Replies to post #338072 on Zeev's Turnips Patch-No Politics (ZEEV)

[hightecheast]

gloe and Sam_0

1. First, I am not a day trader. When I buy options on futures (or actual stocks for that matter) I usually hold them for months (or weeks for stocks). I buy in-the-money options out as far as 9 months to a year or even two (gold for example).

2. As far as buying S&P puts, I am looking for evidence that equities are not headed north quickly from here ... and I think that chart says that clearly. It may not go down right away, it could move sideways or even up some.

3. Fundamentals and macroeconomic factors are hugely bearish in my view for probably the next several years.

4. I would rather play this with gold calls, but I am not ready to do that again yet. In the short term (next several weeks or months), I think the US Dollar will rally temporarily (and maybe a lot), which will probably hurt gold to some extent. Although I do think that gold and the USD will probably disconnect at some point.

5. I am tempted to buy US treasury puts also, but I have not traded in the complicated bond market before.

6. I have a very successful history buying S&P puts since my first entry in July, 2000.

7. If you are making the case that the S&P is not likely to head south fast right away, I agree. Remember that the chart I posted is a weekly or trending chart. That is why I will buy SP puts for September, 2005.

8. I will only get slaughtered (with SP puts) if the SP heads for the moon in early January. But since I am 100% cash now, I do not expect that. Sentiment is too high and the commercials too net-short for that probability.

LAST One of the important Larry Williams factors is that when the ADX and stochastics (relative to each other) are spread away from each other to an extreme (called a PAUNCH), rallies are more likely to occur, but when they are close to each other (called a PINCH), a slump is much more likely. If you look back at the chart I posted, you should see the 3 paunches clearly prior to rallies while they are pinched now.

All in my opinion.

I am going to be off-line until January 3 after today.

Ken Wilson