The 401-Keg Plan

Among earnings highlights will be J.P. Morgan Chase, Merrill Lynch Citigroup , Washington Mutual, Intel, IBM and Google this week. It is truly a week of economic data, earnings, and potential drama.

Yesterday the market gyrated to 12,407 on the theoretical Dow and 12,240 to the downside. Traders that bought into the put were able to scalp tight profits, although we’ll continue to list this position as a higher risk open trade.

The fact that the market did “hold” at prior lows may be a good sign for bulls, but two way trades remain highly likely.

“If you had purchased $1,000 of Delta Air Lines stock just one year ago you would have $49.00 left.
With Enron, you would have $16.50 left of the original $1,000 investment.
With WorldCom, you would have less than $5.00 if you bought it when it was good.
However, if you purchased $1,000 worth of beer, one year ago, drank it all and then turned in the cans for refund, you would have $50.
Based on the above, the best current investment advice is to drink heavily and recycle.
Its call the 401-Keg plan.”

A bit of short term historical perspective:
*Washington Mutual just raised capital to continue. Wall Street took it as a good sign.
*Lehman had a successful convertible debt offering, raising capital really just to stay liquid. Wall Street took this also as a good sign.
At both of our financial services newsletters Floyd teaches simple bell curve overbought and oversold methodology.
This is the core of our Dow projections. Your job is to simplify the input you receive to the easiest ratios to review.

Bell curve methodology says a "count of 7", for example, to the put. With 10 at the outer parameters a 7 shows a fairly overbought/oversold (depending upon the bias) market. Thusly, as you read our recommendations of the day you can personally judge, from your own risk ratio, how far you will "take it". When the count was 6 to 7 Monday to the put, the prior Friday's 264 point drop added to what could be falsely averaged facts, but nonetheless really do reflect in Floydian Bell Curve thinking.
The best trades are in the 4's, moving to 7's. This is when there is the most chance of a larger jump down or up that you can carry out in partial sales, Floydian thirds.
The key to buying and selling in this market is recognizing, stock or option, that profits are fleeting, and gains can be erased in days.