Market Rider

Gold, Uranium Breakout

2006-10-30T13:54:00.000-08:00

First of all, because of my sporadic updates, I am focusing more on long term plays as opposed to short term trades, even though I am still actively trading options. My short term plays aren't really that useful because I'm in and out so fast, that by the time I post, most of the move is over.

Gold broke above 600 today, a level it has been trying to break for the past 2 months. If this breakout is real, gold could begin a new leg towards new highs. Making it more impressive is the fact that other commodities are still consolidating (ie. oil), giving gold a chance to become the leader.

Historically, the gold/oil ratio has been about 15 (I think). This means is that it takes 15 barrels of oil to buy 1 ounce of gold. Currently, the ratio is 10, hinting that gold might outperform oil if this historical ratio holds.

Look for Silver to outperform Gold. During the last gold craze, silver rose much more than gold in terms of percentages. With real industrial demand for silver, I think silver will again outperform gold again during this cycle.

Nice to see small cap uranium stocks breaking out (thanks to Cameco's Cigar Lake flooding). Cigar lake was expected to produce 10% of the world's supply of uranium. With this delay, the uranium market will be squeezed even more (demand already exceeds supply by approx 100%). With the uranium obtained from decommissioned russian weapons ending, uranium could really shoot up vertically in a huge buying panic.

Also, I have turned neutral on oil, because it is too manipulated politically. The reason why oil is consolidating around this region is because OPEC cut production by 1 million barrels. However, as production increases from non-opec sources, OPEC will find it harder and harder to restrain oil supply. Although I expect oil to stay above 50 (prob. hover near 60's), I think oil will underperform other commodities.

Here is my long term portfolio update:

Mega Uranium (TSX: MGA)
Internation Uranium Corp (TSX: IUC)
Paladin Resources (TSX: PDN)
Royal Bank of Canada (TSX: RY)
Silver Wheaton (TSX: SLW)
Fording Coal (TSX: FDG.UN)

Notice I sold Cameco (CCO), Yamana Resources (YRI) and Baytex Energy (BTE.UN) and bought Royal Bank (RY), Silver Wheaton (SLW) and Paladin Resources (PDN) since the last update. I bought PDN basically from its chart pattern (because I was too lazy to research all the uranium plays).

Other small cap uranium stocks include: UEX, IUC, FRG, MGA, PDN, SXR. Check out Uranium Mining Stocks for more uranium coverage.

My Portfolio

2006-09-29T14:49:00.000-07:00

Today, I withdrew a whole bunch of cash from my Canadian ING account and bought Cameco (TSX: CC0) and Yamana Gold (TSX: YRI) as long term holdings, thus breaking my rule about having 50% of my assets in cash at any given time. This lowers my cash balance to approximately 30% of my net worth. I figured that I'd rather put my money at where my mouth is, instead of collecting the 3% interest that ING Canada pays me for having money in the savings account.

Below are the stocks that I hold. My holdings are extremely undiversified (all in the commodities space). Since I am young, and have a job that pays me a decent amount of money, I figured that the money I have saved up/made from trading probably doesn't mean that much (I'm not planning to buy a house any time soon, especially since they are so expensive in the Seattle area). I'd rather focus all my money in one space and take a risk, especially since I believe so strongly in that space.

Baytex Energty (TSX: BTE.UN) 27.2%
Cameco (TSX: CCO) 23.7%
Mega Uranium (TSX: MGA) 14.8%
Yamana Gold (TSX: YRI) 12.0%
Fording Coal (TSX: FDG.UN) 11.5%
International Uranium Corp (TSX: IUC) 10.8%

I bought Cameco because I truly believe uranium is one of the safest things you can hold, with Cameco being the safest because they are the largest, and most diversified uranium company. I don't think uranium has gone down EVER in the last 5 years. If you buy gold or oil, they go down from time to time, but uranium NEVER goes down. With the pricing power of uranium still extremely strong (the cost of uranium is negligible when runing a nuclear power plant), the uranium price can probably surpass $200 in the coming years (currently it's 54). Since Cameco has basically stayed flat the whole year, I don't mind buying and holding, even though it may not move for a while.

I have to admit that commodities are making me nervous. If the economy slows down, demand for commodities will fall a lot and hurt their pricing power.

Sector Watch

2006-09-02T12:11:00.000-07:00

Although every blogger has their opinions of what the markets will do, here is what I think:

Nasdaq

The nasdaq, along with the dow and S&P, managed a very low volume rise in August. With September being historically the worst month, I think the sellers will come back with full force. I expect the nasdaq to at least double bottom, if not break that bottom and go lower.

Crude oil

Crude oil recently hit its bottom trendline. Historically, Gold and oil has done well in September. With the fundamentals unchanged (demand still exceeding supply), I fully expect crude oil to continue it's uptrend.

Gold

Gold is a special commodity, in that it is more affected by psychology than by fundamentals. Unlike other commodities, which depend on supply and demand, gold is dependent on the dilution of paper currency, and on whether the people are willing to value gold as money. Right now, I believe people do think of gold as money, and thus, it will rise long term. Having said that, on the short term, I wouldn't be surprised if gold tries to double bottom (hit 600 or lower), before building a stronger base and moving upwards.

Copper

Copper is one of my favorite commodities, since the demand is so strong, that copper didn't drop that much despite all the "speculators" bailing on it. (Speculators bailed on all commodity stocks in May). Even though copper may retest $3.00 in the short/medium term, over the long term, I expect copper to remain a leader and to make new highs as the commodities bull market continues.

Cameco Corporation (CCJ)

Cameco is my favorite commodities stock, because uranium is the only commodity that never goes down. Contract prices of uranium is controlled by a small group of people. With uranium demand exceeding supply by 100%, uranium prices will continue to go up, making uranium companies more and more valuble. Cameco has already consolidated very strongly since the perceived "bubble" that occured in May. I think another breakout is imminent, and Cameco will rise to 55-60 dollars US in the short/medium term.

Note:

Other stocks I like include Freeport Mcmoran Copper (FCX) , which is my favorite copper stock since Phelps Dodge Corp (PD) decided to diversify and Yamana Gold (AUY), which is the best mid tier gold growth stock since Glamis Gold Ltd (GLG) was bought by Goldcorp Inc .

Good looking stocks

2006-08-27T19:20:00.000-07:00

Every so often, I like to do market scans to search for high relative strength stocks breakout out into new highs. Here are 3 I found:

Research In Motion (RIMM)

For the first time in 2 years, RIMM is outperforming the markets. Despite all the competition, RIMM is still the leader in converged devices (PDA, phone, email), as they are favored by the government and businesses. A knock against RIMM could be that their BlackBerrys are too big; but in the 4th quarter of this year, RIMM is expected to release a new BlackBerry that is thinner, smaller, and sleeker (shiny metal coating) than the BlackBerry 7100 .

Although it faces heavy resistance technically (at around 90), I think it will start another multi-year leg up as BlackBerrys will spread from businesses to individuals.

Overseas Shipholding Group inc (OSG)

Overseas Shipholding Group, Inc. (OSG) is an independent bulk shipping company engaged primarily in the ocean transportation of crude oil and petroleum products. Recently, it has been going up strongly, although it is reaching it's near term target of 72.

Novatel Inc (NGPS)

NovAtel Inc. designs, markets and sells high-precision global positioning systems (GPS). Although it has a short term target of 50 (assuming it continues its current pattern), it faces stiff resistance at that level. However, if it breaks out from 50, this stock could be a winner for a long time.

My thoughts on the markets

2006-08-21T22:51:00.000-07:00

Although the markets have gone up a lot in the past week, I don't trust the strength we're seeing. There are a lot of signs that points towards a slowing economy, which means the markets will trade sideways at best. From what I can remember, September is a bad month, and I wouldn't expect anything different this year.

Regarding the commodity markets, I still think that we are in a long term bull market which will not end until 2015-2020. Fundamentally, nothing has changed; demand is still rising faster than the supply. This will cause the markets to remain tight and to build up "potential" energy for a more powerful "breakout" to the upside. Therefore, I would be very comfortable owning commodity companies for the long term, especially Cameco (CCO), which remains its leader.

By the way, feel free to check out the Elliott Wave webpage, by clicking on the links provided on this site. The people who run Elliott Wave provide some very interesting commentaries about the markets using a very unique methodology. In fact, the Elliott Wave theory was one of the first things I learned about the markets, and it is the reason why I became so intersted in it.

Basically, Elliott Wave states that the markets are patterned and predictable, following the waves of human psychology. Using this theory, it increases the probability of forecasting the markets correctly. I find the Elliott Wave theory extremely helpful, and I encourage you to check it out.

Google

2006-08-18T13:42:00.000-07:00

Sorry for the long delay since my last post. I haven't been in the blogging/trading mood lately, partly because the markets have been so frustrating. While I was gone, I got a job in a city that's south (across the border) from the city that I used to live in.

I'd like to make a comment about Google. I think today is the first time in over a year that GOOG did not close at its "max pain" point. "Max pain" is the price at which most options will expire worthless, thus maximizing the profits of the options issuers. The "max pain" point for Google is 380, but it closed at 383.5. (Normally, if max pain was 380, GOOG would close at 380.05 or something like that)

I think this is extremely bullish for Google in the short term. What I think happened was the MM's (Market Makers) were trying desperately to "pin" GOOG to 380, but they were unable to because the demand for it's shares were so strong. Because of this, I think the chances of GOOG rising on Monday (and in the near term) are pretty high.

Bought Freeport McMoran Copper (FCX)

2006-05-31T06:54:00.000-07:00

I bought back june 55 calls on FCX at 3.20, which is 10 cents lower than what I paid last time. I like commodities too much to not have any exposure in it. I'm still monitoring it day to day, because I am still not certain that we have seen the bottom.

Copper demand remains strong

2006-05-29T09:10:00.000-07:00

Despite all the arguments from the copper bear camp, such as "$4.00 per pound? That's too high!" and "Copper has gone up too much too fast!", and despite the fact that commodities have gone down quite a lot in the past month, copper prices are still near its all time high. As it turns out, copper demand is extremely strong, and supplies are tight, as revealed by the article here. In this article, it says:

Stockpiles in LME warehouses fell 1.1 percent to 105,625 metric tons on May 26, the lowest since Feb. 21. That's equivalent to about two days of global consumption. Copper may rise as much as 50 percent in the next year as demand from hedge funds and cablemakers outstrips supply, according to Sucden U.K. Plc, which trades on the LME.

As I've stated many times before, as long as demand exceeds supply, the price will go up. Yes, I acknowledge that there's tons of speculation already baked into the copper price, but these speculators could run up the copper price a lot more if the copper users are willing to buy at any price.

Disclosure: My current positions are: Freeport Mcmoran Copper (FCX) and Valero Energy Corp (VLO) . As of the current moment, I am only playing a retracement of the correction, but that may change depending on how they do the next few days.

Update: I sold both for pretty nice profits. I don't like the fact that non-commodity stocks are acting weak Monday morning. If they go down, commodity stocks will likely follow. Also, I was disappointed in VLO...the oil sand stocks went up so much, and VLO underperformed badly.

Bought Goldcorp Inc (GG)

2006-05-23T10:32:00.000-07:00

Bought Goldcorp Inc shares @ 31.64 as a swing trade. In retrospect, should have held onto BHP, but was nervous this morning...needed to see whether the market would hold onto it's strength. Since it did, I don't mind getting in again.

Update: Stopped out at a loss. I should be more patient in this market because everything is so deceptive

Bought BHP Billiton (BHP)

2006-05-22T15:00:00.000-07:00

I took a gamble this morning and bought BHP Billiton (BHP) June 40 calls @2.00, or when it was trading around 40. Commodities are still in a long term bull market, and what we're seeing right now is 1987. In 1987, after a sharp drop, tech stocks rallied back until it reached an insane peak in 2000. I expect the same sort of pattern for commodity stocks.

May 23, 8:15am. Update: Sold BHP for close to 100% gain. Although today is an up day, I don't feel comfortable holding in this environment.

Bying options in this environment is hard. Not only do you have to identify good stocks, but you also have to identify stocks whose Implied Volatility (IV) is not that high. Because if the IV is high, you're getting ripped off on the premium.

Cameco Corporation (CCJ)

2006-05-15T14:17:00.000-07:00

I bought June 37.5 CCJ calls today. Cameco Corporation (CCJ) participated in the commodities free fall the last 2 days. Unlike other commodities, uranium did not fall, and will not fall for the forseeable future. Therefore, I believe Cameco Corporation (CCJ) was unduly punished, and should lead the commodities and the rest of the market into a relief rally during the next few days.

Update Sold the CCJ call for a minor gain. Everything is extremely weak.

Markets sell off

2006-05-11T18:00:00.000-07:00

Was this a Kirk report induced sell-off? Haha...just kidding, but he did make a good point when he said that it's generally a good idea to sell at the top of the range. If the general markets go down, there is very little chance that commodities will go up by themselves...but you never know.

Crashes occur when people overextend themselves in debt. That is what happened in 1929 and in 1987. During those years, people were so overleveraged in stocks that when the markets started to go down, margin calls hit, resulting in mass panic. Currently, I believe personal debt is at an all time record (the average debt per person is approximately 10000 USD). I don't know if these are the people that invest in the stock market, but if they are, these people will contribute to the crash.

Another point I would like to make is that although the DOW has "double-topped", meaning it is at the same level as it was 6 years ago, the DOW is actually down 30% in the last 6 years due to the decline of the US dollar. This is what people don't consider; the US government is printing so much money that they are devaluing paper currency. This is the primary reason why gold and commodities are doing so well, and after a correction(?), they will continue to do well.

Thoughts for the day

2006-05-10T16:35:00.000-07:00

Today, I got out of Empire Resources Inc (ERS) for a very nice gain @ 44.60 (I bought it at 38.4), and I'm still hanging on to my Phelps Dodge Corp (PD) calls. I was surprised when ERS tanked during the last 30 minutes of trading. What I think happened was that everyone (including me) was playing the dead cat rally, and when it broke critical support, everyone bailed at once. Does this mean it's still buyable? I wouldn't touch it anymore, because the stock does seem very expensive on a valuation basis.

For commodities, we are clearly in the sweet spot right now. Enjoy it while it lasts, and always remember in the back of your mind that these things can come down. And when they do, the go down with a vengence. When this will happen is beyond me, but as long as it's going up, I'm riding it up. (Just remember that the risks are really high).

Update on positions

2006-05-09T15:39:00.000-07:00

Nothing to report except I sold my Petrochina (PTR) and bought calls on Phelps Dodge Corp (PD) during the morning. Can't believe PTR went down while every other commodity stock was going up.

I also purchased a stock position in Empire Resources Inc (ERS) . I think this is the first time in over a year I have ever bought stocks instead of options for short term trading. But I couldn't resist because the reward is so high.

Nice to see that commodities broke out AGAIN. Let's see how high they can go this time before another consolidation.

Oil stabalizing

2006-05-08T16:03:00.000-07:00

Oil appears to be stabalizing after a week of selloff. I picked up some call options on Petrochina (PTR) because even commodities-bear Warren Buffet likes Petrochina .

Check out the chart on Empire Resources Inc (ERS). It fell 50% in 3 days. I don't know the news behind this fall, but I think it is buyable at this point for a very nice snapback rally.

Charts of interest

2006-05-06T11:59:00.000-07:00

Based on Friday's market action, I think the Nasdaq will test its recent highs. I don't know when gold and copper will short term top, but as long as they're going up, ride them up.

Here are some charts I'm bullish on in the short term:

Apple Computer Inc (AAPL)

Peabody Energy Corp (BTU)

Phelps Dodge Corp (PD)

Cameco Corporation (CCJ)

Goldcorp Inc (GG)

These are only my opinions, so trade at your own risk.

Note: I changed the layout of my blog and lost all my links. So if I left your link out, please let me know.

My ramblings

2006-05-04T15:53:00.000-07:00

Chicago Mercantile Exchange (CME) is in a solid uptrend. I have no idea whether it is overvalued, but as long as the uptrend holds, it doesn't hurt to be in CME. I purchased May 460 Calls @ 14.8 today when CME was trading at around 466.

Update: I sold my CME call at 22.6, or when it was trading around 478. I sold it Friday morning when it kept on dropping after gapping up.

I contemplated shorting Newmont Mining Corp (NEM) today, because NEM is one of the weakest gold stocks. Gold looks really toppy from an elliott wave standpoint; and I would anticipate a correction to at least 650 or even to 600.

Oil is weak because it is overvalued compared to the price of gold. Historically, the gold/oil ratio is roughly 15.8, meaning it takes 15.8 barrels of oil to buy one ounce of gold. Right now, the ratio is 9.7. Based on this ratio, gold will probably outperform oil in the coming years.

The general markets continue to chug along. Although I am bearish on the general markets, mainly due to the TRIPLE deficits (budget, trade, and personal debts), I am going to trade the long side until the market tells me otherwise. However, I would not be surprised if something like October 1987 happens pretty soon (October 1987 happened 5 years after the tech bull market started in 1982, and 2006 is roughly 5 years after the commodities bull market started in 2001-2002). Besides, nothing goes up straight (commodities), and it is in need of a correction.

Freeport Mcmoran Copper (FCX)

2006-04-24T09:48:00.000-07:00

I purchased Freeport Mcmoran Copper (FCX) May 65 calls @ 3.65, when it was trading around 65.7. FCX touched its lower trendline. Since I still like commodities, I don't mind buying it and see what it does.

Crude Oil

Crude oil has been in a solid uptrend for the past few years, and I expect it to make its way to the top trendline in the near future.

As I mentioned in the previous post, I believe commodities are currently in the third wave. According to the "Elliot Wave Principle" written by Robert Prechter, the third wave is characterized as follows:

Third waves - Third waves are wonders to behold. They are strong and broad, and the trend at this point is unmistakable. Increasingly favorable fundamentals enter the picture as confidence returns. Third waves usually generate the greatest volume and price movement and are most often the extended wave in a series. If follows, of course, that the third wave of a third wave, and so on, will be the most volatile point of strength in any wave sequence. Such points invariably produce breakouts, "continuation" gaps, volume expansions, exceptional breadth, major Dow Theory trend confirmations and runaway price movement, creating large hourly, daily, weekly, monthly or yearly gains in the market, depending on the degree of the wave. Virtually all stocks participate in third waves.

I believe this description matches the current state of the commodity cycle. Finally, after rising in obscurity from 2000 to 2004, people are noticing the boom in commodities. This has resulted in almost a non-stop increase in commodity prices, as people are beginning to understand the story behind commodities. Fundamentally, the demand is so much greater than the supply, that commodities CAN NOT go anywhere but up. I believe this third wave will take us into 2008 to 2009, meaning the price movements will be swift to the upside, and dramatic and short to the downside.

The following is a supply-demand graph of crude oil, courtesy of Peak Oil: Life After the Oil Crash

Current demand of crude oil is approximately 30 billion barrels per year AND GROWING, while produciton is only at approx 25 billion barrels per year. To make things bleaker, the discovery of new oil patches is DECREASING, meaning oil supplies will even drop further in the future. In this environment, how can oil go down?

The Newspaper rule

2006-04-20T20:35:00.000-07:00

There's a rule that says you should buy when something is on page 18 of the newspaper, and sell when it makes it to page 1. In Vancouver, gold and oil was the top story of the local newspaper and of CBC 2 days in a row. CBC is the biggest news station in Canada.

Unfortunately, I didn't see this. I guess I know how people felt in 1999. However, today I sold all my positions early in the morning when they started to break down hard.

Gold

Gold has been in a mini mania this last week, and I wouldn't be surprised if it touches the bottom trendline. However, I feel we are in the strongest leg of this gold bull market (which will last 15-20 years), meaning the consolidation may be short and will provide good buying opportunities.

Cameco Corporation (CCJ)

Although Cameco Corporation (CCJ) is my favorite stock, I believe it is trading WAY above its NAV (and that's not discounted NAV....the company is more expensive than all the uranium they have in the ground at today's prices). Therefore, I believe there will be some weakness in this stock in the near future. I considered buying puts today.

Update on positions

2006-04-19T09:49:00.000-07:00

AAPL: (Refusing to rally) + (up day for markets) + (earnings after bell) = SOLD. I sold it at breakeven.

I added some Canadian Natural Resources (CNQ) May calls today. Energy looks as if its going higher, along with all the other commodities. Many people think that there will be some consolidation first; however, I differ from that viewpoint.

Apple Computer Inc (AAPL)

2006-04-18T20:00:00.000-07:00

It was nice to see the markets rally today. I don't think anyone expected this, with the "high oil prices" and everything. Of course, "high oil prices" does not mean anything; it's just an excuse created by the media because they want attention.

With the fed hinting that rising rates may be close to an end, I think we may get a good rally. I don't know whether this rally will be sustainable, but I play short term trends. Going into the close, I bought Apple Computer Inc (AAPL) May 65 Calls @ 4.10. I have no idea what AAPL's earnings will be; I might sell before the close tomorrow cause I have a horrible record at guessing earnings.

Commodities continue to party

2006-04-18T10:11:00.000-07:00

Have you noticed that copper has gone up 20 days out of the past 27 days? And copper has gone up huge on those 20 days, up an average of 2-3% per day. Does this mean we are in a mania, or in a serious supply-demand deficit? Because the street is incredibly bearish on commodities (see last post), I'm leaning towards the latter.

Nice to see Southern Copper Corporation (PCU) is up 5%+ as of right now. However, I foolishly sold Halliburton (HAL) at around 79.9 and Newmont Mining corp (NEM) at around 56.1 this morning. Looking back, I was a bit nervous because I was overleveraged in commodities and in options. At least I held on to the biggest winner of the day which is PCU.

Meanwhile, gold, oil, base metals, steel, uranium continue to roll and I see no end in sight.

Surprise! Commodities rise

2006-04-17T09:22:00.000-07:00

Over the weekend, I was reading an article in the Vancouver Sun titled: "Equity markets defy conventional wisdom". In the article, it said "Nearly three-quarters of Canadian investment managers say the party's over for Canadian equities." Of course, Canadian equities are only composed of 3 things: Gold, Oil and Mining stocks.

Personally, I have no idea whether these "analysts" are right. But as long as commodities go up, and as long as the fundamentals stay strong, I will continue to ride it to the upside. In fact, I like commodities so much that I bought Southern Copper Corporation (PCU) May 95 Calls today. I'm still holding calls on Newmont Mining corp (NEM) and Halliburton (HAL) .

For my parent's portfolio, today I bought Yamana Gold (TSX: YRI) @ 12.00, UTS Energy (TSX: UTS) @ 7.60 and Uranium Participation Corp (TSX: U) I like YRI and UTS because they have tons of growth potential, so in a rising gold/energy environment, they will benefit both from a rising commodity and from a rising production/reserves portfolio. About Uranium Participation Corp, this is an interesting company that holds the actual uranium. Since there is no way to openly buy uranium from the markets (for good reason), the only way to hold uranium is through this company. Although it is trading above its NAV, I have so much confidence uranium will AT LEAST triple over the next five years that I don't mind paying up for it.

Newmont Mining corp (NEM)

2006-04-12T08:36:00.000-07:00

I just purchased May 52.5 Newmont Mining corp (NEM) Calls @2.90, or when NEM was trading around 53. With the upgrade of NEM today, an analyst estimating that the net asset value of NEM is over 100/share, and the fact that gold is holding up extremely well at 600 and seems poised to break anytime, I think NEM might regain its leadership status in gold and rise.

Today's thoughts

2006-04-11T17:38:00.000-07:00

The markets have been free falling for the past few days. Is it the start of an overdue bear market? I have a tough time going short, because everytime you think the markets will fall, it pops back up into new highs.

It's interesting to note that both oil and gold were up for the day, but the oil and gold stocks fell. That tells you that the oil and gold stocks are correlated both with the markets and the commodity. But regardless of what the general stock markets do, if gold breaks up above 600 and oil breaks above 70, I think the oil stocks will rise like crazy, while gold stocks may still stay flat (because they are pretty expensive based on their valuation).

I (luckily) sold my CELG position in the morning for a small profit after it closed its opening gap. I wish I got out of HAL too, but I wasn't around for most of the day. Seeing what oil does, I might sell tomorrow.

Halliburton (HAL)

2006-04-10T09:15:00.000-07:00

I purchased April 75 calls of Halliburton (HAL) when it was trading slightly below 79. I like the strength HAL and oil are displaying, and HAL looks ready to break out above 80. However, because oil is at strong resistance right now, I have tight stops on HAL.

I still have my CELG position. Nice to see that it has reversed its nasty downtrend, and it would be interesting to see how much strength it can get over the next few days.

Market Watch

2006-04-07T17:51:00.000-07:00

It's been a month since my last post. I'm glad to see that the general markets have broken out of its trading range and made new highs. I don't know whether these highs are sustainable, but as long as the market continues its uptrend, it is best follow it in that direction.

Here are my thoughts on the different markets:

1. Nasdaq

Despite the huge downday today, I am still bullish on the Nasdaq going forward. It recently broke out of its sideways trading pattern. As long as it stays above that trading range, I think it would be wise to go on the long side.

2. Gold

The move in gold for the past year has been impressive. It just keeps going higher with all the other commodities. Although the trend is clearly up, I have a hard time buying right now as it is incredibly overbought. In fact, I think it will go into some type of correction in the near future, even though it just broke out into a new high.

3. Silver

The only thing hotter than gold is silver. Silver's ascent has been vertical of late. Based on my experience, I noticed that once things go vertical, it usually crashes. But any crash in silver would be an excellent buying opportunity, due to its strong industrial and "precious metal" demand. Longer term, I think silver will outperform gold and go over $50/ounce.

4. Copper

The copper chart looks very similar to the silver chart, since it too has gone parabolic. The copper market is really tight, and I believe that the current demand exceeds supply. Parabolic charts usually imply that there are tons of speculative money built in. If the speculators all pull their money out instantaneously due to "fears of a top", then I think copper will become an excellent buying opportunity.

5. Crude Oil

Crude oil is in a contracting triangle pattern. I really don't see crude oil breaking this pattern in the immediate future. But in the long term, I see crude going over a $100/barrel and staying there longer than anyone would imagine.

Current position: Celgene corp (CELG) call options

I bought Celgene corp (CELG) April 35 call options at the close today (when CELG was at 37.81). It is rather uncharacteristic of me to buy Celgene. But I do know that CELG is a well loved stock and a sector leader; when well loved stocks sell off this fast without any change in their fundamentals, it usually results in a quick snap back. I hope this is the case with CELG, and I have a target of 41-42 over the next few days.

Update

2006-03-03T11:24:00.000-08:00

Sorry for the lack of posts lately, but I have been extremely busy.

I thought the general markets were in a very healty consolidation over the past 2 weeks, meaning it is poised to break out in a big way. I also liked the consolidation by the resources stocks. They have gone down quite a bit lately amid fears that the commodity cycle is over. But how could it be over if demand is still far greater than supply, and demand will continue to grow much faster than the supply?

I was watching ROBTV (Report on Business Television) the other day, and a guest on that show said he had sold most of his Cameco holdings, and will sell the rest once Cameco pops up. I couldn't stop laughing on that comment. Cameco has been super strong after an initial fall, and if he was selling during this time, it must mean Cameco will go up like crazy once he finishes selling.

If you look at the intraday graph of Cameco, it formed an ascending triangle pattern, and just broke out. In fact, I like it so much that I just bought call options on Cameco when it was trading at 37.6 US. I also added International Uranium (TSX: IUC) to my RRSP account at 6.53. As far as my long term holdings go, right now, I have Baytex Energy (TSX: BTE.UN), Fording COal (TSX: FDG.UN) and International Uranium (IUC). The awesome thing is that I didn't spend a penny of my own money for these long term holdings; they were all paid for by my options trading activity. So options trading does work, contrary to what a lot of people say.

Copper has really gone up strong after a short consolidation. This makes candidates like Phelps Dodge(PD) really enticing. I contemplated buying it today, but didn't because I already had a large exposure in commodity stocks. But I do think PD will go up, past 150 very soon. The reason why copper is so strong is because the copper reserves are very small, meaning the people who use copper must continually replenish their supplies through the open market.

Meanwhile, oil continues to impress me. Although it might stay rangebound for a while (not go past 70), I don't think it will fall that much on this consolidation. As an added bonus, there are so many terrorist activites, that there is always the "risk" that oil will go up big at any given time.

Right now, I have Haliburton (HAL). I bought call options when it was around 70.5. HAL is currently at heavy resistance on the intraday chart, but looking at the daily chart, it seems like HAL will break through this resistance very soon. However, I am keeping a close eye on it because if it fails to break it, it might go down big.

Elliot Wave Analysis of Nasdaq

2006-02-16T14:01:00.000-08:00

This is my interpretation of the Elliot Wave Analysis of the Nasdaq. The chart above is a 4 year chart of the nasdaq. The numbers denote the wave sequence. The brackets beside the numbers indicate the future values of the nasdaq. Although elliot wave was one of the first things I learned about the markets, I haven't done it for a while because of the arbitrary nature of the theory. However, I still like to use it once in a while to get a "clear" picture of the future (especially when I am confused), as elliot wave is the only theory that looks into the future.

According to my interpretation, the nasdaq will make its way towards 3000. Whether this will actually happen is beyond me. But I do like the market action of late; I believe the markets are oversold, and it will go up, even if it is a dead cat bounce. As a result, today, I bought calls in AMD, GOOG and CNQ. (Please note that I may exit and sell these positions without warning, so trade at your own risk).

Selling overdone

2006-02-08T10:48:00.000-08:00

The markets have become super bullish to super bearish in only a matter of days. When the markets are going down, people focus only on the bad news, and when the markets are going up, people only focus on the good news. The fact is, there are arguments to support both a bullish and bearish market.

I bought CNQ again when it was tradin at 66.60 CAD or 57.90 USD. Buying while everything is plunging is scary, but I believe oil is at good support.

Market Commentary

2006-02-06T13:21:00.000-08:00

Wow, what a miss on my Cameco (CCJ) call. I still have no idea why I picked that stock. Prior to that day, I was telling a friend that I thought CCJ was in a serious need of a correction, even though I still like its long term potential. And the next day, I bought it once it started its correction. At least it formed a nice reversal today. I don't know whether I will see a profit on my CCJ position...I might sell it at a smaller loss if things don't work out.

As for the markets in general, I still stand by my opinion that we will see a correction. If I had to guess, I would say that the markets will trade sideways for a few weeks before making new lows. After a 3 year bull markets, some stocks have run up so much, that people are using 50 x earnings to justify their valuations. At least they're not using 50 x revenues like they did back in 2000. But that is one thing I don't understand; how could technology stocks be valued so highly? I thought the markets were supposed to punish risky stocks by giving them a lower valuation. The reason why technology stocks are risky is because they may lose their market share at any time. If their R&D falls behind, another company will invent better technology which will make their technology obsolete.

Meanwhile, I still don't understand why commodity stocks get so little attention. They've been in a raging bull market since 2000 and commodity stocks are still extremely cheap (P/E < 10), yet everybody expects them to fall. One of the first things I learned about the markets is that there is always a bull market, that each bull market is lead by a certain sector, and each successive bull market is lead by a DIFFERENT sector. We saw a great bull market in technology stocks up to the year 2000. But after that, technology stocks started to go down and commodity stocks took over. Many people still do not realize this. Until people start to acknowledge that we are in a long term commodity bull market, and that this is not just a blip on the radar screen, commodity stocks will CONTINUE to go up. I stand by my prediction that we are in a 15-20 year commodities bull market. Fundamentally, China and India are ACCELERATING their growth (as opposed to the popular view that they are slowing down), and I haven't even mentioned the other emerging markets. Having said this, I acknowledge that commodities have run a lot so I would expect some type of correction. But every sign of weakness is an opportunity to buy.

Cameco (CCJ)

2006-02-01T10:26:00.000-08:00

I just bought some CCJ calls. Cameco is off today because they reported "disappointing" earnings, mainly due to their hedging program. I am not really concerned because Cameco goes down after every earnings report, only to go back up after analysts realize they are the only uranium company out there. Spot prices are rising so fast that even if Cameco hedges, they will do well.

By the way, it was nice to see CNQ breakout again. Will crude break above 70? We will see.

Edit: I sold my CNQ calls. Although CNQ may still go up, it has risen too much in the past little while, giving it an unfavorable risk/reward ratio. Besides, my CNQ position had become so large that it was bigger than my long term holdings, so I had to take the profit.

Update on my positions

2006-01-30T16:11:00.000-08:00

1. Canadian Natural Resources (CNQ) : CNQ has been performing amazingly well relative to its peers. Although I am up over 150% on my CNQ calls since my purchase on Jan 16 (and that's not counting the profit I made selling and buying back at a lower price), I see no reason to sell. It just broke out again today from a base that had been forming for 5 days. The only uncertainty I have right now is whether crude oil will break 70. If it does, I believe all oil stocks will rise like crazy as 70 is a significant technical and psychological barrier. If crude does break 70, CNQ could surge past 80 CAD easily.

2. Sears Holding (SHLD) : I bought a put on SHLD as a hedge against the markets. When I bought SHLD, I was fairly bearish. Although I was wrong on my short term outlook for the markets, SHLD has still gone down. Despite the recent rally in the Nasdaq and S&P, I am still not convinced that we will see a new high. Even if I am wrong again, SHLD might go down anyway, so I am still holding on to this one.

Edit: I was unaware that I had a sell order for my SHLD puts...oh well, missed out on some gains. However, there are many more opportunities out there, and I'm biased towards shorting over going long.

Bought CNQ again

2006-01-26T09:22:00.000-08:00

Canadian Natural Resources (CNQ) has had a nice pullback. Since I am bullish on energy stocks in the medium and long term, and because CNQ has been one of the leaders of the energy sector, I really don't mind buying some calls whenever it pulls back and waiting. Besides, all resource stocks have been really hot lately, and they don't seem to consolidate too much before popping back up aggressively. This may indicate that we may be near a short term peak in resource stocks, but until the peak is in place, money can be made on the long side.

Sears Holdings (SHLD)

2006-01-24T09:42:00.000-08:00

I just bought put options on Sears (SHLD) when it was trading at 122.40. Sears has been really disappointing in the past 4 months, as it was stuck in a trading range while the rest of the markets rallied. Part of the reason is because they have been constantly losing market share to their competitors. Therefore, unless a break above 126 occurs, I think shorting Sears at the top of the trading range is a pretty safe bet.

I'm all cash

2006-01-20T10:09:00.000-08:00

I finally capitulated after the crappy action for the past 2 weeks. I even sold my CNQ even though it has done amazingly well. The rally we saw at the beginning of January may just be a bull trap, just like what we saw 2 years ago.

I am becoming more and more bearish about the state of the world economy. The world markets have rallied a lot in the past 3 years. But nothing goes up in a straight line; thus, I am predicting that there will be some sort of a slowdown. Because the American markets have not participated in this rally at all (the DOW, nasdaq were mostly flat), I think the American markets will show the most weakness out of all the economies. With the prospect of the debt bubble imploding (personal debt is at all time highs, trade and budget deficits are unsustainable), there is a possiblity that the markets will crash in a big way.

This doesn't mean that the markets will go down non-stop. There will still be some good rallies and the volatility will increase. But one thing for sure is that the trading environment will be much more difficult.

By the way, I would like to comment on Google. The reason why yahoo reported bad numbers is because they are losing market share to google. See link . Over the past 3 months, the daily reach for google GAINED 27% while the daily reach for yahoo FELL 14%. Because of this, I think GOOG will surprise analysts when they report especially if GOOG stock continues this freefall.

Canadian Natural Resources (CNQ)

2006-01-16T17:30:00.000-08:00

Canadian Natural Resources has been one of the leaders in the energy sector. It has just broken out of an ascending triangle pattern. The energy sector has been really strong in the recent weeks, and I wouldn't be surprised if it continues its bull market after a 5 month consolidation. In fact, I picked up some CNQ Feb. calls today (the Canadian markets were open). I was actually deciding between Cameco (CCO) and CNQ. Reason why I chose CNQ is because the implied volatility is lower, meaning the CNQ options have a lower premium. This makes me sad because Cameco is my favorite stock, and I love riding it into new highs.

Right now, my option positions are CME, JOYG, and CNQ.

I've also started a long term portfolio for myself. Right now, my long term portfolio contains Fording Coal (TSX: FDG.UN - 14% dividend) and Baytex Energy (TSX: BTE.UN - 11% dividend). My goal for my long term portfolio is to buy high dividend paying growth stocks to offset my risky options trading strategy.

Update on my positions

2006-01-12T12:47:00.000-08:00

With the markets on steroids since the beginning of January, a lot of traders (including me) were pushing their luck. Up to today, I was overexposed in the markets, as I had options in Cameco (CCJ), Freeport McMoran(FCX) and Chicago Mercentile Exchange (CME). I sold my Cameco and FCX positions today for nice gains, and I am on the brink of selling CME.

Today may just be a violent shakeout, and the markets may still rebound and rise further. However, at times like this, I have to remember the number 1 rule about trading, which is to protect your own capital. With the markets overextended, I would feel unconfortable to be overloaded.

Blog plug

2006-01-11T20:09:00.000-08:00

I bought some calls on CME today. SDT Research has an excellent analysis on this stock. I have been following SDT Research for about a year now, and most of his picks have been excellent (they outperform the general markets). He is very good in anticipating big moves in stock prices, and I hope CME is no different :)

By the way, I encourage you to check out my blog links. I have recently added a few new links, including Trader X. Trader X is one of the best (day) trading blogs I have ever seen. He gives excellent analysis into why he buys stocks as well as general commentaries about the markets.

Freeport McMoRan (FCX)

2006-01-10T10:17:00.000-08:00

This morning, I was shocked to find that my FCX had fallen 2 points to 56.5. Then I did some investigation and I discovered that Phelps Dodge (another copper company) had lowered their guidance because of decreased production. After reading that story, I regreted not buying more FCX. FCX is now trading at 60.5.

Phelps Dodge (PD) lowering their production is good for the other copper companies because it decreases the supply. With demand increasing, it only means that copper prices will get stronger. When they do, all copper companies, even Phelps Dodge, will continue to set new highs.

Right now, I am holding FCX and CCJ. I expect both stocks to continue to set new highs in the short, medium and long terms.

An excellent way to start the year

2006-01-09T22:13:00.000-08:00

By the way it started, it seems like 2006 will be a very good year for the bulls. After 2 years of consolidation, the American markets seems poised to break out into higher ground. There is a lot of money in the world (since governments from all over the world are mass printing money in order to compete better in the trade wars), and this money will most likely be used to pump up the stock markets. That is, as long as the debt bubble doesn't explode.

It seems scary to go long at this point because the markets have surged so dramatically. However, if you look at the chart above, whenever the markets go up, it seems to go up very quickly with few consolidations. Therefore, I think the best way to play this rise is to hold onto your winners and try not to get shaken out.

Stock Frauds

2006-01-08T16:52:00.000-08:00

Stock Lemon has an excellent record in identifying stock frauds. I have been following them for a while now, and almost all the stocks they tout fall. The stocks they are reporting on now include: GTX Global (GTXC), Housevalues.com (SOLD), Fairfax Financial (FFH), Eden Energy (EDNE), Imergent (IIG)

Although the market looks really strong now, if you ever wanted to short, I think these stocks are high probability shorts. Happy trading!

Update

2006-01-06T10:53:00.000-08:00

GOOG is on fire. I never knew it would start the next leg this fast. Every time I trade GOOG, I always sell it too early. I guess for super hot stocks like GOOG, its better just to buy and hold. I would say that the next target for GOOG is 550, and it could reach it really fast (within 1.5 months).

By the way, I exchanged my UNH for FCX. UNH disappointed me yesterday. I expected it to surge, and it didn't. Part of my strategy is to unload stocks that don't act the way I expect, so I dumped it for FCX. FCX is a copper and gold play, and both commodities are on fire (copper just broke out into a new high after consolidating, gold might break into a new high really soon).

My New Year Resolution

2006-01-04T16:51:00.000-08:00

This year, I resolve to trade stocks that are fundamentally sound (although I am bound to break it because of my impatience and greedy nature). Because I have the privilege of managing both my parent's portfolio was well as trading my own portfolio, I have realized that if you buy a fundamentally sound stock, the stock will probably go up even if your timing is wrong. Therefore, doing so increases the overall probability of your strategy.

How do I determine whether a stock is fundamentally sound? I am no Buffet, but here are the 4 things I look for:

1. Value: Stock is cheap

2. Growth: Revenues and earnings will grow internally

3. Macroeconomic trend: Conditions favor the entire sector to rise

4. Quality: Stock is the leader of the sector (Leaders tend to win market share away from their competition)

After identifying fundamentally strong stocks, I will still enter and exit using technical analysis.

On this note, I bought UnitedHeath Group (UNH) options today. Stock is relatively cheap, has good growth, favored by the macroeconomic trend (healthcare in general will grow because baby boomers will age and live longer), and quality (UNH is the leader in the sector). Also, if you look at the chart, UNH has bounced agressively on most 5 day dips, so I don't expect anything different this time.

By the way, I sold my Cameco calls yesterday and GOOG calls today. I was satisfied with my gains, but I wouldn't be surprised if they go higher.

Welcome back

2006-01-03T10:05:00.000-08:00

I hope all of you had a wonderful Christmas. I was pleasantly surprised when I looked at the markets this morning and saw that the entire commodities sector had exploded upwards. This is good news to me (because I still have those Cameco calls) and to my parents (whose portfolio is heavily weighted towards the resources sector....yes, I DO NOT believe in diversification).

My thoughts this year? I noticed that the American markets (Nasdaq, S&P, DOW) has been heavily underperforming the world economies. During the past year, almost every stock market around the world has made all time highs, but the American markets were still stuck in the trading range. So my question is: what will happen if the world markets go through a resting phase? If that is the case, I believe the American markets will lead the world indexes downwards.

By the way, I picked up some GOOG calls today. If you haven't noticed by now, I love playing macroeconomic trends. What this means is that I love buying hot sectors that I believe will continue to grow fundamentally. The internet sector is definitely one of these.

Quick note

2005-12-20T10:43:00.000-08:00

I'm going to take it easy for the rest of the year and not trade. I remember from previous Christmases that the volume is very spotty and the trading is very choppy (one day up, next day down). Based on the action we have seen lately, I wouldn't be surprised if this pattern repeats itself.

If you plan on trading, good luck to you. Otherwise, merry Christmas and have a wonderful holiday!

Stock picks

2005-12-15T20:23:00.003-08:00

Because I think the markets are on a verge of a breakout to the upside, I did a stock scan to find stocks that have been performing well. Since I am an options trader, part of my stock scanning criteria was that the stock had to have a large market cap, a high share price and a high beta.

Here are the results:

1. MRVL: Price today: 58.82, Target: 66

2. AAPL: Price today: 72.18, Target: 82

3. YHOO: Price today: 41.75, Target: 45

4. UBB: Price today: 61.03, Target: 76

5. EBAY: Price today: 46.02, Target: 53

6. ISRG: Price today: 115.12, Target: 145

Please note that all the targets are short term targets (1 month approx). Also, this is mainly just an experiment, so I am very interested to see how well the targets are met.

Sector watch

2005-12-12T18:11:00.000-08:00

Nasdaq

I really don't know whether the nasdaq will go up or down. Looking at the charts, the Nasdaq just broke out of a perfect contracting triangle pattern. If it fulfills this pattern, the Nasdaq will go past 3000 at least. But the fundamentals of the American economy is so bad (mainly due to the large amounts of debt that they borrow), that it is very hard for me to be converted into a bull. Because of this, I think I will stick to my niche (which are commodity stocks) to play this impending rise.

Gold

The attention gold is getting is amazing. Six months ago, gold was almost invisible. Now, everybody is following gold, and I bet that not many of these people know the true fundamental reasons as to why gold is rising. Because of this, I am going to call a short term top right here. However, after a 6 month consolidation, I expect gold to continue marching upwards to 800 in maybe 3 years time.

Crude oil

Crude oil just hit a major bottom trendline. Given the fact that crude oil is still in short supply, and that the charts are not suffering any technical damange at all, I think crude oil will now resume its advance to 80 in the near future. By the way, oil stocks are still extremely cheap; the reason why they are so lowly priced is because all the "analysts" expect oil to go back to 40. When these "analysts" realize they are wrong, oil stocks will lead crude oil into new all time highs.

Copper

Copper has been on a bit of a parabolic rise. Back in August, I predicted that copper would top at $2/pound. Currently, it is at that level. Although it is very hard to determine where the exact top is, I think the end is near given the almost vertical ascent it has enjoyed recently. However, after the consolidation that will follow (lasting 8 months?), I do think that copper will go higher.

Bought Cameco (CCO/CCJ) again

2005-12-08T18:25:00.000-08:00

Shown above is a 3 year chart of Cameco. Noticed that during the last 8 months, Cameco hit the bottom trendline, formed a nice strong base and just recently broke out of that base. Eight months ago, the price of uranium was $20/pound. Today, it is over $35/pound and counting.

I really think Cameco will hit the top trendline in 6 to 12 months, giving it a price target of 100 CAD, or 86 USD. Because of this, I have repurchased a call option on Cameco which expires in January, because any weakness is an opportunity to buy from now on.

About the general markets, I maintain the stance that we will be in a trading range for a few weeks. I really do not see the markets plunging without some fight from the bulls.

Thoughts

2005-12-07T20:24:00.000-08:00

Currently, I do not have any trading positions. I sold my Cameco call position for a gain of 144%. I will probably buy Cameco again at some point, but on a short term basis, the stock appears overbought and in need of a rest. By the way, this trade has allowed me to withdraw enough money to make all the money in my brokerage accounts free. This feels really good because it had been my goal since the beginning of the year.

The markets are locked in a sideways trading pattern for the moment. Although I have a bearish bias on the markets, I do not feel comfortable owning any positions. The reason is because the seasonality is too strong to go short, and my bearish views prevent me from going long.

Also, I would like to thank The Kirk Report for linking my blog today. It was fun to watch my blog's traffic jump from an average of 30 unique visitors to over 300. Thanks Charles!

My 3 favorite stocks

2005-12-05T17:44:00.000-08:00

Here are my three favorite stocks for the next decade. The reason why I like them is because I strongly believe that we are in a 2 decade commodities bull market. Right now, even though commodity stocks have risen a lot, they are still very cheap (P/E ratios less than 10), meaning the public does not appreciate them. Before this bull market ends, I believe that commodity stocks will be driven to sky high levels, much like the internet stocks of 2000.

Favorite stock # 1: Cameco (TSX: CCO, NYSE: CCJ)

Cameco is an uranium stock. Currently, the demand for uranium exceeds supply by 100%. The demand is expected to increase further as countries from all over the world are opening new nuclear power plants. Although new uranium mines will open in the coming years, the increased production is expected to fall short of demand. What this means is that uranium prices will continue to go up. Since Cameco is the only large cap uranium company in the world, the demand for its shares will remain high as instituition managers will pour money into it.

Disclosure: I bought CCO for my parents at 22 CDN split adjusted. I currently hold call options on this stock.

Favorite stock # 2: Canadian Oil Sands (TSX: COS.UN)

The Canadian oil sands hold the second largest reserves of crude oil in the world, next to Saudi Arabia. As oil runs out in the middle east (Kuwait's oil fields are already running dry), Canadian Oil Sands will literally fuel the world. Since they only have a 10 B CDN market cap today (which is really small), their upside potential is tremendous. The only risk regarding COS.UN is that the cost of extracting oil from the sands is high. But the combined prospects of high energy prices plus improved technology will make it feasible for extraction of the oil to take place. Besides, COS.UN pays a 3.5% dividend, while reinvesting a lot of its cash flow into increasing production.

Disclosure: I bought COS.UN for my parents when it was trading at 110 CDN.

Favorite stock # 3: Fording Coal (TSX: FDG.UN, NYSE: FDG)

Fording coal produces met coal, which is used to create steel. With the booming economies of China and India, and the future booming of the economies from Africa, steel will become a very expensive commodity. Since met coal is finite, and since FDG.UN produces one of the highest quality met coals in the world, the price of met coal will continue to soar. What this means is that FDG.UN will continue to make more money and raise its dividend, which already stands at 15% today.

Disclosure: I bought FDG.UN for my parents at 38 CDN, and I bought it for myself at 45 CDN.

The rise and fall of stocks

2005-11-29T20:49:00.000-08:00

From my 3+ years of experience in the markets, I noticed that the markets go in cycles. Each phase in the cycle has distinct charactertics. When the markets begin a bull market, stocks go up very slowly and tentatively, with each up move matched by a down move. After all the weak investors are shaken out, the markets will start to start a sustained, slow up move, with a few large stocks leading the way. These stocks are the leaders. As more people catch on to the wave, the upward movement of the stock market will accelerate and medium tier stocks will start to move with the leaders. Then, at the end of the bull market, the leader stocks rise so insanely, that investors are forced to buy bottom feeding stocks because they still have "value". After the bottom feeding/loser stocks have been bought, the leaders start to stagger, before collapsing. This marks the end of the bull market and the beginning of the bear market.

We saw this exact same pattern with Energy stocks back in October, and now we are seeing it with the nasdaq. With the collapse of the leaders in GOOG, AAPL, and CME (just to name a few), I think the bull market is over. But how much will it drop? Because I have always been a bear since I started investing in stocks back in 2002 (since I was convinced by Robert Prechter), I think the markets will now start a multi year bear market.

But please do not believe me on my bear stance since it is complete speculation. But I will definitely be more cautious from now on, and may even short if the market rallies a little over the next few days.

Keeps on going up

2005-11-25T22:49:00.000-08:00

The strength in the markets, and especially in the nasdaq is unbelievable. It just keeps on going up, every single day.

On the chart above, I measured the length of each bull and bear period for the last 2 years. Notice the length of these bull and bear waves become consecutively shorter by approximately 1 month. If this patterns continue, the current rally will last between 1.5 to 2 months. This is why I previously guessed that the markets would top on Nov. 30.

On another note, I believe the strength we have seen lately is due to manipulation. Financial people (investment bankers, hedge fund managers) are cranking the markets up because they want to receive record bonuses this year, which will be in the area of millions of dollars. What crooks! 75% of all funds underperform the markets, and they still reward themselves with millions of dollars that they steal from their clients. This is why I will NEVER invest in any mutual fund. Also, I truly believe that all people in the financial sector lack morality. For example, when was the last time you saw an investment banker of a mutual fund manager at a church?

Top in place?

2005-11-15T17:58:00.000-08:00

Originally, I had forecasted that the Nasdaq would hit 2220 on Nov 16 (tomorrow). But after today's actions, I think the markets may have already topped.

Going forward, I see the markets trading in a range (sideways) for about two weeks. After that, there is a good chance that the markets will break down in a big way.

Right now, I am short AMZN. The reason why I shorted is because I believe stocks being added to the S&P 500 are artificially inflated, and all artificailly inflated stocks eventually return to their original path. For example, after Lennar (LEN) was added a few months ago, it shot up to 60, but in the following 5 days, it fell back down to 55. The same goes with RIMM (which was added to the nasdaq top 100 a few years ago), when it fell back down rather quickly after the announcement)

Update

2005-11-11T09:15:00.000-08:00

I sold my SHLD position at approx 116. What a POS, it goes down over 2 bucks while the markets rally. I'm not going to trade anymore for the rest of this "rally" after 2 failed trades in a row.

Update

2005-11-10T19:46:00.000-08:00

Just a quick note: I sold my XLE position at the market open, and bought into SHLD when it was trading at around 116.40. Since my strategy is to predict and then trade by that prediction, I'm going to guess that the Nasdaq will top 4 days later (on November 16th).

Cautiously Optimistic

2005-11-08T18:09:00.000-08:00

Despite the low volume that was exhibited in this rally, I am still cautiously optimistic that we will see higher prices in the short term (with a target of approx 2220 for the nasdaq). Right now, I have options on Cameco (got in at 57.7 CAD) and XLE (entered at approx 48.9). But because the markets are still fairly weak at this point, I will be watching these positions closely and will pull the trigger at the slighest sign of weakness.

KBH Trade

2005-11-04T18:41:00.000-08:00

I sold my KBH (KB Home) put for a 36% gain when it was trading at 66.2. Reason is because the market was holding up quite well on a "consolidation day", so I figured the risk/reward was against me.

The market looks really good right now. Even though it has gone up like crazy this past week, I think the market will go higher before it goes lower. The reason why I didn't buy any long positions going into next week is because there are only 2 weeks left in november, and the options will deteriorate quite significantly over the weekend.

Update for Nov 3

2005-11-03T18:10:00.000-08:00

Today, I sold my CCO call position for a 129% gain. This is my first 100+% gain since the summer, so it definitely feels good.

I also bought a put on KBH when it was trading at 68.1. The reason is because I think the markets are overextended, and I would expect a consolidation. I may be going against the trend with this trade, but with my recent track record in going against trends (see last post), I'm going to press my luck.

October Performance Review

2005-11-02T18:09:00.000-08:00

Overall, I was pretty satisfied with my performance this month. Although there was a lot of volatility in the markets, I thought I played it almost perfectly, as I anticipated most of the moves ahead of time. Ever since I opened my TradeFreedom account on Oct. 13th (which was coincidentally the market bottom), I made 9 US trades in October, with 7 of them successful (success rate = 78%). Although this is a high success rate, I was still quite disappointed in my 2 failures.

One of my failues was my CCJ (Cameco trade). In my Canadian account, I had just sold a CCO (Canadian version of Cameco). The very next day, Cameco dropped (right after I sold it), and I foolishly bought it with my US account. This was a very bad move because there was absolutely no signs that any bottom was reached. The reason why I bought it was because I really like Cameco, so I showed bias in my trading.

My other failure was my QQQQ trade. Before I made that trade, I knew the nasdaq had short term topped. 2 days after I made that assessment, the nasdaq consolidated flat, so I thought the consolidation was over. My bad move came in buying QQQQ instead of GOOG, which I was tracking heavily at that time. The reason is because I like buying leaders, and GOOG was the leader. ALso, I do not buying indexes, because I believe I am buying a lot of bad stocks when I do so.

But overall, I was really pleased with my performance, as I netted over 6000 USD in October with my US account, which isn't bad since I only invest 5000 max at any given time.

With my Canadian account, I was pretty satisfied also. As you can see, I only traded Cameco. Since 9/20, I traded Cameco a total of 6 times (including the position that I still hold today). All of them have been successful, for a success rate of 100%. I was really happy with this because when I traded Cameco long, Cameco was in a downtrend. One of the reasons why I think I am so good at timing Cameco is because I know the stock (not the company) really well as this is my most closely followed stock.

I also bought a Fording Coal (FDG.UN) long position in October. I plan to hold this long term, although it has fallen from my entry point. The reason is because I believe in its fundamentals, and because I like its dividend (18%). In fact, I like FDG.UN so much, that I bought it for my parent's portfolio today at a price of 38.00 CDN.

As I have stated many times since the bottom on Oct 13, 2005, I expect the markets to rally. However, I do not believe this rally will last long, because I think we are currently in the "eye of the storm". Things will be rosy for a while, but probably by the end of November, I expect the rally to end as the US will plunge into a deflationary recession. The reasons for this has been stated in my previous postings.

Review

2005-10-26T19:19:00.000-07:00

I wasn't too satisfied with my assessment of the markets today. First, I bought the QQQQ, which is very uncharacteristic of me. The reason why I don't like buying indexes is because I believe I am buying a lot of bad stocks when I buy the index. 50% of the stock movement comes from the overall market, and 50% comes from the stock itself.

I believe one can maximize the probability that a stock will go up if they choose the "strongest" stock. Although "strong" is a very subjective term, it could mean a fundamental advantage within the company, relative strength, or an interesting technical pattern the stock may be forming. Picking "strong" stocks increases the probabiliy that a stock will go up even when the market goes down.

This morning, I saw a perfect opportunity in GOOG when it was trading between 349 and 350. For some reason, I didn't take it and bought the QQQQ instead. Perhaps a reason is because I am too tired to think properly at 6:30 am when the market opens.

To address this issue, I am going to prepare more the night before. Right now, I am still eyeing XLE (although its an idex, all energy stocks move the same, so there isn't much advantage to picking an individual energy stock....plus, the implied volatility is lower for options). I sold my XLE position today for a small gain, and I think it will drop below 47.5. Since it previously bounced off a major bottom trendline, I believe it will uptrend for a while, so I will be looking to buy XLE again pretty soon.

Anticipating a rally

2005-10-26T07:26:00.000-07:00

I just filled the rest of my QQQQ order today (bought 15 more nov 37 calls @ 1.45), and I also bought some XLE calls yesterday. After this short consolidation, I think a broad based rally is in order.

Markets in rally mode

2005-10-24T17:44:00.000-07:00

It was nice to see the markets rally today amid so much negativity. I guess people are realizing that the economy is not as bad as everyone thinks it is after all the good earning reports.

Today, I made a daytrade on Electronic Arts (thanks to dttong for the heads up). The reason why I didn't hold it is because I think the Nasdaq is overbought and because there is a lot of resistance overhead. The markets may continue rising in the short term, but I am satisfied with today's gain.

For this reason, I also sold my Cameco position today, although I regret it. Energy stocks have sold off a lot recently, and this is the time one should be buying, not selling. The reason why I sold was because I wasn't paying much attention to the markets during the day, so I played it safe.

Going into the close, I placed an order to buy 20 contracts of the QQQQ Nov. 38 call @ 1.30. To my dismay, 3 contracts got filled at that price. Although the QQQQ call option is now at 1.5, I would rather not have this filled, because it is such a small position. It's a good thing I used my Tradefreedom account to buy this position (instead of Etrade Canada), or else the commission would kill me.

After analyzing the markets after the market close, I want in on Energy again. I am now tracking the XLE.

SHLD Trade

2005-10-20T06:53:00.000-07:00

I sold my SHLD nov call option near 125 this morning, because it has moved too much in the short term, and because I want to liquidate all positions going into options expiry. I will probably sell my Cameco position also, but waiting for the opportunity.

Fording Coal

2005-10-19T18:40:00.000-07:00

I bought the Canadian version of Fording Coal (FDG.UN) @ 45.00 today. I plan to hold this long term because I like the demand for steel (coal is used to make steel) and because it pays a 16% dividend. The only downside is that Canada might change their tax laws against income trusts.

I also picked up a nov call option on Cameco while it was trading near 56 CDN. I plan to hold it as a short term trade (less than a week). Reason why I like trading this stock is because I like the long term prospects of this company and because it is the only big uranium company around. Therefore, there is a constant demand for its shares, meaning it has a high probability of bouncing whenever it sells off.

SHLD

2005-10-18T07:10:00.000-07:00

I bought a Nov. call option on Sears Holding when it was trading slightly below 120 this morning. Reason why I did was because of their second buyback. Ever since they announced their first buyback, an insider bought huge amounts at prices between 119-120 and they almost filled their first buyback at a price of 118. If the insiders like the stock so much at these prices, then there is a very high probability that the stock will stay above these prices.

Update

2005-10-17T17:53:00.000-07:00

I sold my CCO (Cameco) and PD (Phelps Dodge) positions today at nice gains. Reason was because I was only playing a short term bounce, and they reached my targets.

The markets are looking more healthy, and I would expect a broad based rally. However, I will probably observe the earnings that are coming in this week and wait until option expiry is over before adding any more positions. The reason is because I am not good at predicting earnings, and I am not good at predicting how the MM's will manipulate the markets leading up to options expiry.

Market Bottom?

2005-10-13T11:40:00.000-07:00

In today's firesale, I managed to pick up a CCO (Cameco) and PD (Phelps Dodge) november calls. Although I did not buy them at the lows, I am still somewhat satisfied. I hope this is a panic bottom, and the markets will go up from now on. Now, let the Christmas rally begin!

October 1987

2005-10-06T22:43:00.000-07:00

In October of 1987, during the noctorious black monday, everything crashed. After the crash, technology stocks along with the general markets slowly crept back up before setting record highs after record highs in a 2 decade long bull market. Meanwhile, resource, gold stocks could not recover from that crash and resumed a 2 decade long bear market.

Now, its octo'ber of 2005, and everything has crashed (although not to the same extent). Will things be reversed this time? Will technology stocks along with the general stocks resume a 2 decade long bear market, while resource and gold stocks will quickly recover before setting record highs?

Note: October of 1987 is exactly 5 years after the bull market in the nasdaq/ bear market in gold started. October of 2005 is exactly 5 years after the bear market in the nasdaq / bull market in gold/resources started.

I'm not saying this will happen. In fact, I will be very surpised if this happens. It's just a thought I wanted to throw out.

Crisis = danger + opportunity

2005-10-06T12:50:00.000-07:00

These past few days are reminding me of october 1987 (although I wasn't into stocks then) when the markets went down 4 straight days, cutting off 20%+ of the market value. People are really panicking right now. Whether its justified is beyond me. One side of me thinks the markets will go down because of rising interest rates, heavy personal debt/national debts, high gas prices, etc. The other side of me thinks the markets will go up because stocks are reasonably valued and because the sentiment is far too negative.

Either way, when there is a crisis, if you take control of yourself emotionally and think rationally, you will take the danger part out of it and be left with an opportunity. Is there an opportunity now? I really don't know. But by analyzing the indexes using my method, I think we are at a critical juncture right now. Either the markets will explode to the upside, or go way lower.

But anyways, I think the fall in the energy sector is way overdone. I took a position in Cameco today (in it again after trading it many times) during the morning. I'm also holding on to GOOG which I bought yesterday when it was at 311. I can't believe how well GOOG is holding up (its up today, and neutral yesterday despite the slaughter).

RIMM trade

2005-10-03T16:41:00.000-07:00

I sold SHLD today because it hit the top trendline, and because I don't like retail stocks. I sold it at a pretty bad time; I was hesitant to sell when it was trading near its high, although it was facing massive resistance on its daily graph.

I was contemplating between buying GOOG, PD or RIMM. GOOG seems to go up despite what the market does, PD follows commodoties, and RIMM acts independently of the markets. I bought RIMM because people are starting to become far too bearish on a cheap growth company.

The nasdaq hit top resistance today, so I wouldn't be surprised if the market rests a little over the next few days (ie. go down). Also, I do expect a bounce to the end of the year, because people in general are becoming far too negative (they are focusing on energy, inflation, rising interest rates, impact of hurricane). If everyone focuses on a common thing, then they are usually wrong.

CanWest MediaWorks Income Fund IPO

2005-10-01T11:21:00.000-07:00

CanWest is spinning off their newspaper unit into an IPO. The new fund is valued at roughly 2.4 Billion, with yearly revenues of about 1.1 Billion, making it the largest IPO in 5 years in Canada. They plan to sell 70 M units for 10 dollars each, raising 700 M. They will use the proceeds to pay down debt. The units will pay a dividend between 8 to 8.5 %

I did some research into this, and for the quarter ending July, their newspaper unit had an operating income of about 74 M. I don't know how much debt will be transfered from the parent company, but after amortization, interest payments and taxes, their net income should be about 50 M per quarter. (The parent company currently has 3.3 B in debt)

However, the biggest concern with this IPO is the fact that Canada has recently stated they will change the tax structure for income trust. This could adversely affect all trusts, because if they pay more taxes, their net income decrease. Therefore, I am not sure what type of demand there will be for the CanWest IPO. If the demand is low, there might not be a huge jump on opening day.

I am still going to subscribe to this IPO, because they are reasonably valued, and the 8 - 8.5% dividend doesn't hurt, although I do not expect much growth. If there is low demand, CanWest might shrink the market capatalization of the company to increase the yield.

RIM

2005-09-30T10:36:00.000-07:00

Research In Motion looks like a pretty attractive buy right here. They are winning the NTP patent dispute, they are growing at 30%+ a year, and they are relatively cheap for a growth company (P/E < 30). The main concern with this company is the competition. Of course, the competition will get some of the market share, but I think RIM will remain the leader in the fast growing space.

I'm reluctant to buy now because the stock is still struggling (no clear bottom), and because I currently have SHLD. I bought an option on this stock when it was below 120. It still looks good in a market that seems poised to rise, so I'm reluctant to sell right now.

Markets

2005-09-28T11:15:00.000-07:00

I'm changing my stance on the markets; I think we hit a bottom, and I expect the markets to rebound significantly over the next few months.

An opinion on Sears Holdings (SHLD). I've been tracking the stock the last couple of days, and there has been extremely strong support in the 120 area. I don't think 120 will be breached. The reason is because SHLD announced a 500 M buyback, and also, an insider has been buying large amounts of shares in the 119-120 range. What this means is that the company will probably repurchase shares at the 120 level. Therefore, I think SHLD would be a good buy there.

Btw, I bought PD. Its pretty high, but I still like commodoties over the rest of the other stocks.

Cameco

2005-09-26T18:58:00.000-07:00

Despite the fact that all the momentum traders sold energy stocks today because the hurricane failed to deliver significant damange, energy stocks rose strong into positive territory at the end. The reason is because all the long term investors saw the buying opportunity and jumped in.

With the price of uranium increasing steadily every week with no signs of slowing down, it only makes sense that Cameco will also increase. I still maintain my 80 dollar target before the end of the year.

Also, with energy stocks displaying strength today, I wouldn't be surprised of oil prices rise to record highs and "shock" the investment community. I am bullish on energy stocks.

Disclosure: I am long Cameco

CML Heathcare

2005-09-26T18:50:00.000-07:00

Being Canadian, the choice of health care stocks is limited. CML Heathcare stands out above the rest because they are the best in what they do. Technically, CML is in a long term uptrend, and just recently touched the lower trendline recently. I think this is an excellent buying opportunity. CML pays a 7% dividend.

Reason why I like heathcare stocks is because of the demographics. With the birth rate super low, there are a lot more old people than young people. With life expectancy expected to increase, and with all the baby boomers aging, the need for heathcare will grow long term. Heathcare stocks will directly benefit from this trend.

Gold

2005-09-26T18:45:00.000-07:00

Gold broke out of a 3 year consolidation pattern. With Gold on a new leg up, it is now time to buy the dips. I would expect Gold to hit 500 in the near future, and then consolidate there for a few months.

Commentary: nasdaq

2005-09-26T18:18:00.000-07:00

I still think the markets will fall more, despite the fact that Rita failed to deal significant damage. On a short term basis,the markets failed to rally significantly and hit the top trendline today. This is very bearish, because even the post-hurricane momentum players failed to push the markets up.

Also, I noticed that on every Fed meeting day, the markets fall. What this means is that the investment community are worried about rising interest rates, even though they tend to "forget" in between the Fed meetings. Rising interest rates discourages people from borrowing money, which will slow and reverse the real estate markets. Since a lot of people have bought houses with borrowed money, falling housing prices will significantly lower these people's total assets, while raising their total liabilities. High debt/asset ratios will cause many people to become insolvent, thus forcing them to sell assets, spend less, and file for bankrupcy. This will directly hurt the retail industry. Banks will also suffer, because people's bad debts will lead to massive write offs, which will lead to "disappointing" earnings. Bad earnings will cause bank stocks to fall, which will cause all the other stocks to fall. Thus, this will send the economy into recession.

I think the scenario described above is very plausable, and thus I am very reluctant to initiate many long positions.

Long term investment

2005-09-26T17:57:00.000-07:00

Inco (N) is a nickel miner. I think this is an excellent long term play, because currently, Inco has excellent technicals, fundamentals and sentimentals. Technically, Inco just broke out of a 3 year consolidation pattern, and may hit a target of 75 within the next year. Fundamentally, Inco has a P/E ratio of just 10 with excellent growth prospects because of an increasing demand from China, India, Latin America and the rest of the fast-growing developing countries. Combined, this gives Inco a very high probability chance of rising whether or not the general markets go up or down.

Reason why I like Inco and the rest of the commodoties because I truly believe that China will pass America to become the largest economy in the world. If this prediction holds true, China will continue to suck in all the natural resources it could get, thus driving prices to insane levels. This is where the sentimentals come in; right now, the public and analysts in general are very bearish on commodities, as could be seen by the extreme low valuations of all the commodoty companies. What this means is that all the analysts expect commodoty prices to fall. However, I think this scenario is very unlikely, and I even expect commodoty prices to rise more. When they do, the public will go into a buying panic, and drive all the resource stocks to sky high levels.

Back from the dead

2005-09-09T14:27:00.000-07:00

Sorry for the lack of posts recently, but the markets were not acting well (or at least I didn't believe the market strength so I mostly stayed out).

But I have been really impressed with commodoties, especially uranium recently. As expected, they are all breaking out into higher ground. The spot price of uranium rose above $30/pound recently, and that has inspired the uranium sector to begin their next leg upward. What does this mean? It probably means that Cameco will hit 80 over the next 2 months.

For the markets overall, I still think they will go down despite the recent strength. The markets love to rally whenever disasters strike (terrorist attacks, hurricane disasters). But is this justified? The damage caused by Katrina will set the economy back hundreds of billions of dollars, and will slow growth by 1%. Also, with record temperatures in the Gulf of Mexico (due to global warming), hurricanes are going to get stronger and more frequent in the future.

The S$P 500 double topped, and the nasdaq is no where near its august highs. I'm looking for weakness towards the end of september.

Bought September 40 EBAY Put @ 1.5

2005-08-22T08:58:00.000-07:00

I don't trust the market strength, and I still think the markets will fall through September. I shorted EBAY because the internet sector has been by far the weakest in the recent weeks, and EBAY is probably one of the weakest stocks in that sector. Also, there are signs that EBAY is being killed in China, and without the growth from that country, EBAY should be a lot lower. My target for EBAY is 35.

Markets nasty

2005-08-16T07:53:00.000-07:00

The end of August and September are notoriously the worst time for the markets, and I don't see anything different this year. There are just too many factors favoring a lower market. Also, I still subscribe to my theory that the saudis are selling, and that is probably why we are getting these major selloffs on major stocks at the end of the day. For this reason, I have sold my QCOM position.

Long term investments

2005-08-11T22:59:00.000-07:00

As my FDG.UN looks poised to be called out :( I will be looking for another "long term" investment. I may buy FDG.UN again, but I really want to get it around 120. I am also looking at CIBC (CM), because of the recent price correction it experienced lately. My buy target for CIBC is 60.

Unlike American banks, I like Canadian banks a lot. I seriously think you can buy a Canadian bank and hold it forever. The reason is because the Canadian economy will be one of the best performing economies in the years to come. Not only does Canada have lots of resources, but the oil sands are also the second largest oil reserves in the world (next to Saudi Arabia). When the oil sands finally come into development, a lot of money and jobs will flow into Canada, which will boost the economy. This, along with Canada's good reputation, will attract a lot more people to live in Canada. Thus, with the population boom, more people will use the banks, resulting in a sustained growth for the Candadian banks.

Reversal?

2005-08-11T17:46:00.000-07:00

Check out the action at the end of the day for the 7 previous days. For all 7 days (besides today), we saw selloffs at the very last hour. However, today, we saw a massive rally leading to the closing bell. I see this as a reversal of the markets, because the suppressor is gone (despite the DELL results).

Anyways, at the last hour, I bought an option call position in Qualcomm. I don't know if this is the best vehicle to ride, but it should do well.

From the Kirk Report

2005-08-10T13:50:00.000-07:00

I found an interesting link from the Kirk Report:

Saudis to retrieve $360 billion abroad

Could this be responsible for the plunge in the markets? If this is true, then the markets still have a long way to fall.

Sold PD Aug 110 call @ 0.95

2005-08-09T21:57:00.000-07:00

Sold it at the worst time possible, but frankly, I didn't want to think about it anymore. The market looks pretty weak at this point. I may initiate short positions, but because shorting is a negative sum game (since the market has a tendency to go up), I may just sit and not do much.

Bought PD August 110 call @ 2.95

2005-08-04T17:56:00.000-07:00

I hope dttong is right with his PD call :) After such a huge runup, it should at least challenge those previous highs, so entering here is pretty safe.

On another note, what a relief to see Fording Coal make a late day reversal today. I wrote a Aug 120 covered call on it. I would really like to keep it because I think it is an excellent long term holding, so I hope it falls below 120 before 3rd Friday of August.

Sold EBAY 42.5 call @ 2.50

2005-08-04T07:00:00.000-07:00

Wow, another breakeven trade. I think my timing is out of sync, because my last few trades have not been that good. But because the markets are so overbought, I would be scared if I kept on holding on to this stock.

Commentary: Copper

2005-08-03T21:27:00.000-07:00

I like copper and commodities in general. Once the general markets top out, I think commodities will continue to go higher. I wouldn't be surprised of copper surges to 2.00

Commentary: Gold

2005-08-03T21:26:00.000-07:00

Gold is currently in a contracting triangle. Once that is done, I fully expect gold to breakout on the upside.

Commentary: Oil

2005-08-03T21:23:00.000-07:00

Today showed a sharp reversal. I am still bullish on oil in the medium term. I think oil will reach 77 before making an "intermediate top", but in the short term, I will be looking for oil to retreat to 57.

Commentary: Nasdaq

2005-08-03T21:19:00.000-07:00

We may get a blow over top, but the Nasdaq rally is coming to an end. After that, I would expect a 2-3 month consolidation, with a downward target of approx. 2000.

SNDA and SINA a good buy before earnings?

2005-08-02T22:19:00.000-07:00

NTES reported blowout earnings today, mainly due to online gaming revenues. This bodes excellent news for the other Chinese portals, especially SNDA. However, I think all of the Chinese internet stocks will report excellent results. This is because the NTES earnings indicate that a lot more Chinese people are flocking to the internet. Due to the laws of statistics, the number of new people using each internet site is proportional to the number of people who were originally using the internet site. What this means is that if NTES has a revenue increase of 100%+, all of its competitors should also post similar results.

SINA reports earnings on Wednesday, August 3rd, after the bell. SNDA reports earnings on Tuesday, August 9th, after the bell.

Bought EBAY Aug 42.5 call @ 2.40

2005-08-02T07:25:00.000-07:00

After taking a look at PD this morning, I wish I took a vacation yesterday. What a blowout today. I guess people are finally coming to their senses and buying cheap commodity stocks instead of assuming that the cycle is over.

But is buying EBAY a good move? I'm a bit late to the party, but after analyzing the nasdaq, it seems like it could easily move to over 2250 over the next few days. I would post a chart, but I'm too tired during the morning.

Sold PD August 105 call @ 4.60

2005-08-01T12:58:00.000-07:00

PD has been showing a lot of "railway tracks" in the daily graph, plus it double topped its previous high. Thus, there is very little chance that PD can make a new high anytime soon, and a pullback below 106 seems more probable.

Report Card: July 2005

2005-08-01T10:03:00.000-07:00

Stock/Option	Quantity	Price Paid	Price Sold	Profit/Loss
AER.UN	100	10.00	11.82	155.01 CDN
CCO Jul 52 Call	10	3.50	6.00	2400.02 CDN
CCO Aug 54 Call	10	2.80	4.50	1607.02 CDN
CCO Aug 56 Call	10	3.75	4.20	353.02 CDN
GLG	400	18.68	19.75	374.02 CDN
GLG Jul 20 Call	-4	0	0.65	228.61 CDN
AAPL Aug 40 Put	10	3.50	3.10	(492.11) USD
PD Aug 100 Call	8	4.50	7.70	2464.96 USD
DNA Aug 85 Call	6	5.30	4.00	(861.69) USD
AAPL Aug 42.5 Call	10	2.20	2.30	15.92 USD
KBH Aug 80 Call	10	3.00	3.80	711.86 USD
TOTAL	---	---	---	7324.43 CDN

*Note: The US/CDN conversion rate is 1.20
**Note: Profit/Loss includes all commissions paid

Bought PD August 105 cal @ 4.30

2005-07-28T07:22:00.000-07:00

PD has been acting very well after that huge runup. Was thinking between PD, X and NUE. Chose PD because it fell down to support, as opposed to X and NUE which rose up to resistance.

Sold KBH August 80 call @ 3.80

2005-07-28T07:08:00.000-07:00

Took advantage of a low volume gap up to sell it. Housing stocks look toppy at this point, esp. with insiders unloading as fast as they can. I would feel extremely nervous if I held onto this stock for any longer.

New link added

2005-07-27T09:25:00.000-07:00

I have just added a new link to my list, and I want to invite you to check out the blog at:

http://www.xanga.com/home.aspx?user=dttong

This is an excellent blog and I check it almost every day. The author of this blog posts and analyzes high probability picks.

Bought KBH August 80 call @ 3.00

2005-07-26T07:27:00.000-07:00

Hit the bottom trendline and bounced heavily off it.