Weekly Report

This past week was another bull week. That makes 4 weeks of positive gains in a row. Does this mean that the bear market is over? I don't think so and I will tell you why.

U.S.
Dow => 8017.59, +246.41
Nasdaq => 1621.87, +76.67
S&P => 842.50, +26.56

Mine
AMD => 3.43, +0.06
F => 3.25, +0.41
NG => 2.96, +0.24
CVX QJ => 0.20, -0.35 (Bought To Open @0.55, 03/31/2009)
FPL QH => 0.55, unchanged (Bought To Open @0.55, 03/31/2009)

So Why Is The Bear Market Not Over?
The reason is simple, momentum is still slowing on this bull. The point increases this week are still relatively small. Two of the above closings are still within the resistance ranges I mentioned last week. And, although the Nasdaq moved over the resistance range I mentioned, it only did so by a point value that is marginally greater than the actual margin I mentioned.

All of the other reasons I mentioned last week are still relatively valid for this week, as well. The Stochastic and MACD for all three of the major indices are still overbought. The RSI for all three returned to their levels of last week. In fact they exceeded them, but they lost momentum on the last couple days. Their projection indicates lowering in the near future.

What Is The Opinionated Investor Doing?
Using the information I just mentioned I am definitely not buying Long or Call positions right now. I actually bought a couple Put positions for the time being, specifically, Chevron and FPL (of course).

Why Put positions? Reason number one being that I don't Short stocks. Not my style. Number two, I don't think spring break will be as productive this year as it was last year. Ill effects of the recession. Also, Florida's spring hasn't started out as hot as it usually does and the winter in the Southeast hasn't been that bad, so I perceive the need for these two energy producers to be less than usual, at least at first.

Explaining My Actions
Now I am playing them a little riskier than I normally would. They were bought about two strike prices OTM in higher multiples. There are a few reasons I did this. One, I actually spend less money on them. Two, I make more profit on them as they become closer to ATM and ITM. Three, the time decay is "slightly" slower than if I were ATM or ITM.

The normal and safer strategy is to buy them ATM or 1 strike price ITM. It is safer because you then at least have intrinsic value (the positive difference in value between the strike price you bought and the price the stock is currently). Intrinsic value is the only substantial value that is left right before an option expires. After an option expires, even intrinsic value vanishes. That is why options are never held until expiration.

If I know this then why am I buying OTM options? The reason is because I am consciously betting on my expectation that the stocks will reach, at least, ATM intrinsic value soon. I believe the following week will start off stagnant and then close lower. Maybe, only by a little. Afterwards, there will be further declines and then another rally that will shatter the current resistance level. I expect to be stopped out by the bounce. At which time I will be following up with the purchase of Calls and going Long on stocks that I will sell Calls against.

That is my opinion, you can take it or leave it.

Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.