Sunday, October 28, 2007

Weekly Qs Update

For this week's update I've attached both weekly and daily linear regression charts. The 30LR weekly chart shows the Qs bumping off the upper channel, with a likely man reversion to the 52 area. The 30LR daily chart shows the opposite picture, with the Qs bouncing off the lower channel, suggesting a mean reversion in the 55+ area.
Just to confuse things a little more, the 11LR daily in moderately negative, while the 11LR weekly is fairly positive. Both the daily and weekly 3LRs are negative.
Historically, the next 2 weeks are regarded as almost sure things, but the Stock Traders Almanac has had an inordinate number of faulty predictions so far this year so I don't want to get too frisky, go all in and then regret it.
To satisfy my risk comfort level I'm looking at a Qs straddle to supplement my counter trend day trades. With 21 days to expiration I can sell the near 56 calls for .41 and the near 51 puts for .38. This play seems fairly low risk with the advantage that and I can always scale in or out and adjust the delta depending on each day's moves.

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