WILD WEEK

Friday capped a very wild week in which we saw some extreme volatility enter into the market. I want everyone to realize that when the market makes swings that big, not many people are making money....bulls, bears, or even spread traders. It can get frustrating. You can also find yourself chasing trades. This is why I have been recommending hedged trades lately...buying calls on the VIX to hedge your bullish trades or buying calls on oil and silver to hedge your bearish trades. These wild swings tell us that neither side (bulls or bears) have a strong conviction on which way the market will go next. The safest trade is to sit on the sidelines until we get some clearer confirmation...like maybe a move above 1344 or below 1302 on the S&P 500. I would hold on to gold (GLD), silver (SLV), and oil (USO) trades until they stop going up. I don't know that I would get into new positions on those stocks since they have already moved up quite a bit. TLT would be a good trade if the market keeps dropping. The TLT is an ETF for the Treasury Bonds. When uncertainty increases on Wall Street, money often flees stocks and goes to gold, silver, and Treasury Bonds. With oil at $106 a barrel at the time of this posting, there will be increased pressure on this quarter's earnings. These spikes in oil are usually not short term events. They often last several months. Any big pull back in oil should be looked at as a golden opportunity to buy...at least in the longer run.