That is what we have been using to "play" the market of late. When we had our successful play with the Volatility Index (VIX) using the VXX vehicle, it was based upon the fact that we were at the homeostasis average of 20ish and due to economic data points and geopolitical influences we assumed we would EVENTUALLY see a deviation from norm. We started buying the VXX. Once we got to what we would call a significant deviation from the norm (In this case above 42) we sold and took a nice profit.

This can be done with metals and indexes. For example if you look at the long term average P/E ratio for the S&P 500 is about 14. If you see the market trading at a P/E ratio of 19-20, like we did in 2006, that would be the time to start really watching your stops closely. Now the P/E eventually went to 21.8 before collapsing back down to 11 in early 2009. You can make money anticipating these anomalies if you are willing and able to know the data points, know the standard deviations from average, and have the risk tolerance to trade accordingly.

You can even do this with stocks, but you really have to have a good history of earnings to establish what the homeostasis might be. Let say we look at IBM whose 10 year P/E ratio is 13.3. Right now their P/E ratio is at 13.00. That does not seem like much, just 3 tenths of a percent. Well it is actually 2.2% off their average. Still not significant, but if their P/E dropped to 12.5 that would be a 6.1% variance. That might be an interesting time to see why that number is down and if it is a prospect for a long term buy.

Sorry, we got this one right. All week we had pretty much called the data points, but the market was not listening to the icky news floating around. We called a dismal jobs report and correction today and unfortunately we got it. It was unfortunate for those who did not play it. In our co-managed portfolios, we got everyone in September SPY PUT options on Monday morning. By Wednesday we were sweating a bit because we had called most of the data points but the S&P 500 kept climbing. Thursday we saw it come back and Today we cashed out of the PUTs with 31% profit for the week.

We also took the dip today to buy more of our core positions, CMG, SMTC, WY, AMZN, AAPL, UN, HON, XOM, PNC, and ZION. We also added to our GLD and SLV positions as we feel today's jobs numbers has eased the pressure in the metals bubble. We are looking for 70 in silver and 2000 in gold by years end.

Ok, yesterday was the beginning of a new month so let's see how are doing in the contest and the portfolios. In the main Salve Lucrum portfolio we had a great month with gains of 8%, spot on. That brings our realized gain total for the year back to even (-.11% NOT -11% -.11%) Of the 16 accounts we directly or indirectly handled our average realized gain year to date is 10.16%. Our overall unrealized gains for the year is 2.03% Considering everything, we are quite happy with that. Our best performing portfolio was one of the niece/nephew trust accounts heavy heavy in metals at 24.4% in realized gains. The worst was our own at -.11%. (The price of learning options). As far as unrealized gains, we had again the niece/nephew metal heavy portfolio up 39.82%. The worst was one we handle for a friend at -11.94%. (It was a timing issue. They got in during the April peak.)

Now for the contest update. Our leader is still our leader though her (Yes I am disclosing the gender for the first time.) lead has diminished a bit. She is enjoying a 5.2% gain on her picks. Last month I believe she had a 7 point lead, but now that is down to a 2 point lead. The spread from first place to last place is 34 percentage points.