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Monday, December 6, 2010

Market Thought... conundrum

There is a consistent theme across many of the +150 charts I follow, overbought. But the 2010 SP500 earnings will be +86. Slap a 14-15 multiple on the earnings, and we have a market range of 1,204-1,290.

Here is my conundrum. The conservative technical trader would sell due to the overbought conditions. But the fundamental trader/investor can not sell due to the inexpensive level.

So my compromise was to transition from Jan 2011 calls to Apr 2011 calls, and continue to wait for until the VIX hits the 2010 low before selling and adding SPY put protection.

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