Portfolio update: The NASDAQ 100 (QQQQ) was closed at the open this morning for a 380% net profit. The trade was initiated on 3/12 at a stock price of 27.00. Three days after the market bottomed on March 9th.
The May 29 calls @ 1.25 closed out @ $6.00. Let me reiterate. Every $125 contract sold for $600. Nice work if you can get it.
At the time I spoke of the apparent anomaly in that the other markets indexes did not participate in the same chart pattern. I knew the NASDAQ 100 could not rally significantly if the other major indexes didn’t. What developed was truly astonishing. The S&P rose 32%, the Dow rose 28% but the QQQQ shot up 36% beating all the other indexes.
Needless to say this bear rally is running out of steam. No market ever had a sustained rally in a straight line from the bottom without a pull back from the depths of recession, banking collapse and the evaporation of trillions of dollars in equity.
Every technical indicator is pointing to the market being stretched way beyond overbought levels. There has been a huge increase in insider and commercial selling far in excess of normal profit taking. Insider selling and low trading volume indicates the air coming out of the rally. Look for one more push higher to get the suckers who are afraid of missing the rally to buy in at the top so the markets can beat them over their pointy little heads and steal their money. Hey, don’t blame me but that’s the way the game is played.
Winner’s laugh and the loser’s say deal, a sucker born every minute and two to “take” ‘em.
Down to business. Expect a huge summer rally in agricultural commodities (ie; DBA). The set up is already in play. Anyone that got in at the call on 3/12/09 has the DBA July 24 calls for 1.85 (approx). The trade closed today @ 2.85 or just north of $26. Look for a move toward 40 (heaviest resistance is at the 40 price).
The entire energy complex is in the early stages of a major bull run. I’m still holding Marathon Oil (MRO) July 30 calls @1.10. Trades today @ $32. The trade was initiated on 3/13 @ 1.10.
Arch Coal (ACI) had a small pull back today (buying opportunity) to around $17. The break out point is @ 20 which puts the stock price between 25-30. No one is expecting coal to rally that far but the charts do not lie (people lie). The July 18 calls can be had for 1.45 each. ACI is a buy.
Don’t overlook the ExonMobile July 70 or 75 calls. Price pattern is in a strong uptrend formation which looks to easily hit $85-90. As crude oil rises it goes right to XOM’s bottom line.
Nat Gas (UNG) is moving up with the rest of the energy complex. I expect this uptrend to continue. The historical ratio between Crude & Nat Gas is completely out of wack (to use a technical term). That ratio hasn’t been this wide in almost seven years. UNG will go higher or crude prices will collapse to right the ship and we haven’t a chance of crude prices falling.
NEW TRADE
Global Resource Corp. (GBRC)
This tiny Company has created and patented a World Changing Technology. It has developed the means to Clean energy independence in a way that can remove pollution from the environment.
I like to call it creating usable, efficient energy from garbage.
This amazing innovation uses a self contained microwave technology to recapture the crude oil used in the manufacture of disposable items. These items include tires, plastic bottles and river dredging to name a few. This is huge. I have been watching this company for the last two years and, full disclosure, I bought the stock at .36 originally when it was named “most innovative company in America” by Time Magazine. I sold it around .90 and watched as the price fell apart. Basically because it had no earnings just a really good idea.
Well I believe it’s time has come. I believe that on or about 5/11 GBRC will be performing a demonstration of it’s process because it is now commercially viable. There are no options traded on Global resource but the current stock price is around $1.90. There has been some licensing agreements and there are some earnings but if they go into full swing production the price movement could be huge. Do expect huge price swings from this one but if you ever felt like swinging for the fences, this would be the place I’d put my money… Come to think about, I did.
Energy from garbage… what an idea.
Till next time.
Ray
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