July 24th – have we topped?

I took a bit of a gamble this week, but it was based on my weekend analysis. So far, so good.

I haven’t entered new posts here this week, because I thought my preview to the week was perfect. In fact, it is turning out to be pretty good. As per my plan, I started entering some small short positions. I have been blown away by some of the happenings. Indeed it looks like the Government will be printing money for the FNM FRE bailout. $25 Billion credit line guaranteed by the Feds, and an UNLIMITED backstop for funding for the GSE’s debt and equity. Basically an open check. So were does this money come from? Printing money from the Fed. So, you and me. Along those lines, FNM and FRE rallied strong. Don’t these people know that this government plan mean “unlimited” dilution of their shares? The market is NOT immediately efficient.
If I can make another 15% this month I may do this:

OK, maybe not.
What should be happening. The dollar should weaken as more US$$ is put into circulation. What is happening? The dollar is gaining strength. What does this tell me? The rest of the world is hurting, especially Europe. So, if our economy is hurting less than the rest but still in decline what is a person to do. I decided to look at Gold, GLD. I see support between the 90 and 90.75 levels.
Here is how I played it.
GLD – Sell 1 unit of the AUG 90/84p for 1.45. I am collecting a credit which takes my cost basis down to 88.55. With $4.45 of risk. I bought it on Wed afternoon, this morning it rebounded slightly.
FNM – I sold 2 units of the 7.5p calendar for .13-15 for a nice small profit. And 1 unit of the 9p for .13. This is not moving out as quickly as I would have hoped, but 120% for a week is decent.
AAPL – I sold 1 unit of te Aug 140/145p 170/175c Iron Condor for 1.80. The risk reward is not my favorite, but there is much resistance above 170-172
C- I have been selling a few more calls which I owned into this incredibly strong rally.
NEWS – US home inventory. There is an 11.1 month supply of homes on the market. What does that tell me? Home prices go lower! What is much of the Henry Paulson speak predicated upon? A bottoming house market. That is not what the facts are telling us. I continue to believe we have not see the bottom.
There was a big break in the Ags and commodities yesterday. I don’t think they are done quite yet. But now to buy, but rather to sell into rallies.

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