I'll be selling NVDA, OTE, MW and TXT from the picks.  I'm going to hold through the fed at 2:15.  While I think there will probably be no big rally on the fed news (and maybe even some selling), I'm going to keep my personal speculation out of the process.  As usual, I'll start selling somewhere around 3:00-3:30.

Getting back a bit more to my roots, I wanted to talk about my recent experience with QuantLib.  I'm working on a piece of software that I wanted to calculate option prices in a robust fashion.  I know RightEdge has this capability and I obviously have the source code, but I needed something a bit more heavyweight that had different pricing engines and support for binaries (exotics).  Enter, QuantLib.

I was firmly opposed to the previous rate cut, although there were reasonably convincing arguments for a 25 bps cut.  The 50 bps cut was just unnecessary.  So now here we are again and I hear that another cut is in the making.  Why now?  Did Cramer pound on a desk somewhere and I missed it?  Something does not pass the smell test.  Apparently the economy is doing all right and inflation is in check so it only makes sense to cut rates.  [cough].  I know that all is not rosy.  The economy while expanding is definitely slowing, but this seems like part of a cycle to me.  The housing market is still the pits, but I think most of the fear and uncertainty is behind us.  Inflation is higher than most would care for, but still historically low.  The cut will murder the dollar and while it may bail out those in trouble with their mortgages, it also hurts that same group of people who have to make a decision to fuel up or pay the house note.

Maybe some of you fancy pants book learners can an enlighten me because I don't get it.

We're coming up on the end of the month.  It's been one of the rockier rides lately thanks to MW and NVDA.  Even GTLS just sort of floated down all month.  The switch will be made Wednesday around the close (I usually start selling around 3:00pm).  New buys are made at the first of the month (Thursday).  I'll post the changes on Wednesday.

But for now, here's the latest numbers.

I underperformed all of the major averages this week but still squeaked out a gain for the week.  I'm still down for the month.  The only other index that is currently down for the month is the Dow (down 1.28%).

Option Attempt

I am also exploring the possibility of a put credit spread in lieu of buying one or more picks this coming month.  This will insure that there is no confusion in tallying the numbers.  While I have much experience with put credit spreads, I usually trade them on highly liquid symbols.  Another thing this will introduce is additional trades on the short option.  I may sell the short side if the price gets to within a nickel or a dime.  This makes the testing a little less cut and dried.

I have a few stocks that I watch that have been stuck in multi year ranges.  GE, MSFT, mostly lethargic big caps.  When they're at the top of their range, I like to consider shorting, when they're at the bottom, I consider going long.  This is almost always done with an option spread.  Well, I had my analysis nearly complete for MSFT and at 31.00, it was on my radar.  I looked at a bearish calendar (one of my favorite strategies for these slow moving dinosaurs) and noticed the IV was juiced which meant that earnings were near.  Sure enough, they were, so I thought I'd wait it out since a vol crush would really hurt my calendar spread.

The second thought along these lines is that MSFT may post good earnings and get a jolt to the upside.  Maybe it would hit $32 and I could get an even better price on my calendar.  The move MSFT made last night made headlines.  The gain was so big in fact, that I may consider scratching MSFT from my boring channeling stock list.

Meanwhile, the NVDA trade is going to hell.  It's still up nicely overall, but it's given a lot back over the last couple of days on some downgrades (yesterday) and some speculation that someone big knew of the impending downgrades (the day before yesterday).  We'll see what our numbers look like tomorrow.

I came across a post in an option trading board that I frequent.  The post refers to a recent short straddle trade on AAPL and it reads:

I have switched over to FBN most of the time that I'm watching financial television now (usually early in the morning and early in the evening).  They have some interesting shows and takes, but some things have to go.  The "Money for Breakfast" show features some very bright people and traders in Eric Bolling and Charles Payne.  But they have an ever so obnoxious "Jargon Alert".  Now I'm all for keeping the jargon to minimum, but I've heard the whole conversation stopped now three times to explain what a P/E ratio is.  How long will this go on?  It seems a bit excessive.  It's a business channel and you should have some very basic jargon under your belt.  I don't expect ESPN to explain the infield fly rule on each episode of Baseball Tonight.

A nice drop yesterday put a bit of a hurtin' on the bulls.  This seemed like a very healthy pull back in my opinion.  It looks like I was just a one or so late on getting my bearish position together.  Story of my life.

Here are the major index numbers for the week.

The Dow and S&P really took it on the chin this week.  I still feel this was healthy and needed to be done.  The picks did pretty well relatively speaking, although MW continued it's free fall.  It's now down almost 22% from the price I picked it up from.  Again, the power of diversification allowed me to beat the S&P and DJIA this week.

With last night's earnings, it appears as if tech is on top for a reason right now.  The S&P companies, especially financials, are not impressing while tech is dazzling.  Two days does not make an earning season, but this is an interesting pattern and if it persists, I'm not sure where things will go.  The Dow has been leading over the last year, but recently, the Nasdaq has taken the helm.  Will we see a big divergence between the industrials and tech?

In unrelated news, MW keeps getting butchered and it looks like we may get some relief (still holding NVDA which has seen a pop thanks to YHOO and INTC).

And finally, the posts and thoughts may be a little light this week.  We're trying to put the wraps on RightEdge 1.1.