Archive for the ‘Uncategorized’ Category

US Treasury recalls dollars

June 12, 2009

I knew it would come to this …

Treasury Department Issues Emergency Recall Of All US Dollars

FAS and FAZ next meeting

May 12, 2009

Like a couple ensnared in a tumultuous relationship, FAS and FAZ are about to get back together again. You can tell they both regret how it’s been lately. They both want to give it another chance, hoping that this time it’s going to be different.

I’m guessing the next meeting pivot is around $7.20. That’s where my regression-like line is pointing. The correlation is currently around -0.86, which is pretty close to being perfectly negatively correlated. I’d like them both to remain below $10 on Friday, as that is options expiry and I’m short both FAS and FAZ calls at the 10 strike in MAY. Readers will recall I collected $1.71 credit for both short calls.

Where is this pair going? Quite frankly, I’m not sure. It’s shaping up as a mean-reverting play, but with a price decay component.

I went long equal shares when FAZ traded at $12.00 and FAS traded at $6.20. I’m becoming convinced that this strategy is mathematically guaranteed to lose. The income from selling covered calls against both longs is reducing the pain just enough for me to keep it alive. How’s that for a trading strategy. Hey, it’s discretionary.

These two little magnets draw each other closer before one switches its polarity and they diverge. All the energy expended on the ritual is wearing both of them out. They have some serious co-dependent issues. It’s like the drunk spouse abusing the enabling spouse. They break up, they get back together. And they’re both worth a little less in the end.

FAS and FAZ price decay

April 30, 2009

Here is a daily chart plotting FAS and FAZ. I’ve highlighted the price points at which they’ve met recently. I’ve drawn a regression-like line depicting their mutual decline.

The bottom study is a correlation study with a 30-bar lookback. As you can tell, I need to upgrade my image publishing skills. If you can’t read the values of the correlation, they start at -0.75 on the top and go down to -0.95 on the bottom. The current correlation value is -0.81. Not perfectly negatively correlated, but pretty close.

The prices at which they’ve met in chronological order is about $9.52, $9.17, $8.35 and $8.22. They started these shenanigans around April 13, 2009.


February 1, 2009

Don’t get it, it worked yesterday … hmmm …

Chart – Long GLD, Short USO

January 31, 2009

This is what the GLD/USO pair looks like on the dailies.

The lines going through the price are linear regression with standard deviation bands. Lower studies are the RSI (oversold breach) and my Super Secret Proprietary Indicator (green bars rising).

So where is this going?

Smoke of the day … El Mejor Emerald

January 29, 2009

I’m not the only one smoking today. S&P 500 up 3.3%. And it’s the sixth up day in a row. And there was no gap fill.

El Mejor Emerald is quite a value at about $3 a stick. I like that funny wrapper-less foot. They call it a shaggy foot and it’s a novelty, but it’s great if you don’t feel like burning a box of matches getting your cigar lit.

Honduran wrapper with Nicaraguan filler. Smooth and medium-bodied. For the price, you’d expect to be spitting your guts out, but that is not the case with El Mejor Emerald. I hate to say it, but it is a gem.