Wed Evening after Market close May 25, 2011
The red black bars are TLT a preferred holding, the solid black line is the SPX. Note the near mirror perfect inverse relationship Bonds up, stocks down I mentioned selling calls against my TLT positions and it looks like we caught the secondary high for TLT, the first high was May 17.
The low in stocks we have talked about appear to be in place now. And so TLT topped out for the time being. Now expect TLT to bottom as stocks top in mid June. That will be the last chance to add TLT at a favorable price. This chart clearly demonstrates why we like TLT expecting stocks to sink for the next 12-18 months starting in June.
I own in one account 600 shares of TLT bought at approximately 92.
I sold six June 17 (expiration date) calls with a strike price of 96 yesterday, these are at the money calls. I did it in two batches for an average sales price of $89 per 100 shares. Tomorrow I will buy some puts using the money from the calls. The idea is that by the June 17 expiration,
the calls will be worth nothing, I expect TLT will be below 96 as stocks top.
The puts should rise in value, that is a trickier play but selling calls against a position which is at a profit in a bull market is an excellent way to enhance returns. We may buy the calls back fi they lose 75% of their value, we shall see.
Plan to purchase more TLT at the low which should be mid June.
Negative social mood is ramping up fast, the Egyptians are going to try Mubarak for Murder, he should have left the country when he could! No doubt other Arab dictators are taking note.
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We would like to send you Ed Carlson's Special Report targeting a June High, Ed is a Certified Market Tech and this report confirms what we have been predicting. Just send us an e mail with your e mail address. We will send the report this weekend.