Sunday, May 31, 2009

Does the Market still have room for another leg up?

Stocks gained 4.1 % during the month of May. And since the March lows we have rallied about 38% off of our lows. The question is, does the market still have enough going power to continue higher before a really healthy pull back. The price action between the Bulls and Bears is becoming less and less directionless, leaving us in a range bound market. But according to the technicians we have not quite violated the uptrend. But Many market participants still anticipate healthy pull back before the market can continue higher. Others believe that there is too much money sitting on the sidelines that will keep the market higher into the summers ans money managers chase performance. What about the "Sell and May and go Away", it may be a bit more active this summer than historically so. Only time will tell. I personally think that this rally may still have some steam to go higher if the Dow can stay above 8200, but then again I am no fortune teller.

On this very topic, a blog that I follow discusses the current market actions vs a previous time in history. Here is the discussion:

"A little comparison between today and 1938. The market rallied 50% off it’s lows before pulling back 14% and then continuing higher. Currently we’ve rallied about 38% off the lows. Maybe we have one last upleg before the pullback that everyone on Wall Street is waiting for?"

The Metal's (Intrinsic Value is > Zero)...Right?

Friday Jason and I met up and got lunch. On the way back to my office we started talking about a position that he has on the silver ETF. If I remember correctly he sold the $8 Puts and bought the $15/$30 bull call spread. Jason Correct me if I am wrong. But anyways the discussion started out with Silvers performance as of late. It has been outperforming gold for sometime now and seems to be the metal of choice for protection against the all mighty inflation. One point that Jason and I discussed was that what the worst case scenario could be with this position. Theoretically Silver could go to zero and he would lose what ever he paid for the call spread and be exercised on his contracts to buy silver at $8. But lets look at this play a little more realistically. It is very unlikely that Silver will ever go to zero because as Jason pointed out "it has intrinsic value" So even if he lost out on the call spread and go executed on the puts he could eventually sell enough calls against his position to break even. I guess what I am trying to say is that I like the risk/reward on this play. As I see hyper inflation a few years down the road, I think that commodities will outperform stocks by a long shot. But one thing put Silver on my radar more than anything and that was the fact that Jason stated on Friday, "That compared to gold Silver has many more practical applications". One example he pointed too was how Silver is a super conductor of electricity and how vital a role it will play in the development of the "Smart Grid". Anyways, thanks Jason for opening this opportunity up to me. I will look to put on a position in Silver, I am just not sure what yet.

Sorry testing posting via blackberry

Wish I knew how to delete posts.

Friday, May 29, 2009

Cool, all I had in mind when I created the Facebook page was just a central portal that we could all access during the day. This looks like it might work better so let's see.

New way to share...

Hey guys,

So I met with Jason today and came up with the idea of creating a blog for the place to share our investments. The only reason I suggest this is because I am unable to access facebook when I am at work. It also will show each post in the order that it was posted. It will have a time stamp so we will no longer need to include the date in the title.