PeakTrader.com Forum Index PeakTrader.com
Economics, Portfolio Optimization, and Technical Analysis
 
 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 
Log inFast Charts

Completion of Rare Overextended Irrational Market (incomple)

 
Post new topic   Reply to topic     PeakTrader.com Forum Index -> Portfolio Optimization
View previous topic :: View next topic  
Author Message
administrator
Site Admin


Joined: 28 Dec 2005
Posts: 11965

PostPosted: Wed Mar 21, 2007 5:33 am    Post subject: Completion of Rare Overextended Irrational Market (incomple) Reply with quote

The SPX 18-month daily chart below shows a classic Oct to May rally and a Jul to Feb "irrational" rally where short-term technical indicators, which were reliable for many years, failed. After the Oct to May rally, most expected SPX to fall in a lower trading range, e.g. between 1,180 and 1,280 through Oct, while few expected a rally. Given indicators failed and volatility compressed, the rally was most difficult to trade. Personally, my portfolio held up well until SPX rose above 1,350 in Oct and then fell apart.

Also, I may add, I almost had a new account in Dec and Feb (from same person). If he invested in Dec (before end of the year), I most likely would have bought only SPY Feb puts and he would have been wiped-out. However, if he invested in Feb (before President's Day holiday), I'd have turned $100,000 into $400,000 in Feb, i.e. reached my target when the Dow fell over 500 points intraday with SPY Apr 142 puts (and those puts exceeded my target rising from 0.70 to 3.90 in one day). Consequently, I'd have made a $200,000 management fee, based on the contract.

Back to top
View user's profile Send private message
Display posts from previous:   
Post new topic   Reply to topic     PeakTrader.com Forum Index -> Portfolio Optimization All times are GMT - 8 Hours
Page 1 of 1

 
Jump to:  
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum


Powered by PeakTrader 2.0.8 © 2001, 2002