Gold and Energy Advisor: Gold, Oil & Energy Markets Investment Research
James DiGeorgia, Mr. Macro
- Chief Editor -
Mr. Macro
Geoff Garbacz, Mr. Micro
- Chief Strategist -
Mr. Micro
Dan Hassey, Mr. Retirement
- Senior Stock Analyst -
Mr. Retirement

Gold and Energy Advisor's Real Wealth

Real Wealth #293  04/25/2011



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Dear Subscribers,

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This past week was a wild one as on Monday S&P downgrade the outlook of the United States to unattractive even though S&P maintained its AAA rating for now. The lows for the week were in by Monday afternoon as positive earnings drove stocks higher.

Gold and Energy Options Trader subscribers benefited as we had bought a call spread in the OIH on Tuesday, April 12th. It was closed on Wednesday, April 20th for a nice gain of 22% as the option spread moved at a much greater than the OIH which was up less than 5%. This comes after taking on a 42% gain on a call spread in GLD for May expiration, on April 8th that we opened just 3 days earlier. These two trades captured the upward movement of commodity prices. This is what we have been doing in 2011.

So far the upward movement of commodity prices as been the theme of 2011. Of our 11 trades closed in 2011, 10 were bullish trades. These trades have returned 265% or 24% per idea. We could have attempted more trades but 2011 has been a treacherous year as Egypt collapsed, other Middle Eastern countries saw mass protests, Japan suffered through a massive earthquake/tsunami/nuclear meltdown and Libya is at war with rebels and NATO. The sudden whipsaw movements have left been a trader on the sidelines with a sore neck but not us.

Despite these events the trend is to the upside for commodities as long as the U.S. Dollar remains weak and commodities will benefit from this pattern that is long in the tooth but could have much further to run. Many fight this trend, not us. The dollar may not be able to rally as the Congress cannot find the wherewithal to address the 2012 Budget and the impending violation of the debt ceiling.

Last one must consider and recognize that the market is being influenced by the Federal Reserve’s Permanent Open Market Operation (POMO) and QE2. In theory, QE2 ends in late June. It won’t. Why? The economy is too weak and Federal Reserve Chairman Bernanke will not risk a drop into the abyss on his watch.

So how do we play these events as we move into May? Carefully. Our stated goal each year is to recommend a trade a week. So far we have closed out 11 trades in 16 weeks. The number of trades recommended so far is a bit below our goal but it may begin to heat up here very quickly.

Why? Congress will regain the airwaves in the next few weeks as the posturing begins to finally, maybe, deal with the debt limit and craft a 2012 budget. Next week the Federal Reserve Open Market Committee (FOMC) will alter how it reports to investors. In the past, the FOMC came down from the mountain and simply said what the policy is. Now they will announce their decision as 12:30pm EDT, the then release the minutes at 2:00 followed by Q&A with the Federal Reserve Chairman. Surely, Wednesday is going to be a wild one as markets try to make sense of these new events.

We will be watching and figuring out how to play this new protocol. One thing is for certain there are going to be some classic opportunities to take a long bias when there is blood in the street and maybe just maybe the short side may become attractive as the parabola begins to lose steam.

Best Wishes,

James DiGeorgia

Editor

P.S. http://www.goldandenergyoptionstrader.com/page/geo/?sid=1303487628.3052


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* see details and track record on Gold and Energy Options Trader website.




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