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November 14, 2011

thought I would run a little review of how things worked out at the end of the first trading session after the release of the first issue of this newsletter. Perhaps this will give further insight as to the way that I invest and trade.

Dividend Stocks
Waste Management (WM): We pulled back in the morning hours, so we never popped higher than the $31.95 resistance parameter that I set for a further purchase. We then sunk lower than $31.40 support parameter. I had mentioned the area of support at $30.90, which is holding, with the close at $31.16. So what now? That $30.90 area of support has to hold. If it does not and the market continues to sink lower, then I simply reevaluate my entry. Which means that I would probably put this one on the back-burner. At least for a short time period. However, if $30.90 does hold, and we begin to move higher and trade higher than $31.41, then this would provide an excellent buy point. Pepsi-Cola (PEP): We only pulled back slightly in the morning hours, and did not fall to the $62.50 region of support that I had mentioned, and didn't fall too much further. I see two scenarios at this point. At the moment, Pepsi-Cola (PEP) looks as if it is 'coiling' for a pop higher. We may not pull back to the $62.50 region at all, and it begins to trade higher than $63.09 and then $63.28. I would view consistent trading in the $63.09 to $63.28 region as a buy area. Or, we continue to pull back, in which case, I will look for a purchase according to the parameters that I laid out in the premiere issue of this newsletter. General Mills (GIS): General Mills did behave according to the parameters that I laid out in yesterdays issue. There are two areas of support that I'm looking at. The current price region of around $39.25. The 'last stand' basis of support is around the $38.66 region. If congestion forms around either one of those two areas, and begins to break higher, I would consider purchases General Mills (GIS).

Shipping Finance Ltd (SFL): Well, as I mentioned in the earlier issue, this is not an investment that the Aileron Market Balance would take for it's model portfolio. But for the larger accounts that I mentioned, there was a slight pullback today, as the market begins to 'coil' along support. So at this point? Only for larger accounts about 10 minutes after the open (to avoid the danger of gap opens)? I'd see $15.05 as a purchase point. I'd look at SFL hedges, but at the moment, I'm not seeing a lot of liquidity and volume in the SFL option market.

Trading
Commodity Market #1 December Silver (SIZ1, YIZ1 for the Mini-Silver or the SLV for the imperfect ETF): The market pulled back overnight, just as I wished. There were a few times in the morning I thought it was getting ready to break up out of the congestion that formed on the one hour chart, but it continued to pop around inside the channel. I set an alert at $34.55 around 11:00 am est. That area was never breached, as the market headed lower. However, Silver is still coiling along EMA support in the $34.00 to $34.20 region. I have adjusted the alert to $34.40 and would consider a short term trade in this region. Commodity Market #2 December Crude Oil (CLZ1 or the USO for the imperfect ETF): So I waited for the market to begin to break lower and it did. Somewhere around 8:50 am this morning, I tweeted that I went ahead and bought the USO Put option. I bought a December 2011 39 USO Put for 2.47 or $247.00 plus around $2.95 in Commissions. We brought down to around $97.20 before consolidating and breaking higher on a small leg up. We consolidated again, before breaking higher once again around 11:31 am est. We're basically riding the EMA resistance down, and at the moment are simply moving sideways. I still believe in the trade, and this is one I will hold onto for a swing trade. At the moment, I only have had to endure a maximum of $19.00 in drawdown, and at the moment I'm sitting on about $12.00 in drawdown. At $98.31 or higher, I'll start seriously sliding into 'riskcontrol' mode, and with significant moves higher than $98.88, I would consider dumping out of the trade. If we continue to move lower along those resistance EMA's? I'll be encouraged with a break lower than $97.92 and then again at $97.17.

Commodity Futures Market #3 December U.S. Dollar Index (DXZ1 or the UUP for the imperfect ETF): There was no break lower, and we blew right past the 77.45 region of resistance that I mentioned. I still would take a brief short trade here. At the moment, we have support along 77.59. With a good tape, I might consider a short trade if the market breaks lower than this region.

Commodity Futures Market #4 December Corn (CZ1 or ZCZ1): Now here we run into a situation where the market did not pull up as I mentioned in yesterdays issue and then Corn proceeded to head in the direction I was looking for. In addition, I wasn't monitoring Corn as closely as I should have this morning. This may have been a trade I would have taken. Unfortunately for me, I'm in Mexico at the moment, and I left my other monitors back in storage in the United States. So I'm stuck to just monitoring the markets with one screen. Trust me, this is something I am looking to correct quickly. Regardless of the reason this is one of those times that I was right on direction, and just completely missed the trade. That's honest, and sometimes that's the way things turn out in the markets. Would I still take the trade? I would have to see the market pull up higher, congest so that I could play a break out to the downside. Commodity Futures Market #5 December Lean Hogs (HEZ1): Wouldn't you know it? Here is another trade in which I was completely correct. Both with the parameters that I had setup, as well as how the market turned out. The market pulled back in early trading, congested, and then broke to the upside on a great long. And I completely missed it. I really need to get my monitors ( as well as my other things that are still in storage). Hopefully, you did not miss it, and you're enjoying profits by being long Hogs. It would be very easy for me to try to 'cherry-pick' the data and say Oh yeah yeah I got Hogs right, and we'll add those profits to the Model Portfolio But I didn't. And it's not about predicting the trend. It's about exploiting the trend. This time, in all honestly, I missed the trade as it occurred. I'll wait to see if we get any pullback to key levels of support ( near 86.50 to start). Until next time, stay safe trade well, and remember that loving other people doesn't cost a dime.
Note: The above statements should not be construed as an investment or trading recommendation. Aileron Market Balance is a newsletter that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change. Any trades or investments that I discuss within this newsletter are simply my own thoughts regarding my own investing and trading outlook. Remember that entering any market is an individual decision. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this newsletter; as larger accounts may require a different strategy as the ones presented here. This newsletter simply contains my trading and investing thoughts for the next week. I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. I personally only enter any market after watching and reading the tape and I trade using money management principles. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 15 years of experience in trading and investing in these markets. The Model Portfolio accounts are hypothetical accounts,with all of the inherent problems therein, which are used within this newsletter in an attempt to track the results of this newsletter, and is run for the education of other traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this newsletter are believed to be public domain. Any charts that are displayed using the ThinkorSwim platform, and other pictures were obtained through Wikipedia's public domain policy.