Good News

I am of course very pleased with the news out of PARE today. The fact that it is not yet reflected in stock price presents an opportunity for those of you without exposure. PARE continuous to be a core position.

Some Quick Notes

Bought some GS common at in the last minutes of trading yesterday. I intend to average into the position.

It is not hard to understand the explosion in Crude prices as geopolitical events unfold. I am well positioned.

It is encouraging to see USD/JPY holding up relative well.

Less Than One Week

GS from under $200 to $210. WFR from under $50 during the sell-off to over $60. MPEL from under $15 to briefly over $17. I am sure the combination of expiration pinning and the market sell-off made many capitulate at the worst possible time. This is exactly how the market machine rakes in. With S&P trading at 1434 and change all this is a lesson in the fallacy of the wait-and-see-until-it-stabilizes-attitude that is so common not least in the media. Over and over the big moves tends to come at the bottom and the big risk is to be on the sidelines at those very moments. All this this should quantified.

On the Crude side of things, the expiration was quite dramatic. With contango we are now trading above $61 again! As written here recently, when Silver was trading below $13, the trade is on the long side. I would also like to point out the ongoing inventory situation in Copper.

On the portfolio side one notes the huge move in Lupe today.

The good thing is: There is always another trade.

Options Expiry

Sold the remaining GS calls today as they go to into expiry tomorrow. It is my experience that trends tends to reverse after expiry (this must be tested) and if you get caught on the wrong side of the trade this will hurt you, even tough as with the case of Goldman they beat the estimates with some 36% or so. In this particular case the market decided that all financials were bad. Seems like the stock will be pinned at $200. When reality sets in I believe the stock will go much higher and I want to get long soon.

Other stocks on my watch list are:

- WFR
- MPEL

The Good and the Bad

Goldman's quarter was fantastic as they beat the expectations by some 34% and surpassed the most optimistic forecast. The stock was up over 2% this morning as I put in orders to sell some of the calls on the offer side at $7.90 and at $8.00. Unfortunately those trades were not done and as per usual the as the market sells off, the correlation increases and even the good names get hit. I don't like to sell into a panic, but with calls the erosion of time value has to be considered.

Market Update

Finally we got somewhat of a bounce yesterday. Goldman Sachs was up $7.37, the biggest one day gain I have ever seen in that stock percentage wise or in absolute terms. Google is back over $450. Today the stock got an upgrade from UBS. Crude briefly traded below $60 where it should have been bought. The problem with this trade is that my exposure to the oil markets is already substantial and risk I believe should be measured by bet size.

I feel very comfortable with being short the Google puts, it is a somewhat optimal trade as we see volatility decrease and prices drift upwards. The more aggressive strategy used for GS is not bearing fruit just yet. Goldman should not be trading down with the housing market as the exposure is minimal. This is still an opportunity.

I don't think I ever have referenced chart patterns on this blog. However, looking at the price action for Silver it does look very bullish to me. Looking at LME inventory stats for Copper and Zinc I feel very confident with the positions in Boliden and Lundin Mining.

On the sideline I have been eyeing a Solar energy play, the stock was up over 7% yesterday and another 1% today in an otherwise rather weak market.

Another Weak Day

Looks like we ended near the lows of the day. In the media as well as for technicians this is seen as bad news for the bulls. This however needs to be tested as the media seems to be focused on the last move at every point in time and that it turns tends you to lean at the wrong direction in every turn. In addition to this the media has a history of repeating market myths and nothing stops you from taking advantage from this if you are an independent thinker. Even though I know that the day the turn-around comes I will regret that I am not even more exposed it always has to be put in relation to the amount of pain you can handle. I am historically a seasoned pain-taker and that has paid off very well over the years.

Some More Buying

Further increased the position in the GS calls. Also sold the Google APR 440 put. These trades were done when GS traded under $200 and Google just above $445. GS is trading under PE 10 on forward earnings and could rebound fast once this is over. The Google puts represents a break-even of about 424 on the stock which in turn would mean a forward PE of 28.

Markets are in large playing out as expected. The question is if the washout this morning was enough to flush out the weak hands.