Options

The last week was not great. Up until Wednesday (7/20) we were having minor positive gains (1%).

But for Thursday(7/21) the prediction were looking weird. For IT and Consumer sectors, predictions looked regular. But for Finance sector they were extremely negative. Out of 48 stocks in finance, the computer recommended 38 shorts, and top 14 recommendations were strong shorts. This is in the context in which normally it recommends about 20 shorts normally. The only time in recent history when the program had similar negative predictions was for 6/1 when the market fall 2%.

First we started to read the news to see what is happening, and we learned that in the next day or so, Europe was set to save Greece from default, or maybe not. And we learned also that the most exposed sector is Finance. That was great news for us, it meant the computer is not that stupid after all.

So I bought options (puts) too. Lots of them. Fortunately for humankind - but unfortunately for my bank account - Europe did produced a plan that delighted the investors (at least for now).

My options are still active, and there is still hope for some return on investment, because the predictions for tomorrow (7/26) look gloomy again (38 shorts out of 48, the only quality long signal in Financial sector is MCO at rank 5, the rest of top 15 predictions are shorts).

Probably the computer senses that if Obama and GOP do not come up with some good debt plan, markets will penalize them heavily tomorrow (based on signal between 3 and 5%). But there could be a nice bump if Government comes up with a nice plan tomorrow. So I will buy a few calls too, (but not much), since I have invested plenty in puts.

On C2 we are now at +8.5%, from our high of +11%