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Friday, April 15, 2011

QQQs Looking Vulnerable To Downside

- AAPL stock has seen lower lows and lower highs recently, setting up a pattern that rest of tech market could follow.  QQQs short-term (11-day) indicators are bearish, while mid-term (22-days) are still in neutral territory.

- Fair Volatility Estimate indicator's value for QQQs are at 17.98 in intraday trade 4/15.  IV Index mean of QQQ as of 4/14 close was at 17.12, and is probably lower today.  Should premiums come down Monday morning, I would think it would be a good time to play QQQs to the downside.  Perhaps, buying the May 57/53 put spread 1x2 for under 0.60 would be a good strategy.

- As for SPY, it is expiration day and the April 133/130 put spread bought for 0.30 is still in the money with SPY trading at 132.3 as of mid-day, but not by much.  Admittedly, however, recommending to buy VXX even under $29 on April 4, resulted in small loss.

- FVE indicator is at 16.3 as of 4/15 intraday, which remains significantly above IV Index mean of 14.5.

Monday, April 4, 2011

SPY Range-Bound? If Yes, Time To Bet On Short-term Fall.

- SPY has rebounded sharply the past 2 weeks. I'm inclined to think that this was a bounce from short-term oversold levels, and not the same continuation of a stampeding bull-market that we have seen since Aug 2010.

- If I'm right, now is the right time to put on a short-term bearish bet, for example, buying April 133/130 1x2 put spread for under 0.30.

- FVE indicator's value is at 16.8 and while it's below its moving average, it is significantly above IV Index mean of 14.77% as of Friday's close. So the risk vs reward payout is, I believe, in SPY bears' favor.

- I do not like to buy VXX (it is better to find opportunitites to sell VXX) but for a short-term trade (few days), I'd look for good entry points to buy VXX intraday, especially under $29.