Post Thanksgiving Stock Market

Europe's financial demise in 2011 came to a pinnacle in the fall when Greece and Italy were both forced to appoint new government leaders. As of Thanksgiving, there was no sign of any quick solution, and the stock market was down for the week due to weak German bond sales. There is no way to tell how far stocks will fall in the week after Thanksgiving. The pullback may be done.

I sold my position in TVIX, the double volatility index, on Friday for $62 and change. I made a small profit since I got in at around $53. My reason for leaving the trade now is that TVIX has struggled over the past month when it has gone over $60 per share several times. My guess is that the Europeans will find another band-aid to patch up their financial problems. This will result in a possible Santa Claus rally in stocks, but the advance will be small since the European situation is not yet fully resolved.

On the long side, I bought shares of ERX, the triple oil ETF, on Friday for around $37. It is possible that the stock could go lower, but I believe it will return to more than $50 per share in just a few weeks or less. I plan to sell my shares at the limit price of $51. This is based on the fact that ERX has gone over $50 per share several times in the past month.

Two other long stocks that I plan to buy on Monday are PEIX, Pacific Ethanol, and RIO, Rio Tinto. Pacific Ethanol has doubled in the past month, and insiders have been buying the stock. Rio Tinto is one of the world's largest miners, and they have a single digit PE. They will eventually be worth twice the current $46 per share.