Did the commodity bubble burst? Difficult to say..

Dear Reader,
Silver and Oil plummeted las week. 10% down day move should happen very rarely with 0.1% probability according to the normal distribution... In the last decade there have been more than 10 such daily moves...

Well, did the commodity bubble burst? In my opinion, not yet. The really interesting events will unfold when the FED exits the QE 2 program. Volaility will certainly pick up substantially.

For now,  I am going to sit out and wait. Oil broke through the psycholgical barrier of 100 USD, silver is not far from 30 USD. Once these barriers are decisively breached, a good hypothetical idea is to buy 4 months-1 year out call options on SLV, USO, GLD.


Disclaimer: Please be advised, this is NOT a reccomendation to buy the mentioned securities, commodities or their derivatives. This is just my personal, hypothetical view on the markets. I do not own any of the mentioned commodities (apart from regular day to day use) or their derivatives traded on exchanges, and options on indices or ETFs, stocks traded on exchanges and I do not plan to own them in the next 72 hours!

Low volatily in bubble territory..

Dear Reader,

Results from the previous two weeks as of last Friday's close: Buy USO(+5.3%), Buy SLV (+10.5%), Short(-5.0%), Sell XLF(-2.82%).
If 25% of portfolio each = 0.25*(+5.3%)+0.25*(+10.5%) + 0.25*(-5.0%)+0.25*(-2.82%)= +7.98%
A very good result!

For next week: I am not sure. Silver and gold look bublish. I think silver will make a historic high and then... who can tell :-)
A good hypothetical strategy would be to buy put options on SLV but calculating the results on a portfolio would require too many assumptions. The stock market exhibits low volatility. In my opinion this could change very abruptly.
So I have decided to sit out this week and see which way will the market go. No clear trend in sight.

Disclaimer: Please be advised, this is NOT a reccomendation to buy the mentioned securities, commodities or their derivatives. This is just my personal, hypothetical view on the markets. I do not own any of the mentioned commodities (apart from regular day to day use) or their derivatives traded on exchanges, and options on indices or ETFs, stocks traded on exchanges and I do not plan to own them in the next 72 hours!