Updated AAPL/ SLV Analog

AAPL, SLV and SPX Analogs

Ran some studies on a couple analogs I've been watching as of late. The first compares the run in silver last spring to apples current parabolic ascent. And the latter the SPX in the fall of 2010 and the current price action over the last couple months.

You'll notice some pretty high correlation values on the longer period inputs. The strategy going forward is to wait and see if the SPX gets the vertical pop that it received in fall of 2010. From there the market fell roughly 5% and then continued to rally well into the spring. Obviously the AAPL/SLV and SPX analogs seem to be all running together, so looking at long positions in some front month otm puts on AAPL, SPY into a move up and then flipping long to far dated atm calls in SPY, SLV after the downside has been observed.

Liquidacion

Took off every position today except the NRGM calls. Not seeing bullishness in the charts, believe more downside will be seen the next few days. Easily could be wrong here and will be heading back in if the picture changes.

Exit:
-2000 AUD/USD @ 1.068750 +$18.84 (+1.14% on account)
+2000 USD/CAD  @ .999350 +$5.94 (+0.36% on account)
premium recieved on both pairs +4.13 (+0.25% on account)--> '12 total net interest (+$3.39 +0.21%)
-1 PII JUN '12 CALL @ 4.30  +$163 (+61.51% on contract, +9.88% on account)
-1 DG MAY '12 CALL @ 2.10  -$17 (-7.56% on contract,  -.1.03% on account)

Yesterday

Exit:
-10,000 GBP/USD @ 1.56656 -$14.10 (-.86% on account)

New Position

Long 10,000 GBP/USD @ 1.56797
Stop Limit @ 1.566710, 1.566510
Target @ 1.57380
Risk $14.60 or .86% of account
Reward $58.30 or 3.4% of account
Ratio 4-1

PII Update

Watching PII closely due to its current position and reaction are critical. On the chart below we have two interpretations, as always a bullish and bearish variety. PII has rallied since mid January to new highs corresponding to a test of a rising trendline. Subsequently this trendline is both a neckline for an inverted head & shoulders continuation pattern and the upper channel line for a rising channel. A break to the upside will confirm the H&S with a measures move to roughly $87. Failure to break above this trendline will likely lead to a downside move to the lower channel line. Typically rising channels are bearish in most scenarios, also inverted head and shoulders continuations usually have necklines that are negative in slope. In addition volume has been declining since the earnings release on the 25th. The best position (risk/reward) wise to take here is to short PII, buy puts or sell calls with a stop above yesterdays highs. However I already have significant profits on this trade (contract up 81%) therefore I plan to hold this position for a potential upside breakout, a mental stop is placed slightly below yesterdays low ~68.60.

DG shenanigans

My finger is on the trigger to dump my call on this stock, looking at the chart we've had 2 failed attempts to sustain a breakout to new highs that were established on 1/26. Obviously what happened yesterday was a surge in volume as the stock ran to a new high then a pretty large sell off for the rest of the day. While DG typically does not correlate with the overall markets its movements yesterday are still very concerning with all of the indices well in the green. This trade is very likely a wash, a break below the low on 2/6 and 2/13 at 41.70 will be my exit signal. The loss will be approximately 18% on the contract representing roughly a 2.4% loss on account. Obviously i violated my 2% rule here slightly which is something im trying to strictly adhere too but trading a small account with somewhat large contracts is making that adherance difficult.

Week 7

CURRENT POSITIONS

     FOREX

·          2000 AUD/USD @ 1.05933

·         -2000 USD/CAD @ 1.00232

   OPTIONS
     
        CALLS

·         1-PII JUN ’12 70.00 CALL @ 2.65

·         1-DG MAY ’12 42.00 CALL @ 2.25

·         2-NRGM JUL’12 22.50 CALL @ .33

THIS WEEKS STRATEGY

FOREX

Watching the AUD/USD closely, Friday was a pretty sharp down day currently we’ve recovered a significant part of that downside move however we have yet to escape Fridays range and until the market decides direction I will remain long my 2000 AUD/USD. A break of Friday’s highs will give me a green light in terms of scaling. I look to add another 1000 units there.  The target remains at 1.1925 with a stop currently at 1.0508.

USD/CAD

Much like the AUD/USD looking to add or close position on movement outside of Fridays range. Stops currently at 1.007520 with a target .9300.

OPTIONS

DG

Continues to test my patience as I was whipsawed last week, today right after the open the stock broke to new highs then quickly fell nearly a point, not a good sign with the overall market trending higher. Looking to offload the contract on a break below 41.70. Target remains at $50.

PII

This is my runner, performing extremely well besides a lack of volume on this advance. Contract is up over 70%. Target $80.

NRGM

Testing my patience as well, close below 20.50 and I liquidate. Bought these calls as a long term speculative play initial target is at $30.