has, I put it at a range from staying right around 750 to possibly making it back to 850 or so before we head back down again, that is based on taking commentary from a host of different places. Most people felt this rally was coming, most people don't really know when it will end and I've seen some thinking it will last into mid April. But I think the spate of positive news combined with comments from Bernanke is enough to push it out of the oversold level back to this tread water level for the time being. I don't really expect to see any powerful counter rally over the next week, and I wouldn't be surprised to see FAS make it's way up towards 6.

I keep praising the options, why not take a 300 share position now at 5 and sell March 5s for .65 on them and lower your cost basis immediately to below the intraday low. You have to wait 5 days for them to expire. If you're afraid of it turning against you before next Friday you could buy March 4s for .25. Now, your cost basis 4.60 and your max loss on the position is limited to $180 on a $1500 position. If nothing happens between now and then, you made $120 for your week worth of work (well, decreasing as you approach 4.60). At the end of next week, you can either take profit on it if you aren't called away, or you can sell covered calls and buy puts again.

I love options. It kept me sane on my 300 shares of FAS I grabbed at $8.16 to see them trade at $6 barely 2 days later. I was prepared to write covered calls on them as long as I need to to get back to even. The premiums are so steep on FAS and FAZ that it would take a complete implosion of the finance sector to really clobber you. I have 1000 shares of this guy now, and I really think I'm just going to keep selling covered calls on it. If it just stays right here I'll be able to sell the April 6s for .80-.90 and the April 5s for 1.20. Cost basis would be $1.60 in that instance. And I'll keep doing it all year. Two more months of that and I'll never be negative on the position. That is a nice pill to swallow.

[Edited on March 13, 2009 at 1:49 PM. Reason : .]

3/13/2009 1:35:46 PM

google boards are full of all kinds of stupid.

it actually makes me proud to be on the wolf web.

3/13/2009 2:16:27 PM

Interesting

http://seekingalpha.com/article/125919-another-two-month-rally-cycle?source=feed

And yet another "data point" claiming 850.

^ Yeah, I feel sorry for some of those people. How they managed to amass a roll that they have only to just blow it on FAS/FAZ. I can only guess they got put out of work or something and think they can get rich on these guys so they just plow into it without much regard for anything.

[Edited on March 13, 2009 at 2:35 PM. Reason : .]

3/13/2009 2:26:59 PM

That makes 4 green days in a row, seen many "experts" saying we will know we have finally turned when we get 5 green days in a row. Of course we see how often these experts have been right up until this point as well.

3/13/2009 4:13:10 PM

Quote :

"Firearms maker Smith & Wesson (SWHC) reported fiscal Q3 EPS of 5c, compared with analysts' consensus estimate of 2c. The company's revenue was also higher than expected. "During the third quarter, we experienced significant increases in the consumer demand for (handguns and tactical rifles),""

Bought in at $2.78 the day after the election, sold 5s for next January at $0.40 a month ago, and it just hit the strike price. /

3/13/2009 4:28:13 PM

hey what do you guys think about silver as a longer term thing?

had an elderly jewish guy (who owns a jewelry store) tell me that silver was gonna do well over the next few years due to inflation and commercial demands. does that make any sense?

3/14/2009 4:00:06 PM

People are looking to silver as an alternative to gold since gold is relatively high priced right now. I think we'll see gold do down quite a bit as we ride out this rally. Hopefully it doesn't last too long because I have April SKF calls!

3/14/2009 8:57:33 PM

^^ Put the iShares silver trust (slv) and gold trust (iau) on the same chart and go back to their inception (May 5 2006) and tell me if you think silver makes sense.

I don't see people who are looking for a defensive play but are put off by gold being overbought looking towards silver. The 'sexy' alternative that has been discussed is platinum but it apparently isn't a liquid enough commodity for it to have an ETF (so you'll have to look to miners to get into it).

GLD touched 80 in that Christmas rally that terminated in mid January, most indications seem to point to this current bear rally lasting just a little bit of time and it should have GLD continuing to pull back. If you're looking for this play, I'd probably wait just a bit for it to keep pulling back. It's what I am going to do and then I'm going to allocate probably 15% of my newly converted 401k (now an IRA) to GLD, maybe for the long term, at least for the intermediate. A worldwide recession and overall slump in commodity demand isn't going to have this guy moving too much, and inflation is still a ways down the road to have an effect on it.

[Edited on March 15, 2009 at 1:04 PM. Reason : .]

[Edited on March 15, 2009 at 1:10 PM. Reason : .]

3/15/2009 1:02:50 PM

http://adamsoptions.blogspot.com/2009/03/bulls-on-parade.html

I think I'm going to set my alarm clock to wake up to some Rage Against the Machine.

3/15/2009 10:37:53 PM

Terror rains drenchin', quenchin' tha thirst of tha power dons
That five sided fist-a-gon
Tha rotten sore on tha face of mother earth gets bigger
Tha triggers cold now empty ya purse

3/16/2009 6:51:03 AM

time to buy into faz yet?

3/16/2009 10:26:09 AM

wait off on the FAZ pull.

What I don't get is how FAZ can decrease at the same time that FAS decreases. I'll also watch rifin.x decrease and then FAZ move down. counter intuitive, IMO

3/16/2009 10:31:54 AM

You could probably take a position here and be fine 1 month from now. At this point, we're talking about timing. Do you get it here, or does this rally continue to run and allow you to get it at 30. I wouldn't be too anxious to jump in just yet. We just saw a relentless amount of selling pressure that didn't abate for nearly 2 weeks. There is no reason to think buying pressure couldn't happen the other direction too.

Ultimately, any sort of news item related to financials is going to trump your strategy as it is, so if you do enter, set tight stop losses and don't get stuck holding the bag.

Personally, I'm going for options to expire this week and then start to look toward April/May calls on FAZ for the inevitable trend back down.

3/16/2009 10:32:40 AM

i just bought in with a small position into faz so that in case the market changes I can still play around later. And have a same idea with fas if it does fluctuate at all today

3/16/2009 10:43:42 AM

Im watching a 5 minute with FAS. It is compressing into an upward triangle with very low volume. It will break one way or the other within the next 20-30 minutes. My guess is it will fall below the 20sma and use that as resistance, possibly touching the 50sma and bouncing off it.

3/16/2009 11:00:03 AM

not bad.

3/16/2009 11:34:33 AM

Actually appears it was using the upper bollinger band for it's resistance. Right now, it's on the 20sma. If it breaks below, I'd look to get some more shares at the 50 (what appears to be about 5.45-5.50 right now) if I was trying to get long on this guy. It's very possibly the 20sma continues to hold though.

3/16/2009 11:56:08 AM

C is killing it today.

3/16/2009 12:47:45 PM

so is AIG and FNM

3/16/2009 1:21:05 PM

taking a small gamble with FAZ

picked up 75 shares at $35 with a stop limit at $30

3/16/2009 2:18:26 PM

Are you looking to scalp, swing, or what?

3/16/2009 2:44:49 PM

I'm looking to get rich, biatch!

3/16/2009 4:01:35 PM

Damn, this shit was up 127 points and ended up going down to -8 in 4 hours. WTF.

3/16/2009 4:05:07 PM

You certainly got lucky as hell with that play.

3/16/2009 4:05:56 PM

this is oddly strange. i watched the market like a hawk until i had a dental appointment and it appears the market tanked as soon as I stopped watching it.

There was no news and no speech, right, so what happened.

3/16/2009 4:07:59 PM

Probably some profit taking that triggered a lot more profit taking and the run was on. Like I said before, we're in a new range. I can imagine FAS will push back up in the next couple of days. It's going to be choppy for a week or so.

3/16/2009 4:09:25 PM

not luck, it's called waaaaaaaaay overbought financials

3/16/2009 4:17:47 PM

Hold on to that FAZ for a few days, see who is right

3/16/2009 4:18:34 PM

i sold out of the faz i had bought (worked out well made 10 % on it) Bought into FAS at 5.00

3/16/2009 4:31:13 PM

i wouldn't count out FAS until the quarterly earnings of the banks are released.

that FAZ was a good play, i'll give you that, but that doesn't mean its not luck. 770snp was acting as a resistance marker as was 470 rifin.x

all that being said i'm long in both, mostly because i expect a down swing again at some point and do not wish to miss what remains of this rally.

3/16/2009 4:32:54 PM

i wasnt worried if it was luck or not i dont mind holding a small position for 3 months if need be

3/16/2009 4:35:23 PM

you dont want to hold fas or faz for a few months, the decay will eat you alive

3/16/2009 4:37:13 PM

^what he said

if you're going to hold a financial ETF for more than a week or two, you might want to play a 2X like UYG or SKF since they don't decay as fast

3/16/2009 6:32:29 PM

Fail Boat you spooked me out of my FAZ, I sold this morning at $43.06

3/17/2009 10:18:29 AM

i wouldn't get upset about it if FAZ moves back up, you made a profit and thats what the game is all about.

3/17/2009 10:20:54 AM

Quote :

"Fail Boat you spooked me out of my FAZ, I sold this morning at $43.06"

rofl

Hey, profit is profit, right? I think for the next week or so we are going to be stuck in a "confused" region. It's like, "alright, we jumped up...umm, now, what do we do?"

It will be choppy until earnings season comes back in and reminds everyone how bad things are.

Just look at FAS, it has moved ~10% down, more than 10% up in the first 30 minutes. That is a confused market with bears/bulls battling for turf.

[Edited on March 17, 2009 at 10:54 AM. Reason : .]

3/17/2009 10:48:32 AM

http://www.cnbc.com/id/29724434

3/17/2009 10:56:44 AM

also, there's options' expiration this friday right? think we'll get a dip Wednesday onwards?

3/17/2009 11:11:34 AM

^^i've seen that, but i don't know how much stock (no pun) to put into it. over the past year and some change they haven't really gained my trust and respect.

3/17/2009 11:19:10 AM

FAS hit a lower high here on the 2/3 month timeframe .. and the shorter term trends are also of lower highs out of the previously strong rally (but volume was not AMAZING on that rally).

If it drops below 4.85, I think it could be tough (without some news) to extend the ralley.

3/17/2009 11:19:59 AM

Quote :

"FAS hit a lower high here on the 2/3 month timeframe .. and the shorter term trends are also of lower highs out of the previously strong rally (but volume was not AMAZING on that rally)."

Are you talking about the rally from last week? And by volume, are you referring to FAS or the market in general?

3/17/2009 11:23:41 AM

FAS specifically

... I know its hard to look at the leveraged etfs for volume/trend analysis...

but it is below the weighted average (1,2 day) right now, and below 485 would be a new intraday low since the 4.60 mark early this morning. (we have also had 3 lower highs since then as well)

3/17/2009 11:31:58 AM

How can you classify the volume as not very strong (not sure what amazing volume would be).

From the last local high it had on Feb 26 the average volume (I'm eyeballing a little) is under 200 million. From the time the rally took off until yesterday the average volume is around 300 million, a 50% increase in volume. That...is fairly amazing.

In regards to the lower high, you didn't consider the decay because of the 3x leverage. Look at the RIFIN that it tracks.

26-Feb-09 445.58 470.30 445.00 450.59 0
25-Feb-09 448.50 462.67 423.00 445.58 0
24-Feb-09 406.68 448.50 406.05 448.50 0

16-Mar-09 451.08 471.63 439.47 441.93 0
13-Mar-09 450.01 459.41 433.84 451.08 0
12-Mar-09 412.94 451.88 403.82 450.01 0

On the 12th/13th it closed at basically the same values as the 24th/26th.

This broke the downtrend and sets a new support level. I'd expect this level in RIFIN to hold as we chop sideways until we get some new news (earnings, suspend m2m, or otherwise) to push it one way or the other.


[Edited on March 17, 2009 at 12:01 PM. Reason : .]

3/17/2009 11:55:39 AM

I see what you are looking at ... move back to the 6 month view though ... youll see that fas has a steady incrementing volume over the last 4 months, and this jump is likely do to more people moving to leveraged etfs (especially of the 3x kind). Cant say I am confident that is just because of the rally ...

Look at xlf as an example ... the volume on sept 18 is what I would call amazing ... and back in july as well .. July was a rally that MANY people were believing was the bottom ...

Im not trying to present an arguement to say which way this is going ... just was trying to point out some technical things that I am looking at, and get some discussion on it.

I have a small long position here, but am holding cash to watch for another entry into the shorts.

3/17/2009 12:04:50 PM

Quote :

"I see what you are looking at ... move back to the 6 month view though ... youll see that fas has a steady incrementing volume over the last 4 months, and this jump is likely do to more people moving to leveraged etfs (especially of the 3x kind). Cant say I am confident that is just because of the rally ..."

I agree that it has gone up in volume as people have discovered it and are trying to get rich off of it. But I didn't compare six months ago to one week ago. I compared 2 weeks ago to 1 week ago.

Quote :

"Im not trying to present an arguement to say which way this is going ... just was trying to point out some technical things that I am looking at, and get some discussion on it. "

Yeah, no problem. I'm not trying to be difficult here either, just presenting what I see. Maybe we can come to a position where we are seeing the same thing.

EDIT:
I just realized that google can't be trusted for charts/volume it seems. The volume they have for XLF is WAY off from what I can see in scottrade and yahoo.



[Edited on March 17, 2009 at 12:19 PM. Reason : .]

3/17/2009 12:12:59 PM

Yeah, I am looking only in scottrade for chart info, as I get the weighted MA there and I like the settings I can save

No doubt .. good volume recently on the uptick ... but we have seen volume this high on short time periods over the past 9 months, maybe 5-6 times ... only to be quickly fizzled out.

Just stay cautious is all im saying.

[Edited on March 17, 2009 at 12:22 PM. Reason : .]

3/17/2009 12:18:48 PM

Quote :

"Just bought 5 BBY April 25 PUTS for 1.45 each. Looking for a horrible earnings announcement that will push these up to the 3-4 range pretty easily."

Getting beaten up on this play big time thanks to upgrades galore for BBY. I'm sticking to my guns on this one, no fucking way RSH reports a shitty quarter, BBY has to compete against the liquidating CC and HHGREG for competition and doesn't feel some of the effects from this economic slowdown.

I went ahead and loaded up on some more April 25s.

I'm gonna find out if my armchair analysis is better than the analysts (all signs point to no!).

3/17/2009 2:59:10 PM

i sold my FAS this morning and kept my FAZ. it appears as if i should have done the opposite since as of now FAS is above my purchase price, and FAZ is below.

major losses this week. oh the irony.

3/17/2009 3:30:17 PM

sold the rest of my BIDU & FAS with great success.

have some legacy ENER that is going to shit, but i had already monetised it several times over.

3/17/2009 4:02:23 PM

ETV and ETW both have dividends on Friday. Thanks to the low stock price the dividend is currently ~18% for both. They're solid long term investments that have treated me very well.

3/17/2009 4:15:05 PM