Hello all,
I'm not posting this as a tip or to in anyway get anyone of you to endorse what I'm doing or join me. I'm only posting this because it helps clarify my thinking to tell others what I'm doing and also it puts it down on record so that if I'm wrong I can't find a way to rationalize later why I was right.
So here goes:
I've noticed that for the last year the chart of OIH:QQQQ has been in a downward trend with regularly spaced peaks. I've also noticed that the downtrend resumes when the price falls below a trend line drawn from the low of the cycle to the next low at least 5 weeks away. Late last week the price did exactly that for what I hope is a next cycle. The downtrends last 2 to 4 months and so I've entered a $value equal long position OIH to short QQQQ (1:3).
Rationale: While I normally would not expect the Q's and OIH to be a good hedging partnership, but rather a directional play, I think that the coming inflation is currently in that stage where most people are happy because everything's going up. So rather than higher oil prices throwing the small caps into the toilet we have people who see prosperity rather than higher interest rates ahead. I am bearish the QQQQ's and bullish oil but I've noticed that generally the public does not agree that the Q's should be priced as low as I think it should. So until everyone agrees with me I need my short positions hedged. I've chosed OIH to do this with

BTW, the CEF:DIA position I told you about before has done very well. I started with $339 more long CEF than I had short DIA as I was pretty well matched $ for $. I currently have over $3K in value long over short. I never would have been able to keep this short position while the DJI went up if I hadn't used the hedge. I thought it would just keep losses low enough not to freak me out, but I've lucked out and have a profit.
Thanks for listening,
h

Howard,

Thanks for sharing these trades with us. Keep us posted on both of them.

Steve

howard,

since you seem to be interested in pairs you should check out:

http://www.pairtrading.com/mentoring.html

the guy who runs this site & workshop i've met - he's a nice guy & his training has helped many traders who are new to the "paris" concept.

-ja

Thanks Jo, I will
h