Monday, January 24, 2001, to enter several BLIP swing trades and perhaps you may be interested in following in your virtual accounts. There are plenty of folks that are interested in learning about some new ideas and not have to spend or risk any money. This will be the our first BLIP swing trade for 2011 and hopefully will be able to pick up the pace. So, don’t worry about feeling you may be missing the boat. It is more important that you learn the process and how to exit the trade.
The ETF’s that I will be placing at the money options contract orders are listed below. I will explain the rationale for placing BLIP trades this week for each of the ETF’s. To learn more you can always visit our web site for more information and updates as the trades are completed. Please sign up for our overview of the strategies so that you understand the BLIP process and why I am selecting these ETF’s and how to exit the trade.
QUICK QUOTETRACKER TECHNICAL INDICATOR READINGS
We use the QuoteTracker software to monitor our positions. This software is free if you don’t mind the ads. Otherwise, you can simply pay the small annual fee and have not ads postings.Each of these ETF’s offer equity options in both types of options, such as calls and puts. This means that you can trade in both directions, one at the time depending on your investing objectives such as expecting a bullish or bearish price trend. As you can see in the charts, the price for each of the ETF’s is approaching a pivot point and there is a high probability that the price will continue in that direction. There are a few economic news items this coming week such as the President of United States, Obama’s, State of the Union Address on Tuesday evening. Already parts of the Obama’s speech and the nitty gritty contents are being disclosed and it sure looks like the US government is about to print more money to further stimulate the US economy or or at least make a last-ditch effort to generate more new jobs or any jobs to save face with the Amercan people. Needless to say, that will most likely fuel a market rally in the short term on this “sugar high” before the reality hits most folks that we will have to pay back over 14-Trillion dollars of debt someday and if we can’t even balance the 1.4 Trillion US annual budget deficit, how in the hell are we going to pay back all that debt without cutting spending which in turn means closing up shop and laying people off government jobs, which seems to be one of the largest overhead costs? Even the Tea Party elected officials all recommend cutting spending, but amazingly no one wants to actually document the details of who’s going take the biggest hit and for how long.
With a short-term bullish rally in mind, purchasing call options for the ETF below, which are at the money, and one month out before expiration may be the right approach. If you wish to be more conservative you may consider options that are two months before expiration. Therefore, we are talking about only the February 2011 or March 2011 expiration dates. If the ETF prices close to the next strike price, choose that one and look for a profit target of $.25-$.35 with a breakeven stop-loss if you wish to take your profits in multiple steps depending on how many option contracts you purchase.
THE TARGET ETS TO CONCENTRATE ON
DVY has been one of those ETF’s on my radar screen for several years. The reason is because this ETF owns companies which pays dividends along with capital appreciation. The net results are higher income combined than other investments. DVY carries far less risk compared to investing in just one stock for the dividends. Think of it as a self-contained mutual fund. With that said, purchasing the DVY call options may be a no-brainer for some quick profits as the price pivots to the upside.
FAS is an ETF which concentrates on Financial Assets 3X Shares and is more aggressive. So, if you are the nervious type, you you might want to consider the other ETF’s which are much more tame. No doubt FAS will move faster than the other ETF’s that means it is a two edge sword. You can make more profits in the short period of time but you can also lose more. Only you can determine your tolerance for risk. Once again the calls options for a $.35-$.45 cents target profit would not be out of line. Needless to say, using limit stoploss orders is highly recommended.
EEM is and emerging markets Index ETF which means it carries many international stock companies which interact with the US economy and takes advantage of US exporting. The weaker US dollar makes it far cheaper for companies to purchase our items and that in turn generate profits for those companies with international reach. Again, this ETF may be moderate to slightly higher risk and therefore you should expect the price movements to be sharper and more pronounced. You can make more money in a short period of time, but you can also lose more. You be the judge. Keep an eye and a co-tracker price pivots for a better awareness of the end of the rally.
IWM is an ETF that consist of the Russell-2000 stock index and therefore consist of smaller companies which sometimes have the potential to move much faster (price wise) than the larger counterparts. Therefore, the price movements are exceptional when you purchase IWM and hold option contracts. The smaller companies tend to move later in the bull market runs near the end of the rally. Such as when the market is starting to taper off and rollover. I don’t predict that this is the end of the bull rally anytime soon. In fact are 39-week moving average indicator is still in a bullish mode and it has never been wrong in the 20+ years I have used it. Therefore it’s full steam ahead. We are in a bullish market.