Tuesday, July 31, 2012

Slow Days

End of month. Traders are obviously waiting for:
Fed to say something
ECB to do something
August 1st to show market direction.
I think what's going to happen:
Fed will say nothing, at least nothing new.
ECB will say a lot and do nothing.
First days of August will show nothing.
Market indices are at the top of the current range. Some traders are waiting for a breakthrough. Some are taking profits on long positions. Fund managers are doing window dressing, trying not to be to obvious, not to draw SEC attention. That's why last two days were so slow.
I don't know what is going to happen next. August can start with a bang or not. One thing I know for sure: politicians (and central bank heads are politicians, whether they want it or not) don't want to make any decisions. Not now. Later, when vacations and Olympic games are over, maybe. So I could've expected slow grind (and trading in range) to continue in August, but for one thing. Hot money. I don't know where is it going next. And, unfortunately, hot money makes market now. Quite often with little help from media (when SEC and Justice are going to look at suspicious transactions coinciding with suspicious publications at last?)
I didn't do much this week. Sold calls against long positions in Red Hat (RHT) and ARM holding (ARMH) and bought puts on QQQ for insurance, that's it. Waiting for market direction.
Disclosure: I am long RHTARMH.
Additional disclosure: I am short RHT, ARMH calls against long positions and long QQQ puts. Positions can change any time.

Saturday, July 21, 2012

Options Expiration

Today is options expiration. I had two positions:
short Facebook (FB) $25 puts, this one expired worthless, good
long WmWare (VMW) 97.5 calls, expired worthless as well, bad.
In total, they about cancel each other. Well, being flat is better than being at loss, but a little profit would be better.
Disclosure: I am long FBVMW.
Additional disclosure: Positions can change any time.

Thursday, July 19, 2012

Muni Closed-End Funds Portfolio Changes

My Mid-Year portfolio review is coming next week. I was thinking about doing it last week, but decided to wait for earnings.
Las couple of months I made changes in my Muni holdings.
Change number one: no more Nuveen closed-end funds. Looks like management sucks: funds are reducing payouts one after another. Today I sold Nuveen Select Quality Municipal Fund (NQS). Before that, I closed my biggest (for that moment) muni holding: Nuveen Municipal Market Opportunity Fund (NMO).
There are CEFs with better management. Currently I hold BlackRock Long-Term Municipal Advantage Trust (BTA), Invesco Van Kampen Trust for Investment Grade Municipals (VGM), Invesco Van Kampen Advantage Municipal Income Trust II (VKI).
Every position is a subject of trading around it. I did several trades around BTA. I also traded around Managed Duration Investment Grade Municipal Fund (MZF) and Dreyfus Strategic Municipal Bond Fund (DSM). Current strategy: buy at discount or small premium to net asset value and sell at premium above 4%. I know, DSM and MZF at times traded at 8% premium and I missed the profit. Well, that's life. You can't win everything. Anyway, every trade worked, with exception of NQS, where I'm about even, counting dividend.
Disclosure: I am long BTAVGMVKI.
Additional disclosure: I have no positions in other funds mentioned. Positions can change any time.

Tuesday, July 17, 2012

Getting Back To Business

I was awfully busy lately. So busy that I didn't have time to write, didn't even have time to seriously analyze my investments, which is even worse. Now I'm getting back.

There are several new trends around. First, and foremost, July looks better than I expected, so far. We had a huge sell-off last week, true, but it looks out of steam. Best of all, barrage of bad news doesn't seem to be able to crush market. And we had a lot of bad news. Libor scandal (it's much larger than anybody thinks), JPM (lesson to Jamie Dimon and all traders: never declare your losses until you close the trade), GDP and manufacturing trends (flatlined), unemployment (holding it's own). Let's add fiscal cliff here. I don't know if GOP has guts to ruin economy completely by refusing to talk about anything but complete surrender from Dems. Experience tells me that they should stop at the last moment. In any case, I'd rather returned Bush tax cuts than doing austerity (just ask Eurozone how much good it does).

But anyway, market holds. Trend, started in June, is not broken. This week is very important. We are getting a lot of earning reports. The earnings themselves are not as important as market reaction to them. Another trend: Treasuries are on the way to my forecast: 1% for 10-year note by Jan 1, 2013. Is there a way to profit from it? Sure, sell puts on TLT or calls on TBT. I'm not doing it, risk is too high, reward is too low.

Last couple of months the only money I made came from trading ranges in muni CEFs. Well, I'm going to continue this range trading.

Last, but not least: gold is broken. And broken hard. It's well below 200-day MA, barely able to stick to 50-day MA. Watch $150 line in GLD, that's the last line of defense.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: I have long positions in several Muni CEFs.