How to make Money in the Stock Market.This blog looks at how you can make money trading and investing in Forex, Stocks Options and Futures.


Friday, 30 March 2007

Iran and the Stock Market

The current situation in Iran is captivating the markets currently and will likely do until the British Military personnel are released.It seems to have been a blatant negotiation tactic on the part of Iran , with the news today that they have sent a letter to the British Government telling them to withdraw their troops from Iraq.

Since the likelihood of this is less than zero we will no doubt see some more posturing over the coming days on both sides .Ultimately I believe that Iran will release the hostages,but they may hold on a lot longer than people are currently speculating.

The impact of this is that Crude Oil has shot up in the last few days and in fact yesterday when there was a rumour of some confrontation it shot up $5 in seven minutes.The likelihood is that Crude could hit over $70 again in the near term if this standoff continues.If it only lasts a short time then it is unlikely to have a major impact on any economies, however what is more important is the perception that may be created of increased risk in the markets.

I personally am still nervous about taking any major positions one way or another until the mid term direction becomes a bit clearer.If I was pressed I would probably favour another pullback but to be honest it could go either way, hence my reluctance to make any major moves.

I am still looking for opportunities to take profits where I can and lighten up my exposure.I am also still holding my protective puts in QQQQ and SPY.I would hold these for another month or so unless we get a major move , then I may look to roll them further out.

Quite often the smart move is to do nothing and wait and see-I feel that this is one of those times.

Best Wishes


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Wednesday, 14 March 2007

More Downside to come and longer term ETF for the Energy Sector

Well the market broke below support today around lunchtime on the back of more bad news coming out of the US sub prime mortgage sector.This prompted a big move down in the Yen crosses as people scrambled to reduce risk.As I have been saying for a while(-

I have been nervous about this market and have been taking profits where I can and buying PUTS or ETF's that protect my portfolio from downside movements. Tomorrow will be important to see whether we have any follow through on today's sell off.If we do then it could be a case of "Look out below".

I urge you to consider some protection for your portfolio either by hedging or by taking money off the table until we get a better handle on the direction of the market over the next month or so.

I am still bullish on energy in the medium to long term and came across a very interesting ETF recently released by Wisdom

It is the Wisdom Tree International Energy Sector ETF (DKA-NYSE) this ETF holds a broad spectrum of the worlds leading Oil companies such as Total, BP Amoco,Royal Dutch Shell, and Statoil, it looks like a great way to play the energy sector with a good amount of diversification. I am looking to add this to my portfolio, but am going to wait a few days until we see which way the market goes.

I would be a buyer up to $30 and would use a stop loss of 15-20% and expect to keep it for a few years.

Lets see what tomorrow brings, I still feel we are starting a downward leg -whether it continues tomorrow or not I don't know , if we get a bounce it may be a good opportunity to consider taking some profits and sitting on the sidelines a bit until things become clearer.

Best Wishes and Good trading


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Wednesday, 7 March 2007

How to protect your profits and Portfolio in a downturn.

Well the last week has been interesting.....If you have been following this blog then you will know over the last month or so I have been becoming increasingly nervous about a downturn and we have seen some of the markets teeth in the last week or so.

I dont think it is over and I believe we have more downside to come-increasingly people's appetite for risk is diminishing and we are seeing the Yen Carry trade possibly starting to unwind as people get nervous and start to liquidate their Yen positions.If this happens then it will have ramifications across the globe.

One of the more challenging things to be able to do in a downtrend is trade it-either as a speculator looking for profit or to hedge your longer term holdings.This can be more difficult in certain types of accounts as there may be restrictions in selling short or using options.

If you are in this situation then I urge you to look at some of the Pro Shares at

They have a number of Short Proshares which you buy like a stock but they move in the opposite direction i.e. as the index they are related to goes down the Proshare price increases.It allows you to profit from a down market or use them as a hedge to protect your existing positions.

Two of the Proshares I like are the Short Dow 30 (DOG) and the Short S&P 500 (SH), you can also get Ultra Short funds which are double the downside .In this market I urge you all to look at doing one or both of the follwing :

1/ Take Profits off the table and lighten up your exposure

2/ Hedge what is left in your portfolio to reduce your downside

If you cannot or dont want to do either of these then consider going in to cash until the dust settles.

As ever good trading


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