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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: kodiak_bull who wrote (42239)	4/20/2005 1:06:21 PM
From: SliderOnTheBlack	Read Replies (2) \| Respond to of 206184

KB ["34% yesterday on OIH, 36% today on RIG. Nice little hit 'n runs."] ...not bad returns for a "Bee-atch" (vbg). Kudo's ...this is THE place and THE time in the Oil cycle to be using options ! < see mathematically supported conclusion below !!!!!!!!!!!!!!!!!> PS: Commander Cricket...you asked if I was Bearish, or Bullish here ? The Answer is neither. The Market dictates which I am....and there are 2 additional choices in addition to being a Bull, or a Bear. - One can also be a "Pig", or a "Hog" as well. I am a "Pig" here... not a Bull, nor a Bear....and hopefully can resist becoming a Hog. A Pig is a realist and is unemotional. A Pig is willing to make money either long, or short, or to even sit in Cash - being out of a given market at any given time....and most importantly; to make those determinations by what the Market (traders) is giving him....not by any preconceptions, or predilections. A Pig takes what the market gives him...and does not get greedy. "HOG's" are greedy. Pigs get Fat.... Hogs get slaughtered. ...Gordon Geko taught us that greed really isn't good...and that indeed; Hogs do get slaughtered (and don't get Daryl Hannah in the end either). Reality (and access to some cutting edge research never quoted here)shows that there has been a significant disconnect by Crude Oil from it's historic underlying fundamentals...ie: The same view shared by Lee Raymond & most Oil CEO's. - I agree. One must realize that Crude Oil and the related basic fundamentals of supply/demand/inventory's are being mathematically skewed against a very complex (major understatement)rapidly changing backdrop of Global Geopolitic's, Economic's (currency/deficits, global trade, Systemic Banking & Market Risk etc), Social & Cultural change and very importantly to threadsters here....the emergence of Oil and Natural Resources arising as both the WEAPON of choice and the "End Game" focal point for today's very real Cold War between the US & China along with being a major catalyst to what is happening between Russia and the former Soviet Satellite country's, in the Middle East,with Venezeula et al... To say the least.... this isn't your Grandfathers Oil Market any longer. Imo, the vast majority of Oilpatch Investors will not see the Forrest for the Tree's...they will be focusing on the "micro" just when the "MACRO" rules and vice versa. ....so, since it's a somewhat boring day in the Oilpatch markets given Oil's unexpected reaction to it's first real fundamental good news in some time... we'll translate the "Forrest for the Tree's" Trading Methodology to a whimsical mathematical proposition: <<< in case anyone here is so inclined...Q'hubo, Tommie etc>>>> ie: The Forrest vs the Tree's mathematical trading analogy: A graph G (greed) is a set of point V(analyst targets)(G), together with a set of technical edges E(G) - <analyst estimates divided by prior sector index highs/lows>, where each element of E(G) is an unordered pair of distinct potential points of V(G). Let G be a graph where V(G) = and E(G) = Z . The Z figure gives a depiction of G....or a possible mathematically paramater for future cyclical bounds. Notice that G contains the historic given "Oilpatchcycle" index paramaters .For the home version we'll call a graph devoid of cyclical index extremes a "tree". A path (prior index cyclical highs/lows) within in a graph G is an alternating sequence of points and edges, (beginning and ending with a point) such that all the points of the path are distinct. In the proposed graph of example 1, is a path giving expected finite points of index volatility <beta> within a specific timeframe parameter. note: Every two points of a tree (minus prior index extremes) are joined by a unique path (or trading option of going either - long/short). A graph is in positive risk:reward ratio if every pair of points are joined by a distinct interestcting path. If the graph for example is connected that signals a positive risk:reward entry point. However if a graph is not connected then it is made up of ``subgraphs" which are and would trigger less favorable risk:reward entry points - that should only be over-riden mathematically if extraneous market events such as a 911 attack are occuring. Each one of these subgraphs is called a connected component of the graph called "G" - or the GREED component...a.k.a = death to traders. A graph for which each connected component is a "tree" (trigger point sans index extemes) is called a forest (desired risk:reward entry trigger). One extreme case worth mentioning is the case when one of the component "trees" has one point but no edges joined to it. This tree looks like an isolated dot. We will call this an an "acorn". We are ready to define the problem of "acorns" ie: misleading trigger/entry points....which is what we are seeing today given the positive supply build/inventory numbers; being negated by the overlying commodity's non-positive reaction to it. The Challenge for Oilpatch investors: Given a rapidly changing forest you are to create a trading program that counts the number of trees and avoids the acorns. How you do that mathematically would be as follows: 1. A list of edges of the tree, ( one per line, given as an unordered pair of capital letters delimited by a row of asterisks.) 2. A list of point in the tree, ( these will be given on one line with a maximum on 26 corresponding to the capital letters, A - Z). Output The number of tree and the number of acorns, in a sentence, for example: "There are x tree(s) and y acorn(s).", where x and y are the numbers of trees and acorns, respectively. Example 2: Let G be a graph whose edges and points are given by the sample input. A depiction of this graph will unfold given the results of data input. But, note! - A forest may have no trees and all acorns, all trees and no acorns, or anything inbetween. The lesson to this exercise: ... keep your eyes open and don't miss the forest for the trees! Resulting Data Points express as follows: Upside paramaters = OSX 165 Downside parameters + OSX 115 OSX presently @ 133. Reward to Risk ratio is low. Risk to Reward ratio is high. Most favored strategy thus = Options STRADDLE. - also explains why Crude Oil market is not reacting/rallying to positive underlying supply/inventory news...ie: not enough reward upside to underlying risk. ;} - Good Luck & Happy Cumbayah New Paradigm Trading; $` a.k.a. The Root~