VDM Trading

5 Indices added to website

John — Thu, 02 Sep 2010 05:40:11 +0000

Site Update;

Five major indices are added to the website. In an instant you are now able to check market conditions on VDM Trading from an American stand point. I made some changes to the site, making the charts a bit bigger on the right sidebar (courtesy of Yahoo), that way in a flash, you’re able to check, while reading interesting posts, the current market conditions. I always figured, if I was to be on a deserted island and had to make a trade of any kind in the US market, which charts would I be looking at? Well, I came up with the following;

The Dow Jones Industrial Average
The Nasdaq
The S&P 500
The VIX (Panic Index)
The US Dollar Index

Left out are the Russell indices since I don’t find them relevant to major market trade decisions. The other main five charts I find them very helpful and in my opinion should be looked at daily or before you make a trade of any kind.

Dow Jones worst August since 2001

John — Wed, 01 Sep 2010 07:31:25 +0000

The Dow Jones Industrial Average had its worst performance since 2001. Take a look at this video clip.

USD/JPY falls to 15 year low, a strong BUY signal?

John — Tue, 31 Aug 2010 05:36:03 +0000

The bank of Japan (BOJ) may intervene soon to fix its currency to increase exports again. On September 6th they will determine whether or not it’s wise to do something about the stronger getting Yen. Will this be too late since already companies like Nissan are seeking their business elsewhere? As far as I see, Japan’s in trouble. Even if the BOJ intervenes it may not be the solution to their problems. Already companies are leaving Japan, that relies so heavily on exports. However, in the short term government intervention could boost the index a few hundred pips higher. As you can see on the chart above I didn’t include any technical indicators since this trade solely relies on a fundamental outlook. These figures are historical these days. I remember a year back there was talk about the USD/JPY breaking through 100.00! With so many major companies in Japan, like Sony and all the Japanese makers relying on exports it’s hard to believe these exchange rates are staying where they are now. I foresee a major boost, bringing it above the 90 mark again, which would conclude a profit around 600 pips and beyond. So whether or not this pair is a buy I say absolutely. I just watched Bloomberg TV that is following analysts that are keeping a close eye on this pair buying at 83.60, I agree with them. I’m buying around 84.00, with a stop loss of 25-30 pips and a profit target of 100-125 pips and beyond! Depending on the velocity of the trade, I might even hold out longer! A strong buy!

Blockbuster (BLOK.A) stock recap

John — Mon, 30 Aug 2010 22:50:33 +0000

Well, that went into a downwards spiral. I hate to admit that I was wrong on that call, luckily I don’t have too many shares invested in it, and who knows a miracle might happen. It’s incredible that Blockbuster is in so much debt. On July 21st I posted an article about Blockbuster (BLOK.A) that was then trading around $0.14 a share. A bargain in my opinion at that time, and for awhile there it touched the $0.20 a share mark. After that it has been going down slowly but surely, with no end in sight other then bankruptcy?

Take a look at the following;

Now trading at $0.07 a share. Any hope left? If this company is going under, I think it’s because of mis management, not debt believe it or not. The company’s debt is a result of mis management. They adapted pretty much all the things Redbox and Netflix have, just a little too late. No advertising, so not many people know about it. Too bad, maybe it’ll be the rise of the little independent video stores again… who knows.

Time to buy the following ETF options

John — Wed, 25 Aug 2010 21:15:17 +0000

This is what I did to diversify my ETF option portfolio in a single trading day to limit risk. Let’s say when after analysis you came to the conclusion a trend may be forming in a certain sector you can buy or sell different investment vehicles that are somewhat correlated with each other, I usually do this within the same day.
The Dow slipped below 10k today, crawling back up closing at 10,060. The index has lost a lot of points over the last few days as a result of missed estimates, probably the biggest one being the housing market. Despite all the negative news it managed to maintain a close slightly above the 10k mark. To me, this is an indication the DJIA is trading around psychological levels. In fact, given all the doom and gloom out there at the moment I was quite surprised about the ‘minimal’ losses the index endured signaling an uptrend soon.
As I am talking about this index it makes sense to focus on an ETF that tracks this index (DIA) and ETFs that correlate with it. My picks are; DIA, SPY (S&P 500), QQQQ (NASDAQ) and the FXE, and their associated option contracts. All of these are Calls, even the FXE (tracks the Euro) that has the tendency to move upwards when the Dow moves in that direction too.

Take a look at the chart below;

From that, I bought the call option DIA1018I100 which mean it will expire September 18, for the purchase price of $2.34, trading around the close at $2.60.
The same goes for:

SPY1018I109 @ $0.86, now @ $1.05
QQQQ1018I44 @ $0.94, now @ $1.13
FXE1018I126 @ 1.60, now @ 1.53

As you can see, I’m losing a bit of money on the FXE option, but that’s not as big of a deal since I made a profit on all the others. Besides, I still have until the 18th of September to decide whether I want to sell the option or let it expire. I usually hold on to these unless something drastic happens, which is not often the case.
There are tons of other ETFs out there that are somewhat correlated with each other. Like Gold and Silver, or Oil and the USD Index. If one investment goes up, the other might veer off the path a bit, but it’s not like you put all your eggs in one basket, and if you’re right, all your investments will go up!