While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
In this morning's daily update, I mentioned how I felt that the XLE was at a key inflection point.
An inflection point to me is when a stock or sector is at a level where something significant is going to happen.
If it breaks down, it should continue much lower.? If it bases, it is likely that a major turning point is possible.
As I write, the XLE is up just over 5% on the day, which leads me to believe that the latter maybe the case.
Based on this, I want to make a recommendation today.
It is actually a Master Limited Partnership or MLP.
The company is Vanguard Natural Resources, LLC, symbol VNR.
There are a few reasons why I like this deal.
The first is that it pays a monthly distribution of $.118 per month.
Based on a price of $8.94 as I write this, the annual yield is 15.8%.
As you know, there is no guarantee that they will maintain this distribution.
The second reason I like this is because there was recently some major insider buying, which leads me to believe they will maintain that distribution level.
The final reason I like this is because, unlike most MLP's, VNR actually has decent option premiums.
My suggestion is to buy VNR at the market, which is $8.95 as I write this.
Because it appears a bit overextended on the short term charts, I will suggest you Sell to Open (1) September $9 call for every 100 shares you buy.
They are quoted at $.35 to $.60, with the last sale at $.50.
Try and sell them for $.50.
This is for a full allocation or about 1,100 shares, based on a $10,000 investment
