Now, just read this and tell me what's wrong?
TEL AVIV (MarketWatch) -- General Motors (GM 17.15, -0.27, -1.5%) is planning more cost cuts as U.S. truck sales slump, people familiar with the matter told The Wall Street Journal.
The move would follow reports on Wednesday that Ford Motor (F:6.78, -0.02, -0.3%) plans to cut 2,000, or 12%, of it salaried jobs because U.S. consumers are shifting to smaller vehicles. GM management and the board have discussed the planned cuts, and Chief Executive Rick Wagoner will disclose them at the annual meeting June 3, the Journal reported.
And some good lessons from subscribers:
Does the risk increase the higher in support/resistance you go ? Like the risk is higher as it approaches R3 and S3 and it would be good to lock profits before these ? I just sold all my 630calls which I bought 3 days ago, so theoretically tomorrow is the 2nd last day. I sold at $15.50, $15.80, and $16.00 at the OEX R2 which was 639. The R3 was 641, was this a good decision ? Thanks Floyd =).
Just wondering the 630calls do they have to be sold by tomorrow 30 May as in your stop loss date or is it ok to keep them abit longer until next Monday or Tuesday, reason being I don't feel comfortable when the stop loss date being so close, didn't we just make new 630call buys today so the stop loss date would be next Wednesday ? I'm just scared if tomorrow is the top loss date then I might sell in a rush and I don't like making decisions in a rush. Just like your opinion on this. Thanks Floyd.
Regards,
D
Floyd-the right answer: risk always increases with a higher count, and as resistance or support lines are violated.
You used the phrase again today "classic fight between bulls and bears". If the fight between them were just random price battle, sellers wanting to charge more, buyers wanting to pay less no pattern or cycles would particularly show.
Sure, supply and demand tracking through PnF would show overbought/oversold but not particularly cyclically. I am much happier with the notion of cycles - because they clearly do exist, repeat cycles of approx equal periods of 21 days - if I know that the market is actually steered, consciously manipulated by companies which build their business plans around being certain of the position of the market at specific times and by knowing that their buying and selling and power can take the market to those points. i.e. they are the supply and demand.
Supply and demand is the institutional traders first, NOT the companies selling the stock. Fund and institutional traders play the cycles, the news, and the earnings/quarterly reports.
You never use throw away words so when you say something even casually I tune in
"What's next? We think yesterday's crash may slow the euphoric upsurge. The bears are now "fully in charge". Thusly we think upside may be near :)"
For you a simple line and perhaps almost a subconscious thought. The lead musician at an orchestra-concert doesn't read the music, he's done that so often he now just looks at it and hears the music through his eyes and it flows out from his fingers.
You will read charts in a similar way.
By your comment above do you mean that now prices have been driven down sufficiently its time to start ramping them back up?
Yes, and I also mean that the sentiment is waning to the upside, thusly more likely upside will continue.
Steve Nison writes very emotively and especially about the "battle" between the Bulls and Bears - until I read Dorsey and Hutson I had always struggled with the concept of "who" wants prices to go down. "Who" would choose to be a bear.
"Bears in charge or in control" simply means "buyer's market" - right? A Bear is not soemone who wants prices to go down, he is someone who just won't or can't pay higher prices at the moment and with that attitude across the market prices fall because there must always be sellers to keep the market liquid?
Exactly
The more I learned about accumulation techniques the more I understood that large corporations can stockpile shares obtained at relatively low prices and then sell them at ever increasing prices to Joe Average (JA) who buys them intending initially to hold onto them forever thinking they'll be worth gold bars in a few years in the same way he thinks about his house being his retirement plan - not realising that it only provides him with a nest egg if he sells it and forgetting that having done so he will need to live somewhere - groan.
Exactly, again
So, after a sideways move in the market, accumulation, such as throughout the first half of May, why would there be a sell off? The bursts up to 13100 were these corporations selling to JA - doctors, dentists and lawyers in the 6 figure salary directories which the boiler-room brokers find their victims, err, clients in?
It is the institutions doing this, not the corporations...the mutual funds and floor traders. They are also influenced by news, oil pricing, and their own set of fear and greed.
The sell off took place only after this burst up - right? This is corporations pushing prices up ? I did not miss the sequence of events if I say this?
Institutional traders
The sell off is from private investors - and probably idiot pension companies (I hear of daily) gambling the working stiff's hard-earned on the market and blowing it - being advised by his broker who got him into it to get out quick before the crash comes, which then actually prompt and ensures the crash. The same large corporations sell up to profit and then scare JA's brokers by bidding really low. The broker can panic his dentist clients into selling so the broker keeps trades moving to get his commission?
The individual client is only a small % of the game. The retail broker who sells to the individual also a small game. It's the floor and institutional traders selling for insurance companies, mutual funds, and investment brokers that run the show.
Either these brokers don't know what they're involved in as the film Wall Street portrays them or they do know and don't care because their job is commission not client care as the film Wall Street portrays them - except Dorsey who clearly does know but plays the game in such a way as to make money for his client while he plays it.
Dorsey sells to brokers very well. A large part of our subscriber base are also these brokers, most just "joes' trying to make a living, and no more skilled than you or most other subscribers. If investors read my emails from brokers they would be shocked at how stupid these people can be.
I can make that work in my mind except for the way the prices actually fall. Between a seller's market and a buyer's market I expect a stagnation while people dither. I know we went through a tight trading range late last week´, so was that still accumulation or dithering stagnation?...............but price then rocketed to a peak on Monday and then reversed the same day.
Floor traders again not buying or selling, but beginning to try to boost the price up. Much of stock prices are traders manipulating the price up to get others to buy their shares. They sell partials ( in large blocks) to boost market price, to sell off their remaining issues.
In most commercial markets there would be stagnation and dithering at peaks and troughs but the stock market can be kick started in either direction so rise and fall can be pretty much instantaneous?
Yes
The reversal down is probably so sudden because perhaps the manipulators begin work on JA's brokers as soon as they've emptied their portfolios to the upside? Why wait to make money? They immediately put mass buy orders in for much lower prices than they just sold for? The broker calls JA to tell him to take this slight dip now with perhaps still some profit or cut his losses before they grow. At which point strong willed JA checks with his brother-in-law and says, no it's a good stock, it'll come back, I'll hold, so he has to be scared some more....
they actually move the sales and profits to new issues that have been beaten down, by them, to repeat the same action
I can place logical triggers for falls in my mind, large corporations now with empty portfolios sold out for profit, the price manipulation for downturn is timed with the news, tell a journalist what you want him to know and he'll cause the panic for you as it sells better than calm, own your own subsidiary of market analysts and feed them the triggers to give to journalsist.....
Tell the journalist, or more importantly, the "analyst", the Wall Street kids that play this information for floor traders, inadvertently and not
What I don't see is who buys at the start of the crash? At that point the shares are in weak hands, JA owns them. The more he paid for them the less of a dip in the market he can stand so he can be scared into selling quickly. I could identify with him up until very recently so I'm not cocking-a-snoot at him. I can see the coroprations buying, selling, rebuying, reselling to push the market up - but buy lower, rebuy lower, resell lower to get prices down, they sustain losses in order to drive the market down, reducing profits they made on the way up.
Ah!! as I ramble, do I answer my own question? Yes, this is how price is driven down and this is what the OEX index is for, to sell Puts (to the same gullibles) to hedge the manipulators' losses on stock while they are sustaining them in driving down prices. Calls on the index cover in case they don't achieve the prices on the way up.
If that is anywhere near the mark......... who buys Calls and Puts on the day before expiry if they just evaporate?
Floor traders moving in and out for pennies
Also, if that is anywhere near the mark............. in there somewhere is your 21 day cycle. It is a cycle I describe above even if you need to tweek it and modify it for me then - beautiful!! and I will find the duration of the cycle. If I managed a cycle which was my bread and butter I wouldn't want it to be too long because I need to pay my costs, buildings, salaries etc while I'm working it. If I write business running costs into my cycle I will need to draw down profit from it and not reduce my trading capital when I do it. I only want to pay my costs out of profits and still leave headroom. I pay my costs monthly so I want my profit cycle not start and be complete inside a month.- I'll check later but, average 21 days between expiry Fridays, 3rd Friday of a month? Because the Fridays are different positions in a month it breaks up a regular pattern which even JA could see from his daily paper. If the cycle were complete on the last Friday of every month JA would see price rise and falls on dates he readily associates with such as his pay day at month ends. A scattered pattern is more difficult to spot casually. The start and end date doesn't matter but having the cash generating cycle complete inside the paying out cycle is the sort of business which would make a shipbuilder or powerstation constructor candescent green with envy huh?
Mostly correct. The patterns will change by the market, not the trading days, except around expiry and FOMC and ends of quarters.
Bookmakers operate on the principle that you can't fool everybody all the time, you just have to be able to fool most people most of the time. Bookmakers know that they will always have to pay out on winners, someone will have backed it. Bookmakers could not care less which competitor wins, they just want enough gullible gamblers to pay for the winners by luck or by professional attitude. He wants every competitor in the competition to be backed, there will only be one winner so he wants all other competitors to contribute to what he will have to pay out, and leave him some headroom to run his Rolls Royce with. In fact bookmakers really love a good relationship with a regular repeat big investor winner. This is regular income to his book and he can have perhaps one competitor now frozen in odds on his book. It is one less competitor he needs to sell to the gamblers. If he ends up taking too much on one competitor to the extent that if it wins he does not have enough income from the other competitors he will sustain a loss, what does he do? He lays it off. He himself backs that competitor with another bookmaker to hedge his exposure.
Bookmaking is identical to stock trading. They are really the same thing, as you are describing above.
So, from the same motives, smart money will never object to smart individual traders reading their actions, we're not going to dent it. They have no choice anyway, they're not allowed to cheat and they can't hide it from intelligent observation.
I might not be quite accurate with the description of the cycle, until you tweek it for me, but the buying and selling of a limited, well, actually fixed quantity of items - company shares - must move into and out of the same hands because the number of "hands" on that playing field, in that game, are also, more or less fixed. It must be fluid, liquid even. otherwise there are periods when large corporations are not generating income. For them to generate income, it has to be daily, all other conditions force the matter into a cycle. Because the OEX is an index created for the purpose of hedging it guarantees its own liquidity and this is the sageguard for covering losses in the move to drive prices down. Market Makers don't need to keep funding their own campaigns, they can get JA to fund it while they prepare to fleece him again.
Yes, and corporations do it through institutional traders, covertly and overtly. Institutional traders do the same thing, playing the move for their benefit, with no real care of the EPS or value, only the perceived value.
I like Dorsey's basketball game analogies (from his videos you can picture him gracefully striding the court huh?). There are many variations of tactics for the game but the conditions, size of court, number players etc, force a limit to the amount of variations. The trick for the opposing team is to spot very quickly which tactic the other is playing today and counter it. Ours as traders is to spot today's tactic of smart money and piggy back?
Exactly
Friday, May 30, 2008
Wednesday, May 28, 2008
The Market is Hesitant
The market is quite hesitant. In morning trading yesterday the market moved to a top of 12,640 and a bottom of 12,445, within a few hours. This allowed our June620Puts to close profitably. Day traders got up to 3.00 a contract in profits on the June630C.
New trades were possible on the June630C, for tight scalping profits, as the market gyrated, we also continue to hold a longer position to this in the money call; Day traders got up to 3.00 a contract in profits on the June630C.
The market can be viewed as in a technical befuddle; that is, either ripe for upside, or poised for downside. Wyckoff chartists would read this market as ripe for another sell off, despite a stronger count still to the call.
Downside will occur and will surprise the bulls. Right back to former moving averages. A complete sell off has not occurred.
But a sucker's rally, or a just a burst of buying, still just as likely in this range bound market.
From our subscribers:
"Looking at the history of the last 60 days, the theoretical DJ has really been lethal. Someone bought my calls for 13.9 yesterday at the end. Today I bought and sold puts for net 18% and bought calls at $12. I will sell the calls when the buy is back on the puts. I will not walk away until all is sold and I will use a 20% stop which is getting pretty dusty and rusty. :) Wow ! As reality unfolds the shock and aw become quiet. I think the enemy is really close now, me. "-TP, Oregon
and hours later:
"There it is, the put is back were it was and my sell order on the call got filled. I am not buying anymore until tomorrow."
“Interesting to watch.”? That is an understatement! It was like someone flipped at switch at 3:27. Is that just years of experience knowing times of the day that the buyers might step in? Based on what happened, I feel like I know so very little. I know not one thing magically tells the story; however I would certainly not predicted that – other than the DOW being near a strong support level and the 21 day trend you speak of. Institutional buyers at that time of day?
Higher volume on increasing prices and ending at or near the high….. Clear sailing Thursday. Maybe ;-)
As Ed McMahon so eloquently coined: I will simply call you Karnack the Magnificent.
Kind Regards,
RC
Floyd: This subscriber was noticing the increasing volume and thinking we were near a sell off. I had advised "interesting to watch" and commented on our regular tests of support lines.
"I really appreciate your responses Floyd. It is obvious that I need to still "learn what I do not know."
A couple of things are holding me up right now. One of them is HOW or WHY the market moves. Am I right by saying that your service teaches that it is all based on supply and demand, over bought/oversold, support and resistance lines and mathematical sequences? It really has nothing to do with the news or what is going on "out there?" What about FOMC meetings, earnings, commodity prices, the value of the dollar etc.? Don't those things cause market changes? When you say that they "trigger" moves in the market, what you are really saying is that they are not responsible for what was already going to happen correct? How do you KNOW (with the accuracy that you have) what is going to happen (you say that 70% is intuitive - is the rest x's and o's?). And can we develop this "intuition?"
Floyd: The Dow projections are mere tools. Do NOT get hung up on just the Dow projections. I am suggesting that the "news" triggers cause and effect off supply and demand.
Ex: If the market is vastly high and overextended, and "news" comes out that the FEDS are raising rates, the ODDS of a greater downturn off this are greater than if the Feds announced a rate cut and the market was already high, but with this news moved up only a slight bit.
Do nothing more than study s/r, pivot points and the Dow to understand the moves of that day.
The second thing messing me up is my intraday analysis. I am confused as to WHEN and HOW to analyze intraday. Do you do this an noon? And when you do, do you just calculate a new pivot (high + low divided by 2) and this new pivot will provide new support and resistance lines?
Floyd: Traders often recalculate at 10.30 a.m and again in the early afternoon. It's ONLY necessary to do if the market is showing 100 point type swings during the day. All of this is in the calculation models on the website.
Thirdly, when you list the Fibonacci percentages...is there a reason why 62% is listed before 50%? Which is most important (the 50%?). And what exactly are you looking for with the Fibonacci lines? Is this just for pullback reasons and better entry points or do you use these to help predict reversals at all?
Floyd: There are three Fib retracements. All three are listed. The alert identifies all three, and that the 50% line is the common "support" line, just another support line to know.
From the tone of your questions, I can see a subscriber that has not truly studied the manual, and continues to miss many obvious things, making them more complicated than they are, and trades without knowledge. This way you'll lose money.
Hey Floyd,
I am learning some lessons the tough way.
I've been holding the 630 calls since Friday (3 calls with an average price of 13.80).
Floyd: Stop loss should be this Friday Two buys should have been made. The position has been available several times for scalp profits also.
Tuesday's 2nd signal was the 620 Put. I jumped the gun slightly and filled 2 positions at 8.00. This was at 9:55am (5 minutes before the new home sales report and the consumer confidence report came out). I figured that both would be below expectations. Well at 10am, after the reports came out, the DOW shot up. I quickly sold my puts for a $60 total loss b/c I thought we were taking off on the upside. After about 1/2 hour, I noticed the DOW falling again. This time I filled four 620 Puts at 7.80. There was one point, about an hour or two later, where I was up about $400 (that is about a 13% gain). I never sold any of my puts until I slowly watched my profit dwindle to a measly $80. All in all, I ended up taking a $16 loss dues to commissions.
Floyd: The lesson here is buying too early. You were "guessing" on the report, and "guessing" on "taking off one the upside.
You would know this from studying support/resistance and pivot points.
I need to come up with a freakin' plan because trading like this will get you broke real quick!!
Floyd: The plan already exists. You must just follow it.
1. What system do you follow with regards to "high risk" day trades? What are the profit goals? 10-15%? Because I was thinking that the DOW had more room to drop, I was holding out (greed) and it just never got there. Now if I had a system in place, some strict rules to follow, I would have probably been much better off. Any suggestions?
Floyd:If puts were higher risk and you were new to trading, why take that risk? You must have profit goals in advance. I cannot give you exact profit goals, as each trader with us is different, and has different risk management methods and goals.
Trader A might buy 100 contracts at settle for 8%, another might buy 2 contracts and be willing to buy 4 more, and settle for 20%.
And, as an example, puts were profitable today on several downturns. We entered a trade range.
2. When the DOW did drop to the low to mid 12.400's...should I have bought some more 630 calls? That just seemed like a good idea being down that far. I wanted to buy some more calls but you had previously mentioned having made to 2 buys already. Would that have been a bad move to buy more?
Floyd: This would have been the time to do so, but if you already made two buys on the position you would be breaking rules.
Some traders had not bought the second time yet.
3. I see in your new alert that you write, "The open put, sold by many traders yesterday, remains a viable buy if market conditions show deterioration. Buy no higher than prior day close, sell for only UP to 18% profits." I appreciate the specific profit goals. To be more conservative, I will stick to 10-15%. My question to you is the following, :How will a trader with little experience know when and if the "market conditions show deterioration?" What am I looking for exactly? Breaking through support lines? What are the key indicators?
Floyd: We were close to a Dow bottom. I advised a shorter term hold, and the higher risk. I would, if little experience, been paper trading still. You must learn first what you do not know.
Thanks for your help Floyd,
I'm learning good stuff here! Unfortunately, some of it is the hard way. What I like is that I am gaining some confidence because my understanding is increasing. Oh I almost forgot. You keep mentioning that you anticipate a move back up to 13,000. Wouldn't we want to keep some 630 calls until then or do you like to just keep taking profits and continue buying along the way up? If you prefer the latter, can you explain why?
Floyd: Always take profits off the table. One can always rebuy. Market moves may CHANGE trom a projection in a revised projection as market conditions change each day.
New trades were possible on the June630C, for tight scalping profits, as the market gyrated, we also continue to hold a longer position to this in the money call; Day traders got up to 3.00 a contract in profits on the June630C.
The market can be viewed as in a technical befuddle; that is, either ripe for upside, or poised for downside. Wyckoff chartists would read this market as ripe for another sell off, despite a stronger count still to the call.
Downside will occur and will surprise the bulls. Right back to former moving averages. A complete sell off has not occurred.
But a sucker's rally, or a just a burst of buying, still just as likely in this range bound market.
From our subscribers:
"Looking at the history of the last 60 days, the theoretical DJ has really been lethal. Someone bought my calls for 13.9 yesterday at the end. Today I bought and sold puts for net 18% and bought calls at $12. I will sell the calls when the buy is back on the puts. I will not walk away until all is sold and I will use a 20% stop which is getting pretty dusty and rusty. :) Wow ! As reality unfolds the shock and aw become quiet. I think the enemy is really close now, me. "-TP, Oregon
and hours later:
"There it is, the put is back were it was and my sell order on the call got filled. I am not buying anymore until tomorrow."
“Interesting to watch.”? That is an understatement! It was like someone flipped at switch at 3:27. Is that just years of experience knowing times of the day that the buyers might step in? Based on what happened, I feel like I know so very little. I know not one thing magically tells the story; however I would certainly not predicted that – other than the DOW being near a strong support level and the 21 day trend you speak of. Institutional buyers at that time of day?
Higher volume on increasing prices and ending at or near the high….. Clear sailing Thursday. Maybe ;-)
As Ed McMahon so eloquently coined: I will simply call you Karnack the Magnificent.
Kind Regards,
RC
Floyd: This subscriber was noticing the increasing volume and thinking we were near a sell off. I had advised "interesting to watch" and commented on our regular tests of support lines.
"I really appreciate your responses Floyd. It is obvious that I need to still "learn what I do not know."
A couple of things are holding me up right now. One of them is HOW or WHY the market moves. Am I right by saying that your service teaches that it is all based on supply and demand, over bought/oversold, support and resistance lines and mathematical sequences? It really has nothing to do with the news or what is going on "out there?" What about FOMC meetings, earnings, commodity prices, the value of the dollar etc.? Don't those things cause market changes? When you say that they "trigger" moves in the market, what you are really saying is that they are not responsible for what was already going to happen correct? How do you KNOW (with the accuracy that you have) what is going to happen (you say that 70% is intuitive - is the rest x's and o's?). And can we develop this "intuition?"
Floyd: The Dow projections are mere tools. Do NOT get hung up on just the Dow projections. I am suggesting that the "news" triggers cause and effect off supply and demand.
Ex: If the market is vastly high and overextended, and "news" comes out that the FEDS are raising rates, the ODDS of a greater downturn off this are greater than if the Feds announced a rate cut and the market was already high, but with this news moved up only a slight bit.
Do nothing more than study s/r, pivot points and the Dow to understand the moves of that day.
The second thing messing me up is my intraday analysis. I am confused as to WHEN and HOW to analyze intraday. Do you do this an noon? And when you do, do you just calculate a new pivot (high + low divided by 2) and this new pivot will provide new support and resistance lines?
Floyd: Traders often recalculate at 10.30 a.m and again in the early afternoon. It's ONLY necessary to do if the market is showing 100 point type swings during the day. All of this is in the calculation models on the website.
Thirdly, when you list the Fibonacci percentages...is there a reason why 62% is listed before 50%? Which is most important (the 50%?). And what exactly are you looking for with the Fibonacci lines? Is this just for pullback reasons and better entry points or do you use these to help predict reversals at all?
Floyd: There are three Fib retracements. All three are listed. The alert identifies all three, and that the 50% line is the common "support" line, just another support line to know.
From the tone of your questions, I can see a subscriber that has not truly studied the manual, and continues to miss many obvious things, making them more complicated than they are, and trades without knowledge. This way you'll lose money.
Hey Floyd,
I am learning some lessons the tough way.
I've been holding the 630 calls since Friday (3 calls with an average price of 13.80).
Floyd: Stop loss should be this Friday Two buys should have been made. The position has been available several times for scalp profits also.
Tuesday's 2nd signal was the 620 Put. I jumped the gun slightly and filled 2 positions at 8.00. This was at 9:55am (5 minutes before the new home sales report and the consumer confidence report came out). I figured that both would be below expectations. Well at 10am, after the reports came out, the DOW shot up. I quickly sold my puts for a $60 total loss b/c I thought we were taking off on the upside. After about 1/2 hour, I noticed the DOW falling again. This time I filled four 620 Puts at 7.80. There was one point, about an hour or two later, where I was up about $400 (that is about a 13% gain). I never sold any of my puts until I slowly watched my profit dwindle to a measly $80. All in all, I ended up taking a $16 loss dues to commissions.
Floyd: The lesson here is buying too early. You were "guessing" on the report, and "guessing" on "taking off one the upside.
You would know this from studying support/resistance and pivot points.
I need to come up with a freakin' plan because trading like this will get you broke real quick!!
Floyd: The plan already exists. You must just follow it.
1. What system do you follow with regards to "high risk" day trades? What are the profit goals? 10-15%? Because I was thinking that the DOW had more room to drop, I was holding out (greed) and it just never got there. Now if I had a system in place, some strict rules to follow, I would have probably been much better off. Any suggestions?
Floyd:If puts were higher risk and you were new to trading, why take that risk? You must have profit goals in advance. I cannot give you exact profit goals, as each trader with us is different, and has different risk management methods and goals.
Trader A might buy 100 contracts at settle for 8%, another might buy 2 contracts and be willing to buy 4 more, and settle for 20%.
And, as an example, puts were profitable today on several downturns. We entered a trade range.
2. When the DOW did drop to the low to mid 12.400's...should I have bought some more 630 calls? That just seemed like a good idea being down that far. I wanted to buy some more calls but you had previously mentioned having made to 2 buys already. Would that have been a bad move to buy more?
Floyd: This would have been the time to do so, but if you already made two buys on the position you would be breaking rules.
Some traders had not bought the second time yet.
3. I see in your new alert that you write, "The open put, sold by many traders yesterday, remains a viable buy if market conditions show deterioration. Buy no higher than prior day close, sell for only UP to 18% profits." I appreciate the specific profit goals. To be more conservative, I will stick to 10-15%. My question to you is the following, :How will a trader with little experience know when and if the "market conditions show deterioration?" What am I looking for exactly? Breaking through support lines? What are the key indicators?
Floyd: We were close to a Dow bottom. I advised a shorter term hold, and the higher risk. I would, if little experience, been paper trading still. You must learn first what you do not know.
Thanks for your help Floyd,
I'm learning good stuff here! Unfortunately, some of it is the hard way. What I like is that I am gaining some confidence because my understanding is increasing. Oh I almost forgot. You keep mentioning that you anticipate a move back up to 13,000. Wouldn't we want to keep some 630 calls until then or do you like to just keep taking profits and continue buying along the way up? If you prefer the latter, can you explain why?
Floyd: Always take profits off the table. One can always rebuy. Market moves may CHANGE trom a projection in a revised projection as market conditions change each day.
Memorial Day Week
Memorial Day Week, Dow up big 12 straight 1984-1995, down 7 of last 11.
In good trading after the holiday weekend the market moved up 50 plus points, with oil slightly falling, which allowed traders to take entry to the June620P at 7.70 and less easily, and sell on support lines to 9.00 hours later. The June630C rose for tight profits in early trading, retraced and allowed new or second buys, and began a gap up again near 3 p.m. This one sold to highs of 13.90 in afternoon trading. Many traders reported fast scalp profits on the Dow moves today.
Floyd on soapbox:
Saudi Arabia made a contribution of $500 million to the U.N World Food Program to respond to rising prices, meaning the agency won't have to cut rations to the world's needy. This was the world's largest appeal for $755 million to cover increased costs that had threatened critical aid to millions of needy people.
Total contributions to this effort reached $960 million from 32 countries.
We can see these "facts" as "that is all that Saudi, which produces 25% of the world's oil, can give? Those greedy ____" to "where is the U.S. contribution, and how much do we spend in Iraq in a week?", to "what is the real reason that food prices are rising so much?"
Read our Dow projections and count carefully. We are in the midst of tests to upswing. Market news is not good...but oil showed a sign of weakening. The market appears ripe to at least try upswing. Post holiday happiness, or ?
In good trading after the holiday weekend the market moved up 50 plus points, with oil slightly falling, which allowed traders to take entry to the June620P at 7.70 and less easily, and sell on support lines to 9.00 hours later. The June630C rose for tight profits in early trading, retraced and allowed new or second buys, and began a gap up again near 3 p.m. This one sold to highs of 13.90 in afternoon trading. Many traders reported fast scalp profits on the Dow moves today.
Floyd on soapbox:
Saudi Arabia made a contribution of $500 million to the U.N World Food Program to respond to rising prices, meaning the agency won't have to cut rations to the world's needy. This was the world's largest appeal for $755 million to cover increased costs that had threatened critical aid to millions of needy people.
Total contributions to this effort reached $960 million from 32 countries.
We can see these "facts" as "that is all that Saudi, which produces 25% of the world's oil, can give? Those greedy ____" to "where is the U.S. contribution, and how much do we spend in Iraq in a week?", to "what is the real reason that food prices are rising so much?"
Read our Dow projections and count carefully. We are in the midst of tests to upswing. Market news is not good...but oil showed a sign of weakening. The market appears ripe to at least try upswing. Post holiday happiness, or ?
Tuesday, May 27, 2008
Oil is Clearly the Catalyst
Market moves Friday allowed astute traders to move in and out on short term gains on the open June630C, and for second buys to be made. As I warned, I may have been a bit early on the move to the call, but market bottoms continue to be tested, all because of oil.
Being early has allowed astute traders to profit for up to 2.00 a contract last Thursday, and up to a $1.00 a contract last Friday. We believe 630 is a natural progression area for where we see market bottoms, and first market tops.
Our Dow projections are quite detailed. Study carefully. Oil is clearly the catalyst, but it will not be long before America accepts $4.00 a gallon, and perhaps even $5.00, and market tops are occurring in oil because of floor traders, and because yet again we have taken our eye off the ball, and while creating "democracy" in the Middle East so well, have forgotten intelligent ways to manage risk. Buying new Ford F150 trucks for tooling around the suburbs of our cities is simply stupid, and we will pay for it.
From Subscribers:
1.Hi Floyd,
I wonder when you say that risk is increasing in your alerts as these are extra ordinary successful.
Why you say that?
We have been right 38 out of the last 39 trades, at last count. This is extraordinary performance, and quite unrealistic. If we are "right" 73% of the time, we'd be pleased. Our normal rate of "win" ratios runs 81%. We are only afraid that subscribers will begin to think we are infallible, and that "this is easy".
I believe you're proving your hard work and putting you experience in alerts that's why these are so much true. You're proving if someone (like yourself) thoroughly analyze the market with leading (not lagging) indicators and successful experience, you can be true almost all time. As all contributes to your hard work which correctly forcasts the market direction.
Successful alerts in a row increase the confidence in your alerts. But when you say risk is increasing, it disturbs your subscribers (like myself).
Thanks for your valuable alerts.
The alerts should build no confidence. They are a tool for you as a subscriber to use to analyze the market. We teach you HOW to trade, NOT what to trade. I become nervous when subscribers "count" on a signal, and "get rich" with me. All is not as it appears.
"Floyd, made a 1.00 on the 630C as it whipsawed on Friday, and have an open two buy position at an average cost of 13.40 also. I've made $36,000 in the past 14 trades with you, and have had only successes. I take full credit for this, as I'm following your rules to a T, and truly not over studying "facts" as you so well teach. Eliminating "noise" has been the hardest thing I"ve ever done trading. I consider you a stock market genius"-NEB
I laugh when subscribers are nervous about market conditions, as if they could understand them really. What I've learned is that the market moves to tops and bottoms in a 21 day average period, around support and resistance lines, and that "news" is the trigger. I actually am beginning to follow supply and demand". JAE
We also believe the great American Bush tax credit game, money back to spur the economy, is hitting Bushian reality, which Floyd defines as "3 months after something is done it's found to be harmful, not beneficial":
Paulson Job-Growth Forecast May Come Up Short, Economists Say
By Brendan Murray
May 23 (Bloomberg) -- Treasury Secretary Henry Paulson's prediction that tax rebates will create half a million new jobs this year may come up short as the impact of the stimulus fades, according to a survey of economists.
``It is a one-time shot, a drug addict getting a hit,'' said William Dunkelberg, the National Federation of Independent Business chief economist in Washington. ``It will feel good for a quarter, but then the stimulus is gone and it's not clear what would fill that void.''
At stake for Paulson's boss, George W. Bush, is whether he will become the first president since Dwight D. Eisenhower to preside over a drop in payrolls in his final year in office. The administration is counting on the more than $100 billion of rebates this year to spur a rebound in growth that encourages companies to boost hiring.
The median estimate of 10 forecasters responding to a Bloomberg News survey was for an increase of 158,500 jobs resulting from the stimulus package. Another nine respondents declined to offer a forecast, either doubting there would be any increase in payrolls or judging that the impact was impossible to project with any accuracy.
Paulson traveled to Kansas City, Missouri, this month to watch printing presses roll out checks as part of a $168 billion stimulus plan. He said that more than $100 billion will come as cash to consumers and that the package ``will lead to the creation of over 500,000 new jobs that would not have been created otherwise.''
`Way Too High'
Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York, called Paulson's forecast ``way too high,'' saying a better guess would be 100,000 to 200,000 jobs.
The Federal Reserve said this week officials expect the U.S. unemployment rate will rise as the housing slump deepens and consumers rein in spending. Policy makers anticipate the rate will rise to 5.5 percent to 5.7 percent in the final quarter of 2008 from 5 percent in April.
Administration officials base their forecast on the expectation of a jolt toconsumer spending, which accounts for about 70 percent of U.S. gross domestic product.
``And the tooth fairy creates a million jobs when the kids spend their money,'' said Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania. ``If we get a tenth of that, I would be happy.''
Computer Model
Paulson's estimate came from a computer model developed by Macroeconomic Advisers LLC, the St. Louis- based forecasting firm, which requires the administration to plug in assumptions about when and how much money will be spent. The rebates and business-tax incentives amount to about 1 percent of U.S. GDP, according to the Treasury.
Responding to questions, Phillip Swagel, the Treasury's assistant secretary for economic policy, defended the administration's forecast.
``The stimulus will provide a boost to the economy,'' he said in an e-mailed reply. ``Sure, they would have been created eventually, but we'll get them sooner and that's useful.''
Paulson cited evidence on May 8 that consumers in 2001 and 2003 spent, rather than saved or repaid debt, one-third to two-thirds of two separate tax-cut and stimulus packages.
Saul Hymans, director of economic forecasting at the University of Michigan in Ann Arbor, predicted that while the job dividend may fall short of 500,000 this year, the stimulus may still have an effect in 2009.
2009 Impact
``The job effect of the stimulus continues to strengthen through the first half of next year and then its effect begins to wane,'' he said, anticipating a total gain of 380,000 in the first and second quarters of 2009.
Most analysts see further declines in U.S. payrolls after employers cut 260,000 jobs in the first four months of the year. Results from the Blue Chip Economic Indicators survey released May 10 showed economists forecast payrolls will drop by an average of 25,000 a month this year.
``Economic theory is surprisingly unified on this; one-time tax'' adjustments ``do not affect permanent changes in spending behavior, and therefore should not have any effect on employment,'' said Christopher Low, chief economist at FTN Financial in New York. ``The fallacy in this reasoning is that it assumes the tax cut is ongoing.''
Recession Losses
During the country's last recession, which lasted from March 2001 to November 2001, payrolls declined by 181,000 a month on average. As the expansion resumed in December 2001, an average 47,000 jobs a month were lost for the next year.
Bush has presided over average payroll gains of 61,000 a month since he took office, compared with increases of 240,000 under President Bill Clinton. Bush's record is slightly stronger than his father's. George H.W. Bush oversaw an average of 54,000 more jobs a month.
Eisenhower was the last president to see a drop in payrolls in his final year, when the economy fell into a recession in 1960 following a steel-industry strike and tight monetary policy the previous year.
```To think the result'' of the tax rebates ``might be a relatively quick turn to strong job growth is a pipe dream,'' said Ken Goldstein, chief economist at the New York-based Conference Board.
Being early has allowed astute traders to profit for up to 2.00 a contract last Thursday, and up to a $1.00 a contract last Friday. We believe 630 is a natural progression area for where we see market bottoms, and first market tops.
Our Dow projections are quite detailed. Study carefully. Oil is clearly the catalyst, but it will not be long before America accepts $4.00 a gallon, and perhaps even $5.00, and market tops are occurring in oil because of floor traders, and because yet again we have taken our eye off the ball, and while creating "democracy" in the Middle East so well, have forgotten intelligent ways to manage risk. Buying new Ford F150 trucks for tooling around the suburbs of our cities is simply stupid, and we will pay for it.
From Subscribers:
1.Hi Floyd,
I wonder when you say that risk is increasing in your alerts as these are extra ordinary successful.
Why you say that?
We have been right 38 out of the last 39 trades, at last count. This is extraordinary performance, and quite unrealistic. If we are "right" 73% of the time, we'd be pleased. Our normal rate of "win" ratios runs 81%. We are only afraid that subscribers will begin to think we are infallible, and that "this is easy".
I believe you're proving your hard work and putting you experience in alerts that's why these are so much true. You're proving if someone (like yourself) thoroughly analyze the market with leading (not lagging) indicators and successful experience, you can be true almost all time. As all contributes to your hard work which correctly forcasts the market direction.
Successful alerts in a row increase the confidence in your alerts. But when you say risk is increasing, it disturbs your subscribers (like myself).
Thanks for your valuable alerts.
The alerts should build no confidence. They are a tool for you as a subscriber to use to analyze the market. We teach you HOW to trade, NOT what to trade. I become nervous when subscribers "count" on a signal, and "get rich" with me. All is not as it appears.
"Floyd, made a 1.00 on the 630C as it whipsawed on Friday, and have an open two buy position at an average cost of 13.40 also. I've made $36,000 in the past 14 trades with you, and have had only successes. I take full credit for this, as I'm following your rules to a T, and truly not over studying "facts" as you so well teach. Eliminating "noise" has been the hardest thing I"ve ever done trading. I consider you a stock market genius"-NEB
I laugh when subscribers are nervous about market conditions, as if they could understand them really. What I've learned is that the market moves to tops and bottoms in a 21 day average period, around support and resistance lines, and that "news" is the trigger. I actually am beginning to follow supply and demand". JAE
We also believe the great American Bush tax credit game, money back to spur the economy, is hitting Bushian reality, which Floyd defines as "3 months after something is done it's found to be harmful, not beneficial":
Paulson Job-Growth Forecast May Come Up Short, Economists Say
By Brendan Murray
May 23 (Bloomberg) -- Treasury Secretary Henry Paulson's prediction that tax rebates will create half a million new jobs this year may come up short as the impact of the stimulus fades, according to a survey of economists.
``It is a one-time shot, a drug addict getting a hit,'' said William Dunkelberg, the National Federation of Independent Business chief economist in Washington. ``It will feel good for a quarter, but then the stimulus is gone and it's not clear what would fill that void.''
At stake for Paulson's boss, George W. Bush, is whether he will become the first president since Dwight D. Eisenhower to preside over a drop in payrolls in his final year in office. The administration is counting on the more than $100 billion of rebates this year to spur a rebound in growth that encourages companies to boost hiring.
The median estimate of 10 forecasters responding to a Bloomberg News survey was for an increase of 158,500 jobs resulting from the stimulus package. Another nine respondents declined to offer a forecast, either doubting there would be any increase in payrolls or judging that the impact was impossible to project with any accuracy.
Paulson traveled to Kansas City, Missouri, this month to watch printing presses roll out checks as part of a $168 billion stimulus plan. He said that more than $100 billion will come as cash to consumers and that the package ``will lead to the creation of over 500,000 new jobs that would not have been created otherwise.''
`Way Too High'
Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York, called Paulson's forecast ``way too high,'' saying a better guess would be 100,000 to 200,000 jobs.
The Federal Reserve said this week officials expect the U.S. unemployment rate will rise as the housing slump deepens and consumers rein in spending. Policy makers anticipate the rate will rise to 5.5 percent to 5.7 percent in the final quarter of 2008 from 5 percent in April.
Administration officials base their forecast on the expectation of a jolt toconsumer spending, which accounts for about 70 percent of U.S. gross domestic product.
``And the tooth fairy creates a million jobs when the kids spend their money,'' said Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania. ``If we get a tenth of that, I would be happy.''
Computer Model
Paulson's estimate came from a computer model developed by Macroeconomic Advisers LLC, the St. Louis- based forecasting firm, which requires the administration to plug in assumptions about when and how much money will be spent. The rebates and business-tax incentives amount to about 1 percent of U.S. GDP, according to the Treasury.
Responding to questions, Phillip Swagel, the Treasury's assistant secretary for economic policy, defended the administration's forecast.
``The stimulus will provide a boost to the economy,'' he said in an e-mailed reply. ``Sure, they would have been created eventually, but we'll get them sooner and that's useful.''
Paulson cited evidence on May 8 that consumers in 2001 and 2003 spent, rather than saved or repaid debt, one-third to two-thirds of two separate tax-cut and stimulus packages.
Saul Hymans, director of economic forecasting at the University of Michigan in Ann Arbor, predicted that while the job dividend may fall short of 500,000 this year, the stimulus may still have an effect in 2009.
2009 Impact
``The job effect of the stimulus continues to strengthen through the first half of next year and then its effect begins to wane,'' he said, anticipating a total gain of 380,000 in the first and second quarters of 2009.
Most analysts see further declines in U.S. payrolls after employers cut 260,000 jobs in the first four months of the year. Results from the Blue Chip Economic Indicators survey released May 10 showed economists forecast payrolls will drop by an average of 25,000 a month this year.
``Economic theory is surprisingly unified on this; one-time tax'' adjustments ``do not affect permanent changes in spending behavior, and therefore should not have any effect on employment,'' said Christopher Low, chief economist at FTN Financial in New York. ``The fallacy in this reasoning is that it assumes the tax cut is ongoing.''
Recession Losses
During the country's last recession, which lasted from March 2001 to November 2001, payrolls declined by 181,000 a month on average. As the expansion resumed in December 2001, an average 47,000 jobs a month were lost for the next year.
Bush has presided over average payroll gains of 61,000 a month since he took office, compared with increases of 240,000 under President Bill Clinton. Bush's record is slightly stronger than his father's. George H.W. Bush oversaw an average of 54,000 more jobs a month.
Eisenhower was the last president to see a drop in payrolls in his final year, when the economy fell into a recession in 1960 following a steel-industry strike and tight monetary policy the previous year.
```To think the result'' of the tax rebates ``might be a relatively quick turn to strong job growth is a pipe dream,'' said Ken Goldstein, chief economist at the New York-based Conference Board.
Friday, May 23, 2008
Why Oil is Rising
The Friday before Memorial Day tends to be lackluster with light trading. The market is closed on Monday.
First, a good question from new trader MP:
Hey Floyd,
I'm a little frustrated over here. I feel like everyone is enjoying this party and I'm left shaking my head as to what went wrong.
I've got some questions for you. I think that maybe I am over analyzing things and trying to make the perfect trade. I don't know. Hopefully you can help me figure out where my focus is and what I need to change.
Here goes:
Yesterday you wrote:
"Read our Dow projections. Bottoms may NOT be finished, but whipsaw is likely. The market held at a strong resistance area of 12,740 today. We'll enter puts one more time, but the risk is increasing." How or why do you decide to enter puts again after a 200 pt. drop in the DOW. That seems kinda gutsy. What makes you decide that? And when you say that the "risk is increasing", what exactly do you mean by that; does that mean you have less than a 50/50 chance?
Simple answer. I saw an additional downside. The move was not yet over. I knew the FOMC minutes were coming out and it was likely they would curtail the rate drops. The 21 day cycle was not complete, it was time for more downside to what we just hit.
All is not as it appears. The news will tell you that yesterday's drops were caused by " fill in blanks". The market drops were ALREADY coming, and the "fill in blanks" was just the catalyst for the downside. When you say that the market was already coming, are you saying that the supply was greater than the demand and that there was no way to stop it?
News merely triggers what already is. The reverse of what people expect. Oil and FOMC were the trigger to moves that would occur
When you put out the early morning alert about paying up to 10% over prior day close, you also wrote to me privately saying that though you may suggest that kind of strategy at times, you still never do it. This gave me the impression that I should not do it either. I figured that "If Floyd isn't doing it, then there must be a good reason so I better not do it either. I've got months experience and you've got years." That's OK too. I'm actually pretty proud of myself that I followed that rule because it showed that I had some discipline. However, the bottom line is that for the past two days, I didn't enter because I couldn't get filled less than prior day close (I missed it today). When and if that happens to you, how do you have peace with that b/c I'm kicking myself right now that I didn't get filled for at least 10.00 today. I just didn't have the guts to get in b/c you stated this morning that "We 've been right so many times in a row that our risk is also increasing, and that the chance of downside with a count of 5 to 6 to the put is at 55%." When I read something like that, being so new at this, it's hard for me to risk my money. What suggestions do you have for someone in my position who is experiencing this kind of hesitation?
Nothing. My ratio of wins is extraordinary right now. I'm simply sharing with greedy subscribers to recognize that this is option trading.
I NEVER worry if I don't not make money. I only worry if I lose money.
Last week I wrote to you regarding entering a position. I told you that I seem to always enter too early. I asked you how soon you enter a position in the morning and you stated that you like to wait for an hour to see what the market is doing. Looking back at the plays that I've made, I realized that if I did it your way, I would have made out much better. However, today, that strategy hurt me. How do you know when to hold out for before entering and when to get in right away like people did today?
Only by experience, and a bit of control. I do sometimes put best buy prices in prior to market; it all depends upon the count of the market.
And lastly,
Here we are with the DOW 400pts. down in 2 days. We've gotta be close to a bottom as you suggest. You put out an alert for the 630 call for 15.50 or less. Of course I wasn't able to get filled for that price today and I followed your suggestion of not chasing it up. You also tell us to be prepared to make a larger second buy. I am a bit confused. If we are almost at the bottom, what second buy is there going to be? Isn't this puppy going to be rising like a bat out of hades? You say that
Deeper bottoms are now possible, but we'd think a low of 12,470 might suffice, and also believe the market may now have an exhaustive gap upside.
What is an exhaustive gap upside? Does that mean we are going bullish? OR does that mean we are slowly going to rise? Should I wait for the DOW to drop more and enter at 15.50 or less or do I try to get in on this 630 call asap. It closed at 16.00 and as I type this, the futures are +14 (I realize that at this time of the evening, that doesn't mean much). Anyway, I am a bit concerned about my entry into this position. I don't want to miss the play like I did in the last two days but I also don't want to do something stupid. Any suggestions?
At times I may enter too early, just to be sure I am entering. A second buy only assures and allows the trader profits if I do enter early. I entered as the market hit my bottom. It may now go another bit lower, although doubtful, and if so, we'll simply increase the position for the next move.
Do not worry about missing plays. There is always a chance to buy. Doing the worrying is what creates FEAR and GREED.
This is what destroys the trader.
I appreciate you taking the time to help me. I am working hard over here. I'm taking it slow and I'm up $1400 on the year so far (it's only been two weeks). I want to trade smart that's all. I love your service and I'm thrilled to be a part. When I earn more money, I want to sign up for Blue Chips and advanced mentoring. I am reading Dorsey and I think it's great.
Forgive me if I hound you too much!!
Again, I appreciate your time and advice.
Mike
PS - I bought a hand held device today like you suggested. Now I can watch my trades while I'm with my girls at the park!! I'm so pumped!! When you are using your iphone, what do you focus on? DOW? Option prices? Charts?
Just Dow. I keep all noise out of trading.
Second, here's why oil is rising. It's not the "evil empire" as Emperor Bush says, it's NOT Saudi Arabia et al raising the prices.
It's Wall Street, and it's the DEMAND:
Blame Wall Street for $135 Oil on Wrong-Way Betting (Update1)
By Alexander Kwiatkowski and Grant Smith
May 22 (Bloomberg) -- Oil's rally to a record above $135 a barrel came as traders bought crude to cover wrong-way bets that prices would decline, according to data from the New York Mercantile Exchange.
The number of outstanding futures contracts, known as open interest, fell 8.1 percent in a week to 1.36 million at the same time that prices rose 2.6 percent, the data show. Falling open interest and rising prices are signs that traders are buying to exit so-called short positions that would profit if oil fell, and lose money as they rose.
``In a market like today, which is trending higher while open interest is falling, it's a sign that money is moving out of the market,'' said Stephen Schork, president of Schork Group Inc. in Villanova, Pennsylvania. Open interest in Nymex crude futures peaked this year at 1.5 million on March 13.
Crude futures yesterday gained 3.3 percent to $133.17 a barrel for July delivery, the largest advance since May 2 on the Nymex, and touched a record $135.04 today. Oil rose after a government report showed U.S. inventories unexpectedly declined last week. Oil has more than doubled in the past year.
Open interest has been sliding for months, after the number of outstanding crude futures reached a record 1.58 million on July 16, 2007.
``It is not a growing market, it is a shrinking market in terms of open interest,'' said Olivier Jakob, managing director of Petromatrix Gmbh in Zug, Swizterland. ``It is also facilitating the move upward.''
Shell's View
Oil prices have closed at record highs on 27 days so far this year, prompting OPEC oil ministers including Saudi Arabia's Ali al-Naimi to declare that the rally is led by investors, rather than a shortage of supply.
Crude for delivery in December 2016 ended yesterday at $142.09 a barrel, signaling investors anticipate prices will gain for years. Some traders speculate oil will reach $200 this year. The price of a December 2008 option contract that allows the holder to buy 1,000 barrels of crude at $200 each jumped 67 percent in three days to $1.72 a barrel yesterday on the Nymex.
U.S. oil executives told Congress yesterday that prices should be between $35 and $90 a barrel. John Hofmeister, president of Shell Oil Co., the Houston-based subsidiary of Royal Dutch Shell Plc, pegged the proper range ``somewhere between $35 and $65 a barrel.''
Saudi minister al-Naimi said in March when oil was trading near $100 that prices were unlikely to fall below $60 or $70, representing the cost of producing alternatives such as biofuels or tar sands.
Third, from trader PC:
I have almost double my IRA had $12000 4 months ago and now have $23500 in it. Things have been going great trading. I have not even traded more than 20% of my capital to do it either. Usually 1 contract sometimes will buy down as things appear attractive. Just trading OEX on Dow projections, P & F charts, pivot points calculated daily, FIB levels from long term levels, and long term trend lines. Its worked very well. Of course reading the alerts and your advise to help guide my decision process. The great thing is now that I have not been relying totally on you to trade. I have had many successful trades on my own using what you have taught me.
Fourth, from trader TP
I bought calls today two times at 15.5. Just put the order in early, was thinking maybe no trading today oh well, boom filled. After I sold the first batch I put in an order for $15.5 and thought if this gets filled that would be cool, and it did, and sold again. When it works, it works.
And lastly, the market. The Dow moved right to our 12,690 Top (sorry, also wrote this as 13,690 yesterday but I'm sure you all caught that the market would not move up 1000 points:)). The Dow hit a theoretical top of 12,709 on Thursday. The June630C, bought at 15.50, hit highs of 17.60. We'll keep this position open.
As noted above, trading may be light today, but the market will continue to struggle. Oil at rape prices is concerning to all.
First, a good question from new trader MP:
Hey Floyd,
I'm a little frustrated over here. I feel like everyone is enjoying this party and I'm left shaking my head as to what went wrong.
I've got some questions for you. I think that maybe I am over analyzing things and trying to make the perfect trade. I don't know. Hopefully you can help me figure out where my focus is and what I need to change.
Here goes:
Yesterday you wrote:
"Read our Dow projections. Bottoms may NOT be finished, but whipsaw is likely. The market held at a strong resistance area of 12,740 today. We'll enter puts one more time, but the risk is increasing." How or why do you decide to enter puts again after a 200 pt. drop in the DOW. That seems kinda gutsy. What makes you decide that? And when you say that the "risk is increasing", what exactly do you mean by that; does that mean you have less than a 50/50 chance?
Simple answer. I saw an additional downside. The move was not yet over. I knew the FOMC minutes were coming out and it was likely they would curtail the rate drops. The 21 day cycle was not complete, it was time for more downside to what we just hit.
All is not as it appears. The news will tell you that yesterday's drops were caused by " fill in blanks". The market drops were ALREADY coming, and the "fill in blanks" was just the catalyst for the downside. When you say that the market was already coming, are you saying that the supply was greater than the demand and that there was no way to stop it?
News merely triggers what already is. The reverse of what people expect. Oil and FOMC were the trigger to moves that would occur
When you put out the early morning alert about paying up to 10% over prior day close, you also wrote to me privately saying that though you may suggest that kind of strategy at times, you still never do it. This gave me the impression that I should not do it either. I figured that "If Floyd isn't doing it, then there must be a good reason so I better not do it either. I've got months experience and you've got years." That's OK too. I'm actually pretty proud of myself that I followed that rule because it showed that I had some discipline. However, the bottom line is that for the past two days, I didn't enter because I couldn't get filled less than prior day close (I missed it today). When and if that happens to you, how do you have peace with that b/c I'm kicking myself right now that I didn't get filled for at least 10.00 today. I just didn't have the guts to get in b/c you stated this morning that "We 've been right so many times in a row that our risk is also increasing, and that the chance of downside with a count of 5 to 6 to the put is at 55%." When I read something like that, being so new at this, it's hard for me to risk my money. What suggestions do you have for someone in my position who is experiencing this kind of hesitation?
Nothing. My ratio of wins is extraordinary right now. I'm simply sharing with greedy subscribers to recognize that this is option trading.
I NEVER worry if I don't not make money. I only worry if I lose money.
Last week I wrote to you regarding entering a position. I told you that I seem to always enter too early. I asked you how soon you enter a position in the morning and you stated that you like to wait for an hour to see what the market is doing. Looking back at the plays that I've made, I realized that if I did it your way, I would have made out much better. However, today, that strategy hurt me. How do you know when to hold out for before entering and when to get in right away like people did today?
Only by experience, and a bit of control. I do sometimes put best buy prices in prior to market; it all depends upon the count of the market.
And lastly,
Here we are with the DOW 400pts. down in 2 days. We've gotta be close to a bottom as you suggest. You put out an alert for the 630 call for 15.50 or less. Of course I wasn't able to get filled for that price today and I followed your suggestion of not chasing it up. You also tell us to be prepared to make a larger second buy. I am a bit confused. If we are almost at the bottom, what second buy is there going to be? Isn't this puppy going to be rising like a bat out of hades? You say that
Deeper bottoms are now possible, but we'd think a low of 12,470 might suffice, and also believe the market may now have an exhaustive gap upside.
What is an exhaustive gap upside? Does that mean we are going bullish? OR does that mean we are slowly going to rise? Should I wait for the DOW to drop more and enter at 15.50 or less or do I try to get in on this 630 call asap. It closed at 16.00 and as I type this, the futures are +14 (I realize that at this time of the evening, that doesn't mean much). Anyway, I am a bit concerned about my entry into this position. I don't want to miss the play like I did in the last two days but I also don't want to do something stupid. Any suggestions?
At times I may enter too early, just to be sure I am entering. A second buy only assures and allows the trader profits if I do enter early. I entered as the market hit my bottom. It may now go another bit lower, although doubtful, and if so, we'll simply increase the position for the next move.
Do not worry about missing plays. There is always a chance to buy. Doing the worrying is what creates FEAR and GREED.
This is what destroys the trader.
I appreciate you taking the time to help me. I am working hard over here. I'm taking it slow and I'm up $1400 on the year so far (it's only been two weeks). I want to trade smart that's all. I love your service and I'm thrilled to be a part. When I earn more money, I want to sign up for Blue Chips and advanced mentoring. I am reading Dorsey and I think it's great.
Forgive me if I hound you too much!!
Again, I appreciate your time and advice.
Mike
PS - I bought a hand held device today like you suggested. Now I can watch my trades while I'm with my girls at the park!! I'm so pumped!! When you are using your iphone, what do you focus on? DOW? Option prices? Charts?
Just Dow. I keep all noise out of trading.
Second, here's why oil is rising. It's not the "evil empire" as Emperor Bush says, it's NOT Saudi Arabia et al raising the prices.
It's Wall Street, and it's the DEMAND:
Blame Wall Street for $135 Oil on Wrong-Way Betting (Update1)
By Alexander Kwiatkowski and Grant Smith
May 22 (Bloomberg) -- Oil's rally to a record above $135 a barrel came as traders bought crude to cover wrong-way bets that prices would decline, according to data from the New York Mercantile Exchange.
The number of outstanding futures contracts, known as open interest, fell 8.1 percent in a week to 1.36 million at the same time that prices rose 2.6 percent, the data show. Falling open interest and rising prices are signs that traders are buying to exit so-called short positions that would profit if oil fell, and lose money as they rose.
``In a market like today, which is trending higher while open interest is falling, it's a sign that money is moving out of the market,'' said Stephen Schork, president of Schork Group Inc. in Villanova, Pennsylvania. Open interest in Nymex crude futures peaked this year at 1.5 million on March 13.
Crude futures yesterday gained 3.3 percent to $133.17 a barrel for July delivery, the largest advance since May 2 on the Nymex, and touched a record $135.04 today. Oil rose after a government report showed U.S. inventories unexpectedly declined last week. Oil has more than doubled in the past year.
Open interest has been sliding for months, after the number of outstanding crude futures reached a record 1.58 million on July 16, 2007.
``It is not a growing market, it is a shrinking market in terms of open interest,'' said Olivier Jakob, managing director of Petromatrix Gmbh in Zug, Swizterland. ``It is also facilitating the move upward.''
Shell's View
Oil prices have closed at record highs on 27 days so far this year, prompting OPEC oil ministers including Saudi Arabia's Ali al-Naimi to declare that the rally is led by investors, rather than a shortage of supply.
Crude for delivery in December 2016 ended yesterday at $142.09 a barrel, signaling investors anticipate prices will gain for years. Some traders speculate oil will reach $200 this year. The price of a December 2008 option contract that allows the holder to buy 1,000 barrels of crude at $200 each jumped 67 percent in three days to $1.72 a barrel yesterday on the Nymex.
U.S. oil executives told Congress yesterday that prices should be between $35 and $90 a barrel. John Hofmeister, president of Shell Oil Co., the Houston-based subsidiary of Royal Dutch Shell Plc, pegged the proper range ``somewhere between $35 and $65 a barrel.''
Saudi minister al-Naimi said in March when oil was trading near $100 that prices were unlikely to fall below $60 or $70, representing the cost of producing alternatives such as biofuels or tar sands.
Third, from trader PC:
I have almost double my IRA had $12000 4 months ago and now have $23500 in it. Things have been going great trading. I have not even traded more than 20% of my capital to do it either. Usually 1 contract sometimes will buy down as things appear attractive. Just trading OEX on Dow projections, P & F charts, pivot points calculated daily, FIB levels from long term levels, and long term trend lines. Its worked very well. Of course reading the alerts and your advise to help guide my decision process. The great thing is now that I have not been relying totally on you to trade. I have had many successful trades on my own using what you have taught me.
Fourth, from trader TP
I bought calls today two times at 15.5. Just put the order in early, was thinking maybe no trading today oh well, boom filled. After I sold the first batch I put in an order for $15.5 and thought if this gets filled that would be cool, and it did, and sold again. When it works, it works.
And lastly, the market. The Dow moved right to our 12,690 Top (sorry, also wrote this as 13,690 yesterday but I'm sure you all caught that the market would not move up 1000 points:)). The Dow hit a theoretical top of 12,709 on Thursday. The June630C, bought at 15.50, hit highs of 17.60. We'll keep this position open.
As noted above, trading may be light today, but the market will continue to struggle. Oil at rape prices is concerning to all.
Wednesday, May 21, 2008
Utter Stupidity
"The market shows clear signs of increases to the 13,500 area, and we believe the worst is past. Much of the subprime situation is now resolved, the government actions have slowed the tide, and all charting indicators show signs of increases. We will be issuing more "buys" to the market on the recent upside."-Major brokerage, one week ago.
I love most the utter stupidity of our bankers and brokerages, always following lagging indicators and believing their own forecasts. At OEX we believe no indicators, and do not believe the market can be read beyond a 21 day period. And, we've been right.
Yesterday the June660P was available as low as 8.70, and sold to 15.50, following all of our rules. From our subscribers:
"I also am concerned about the wins with no losses. I decided to take a break for the last 2 trading sessions with no trades. Today I decided to try all the tools and before the market started I had an order in for 8.9, and 7.9 best price. I did not want to be a high risk trader when starting new. So the order for $8.9 got filled within seconds of market bell. I was looking at 11.9 and well past 11.9 now, filled. :) I feel like I started over instead of adding on to the past winning streak. Hope I can keep that in check. Thanks Floyd that was an easy 29 percent plus."TP
"I am sorry I write you so often with my dumb fears, Floyd. Everytime you tell me to go back and study the alert, and I get frustrated, and then I do, and sure enough, my questions are answered. I've put $21K in my account this week alone in profits. I've learned more from your trading style than any course I've ever taken in the market, and appreciate your private emails to me so much. I admire why you do this". -NPW
"Your forecasts are amazing. I hope this doesn't cause offence but I need to be self sufficient in due course. Would enrolling in the level 3 program help me achieve that goal ?
I do realise it is an art, but what happens if you decide to retire ?"
Floyd-Level 3 and Advanced Mentoring does one thing...makes you invest in time with me, so that I can work on you on managing you.
What's next? We think yesterday's crash may slow the euphoric upsurge. The bears are now "fully in charge". Thusly, we think upside may be near:)
In late trading yesterday we issued a first buy to the June 630C. Study our Dow projections very carefully.
I love most the utter stupidity of our bankers and brokerages, always following lagging indicators and believing their own forecasts. At OEX we believe no indicators, and do not believe the market can be read beyond a 21 day period. And, we've been right.
Yesterday the June660P was available as low as 8.70, and sold to 15.50, following all of our rules. From our subscribers:
"I also am concerned about the wins with no losses. I decided to take a break for the last 2 trading sessions with no trades. Today I decided to try all the tools and before the market started I had an order in for 8.9, and 7.9 best price. I did not want to be a high risk trader when starting new. So the order for $8.9 got filled within seconds of market bell. I was looking at 11.9 and well past 11.9 now, filled. :) I feel like I started over instead of adding on to the past winning streak. Hope I can keep that in check. Thanks Floyd that was an easy 29 percent plus."TP
"I am sorry I write you so often with my dumb fears, Floyd. Everytime you tell me to go back and study the alert, and I get frustrated, and then I do, and sure enough, my questions are answered. I've put $21K in my account this week alone in profits. I've learned more from your trading style than any course I've ever taken in the market, and appreciate your private emails to me so much. I admire why you do this". -NPW
"Your forecasts are amazing. I hope this doesn't cause offence but I need to be self sufficient in due course. Would enrolling in the level 3 program help me achieve that goal ?
I do realise it is an art, but what happens if you decide to retire ?"
Floyd-Level 3 and Advanced Mentoring does one thing...makes you invest in time with me, so that I can work on you on managing you.
What's next? We think yesterday's crash may slow the euphoric upsurge. The bears are now "fully in charge". Thusly, we think upside may be near:)
In late trading yesterday we issued a first buy to the June 630C. Study our Dow projections very carefully.
Tuesday, May 20, 2008
Never Buy Above Prior Day Close
We will lead with commentary and quotes from our subscribers:
#1 - When I read the tape this morning from 9:32-9:35, I got a drop of about 27-28 points. that is by far the biggest since I've been a subscriber. And that was after the initial drop due to the futures being lower. I know your rule states not to purchase calls or puts that are more expensive than prior day close. However, if we did buy some puts when the bell rang, we would have made out alright today. How do you wrestle with that dilemma? Do you ever buy more expensive than prior day close when you get an opening like that?
Floydian rule: do not break the rules. I never buy above prior day close. It's up to the individual trader to change my rule.
#2 - Should I be getting ready to buy some calls right now or does this thing gonna get to your bottom of 12,690. If it is going to get to 12,690 - shouldn't we be buying some puts? And how do you "know" or "estimate" where this puppy is going to end up before it reverses? Resistance 3?
Floydian rule: lock profits. One can always buy again. What is predictable and obvious may not not be. All is not as it appears.
I am reading Dorsey's book and I love it. If I do what he tells me and study the point and figure method, will I be able to predict the DOW with such precision like yourself or are you just some gifted market genius that will always be superior to us? No offense to you but I want to be self-sufficient. If I can't learn how to do this, my income potential will drop dramatically when you retire!!! How long before I will "know" when to buy and sell. I lost so much money yesterday b/c I sold too early and I would have bought calls 5 times over by now. How do you know what to do with such pin point accuracy? I cannot believe you don't have infomercials somewhere!!
Predicting the Dow is the question I receive most. I use point and figure charts, with 50 day moving averages, Bollinger Bands, and both 3:1 and 1:1 charts. I study news.
70% of my work is intuitive. Advanced Mentoring client P.C. from Germany is kind of enough to have offered to try to put my many thoughts on Dow projections in writing to try to teach it.
I would not ever infocommercial or advertise and "sell". I would then get too many clients and it would not be fun. I am not in this for the money.
Like clockwork, top sells to 20.50, so far $45k on this trade waiting for last fill, will adjust if needed to be out of inventory at the end of the day. I adjusted sell orders up this morning after the futures tanked.
Floyd: a smart trader
I sold 110 contracts today, still holding 10. Nope sold 120, just got filled at 21.00.
Floyd: a happy and profitable trader.
Yesterday’s market was up to a high yet closed near the low and when the high was occurring the volume was dropping – then the plunge today. Right out of Wyckoff’s book and right in line with your signal. I love it when you give a signal and the second buy opportunity occurs because that means to me the signal (at that purchase point) has even a more profit potential.
Thanks again for another great trade!! You helped put another 15k into my trading account
Floyd: Good traders follow the rules, and don't believe the "facts". Last week the bulls could not end....and the analysts were telling us 13,500, and it's all coming.
Wonder what they are saying today?
What's next?
Read our Dow projections. Bottoms may NOT be finished, but whipsaw is likely. The market held at a strong resistance area of 12,740 today. We'll enter puts one more time, but the risk is increasing.
All is not as it appears. The news will tell you that yesterday's drops were caused by " fill in blanks". The market drops were ALREADY coming, and the "fill in blanks" was just the catalyst for the downside.
#1 - When I read the tape this morning from 9:32-9:35, I got a drop of about 27-28 points. that is by far the biggest since I've been a subscriber. And that was after the initial drop due to the futures being lower. I know your rule states not to purchase calls or puts that are more expensive than prior day close. However, if we did buy some puts when the bell rang, we would have made out alright today. How do you wrestle with that dilemma? Do you ever buy more expensive than prior day close when you get an opening like that?
Floydian rule: do not break the rules. I never buy above prior day close. It's up to the individual trader to change my rule.
#2 - Should I be getting ready to buy some calls right now or does this thing gonna get to your bottom of 12,690. If it is going to get to 12,690 - shouldn't we be buying some puts? And how do you "know" or "estimate" where this puppy is going to end up before it reverses? Resistance 3?
Floydian rule: lock profits. One can always buy again. What is predictable and obvious may not not be. All is not as it appears.
I am reading Dorsey's book and I love it. If I do what he tells me and study the point and figure method, will I be able to predict the DOW with such precision like yourself or are you just some gifted market genius that will always be superior to us? No offense to you but I want to be self-sufficient. If I can't learn how to do this, my income potential will drop dramatically when you retire!!! How long before I will "know" when to buy and sell. I lost so much money yesterday b/c I sold too early and I would have bought calls 5 times over by now. How do you know what to do with such pin point accuracy? I cannot believe you don't have infomercials somewhere!!
Predicting the Dow is the question I receive most. I use point and figure charts, with 50 day moving averages, Bollinger Bands, and both 3:1 and 1:1 charts. I study news.
70% of my work is intuitive. Advanced Mentoring client P.C. from Germany is kind of enough to have offered to try to put my many thoughts on Dow projections in writing to try to teach it.
I would not ever infocommercial or advertise and "sell". I would then get too many clients and it would not be fun. I am not in this for the money.
Like clockwork, top sells to 20.50, so far $45k on this trade waiting for last fill, will adjust if needed to be out of inventory at the end of the day. I adjusted sell orders up this morning after the futures tanked.
Floyd: a smart trader
I sold 110 contracts today, still holding 10. Nope sold 120, just got filled at 21.00.
Floyd: a happy and profitable trader.
Yesterday’s market was up to a high yet closed near the low and when the high was occurring the volume was dropping – then the plunge today. Right out of Wyckoff’s book and right in line with your signal. I love it when you give a signal and the second buy opportunity occurs because that means to me the signal (at that purchase point) has even a more profit potential.
Thanks again for another great trade!! You helped put another 15k into my trading account
Floyd: Good traders follow the rules, and don't believe the "facts". Last week the bulls could not end....and the analysts were telling us 13,500, and it's all coming.
Wonder what they are saying today?
What's next?
Read our Dow projections. Bottoms may NOT be finished, but whipsaw is likely. The market held at a strong resistance area of 12,740 today. We'll enter puts one more time, but the risk is increasing.
All is not as it appears. The news will tell you that yesterday's drops were caused by " fill in blanks". The market drops were ALREADY coming, and the "fill in blanks" was just the catalyst for the downside.
A Sucker Rally
As Emperor Bush returns from the Middle East, having accomplished nothing, please note: 1. The U.S. has let in 5000 Iraqi refugees since the war for nothing began.
Sweden, totally neutral, has brought in 40,000 Iraqi refugees. Shame on ourselves for this travesty. Elect smartly.
Yesterday a bit of a sucker rally took place, scaring the bejeebies off a few of you, and making a number of you smile, as the market moved right to 13, 136 (12,176 theoretical Dow), right near our highest top, and then moved right back to close at 13,020.
This allowed call traders that still held Friday inventory to sell right to top profits. Floyd left off the open call in yesterday's alert in error, as many traders had sold profitably Friday, but it had a stop loss of Tuesday, and many traders again sold to top profits in Monday's trading. The June660P was available for new and second buys, and day trading, and hit tops of 17.10.
We believe the rally we have been seeing was not "forever", and a rally on euphoria. There is more downside to come with housing, and remember that the mortgage banks are backstopped by the FED, which continues to expand the money supply, so the market COULD rise again on this false build up. If the Frank-Dodd mortgage bailout plan takes place, which economists are backing, recession could slow, inflation could slow....and the economy falsely expand. Classic government false bail out.
From traders:
"1. Hey Floyd,
Got in Jun660p @ $12.40 and just sold @ $16.20. Total time just over 3 hours!
Thanks again!
dexter"
"2. I bought 2 sat 15.80 on Friday and 4 more at 12.40 Monday and sold at 16.10. Nice fast profits, again.
DAE"
We will keep today's commentaries short. There's little to say. Fall in love with the June 660P, and continue to play for tight profits. Yesterday we think we saw a sucker rally over the idiots at Microsoft, who can't even make good software, trying to buy Yahoo, who have lost their foothold in the search market.
I know this: everyone I know that has Microsoft Vista is unhappy, and it's the new product. And, at OEX, we advertise on Yahoo, and find them utter idiots to work with, while Google works, and are a pleasure. And we own Apple computers. Hmmm.
Downside has higher potential now than upside, to a higher Dow bottom as noted below, before euphoria could take over again. Take prudent risk. We've been right so much recently, traders, we emphasize that it is possible to lose money on a trade. Do not become complacent.
Sweden, totally neutral, has brought in 40,000 Iraqi refugees. Shame on ourselves for this travesty. Elect smartly.
Yesterday a bit of a sucker rally took place, scaring the bejeebies off a few of you, and making a number of you smile, as the market moved right to 13, 136 (12,176 theoretical Dow), right near our highest top, and then moved right back to close at 13,020.
This allowed call traders that still held Friday inventory to sell right to top profits. Floyd left off the open call in yesterday's alert in error, as many traders had sold profitably Friday, but it had a stop loss of Tuesday, and many traders again sold to top profits in Monday's trading. The June660P was available for new and second buys, and day trading, and hit tops of 17.10.
We believe the rally we have been seeing was not "forever", and a rally on euphoria. There is more downside to come with housing, and remember that the mortgage banks are backstopped by the FED, which continues to expand the money supply, so the market COULD rise again on this false build up. If the Frank-Dodd mortgage bailout plan takes place, which economists are backing, recession could slow, inflation could slow....and the economy falsely expand. Classic government false bail out.
From traders:
"1. Hey Floyd,
Got in Jun660p @ $12.40 and just sold @ $16.20. Total time just over 3 hours!
Thanks again!
dexter"
"2. I bought 2 sat 15.80 on Friday and 4 more at 12.40 Monday and sold at 16.10. Nice fast profits, again.
DAE"
We will keep today's commentaries short. There's little to say. Fall in love with the June 660P, and continue to play for tight profits. Yesterday we think we saw a sucker rally over the idiots at Microsoft, who can't even make good software, trying to buy Yahoo, who have lost their foothold in the search market.
I know this: everyone I know that has Microsoft Vista is unhappy, and it's the new product. And, at OEX, we advertise on Yahoo, and find them utter idiots to work with, while Google works, and are a pleasure. And we own Apple computers. Hmmm.
Downside has higher potential now than upside, to a higher Dow bottom as noted below, before euphoria could take over again. Take prudent risk. We've been right so much recently, traders, we emphasize that it is possible to lose money on a trade. Do not become complacent.
Monday, May 19, 2008
Study the REAL Facts
The text in this blog is taken from the daily alerts I send to subscribers of my OEX Options trading instruction service at OEX Options
The June 660C was available for up to .90 profits on Friday, extending our winning streak. Market moves down in the a.m. allowed traders to buy at best buy, and following our commentary to sell for tight profits, this was an easy and fast tight profit signal.
While Bush was in Israel and Saudi Arabia destroying our cultural relationships, Obama and McCain fought out the fear monger game, just now beginning again for this election, and our gun toters continue to falsely believe that we will have "peace and solution" in Iraq by 2013. Please study our candidates for this election carefully. More has been done to destroy our country in the last 8 years than many can even fathom, and we are a fat people nation driving SUV's at extreme risk.
U.S. Economy: Confidence Slumps, Single-Family Home Starts Fall
May 16 (Bloomberg) -- U.S. consumer confidence was the weakest this month since Jimmy Carter was president, and single- family home construction fell to a 17-year low in April.
The Reuters/University of Michigan preliminary index of consumer sentiment dropped to 59.5, compared with an average reading of 85.6 in 2007. Builders broke ground on 692,000 single-family homes at an annual rate, the Commerce Department said today in Washington.
Floyd-read carefully. Carter inherited the mess that made him "our worst President'. Our next President inherits this mess. Both messes were caused by Republican overspending, opposite of what most think Republicans do. Study the REAL facts.
May 16 (Bloomberg) -- Saudi Arabia, the world's largest oil exporter, will increase crude production next month in response to rising demand from its customers and a request by U.S. President George W. Bush to ease the strain of record prices.
The country will raise output by 300,000 barrels a day, or 3.3 percent, to 9.45 million barrels a day in June, Saudi Oil Minister Ali al-Naimi said in Riyadh today, following a meeting between Bush and Saudi Arabia's King Abdullah.
``The president has asked the Saudis to produce oil to meet demand,'' Tony Fratto, a White House spokesman, said in Riyadh after Naimi's remarks. ``He was reassured by the king that they have increased production as the market demands.''
Floyd-most fat Americans driving the SUV's believe that it is the Middle East causing our oil prices. It is not. It is Bush and his gamble on Iraq and the oil pipeline, and the floor traders on the stock exchanges that have chosen oil as the supply/demand commodity to "play". Few understand the real price of oil is driven by the floor traders, leading the oil companies to profits, led by a President whose Daddy is on the Board of two Saudi oil firms. Now he argues that the "liberals" won't let the U.S. use our domestic resources, exploiting and destroying our own environmental infrastructure, not admitting he failed with the Saudis,and that world consumption is increasing. The obvious answer is NOT more oil, but LESS dependence upon oil
All is not as it appears.
We're pleased the market has moved up for no real reason. It's helped us profit all of last week. We continue to see a larger potential for downside, triggered by any news or economic reports. There is still a possibility of euphoric upside. This is a market and public that wants things to improve.
They will not.
Lastly, in response to our new subscriber and his concerns on the market and how to trade using our system, a simply great email from P.C. in Germany:
"Ffloyd is going to be swamped by response to his request from Friday. We are all going to start with the same sentence... "I know exactly how you feel. I was there!". I have worked with Ffloyd now just on a year. I would class myself as an intermediate trader, making mistakes and progressing. Before joining Ffloyd I had a grounding in chart pattern trading, and stock options, so, I had the rudiments. All below applies to my journey to this point... and beyond.
• I read the manual written in plain English - to begin with I did not understand it. It was MY mind that was in Greek.
• The words "overwhelmed", "on my own", "no trade in yesterday's alert" show panic, fear - means manual scan-read this way. The more driven one is to need success, the slower the pace and smaller the steps need to be. It pays, it pays!!
• DO NOT trade money, not yet, not from that position, not in that state of mind. If you rush you will fail and you end up telling yourself "trading's not for me". When, of course it is - if you learn to think in it. Tom Dorsey was in this state!! Read his book - you cannot fail to feel power. Fear is eradicated by understanding.
• Do the Myers Briggs test, let Ffloyd help you find out how you see life - all we "Ffloyd Team" say it sooner or later - learning to trade is a journey through our own characters!!
• The manual is not a stock market operating manual, press these buttons in sequence and money pours out. It is a spectrum of experience and areas for users to concentrate on to develop their own skill. Read a book on how to play a violin, could you play it? Solution, step by step. Sit with the manual. Watch the videos. Take notes, ask questions step by step. You will get answers, they will be short but they will tell you everything - by steering you to think!
• The more questions you ask, the more you will see what you don't know, so you ask, repeat. When you think you know the manual and videos very well - is the time to read and watch again to see all the detail you missed - betya!!
• Go easy on yourself, patience, study, review. Despite yourself you will (I do) make mistakes. Record each success and failure and dissect them, concentrate on your biggest repeat errors. Be clear about WHY you did what you did, either way. Especially find out HOW and WHY you did not follow Ffloyd's recommended methods.
• It is not complicated. It is simply a broad subject with many elements. Work with Ffloyd to let him show you how to simplify not only trading the OEX but also the most complex element of it - you (me), (we).
• Ffloyd's objective is to teach, he passes on some expert tools but NONE of them can be used effectively until you learn to think when and how to use them.
• Read fellow subscibers' comments in the daily commentary. You will find yourself identifying with a fellow traveler at different levels as you go. You will be inspired by and rejoice in their progress, you will recognize the EFFORT they put in to get there. Soon you will look back to new traders who stand where you stand today and want to give them assurance - again, betya!
• Don't even begin to think such nonsense as "on my own" - we, your fellow students cheer each other on. I am sure I do not just speak for myself when I say that some of us owe more to Ffloyd than you can imagine. You are in the safest hands but the effort and study lie with you.
• I wish you ONLY success. It IS yours for the taking.
Hope you make use for some of them.
Regards
P.C./Germany
The June 660C was available for up to .90 profits on Friday, extending our winning streak. Market moves down in the a.m. allowed traders to buy at best buy, and following our commentary to sell for tight profits, this was an easy and fast tight profit signal.
While Bush was in Israel and Saudi Arabia destroying our cultural relationships, Obama and McCain fought out the fear monger game, just now beginning again for this election, and our gun toters continue to falsely believe that we will have "peace and solution" in Iraq by 2013. Please study our candidates for this election carefully. More has been done to destroy our country in the last 8 years than many can even fathom, and we are a fat people nation driving SUV's at extreme risk.
U.S. Economy: Confidence Slumps, Single-Family Home Starts Fall
May 16 (Bloomberg) -- U.S. consumer confidence was the weakest this month since Jimmy Carter was president, and single- family home construction fell to a 17-year low in April.
The Reuters/University of Michigan preliminary index of consumer sentiment dropped to 59.5, compared with an average reading of 85.6 in 2007. Builders broke ground on 692,000 single-family homes at an annual rate, the Commerce Department said today in Washington.
Floyd-read carefully. Carter inherited the mess that made him "our worst President'. Our next President inherits this mess. Both messes were caused by Republican overspending, opposite of what most think Republicans do. Study the REAL facts.
May 16 (Bloomberg) -- Saudi Arabia, the world's largest oil exporter, will increase crude production next month in response to rising demand from its customers and a request by U.S. President George W. Bush to ease the strain of record prices.
The country will raise output by 300,000 barrels a day, or 3.3 percent, to 9.45 million barrels a day in June, Saudi Oil Minister Ali al-Naimi said in Riyadh today, following a meeting between Bush and Saudi Arabia's King Abdullah.
``The president has asked the Saudis to produce oil to meet demand,'' Tony Fratto, a White House spokesman, said in Riyadh after Naimi's remarks. ``He was reassured by the king that they have increased production as the market demands.''
Floyd-most fat Americans driving the SUV's believe that it is the Middle East causing our oil prices. It is not. It is Bush and his gamble on Iraq and the oil pipeline, and the floor traders on the stock exchanges that have chosen oil as the supply/demand commodity to "play". Few understand the real price of oil is driven by the floor traders, leading the oil companies to profits, led by a President whose Daddy is on the Board of two Saudi oil firms. Now he argues that the "liberals" won't let the U.S. use our domestic resources, exploiting and destroying our own environmental infrastructure, not admitting he failed with the Saudis,and that world consumption is increasing. The obvious answer is NOT more oil, but LESS dependence upon oil
All is not as it appears.
We're pleased the market has moved up for no real reason. It's helped us profit all of last week. We continue to see a larger potential for downside, triggered by any news or economic reports. There is still a possibility of euphoric upside. This is a market and public that wants things to improve.
They will not.
Lastly, in response to our new subscriber and his concerns on the market and how to trade using our system, a simply great email from P.C. in Germany:
"Ffloyd is going to be swamped by response to his request from Friday. We are all going to start with the same sentence... "I know exactly how you feel. I was there!". I have worked with Ffloyd now just on a year. I would class myself as an intermediate trader, making mistakes and progressing. Before joining Ffloyd I had a grounding in chart pattern trading, and stock options, so, I had the rudiments. All below applies to my journey to this point... and beyond.
• I read the manual written in plain English - to begin with I did not understand it. It was MY mind that was in Greek.
• The words "overwhelmed", "on my own", "no trade in yesterday's alert" show panic, fear - means manual scan-read this way. The more driven one is to need success, the slower the pace and smaller the steps need to be. It pays, it pays!!
• DO NOT trade money, not yet, not from that position, not in that state of mind. If you rush you will fail and you end up telling yourself "trading's not for me". When, of course it is - if you learn to think in it. Tom Dorsey was in this state!! Read his book - you cannot fail to feel power. Fear is eradicated by understanding.
• Do the Myers Briggs test, let Ffloyd help you find out how you see life - all we "Ffloyd Team" say it sooner or later - learning to trade is a journey through our own characters!!
• The manual is not a stock market operating manual, press these buttons in sequence and money pours out. It is a spectrum of experience and areas for users to concentrate on to develop their own skill. Read a book on how to play a violin, could you play it? Solution, step by step. Sit with the manual. Watch the videos. Take notes, ask questions step by step. You will get answers, they will be short but they will tell you everything - by steering you to think!
• The more questions you ask, the more you will see what you don't know, so you ask, repeat. When you think you know the manual and videos very well - is the time to read and watch again to see all the detail you missed - betya!!
• Go easy on yourself, patience, study, review. Despite yourself you will (I do) make mistakes. Record each success and failure and dissect them, concentrate on your biggest repeat errors. Be clear about WHY you did what you did, either way. Especially find out HOW and WHY you did not follow Ffloyd's recommended methods.
• It is not complicated. It is simply a broad subject with many elements. Work with Ffloyd to let him show you how to simplify not only trading the OEX but also the most complex element of it - you (me), (we).
• Ffloyd's objective is to teach, he passes on some expert tools but NONE of them can be used effectively until you learn to think when and how to use them.
• Read fellow subscibers' comments in the daily commentary. You will find yourself identifying with a fellow traveler at different levels as you go. You will be inspired by and rejoice in their progress, you will recognize the EFFORT they put in to get there. Soon you will look back to new traders who stand where you stand today and want to give them assurance - again, betya!
• Don't even begin to think such nonsense as "on my own" - we, your fellow students cheer each other on. I am sure I do not just speak for myself when I say that some of us owe more to Ffloyd than you can imagine. You are in the safest hands but the effort and study lie with you.
• I wish you ONLY success. It IS yours for the taking.
Hope you make use for some of them.
Regards
P.C./Germany
Friday, May 16, 2008
If You Believe This
The text in this blog is taken from the daily alerts I send to subscribers of my OEX Options trading instruction service at OEX Options
Consumer inflation cooled last month, which made the Fed's case that inflation is easing. If you believe this you're a Republican and know that the war in Iraq is necessary to restore real world order:)
But it was this, coupled with Icahn stepping in to raid Yahoo, and deal making, lowering oil that allowed investors to look past mostly weak economic reports and yet again raise the market to Dow tops of 13,040. We continue to believe that bulls may take this market to 13,100 area on the theoretical Dow, especially noting that May option expiry the market has been up 7 and down 7 since 1993. It coincides with the very slight whipsaw "counts" we've seen all week.
The June630C was available as low as 16.00 in morning downside, and sold to tops of 20.70 by late afternoon, for profit potentials of 29% in single day trading.
A few comments and lessons from subscribers:
"Hi,
I received my alert this morning without trade recommendations. I received commentary from Floyd but no alerts.
I read my manual last night and was overwhelmed. I can follow the trade recommendations with the work sheets but everything else is Greek.How much of this I am going to have to do on my own? I am a newbie and willing to learn but this stuff looks complicated.
Give me some insights please."
Floyd-I'd like subscribers to help me answer this. What would you say to this subscriber?
"Do you mind sharing with me what metric(s) you use to determine your tops and bottoms for the Dow? Also, if you could have any of your student/trader’s study and really focus on 2-3 areas of learning, what would they be? (above and beyond point and figure charting)."
Floyd-this is a widely asked question.
1. I use point and figure charts with 50 and 200 day moving averages and Bollinger Bands.
2. I track on point and figure daily charts and watch support and resistance lines that "stand out". Much of this is intuitive, and NOT mechanical.
3. In a 21 day average period this past year the market moves in 586 point ranges. Level 3 subscribers have an excellent article on "Watching Drops in the Marketplace" on the website. I believe that at market tops (which I project) the market will typically move around support lines proportionately 586 points over an up to 21 day period. News will act as the catalyst and trigger, around economic data.
And from another subscriber, with Floyd comments in bold:
"
Hi Floyd,
Am new to the service.
Make sure you really read our manual.
Please clarify your sell strategy. e.g. May 640 c alert (issued May 13) was sell to 24.90 and first buys only made.
Yes, and this hit up to 30%profit goals, and was profitable for two days. The sell prices we list are the TOP prices we think the option will go to.
It did not hit 24.90 with a high of 19.90 yesterday and there were no second buys. However your May 15 premarket commentary says it should have been sold on the 14th !
We often take an option off the alert if it's been profitable. We list the stop loss initially for the morning of the 4th day, with the first day beginning the day after the buy
This would change if a second buy were made, with the # of days stop loss then beginning the morning after the second buy. When making a second buy you would average your costs (the second buy typically TWICE the number of contracts as the first) and setting sales goals of up to 30% on the averaged costs
Are we supposed to wait until we hit these recommended sell rates or sell when the DOW hits the upper limit mentioned in your commentary (upper limit minus 30 points so 13000-30 = 12970 which it hit yesterday) and just book whatever profit (depending on the purchase price). The Dow projections tell you the top or bottom areas we see the market going to.
Holding for the top levels, or bottom, is higher risk, and we recommend always selling a profitable option in 1/3's, holding the final 1/3 for the top range (near, not at), if looking for top profits. The risk increases as you hold the final partials.
Or do we just hold for the 5 days with a sell price of 24.90 and if it does not hit the target sell on the morning of the 5th day.
Be sure and really study our 130 page manual. Understand your own risk/reward ratios, and define what your profit goals are.
Consumer inflation cooled last month, which made the Fed's case that inflation is easing. If you believe this you're a Republican and know that the war in Iraq is necessary to restore real world order:)
But it was this, coupled with Icahn stepping in to raid Yahoo, and deal making, lowering oil that allowed investors to look past mostly weak economic reports and yet again raise the market to Dow tops of 13,040. We continue to believe that bulls may take this market to 13,100 area on the theoretical Dow, especially noting that May option expiry the market has been up 7 and down 7 since 1993. It coincides with the very slight whipsaw "counts" we've seen all week.
The June630C was available as low as 16.00 in morning downside, and sold to tops of 20.70 by late afternoon, for profit potentials of 29% in single day trading.
A few comments and lessons from subscribers:
"Hi,
I received my alert this morning without trade recommendations. I received commentary from Floyd but no alerts.
I read my manual last night and was overwhelmed. I can follow the trade recommendations with the work sheets but everything else is Greek.How much of this I am going to have to do on my own? I am a newbie and willing to learn but this stuff looks complicated.
Give me some insights please."
Floyd-I'd like subscribers to help me answer this. What would you say to this subscriber?
"Do you mind sharing with me what metric(s) you use to determine your tops and bottoms for the Dow? Also, if you could have any of your student/trader’s study and really focus on 2-3 areas of learning, what would they be? (above and beyond point and figure charting)."
Floyd-this is a widely asked question.
1. I use point and figure charts with 50 and 200 day moving averages and Bollinger Bands.
2. I track on point and figure daily charts and watch support and resistance lines that "stand out". Much of this is intuitive, and NOT mechanical.
3. In a 21 day average period this past year the market moves in 586 point ranges. Level 3 subscribers have an excellent article on "Watching Drops in the Marketplace" on the website. I believe that at market tops (which I project) the market will typically move around support lines proportionately 586 points over an up to 21 day period. News will act as the catalyst and trigger, around economic data.
And from another subscriber, with Floyd comments in bold:
"
Hi Floyd,
Am new to the service.
Make sure you really read our manual.
Please clarify your sell strategy. e.g. May 640 c alert (issued May 13) was sell to 24.90 and first buys only made.
Yes, and this hit up to 30%profit goals, and was profitable for two days. The sell prices we list are the TOP prices we think the option will go to.
It did not hit 24.90 with a high of 19.90 yesterday and there were no second buys. However your May 15 premarket commentary says it should have been sold on the 14th !
We often take an option off the alert if it's been profitable. We list the stop loss initially for the morning of the 4th day, with the first day beginning the day after the buy
This would change if a second buy were made, with the # of days stop loss then beginning the morning after the second buy. When making a second buy you would average your costs (the second buy typically TWICE the number of contracts as the first) and setting sales goals of up to 30% on the averaged costs
Are we supposed to wait until we hit these recommended sell rates or sell when the DOW hits the upper limit mentioned in your commentary (upper limit minus 30 points so 13000-30 = 12970 which it hit yesterday) and just book whatever profit (depending on the purchase price). The Dow projections tell you the top or bottom areas we see the market going to.
Holding for the top levels, or bottom, is higher risk, and we recommend always selling a profitable option in 1/3's, holding the final 1/3 for the top range (near, not at), if looking for top profits. The risk increases as you hold the final partials.
Or do we just hold for the 5 days with a sell price of 24.90 and if it does not hit the target sell on the morning of the 5th day.
Be sure and really study our 130 page manual. Understand your own risk/reward ratios, and define what your profit goals are.
Thursday, May 15, 2008
All is Good
The text in this blog is taken from the daily alerts I send to subscribers of my OEX Options trading instruction service at OEX Options
Ahh, euphoria. All is good. And the market topped a theoretical Dow of 13,033 before a downward slide near the end of the day. All calls were profitable. And now, the market talking heads will tell us that "upside is on its way" and the worst might be over.
A few words from subscribers:
Floyd:
"scaled into 80 contracts from 16.80 to 15.80. Sell orders filled at 17.80 & 19.00, waiting for final fill at 21.00.
Another winner......on top of the 630 Call. Monday, flipped 20 contracts for $5k.
No emotion.......
Of course I'm having fun.....but always in the back of my head, don't get greedy....
Honestly, in 3 months I've banked around $150k and still working a $100k full time job.
Thank you, It's taken some heavy losses to finally "get it", but thanks to your instruction, reseach, and Floydian intuition, I definately have become a much better trader.
I also try to use the poker philosophy, don't count your money at the table, because the table will end up with your money. BTW, I don't gamble, I have an addictive personality...:)
Trader BD
From: Trader RC
Floyd,
Thanks for another very successful trade. It is greatly appreciated. I actually am beginning to feel the market a bit. Today I sold at $19.40 before the afternoon Dow jump because it appeared our price was not moving much with large moves in the OEX. Also, I heeded your top advisement of 13,000 on the Dow.
I have made it through Dorsey’s book over the weekend and I am making my way through Wyckoff’s this week. My wife asked, “isn’t that stuff really boring?” I just smiled. This is an absolute joy because I feel like a kid again - fully absorbed in learning something new.
I am sure you hear this all the time however I will tell you I started my trading account with $77,000 in late March and it is now at $102k and some change. That is with a boat load of self made mistakes (my own trades initiated with no data to back them up - losses of at least 10k), and not really following your model fully until three weeks ago.
From PC in Germany, with Floyd responses in bold
Hi Ffloyd,
I bought the Jun 640C yesterday at 16.50. Dow and OEX obeyed your instructions nicely today. The Dow reached your theoretical projection of 13000, actual 12960ish, after a bit of a struggle to break 12980 theoretical. Looking at where the Dow was at 13000 I couldn't see much more mileage in the OEX and thus the 640C. TOS got me 19.30 on a tick of 19.50 so, nice.
I was "rewarded" on this decision by the price reversing almost immediately after I sold so please do take personal pride that your students are coming along :-)
Exactly right.
I'm still buying in single contracts and so now hold no inventory and am happy with this position. I can comfortably tell myself I've made my money for the day. I made 17% in actual cash profit as a strong resistance point proved to be a reversal point.
So my question is not greed but philiosophy - I ask the following so that I can watch.
You have the expression "falling in love" with an option. I neither presume nor hope that this is an occasion for it, based on your recent projections we are too close to a top for this - right? But in order to be in love for the day you must be reading the moves of hours day fairly accurately too and not just taking your lead from your overall projections which in finest detail is a day and by default up to 5 days. To buy more than once in one day you are confident that the drop which let you back in is not in fact a reversal but retracement within that trading day.
Yes, right now I'm not yet in love with the 640C, because of so much potential for reversal. What happened after you sold is a good example of the struggle.
So, with so much of the trading day remaining, how do you see it going from here? 2 hours into it. How do you "spot" a retracement intraday? Intraday Fibonacci?
My first hour OEX pivot calculations show pivot at 647.49 and R1 at 650.10, my own limited experience says to me that the OEX will now flap about between these points for the next couple of hours - comment?
First hour ATR shows potential high of 653.39, potential low 640.40.
We'll see how this plays out, but I suspect the market will break 13,000 today (or tomorrow) and the bulls will be babbling all over the place that it's getting better, and we'll then quickly reverse"
Excellent trades Floyd. Out of the 640C at 30% and the 630C at 28%. Haven't missed a trade in so long I'm nervous. I've learned so much from you, but what I've learned most?....The market moves in patterns, and the "idiots" (you're nice) that tell us what is happening know nothing".-NBW
It is very likely the market could lead with more upside. Follow our Dow projections carefully. Calls may still have some short lived strength, but as soon as everyone thinks it's going well, it will fall again. All is NOT as it appears.
Ahh, euphoria. All is good. And the market topped a theoretical Dow of 13,033 before a downward slide near the end of the day. All calls were profitable. And now, the market talking heads will tell us that "upside is on its way" and the worst might be over.
A few words from subscribers:
Floyd:
"scaled into 80 contracts from 16.80 to 15.80. Sell orders filled at 17.80 & 19.00, waiting for final fill at 21.00.
Another winner......on top of the 630 Call. Monday, flipped 20 contracts for $5k.
No emotion.......
Of course I'm having fun.....but always in the back of my head, don't get greedy....
Honestly, in 3 months I've banked around $150k and still working a $100k full time job.
Thank you, It's taken some heavy losses to finally "get it", but thanks to your instruction, reseach, and Floydian intuition, I definately have become a much better trader.
I also try to use the poker philosophy, don't count your money at the table, because the table will end up with your money. BTW, I don't gamble, I have an addictive personality...:)
Trader BD
From: Trader RC
Floyd,
Thanks for another very successful trade. It is greatly appreciated. I actually am beginning to feel the market a bit. Today I sold at $19.40 before the afternoon Dow jump because it appeared our price was not moving much with large moves in the OEX. Also, I heeded your top advisement of 13,000 on the Dow.
I have made it through Dorsey’s book over the weekend and I am making my way through Wyckoff’s this week. My wife asked, “isn’t that stuff really boring?” I just smiled. This is an absolute joy because I feel like a kid again - fully absorbed in learning something new.
I am sure you hear this all the time however I will tell you I started my trading account with $77,000 in late March and it is now at $102k and some change. That is with a boat load of self made mistakes (my own trades initiated with no data to back them up - losses of at least 10k), and not really following your model fully until three weeks ago.
From PC in Germany, with Floyd responses in bold
Hi Ffloyd,
I bought the Jun 640C yesterday at 16.50. Dow and OEX obeyed your instructions nicely today. The Dow reached your theoretical projection of 13000, actual 12960ish, after a bit of a struggle to break 12980 theoretical. Looking at where the Dow was at 13000 I couldn't see much more mileage in the OEX and thus the 640C. TOS got me 19.30 on a tick of 19.50 so, nice.
I was "rewarded" on this decision by the price reversing almost immediately after I sold so please do take personal pride that your students are coming along :-)
Exactly right.
I'm still buying in single contracts and so now hold no inventory and am happy with this position. I can comfortably tell myself I've made my money for the day. I made 17% in actual cash profit as a strong resistance point proved to be a reversal point.
So my question is not greed but philiosophy - I ask the following so that I can watch.
You have the expression "falling in love" with an option. I neither presume nor hope that this is an occasion for it, based on your recent projections we are too close to a top for this - right? But in order to be in love for the day you must be reading the moves of hours day fairly accurately too and not just taking your lead from your overall projections which in finest detail is a day and by default up to 5 days. To buy more than once in one day you are confident that the drop which let you back in is not in fact a reversal but retracement within that trading day.
Yes, right now I'm not yet in love with the 640C, because of so much potential for reversal. What happened after you sold is a good example of the struggle.
So, with so much of the trading day remaining, how do you see it going from here? 2 hours into it. How do you "spot" a retracement intraday? Intraday Fibonacci?
My first hour OEX pivot calculations show pivot at 647.49 and R1 at 650.10, my own limited experience says to me that the OEX will now flap about between these points for the next couple of hours - comment?
First hour ATR shows potential high of 653.39, potential low 640.40.
We'll see how this plays out, but I suspect the market will break 13,000 today (or tomorrow) and the bulls will be babbling all over the place that it's getting better, and we'll then quickly reverse"
Excellent trades Floyd. Out of the 640C at 30% and the 630C at 28%. Haven't missed a trade in so long I'm nervous. I've learned so much from you, but what I've learned most?....The market moves in patterns, and the "idiots" (you're nice) that tell us what is happening know nothing".-NBW
It is very likely the market could lead with more upside. Follow our Dow projections carefully. Calls may still have some short lived strength, but as soon as everyone thinks it's going well, it will fall again. All is NOT as it appears.
Wednesday, May 14, 2008
Markets Are Not Normal
The text in this blog is taken from the daily alerts I send to subscribers of my OEX Options trading instruction service at OEX Options
This ought to be enough to make you smile:
NEW YORK (MarketWatch) -- U.S. stocks fell on Tuesday, with financials greasing the slide, after Federal Reserve Chairman Ben Bernanke described financial markets as far from normal and an analyst slashed estimates for major brokers, including Merrill Lynch & Co.
"Financials are selling off again today, we saw an influential analyst cut numbers -- brokers still have downside -- and, the market is just taking some profit," given its 10% climb from the bottom hit in the middle of March."
Where do these idiots come from? The financial markets are NOT normal, oil is at all time high, and brokers should all be downgraded. It's obvious.
With this said, we took entry to the June640C, sold our June630C from the day prior (or may still hold partials) and continue to see two way trades in the market.
We continue to see a potential for short upside to near and around 13,000, moves then to below 50 day moving averages, and a return to upside. The directional bias,however (which will come first) will depend upon events,and what the idiots say today. Bernanke led this sell off with "markets are not normal".
This ought to be enough to make you smile:
NEW YORK (MarketWatch) -- U.S. stocks fell on Tuesday, with financials greasing the slide, after Federal Reserve Chairman Ben Bernanke described financial markets as far from normal and an analyst slashed estimates for major brokers, including Merrill Lynch & Co.
"Financials are selling off again today, we saw an influential analyst cut numbers -- brokers still have downside -- and, the market is just taking some profit," given its 10% climb from the bottom hit in the middle of March."
Where do these idiots come from? The financial markets are NOT normal, oil is at all time high, and brokers should all be downgraded. It's obvious.
With this said, we took entry to the June640C, sold our June630C from the day prior (or may still hold partials) and continue to see two way trades in the market.
We continue to see a potential for short upside to near and around 13,000, moves then to below 50 day moving averages, and a return to upside. The directional bias,however (which will come first) will depend upon events,and what the idiots say today. Bernanke led this sell off with "markets are not normal".
Tuesday, May 13, 2008
Wonder Bread is Up 74 Percent
As the market dipped last week, in an anticipated Floydian downside, the volume of the market as this occurred was not large. A telling statement.
Bananas are up 41% since 2003. Wonder Bread is up 74% in the same time period, Skim Mil up 38% and Diet Coke 10%. This is what pumps inflation. China just showed it's highest inflation numbers since 1996.
With strong influence economic data out this week it's likely to have classic whipsaw, as the market struggles between optimism and realism. Downside, we do not believe, is yet over, as the historical cycle of # of days between moves has not yet shown a full downside, with strong support lines showing hesitancy time and time again. Because of this we believe our Dow projections could have two additional "faltering points": up moves to just under 13,000 (12,950) and down moves to just under 12,540.
The USD is reaching new highs, due to NOTHING we have done to stabilize the dollar, but the massively strengthening Euro hitting new highs. We believe the Euro may soon seriously falter, which could affect the USD positively, and affect the price of a barrel of oil. Remember, barrels of oil are priced worldwide in USD, and any faltering of the Euro could actually decrease our inflation, and lower the price of oil.
When this happens Republicans will take the responsibility, and point out the preventive measures put in place that are now working, with only those of us in the know smiling as to "all things are not as they appear."
We saw a good upsurge on Monday, with the market topping the theoretical Dow at 12,944, which MAY be the first top to the market, before more downside. The June630C, available and bought on Friday, surged to 24.70 in yesterday's trading, and remains an open signal.
Study our Dow projections carefully, as we believe the market may TOP just at 13,000 and have a short, but potentially large slide, before more upside.
Bananas are up 41% since 2003. Wonder Bread is up 74% in the same time period, Skim Mil up 38% and Diet Coke 10%. This is what pumps inflation. China just showed it's highest inflation numbers since 1996.
With strong influence economic data out this week it's likely to have classic whipsaw, as the market struggles between optimism and realism. Downside, we do not believe, is yet over, as the historical cycle of # of days between moves has not yet shown a full downside, with strong support lines showing hesitancy time and time again. Because of this we believe our Dow projections could have two additional "faltering points": up moves to just under 13,000 (12,950) and down moves to just under 12,540.
The USD is reaching new highs, due to NOTHING we have done to stabilize the dollar, but the massively strengthening Euro hitting new highs. We believe the Euro may soon seriously falter, which could affect the USD positively, and affect the price of a barrel of oil. Remember, barrels of oil are priced worldwide in USD, and any faltering of the Euro could actually decrease our inflation, and lower the price of oil.
When this happens Republicans will take the responsibility, and point out the preventive measures put in place that are now working, with only those of us in the know smiling as to "all things are not as they appear."
We saw a good upsurge on Monday, with the market topping the theoretical Dow at 12,944, which MAY be the first top to the market, before more downside. The June630C, available and bought on Friday, surged to 24.70 in yesterday's trading, and remains an open signal.
Study our Dow projections carefully, as we believe the market may TOP just at 13,000 and have a short, but potentially large slide, before more upside.
Monday, May 12, 2008
Successful Trading is a Journey
NEW YORK (MarketWatch) -- With the first-quarter earnings season almost past, investors will continue to face mounting concerns about consumption and the U.S. economy next week, with retail sales and consumer-price data likely to reflect the impact of surging energy and food prices. Retail earnings and consumer sentiment reports will trigger reaction or action, we think entirely dependent upon the price of oil. Any slight oil drop could trigger the event of upsurge.
5/12 – Monday before May expiration, Dow up 17 of last 19
Monday after Mother’s Day, Dow up 10 of last 12
"The subscriber you quote today - Mike - said it exactly right. "Like life, successful trading is a journey". Next time you run across Mike, please pass on my regards, I like the way he thinks and can identify with it more and more by the day.
Thanks also for the Put yesterday. I wonder how many of us smiled when we saw that come through............ I smiled for the following reason.........
When a horse wins a handicap race comfortably it is generally because in his preceding few races his trainer placed him over longer distances (or shorter and faster) than his natural best winning distance, e.g, a mile race instead of 5 or 7 furlongs, and in "better class" i.e. in races he has no chance of winning. The handicapper gives him low weight due to his "failing" performance up to then (in races not suited to him). Now he comes out, race fit, having been stretched either by distance or speed he's placed for his natural pace. If he's won at that distance before, probably at that type of course you pay attention to him in the betting (money) market, a money trail WILL show - if you look!! as many do not and on this lies the success of the manipulators to ensure their best betting odds - You are not surprised at his win.
If this horse now enters a race within 14 days of that win he will carry a penalty weight, there may also be another adjustment of distance, even jockey change, eg, an apprentice jockey, they are allowed to claim weight off in handicap races, so the penatly weight may be cancelled out but still show as having been issued - seeing 7lbsex, 7 pounds extra, on the race card puts joe public off for instance. Now you really pay attention to him in the money market. His best chance of a win is directly after a win.................
It's simplicity is its greatest disguise :-) Mr Wyckoff described handicap racing. Big money cannot move any other way, it must be disguised from those who do not train themselves to look. The source of income for the manipulators.
I just love these men Wyckoff and Ffloyd, he's taking me back to the home of my spirit.
Yesterday, the above horse was called May 655P and romped home nicely - thank you!!"
The market continued to move downward as Bush oil hit new highs. $32.00 a barrel when he entered office, and $126.00 Friday. There is no market manipulation going on:)
Midday we issued an alert for the June630C, and took entry immediately . For traders that held out for best buy price we continue to recommend a new ITM June option, contrarian to sentiment, as our first trade of June expiry.
Our view of macroeconomics: about every 20 to 23 days the market has the historical nature to shift trends by an average of 586 points. Make money off these trends.
5/12 – Monday before May expiration, Dow up 17 of last 19
Monday after Mother’s Day, Dow up 10 of last 12
"The subscriber you quote today - Mike - said it exactly right. "Like life, successful trading is a journey". Next time you run across Mike, please pass on my regards, I like the way he thinks and can identify with it more and more by the day.
Thanks also for the Put yesterday. I wonder how many of us smiled when we saw that come through............ I smiled for the following reason.........
When a horse wins a handicap race comfortably it is generally because in his preceding few races his trainer placed him over longer distances (or shorter and faster) than his natural best winning distance, e.g, a mile race instead of 5 or 7 furlongs, and in "better class" i.e. in races he has no chance of winning. The handicapper gives him low weight due to his "failing" performance up to then (in races not suited to him). Now he comes out, race fit, having been stretched either by distance or speed he's placed for his natural pace. If he's won at that distance before, probably at that type of course you pay attention to him in the betting (money) market, a money trail WILL show - if you look!! as many do not and on this lies the success of the manipulators to ensure their best betting odds - You are not surprised at his win.
If this horse now enters a race within 14 days of that win he will carry a penalty weight, there may also be another adjustment of distance, even jockey change, eg, an apprentice jockey, they are allowed to claim weight off in handicap races, so the penatly weight may be cancelled out but still show as having been issued - seeing 7lbsex, 7 pounds extra, on the race card puts joe public off for instance. Now you really pay attention to him in the money market. His best chance of a win is directly after a win.................
It's simplicity is its greatest disguise :-) Mr Wyckoff described handicap racing. Big money cannot move any other way, it must be disguised from those who do not train themselves to look. The source of income for the manipulators.
I just love these men Wyckoff and Ffloyd, he's taking me back to the home of my spirit.
Yesterday, the above horse was called May 655P and romped home nicely - thank you!!"
The market continued to move downward as Bush oil hit new highs. $32.00 a barrel when he entered office, and $126.00 Friday. There is no market manipulation going on:)
Midday we issued an alert for the June630C, and took entry immediately . For traders that held out for best buy price we continue to recommend a new ITM June option, contrarian to sentiment, as our first trade of June expiry.
Our view of macroeconomics: about every 20 to 23 days the market has the historical nature to shift trends by an average of 586 points. Make money off these trends.
Friday, May 9, 2008
Crude Oil is Priced by Floor Traders
Subscriber quote detail in the commentary has become quite interactive over this past 7 market days, and feedback has helped a number of traders.
From an Advanced Mentoring and Level 3 subscriber in California, MF:
"Hi Floyd,
For the record, I never doubted you. You're a great man, not because signal 28(or whatever) in row made money, but because you're a great teacher which teaches how to trade not buy an option.
Like life, successful trading is a journey. I hope most of your scared subscribers learned that, and now make the changes to thrive during the journey.
Thanks,
Mike "
From AWE/Chicago:
"14.50 to 15.70 in 75 minutes. Scalped it again for 1.00 later. Right to 12,760 again, Floyd, and up 8k for the day. No emotions. Knew the risk to the trade"
Yesterday's moves helped us see the strength of uptrend, and longer term bias. Midday we issued an alert for May655P at 12.70 or less, promptly available to buy, and sold for up to 15.70, right near our 15.90 top, within two hours, and available for day trading scalping several times after that, all around the struggle at 645 and 647.
Today is historically stronger, the Dow up 8 of the last 12 years. Floyd sees a 52% chance of more downside, however, and today could show whipsaw, and a plunge. Who knows?
It's now a struggle beginning at a trading range, and oil will lead the "event" that will be construed to trigger movement...read that carefully, because the cause and effect are already in place around supply and demand; it will be an "event" (earnings, oil, fraud probe that will provide the trigger to what is already going to happen.
We'll hold and recommend the same put today, a high risk trade, focusing on one more downward plunge, before a renewed 350 point potential upside. Bias is being established.
OPEC tells us that $200.00 oil could truly be on the horizon, and we hear from economists we'll soon hit 4.00 to 5.00 gallon, to other economists telling us that oil has peaked, and gas prices could tumble.
We believe oil is priced entirely by commodity traders entirely at this time, and the value of supply/demand, or what can be refined (all the gobblygook we read each day) has little to do with the price of crude. We believe crude oil is priced by floor traders, leading the market with their manipulation.
In actuality the European Central bank may actually become our American ally, and our undoing. What's happening is that the Euro is becoming hugely expensive compared to our USD.
Europe is having trouble exporting because of the value of their own "dollar". We could soon see, thusly, the Euro devalue,and conversely the USD rally. What will happen is not so obvious to the American public, but oil is priced worldwide in U.S. Dollars. If there were a 10% rise in the dollar, for example, oil could fall by $1.00 a gallon.
This will, of course, move our silly little minds right back to the SUVS, and to massive consumption, as "all is better", and "it is easy again", and we will lose sight of the real picture, yet again letting the horse out of the barn and locking the door. The USD is at a 12 year low against the Japanese yen and the Euro has almost doubled against the USD since 2002.
We are now creating a foreign currency bubble, and all bubbles burst.
Remember that what the majority expect is seldom right. Recession could actually begin to slow (Floyd predicts the end by October 2008, while the economists still debate whether we are in one) because the USD strengthens, NOT from our wise movements or $160 billion stimulus package (yet most will think this is why we improve, again falsely). If recession slows it will do so because the USD gains false value BECAUSE the foreign currency bubble bursts.
We're watching. It may soon be time to short oil, and to move out of some commodities, as the USD may gain because of others stupidity, and nothing that we do to truly improve the value of our paper currency.
DJX or SPX Option traders: Puts profitable again yesterday. New Trade: DJX May ATM Put for 20% profits. Sell by day end. High risk trade.
"The federal government is sending each and everyone of us at least a $600 rebate. If we spend that money at Wal-Mart, the money will go to China. If we spend it on gasoline it will go to the Arabs. If we purchase a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala. If we purchase a good car it will go to Japan. If we purchase useless crap it will go to Taiwan ... and none of it will help the American economy. The only way to keep that money here at home is to buy prostitutes, weed, beer, cigarettes, whiskey, and tattoos, since these are the only products still produced in the USA. Thank you for your help & please support the U.S."
From an Advanced Mentoring and Level 3 subscriber in California, MF:
"Hi Floyd,
For the record, I never doubted you. You're a great man, not because signal 28(or whatever) in row made money, but because you're a great teacher which teaches how to trade not buy an option.
Like life, successful trading is a journey. I hope most of your scared subscribers learned that, and now make the changes to thrive during the journey.
Thanks,
Mike "
From AWE/Chicago:
"14.50 to 15.70 in 75 minutes. Scalped it again for 1.00 later. Right to 12,760 again, Floyd, and up 8k for the day. No emotions. Knew the risk to the trade"
Yesterday's moves helped us see the strength of uptrend, and longer term bias. Midday we issued an alert for May655P at 12.70 or less, promptly available to buy, and sold for up to 15.70, right near our 15.90 top, within two hours, and available for day trading scalping several times after that, all around the struggle at 645 and 647.
Today is historically stronger, the Dow up 8 of the last 12 years. Floyd sees a 52% chance of more downside, however, and today could show whipsaw, and a plunge. Who knows?
It's now a struggle beginning at a trading range, and oil will lead the "event" that will be construed to trigger movement...read that carefully, because the cause and effect are already in place around supply and demand; it will be an "event" (earnings, oil, fraud probe that will provide the trigger to what is already going to happen.
We'll hold and recommend the same put today, a high risk trade, focusing on one more downward plunge, before a renewed 350 point potential upside. Bias is being established.
OPEC tells us that $200.00 oil could truly be on the horizon, and we hear from economists we'll soon hit 4.00 to 5.00 gallon, to other economists telling us that oil has peaked, and gas prices could tumble.
We believe oil is priced entirely by commodity traders entirely at this time, and the value of supply/demand, or what can be refined (all the gobblygook we read each day) has little to do with the price of crude. We believe crude oil is priced by floor traders, leading the market with their manipulation.
In actuality the European Central bank may actually become our American ally, and our undoing. What's happening is that the Euro is becoming hugely expensive compared to our USD.
Europe is having trouble exporting because of the value of their own "dollar". We could soon see, thusly, the Euro devalue,and conversely the USD rally. What will happen is not so obvious to the American public, but oil is priced worldwide in U.S. Dollars. If there were a 10% rise in the dollar, for example, oil could fall by $1.00 a gallon.
This will, of course, move our silly little minds right back to the SUVS, and to massive consumption, as "all is better", and "it is easy again", and we will lose sight of the real picture, yet again letting the horse out of the barn and locking the door. The USD is at a 12 year low against the Japanese yen and the Euro has almost doubled against the USD since 2002.
We are now creating a foreign currency bubble, and all bubbles burst.
Remember that what the majority expect is seldom right. Recession could actually begin to slow (Floyd predicts the end by October 2008, while the economists still debate whether we are in one) because the USD strengthens, NOT from our wise movements or $160 billion stimulus package (yet most will think this is why we improve, again falsely). If recession slows it will do so because the USD gains false value BECAUSE the foreign currency bubble bursts.
We're watching. It may soon be time to short oil, and to move out of some commodities, as the USD may gain because of others stupidity, and nothing that we do to truly improve the value of our paper currency.
DJX or SPX Option traders: Puts profitable again yesterday. New Trade: DJX May ATM Put for 20% profits. Sell by day end. High risk trade.
"The federal government is sending each and everyone of us at least a $600 rebate. If we spend that money at Wal-Mart, the money will go to China. If we spend it on gasoline it will go to the Arabs. If we purchase a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala. If we purchase a good car it will go to Japan. If we purchase useless crap it will go to Taiwan ... and none of it will help the American economy. The only way to keep that money here at home is to buy prostitutes, weed, beer, cigarettes, whiskey, and tattoos, since these are the only products still produced in the USA. Thank you for your help & please support the U.S."
Thursday, May 8, 2008
Trust the Facts, Not the False Facts
FLOYD is NOT ONLINE at all today. FISHING. I will lead with this, before I tell you all: I TOLD YOU SO! There! It felt so good to see us in the know watch the May655P move to highs of 16.90, allowing profits to all traders that held it out, and trusted in the FACTS, not the false facts.
The Dow moved to a low of 12,759 on the theoretical Dow. Not sure if I could have been more close in my top level projection. And it's not to brag, but to PROVE to you that the financial babble of the "bulls have taken over" macroeconomic gobblegook that so influenced you all for days. Here's a few comments:
1. “Floyd, That was the single hardest thing I have ever done with regards to investing – keeping to the 4 day rule of stop loss. It was unbelievable how challenging it was. The key element however that you have introduced us to a time tested successful model. I would have NEVER thought to hold that option through the lows. I can’t say the emotion was completely out of it (yet) but I can say I am thrilled I followed your advice/model!!!” - Gratefully, RC
2. “ Sorry about the nervousness. I just lost a lot over the last few days, over $6,ooo after yesterdays reversal. I have 10 puts at a 13.65 average cost so I’m still $4775 out. I wasn’t home yesterday do to work and got burned when the market reversed before it reached my sell order. I would like to stay with it, but I’m concerned it will do like it did yesterday again. I know I over extended on the buy by my own stupidity, but I would appreciate any help you can give me on bailing myself out of this.
Floyd, thank you I bow to your wisdom. sorry I was such a pest. I turned a $6000 loss into a $2000 profit with your advice. I just became a member today and can’t wait to learn more. thanks again.” – D
3. “Floyd, you amaze me. I fought to listen to you, and just realized I wrote you over 15 times on "how wrong you were" and "what I had read", but I kept the faith. I just made 42% and total profits of $31,000 on the one trade. I've never seen the psychology of the trade so perfectly analyzed as your many reader comments. I'll tell them all: subscribe to Advanced Mentoring. Listen and read to you. You can trade full time within a year. And, I agree with your rants...I’ve begun to see what I did not understand. "NC, Asheville
4. “Hi. just wondering why over the last two days, the price has ended up at the opposite level the "first 30-60 minutes of trading" rule of the price in relation to the pivot point said it would. I'm probably just misunderstanding something.
Floyd: Indicators are just indicators.
Also, yesterday, I seem to remember the bias being to the put and yet the day ended up significantly positive. Was this bias fulfilled in the morning? Because that was a short-lived dip in price followed by a much longer-lived rise. Is the bias intended to predict to entire trading day?
Floyd: The bias lasts sometimes 30 minutes:) Puts were profitable yesterday.
This morning's signal was to buy OEYQK again. I already had a contract I bought at 8:40 or so (Which today filled out to sell giving me a 36% return) a little while ago. So this new signal for the day was to add to my position?
Floyd: Can we see from this email that the subscriber still has to learn? It was a new signal. No need to add, if we already owned the signal.
If so, I'm assuming I was supposed to follow the buying rule of waiting until it drops 30% of the price I paid for the original contract. That's how I filled out my pre-market buy orders. They obviously didn't get filled, but I'm just wondering if when you give us a new signal for a position we already have, if you still expect us to wait for it to drop the 33% of our first buy, or if you think its ok to buy at up to 20% of the previous day close?
Floyd: This subscriber needs to read our manual and study.
I made a mistake last week. I had only 10,000 in my paper trading account and bought into OEYQK at a little over $16.00 . My first mistake was to pay more than 10% of my account into that trade. MY second mistake was not buying at 33% discount when the price fell. There I couldn't have held two contracts at a lower averaged cost and profit off of yesterday's early morning drop in the oex. So I took a loss. THANK GOD IM PAPER TRADING!! I'm also glad I had a chance to lose fake money right off the bat. I've learned so freakin much over the last week and a half since I subscribed to you service. I will NEVER make those mistakes again. I might even paper trade longer than 4 months. And just to let you know, I've been considering subscribing to you service for almost a year and have been sourcing you out to see if you're a scam. (20-40 percent returns daily sounds like a scam). But honestly, all I found was positive feedback. I'm deadly serious about trading for a living. I'm only 24, but I'm very committed and serious about it. I'm really glad there’s a mentoring service out there where I can get one on one help. Once I start making real money, I'll also subscribe to bluechipoptions.com and bump up my oexoptions.com level to level 3. "
Floyd: This would be the time this subscriber should subscribe to Level 3, not after making money:)
5. “Man did those guys eat there words today that wrote the emails. Nice call. I still have much to learn though. I was getting restless and sold out just above S1 level and missed out on 125 points of downside. I got back to break even on old 655 trade and then sold the more in the money option I bought yesterday for a decent profit. I just should have had patients, guess it just a learning process. I can not beat myself up for making less profit than I could have. Just learn my emotions.”
With this all said, it's time to move on. The Friday before Mother's Day the Dow has been up 8 of the last 12 years. Be prepared. I suspect we could have a bit more downside today, and will keep the same Dow projection potential bottoms for the short term, and NOT issue a new signal for market opening.
As noted above I plan to "fish" a few hours. For those of you that are new to my style, FISHING means I will not watch the market, will do NOTHING, and will let the dust settle a bit. As I see futures, and appropriate bias clarification, I'll watch for entry to the call. Read our Dow projections carefully.
Lastly, one subscriber wrote yesterday with the question "Is George Soros right?". Soros is a billionaire investor that I believe as astute as Buffett, and like Buffett, he believes that the "worse may be over" and the "recession controlled". Meanwhile, back at the political ranch, the economists and children of government still argue when the recession has begun, or if we are in one. Just as most do not understand that the price of oil has NOTHING to do with supply or demand, or the oil companies, but with oil traders and how they've bet futures, and with how Bush took it from $32.00 a barrel to $120.00 a barrel in his eight years of idiocy, by how he bet our lives on "democracy in the Middle East", and the control of Iraqi oil.
As I teach: ALL is not as it appears.
And one last trader who made my day – “Hey Floyd, My kids are vying for my attention right now so I don't have much time. There is so much I'd like to write to you about.
At this point, all I can say is that I think you are a freakin' genius. Utterly amazing. I cannot believe how someone can predict the market with this kind of accuracy. I realize that you cannot be correct 100% of the time...but I'm telling you right now - I will NEVER doubt you again.
I am studying your manual, watching your videos, and reading your articles. I am only 34 and I know you are older than me. I will have a membership for as long as you are offering your services. However, I want to make sure that on the day you retire, I'm not left with my thumb up my rear not having a clue as to what to do. I am so glad that I signed up for Level 3.
I can't wait to hear what you have to say next. One happy camper!” – MP
Floyd: Thanks MP
The Dow moved to a low of 12,759 on the theoretical Dow. Not sure if I could have been more close in my top level projection. And it's not to brag, but to PROVE to you that the financial babble of the "bulls have taken over" macroeconomic gobblegook that so influenced you all for days. Here's a few comments:
1. “Floyd, That was the single hardest thing I have ever done with regards to investing – keeping to the 4 day rule of stop loss. It was unbelievable how challenging it was. The key element however that you have introduced us to a time tested successful model. I would have NEVER thought to hold that option through the lows. I can’t say the emotion was completely out of it (yet) but I can say I am thrilled I followed your advice/model!!!” - Gratefully, RC
2. “ Sorry about the nervousness. I just lost a lot over the last few days, over $6,ooo after yesterdays reversal. I have 10 puts at a 13.65 average cost so I’m still $4775 out. I wasn’t home yesterday do to work and got burned when the market reversed before it reached my sell order. I would like to stay with it, but I’m concerned it will do like it did yesterday again. I know I over extended on the buy by my own stupidity, but I would appreciate any help you can give me on bailing myself out of this.
Floyd, thank you I bow to your wisdom. sorry I was such a pest. I turned a $6000 loss into a $2000 profit with your advice. I just became a member today and can’t wait to learn more. thanks again.” – D
3. “Floyd, you amaze me. I fought to listen to you, and just realized I wrote you over 15 times on "how wrong you were" and "what I had read", but I kept the faith. I just made 42% and total profits of $31,000 on the one trade. I've never seen the psychology of the trade so perfectly analyzed as your many reader comments. I'll tell them all: subscribe to Advanced Mentoring. Listen and read to you. You can trade full time within a year. And, I agree with your rants...I’ve begun to see what I did not understand. "NC, Asheville
4. “Hi. just wondering why over the last two days, the price has ended up at the opposite level the "first 30-60 minutes of trading" rule of the price in relation to the pivot point said it would. I'm probably just misunderstanding something.
Floyd: Indicators are just indicators.
Also, yesterday, I seem to remember the bias being to the put and yet the day ended up significantly positive. Was this bias fulfilled in the morning? Because that was a short-lived dip in price followed by a much longer-lived rise. Is the bias intended to predict to entire trading day?
Floyd: The bias lasts sometimes 30 minutes:) Puts were profitable yesterday.
This morning's signal was to buy OEYQK again. I already had a contract I bought at 8:40 or so (Which today filled out to sell giving me a 36% return) a little while ago. So this new signal for the day was to add to my position?
Floyd: Can we see from this email that the subscriber still has to learn? It was a new signal. No need to add, if we already owned the signal.
If so, I'm assuming I was supposed to follow the buying rule of waiting until it drops 30% of the price I paid for the original contract. That's how I filled out my pre-market buy orders. They obviously didn't get filled, but I'm just wondering if when you give us a new signal for a position we already have, if you still expect us to wait for it to drop the 33% of our first buy, or if you think its ok to buy at up to 20% of the previous day close?
Floyd: This subscriber needs to read our manual and study.
I made a mistake last week. I had only 10,000 in my paper trading account and bought into OEYQK at a little over $16.00 . My first mistake was to pay more than 10% of my account into that trade. MY second mistake was not buying at 33% discount when the price fell. There I couldn't have held two contracts at a lower averaged cost and profit off of yesterday's early morning drop in the oex. So I took a loss. THANK GOD IM PAPER TRADING!! I'm also glad I had a chance to lose fake money right off the bat. I've learned so freakin much over the last week and a half since I subscribed to you service. I will NEVER make those mistakes again. I might even paper trade longer than 4 months. And just to let you know, I've been considering subscribing to you service for almost a year and have been sourcing you out to see if you're a scam. (20-40 percent returns daily sounds like a scam). But honestly, all I found was positive feedback. I'm deadly serious about trading for a living. I'm only 24, but I'm very committed and serious about it. I'm really glad there’s a mentoring service out there where I can get one on one help. Once I start making real money, I'll also subscribe to bluechipoptions.com and bump up my oexoptions.com level to level 3. "
Floyd: This would be the time this subscriber should subscribe to Level 3, not after making money:)
5. “Man did those guys eat there words today that wrote the emails. Nice call. I still have much to learn though. I was getting restless and sold out just above S1 level and missed out on 125 points of downside. I got back to break even on old 655 trade and then sold the more in the money option I bought yesterday for a decent profit. I just should have had patients, guess it just a learning process. I can not beat myself up for making less profit than I could have. Just learn my emotions.”
With this all said, it's time to move on. The Friday before Mother's Day the Dow has been up 8 of the last 12 years. Be prepared. I suspect we could have a bit more downside today, and will keep the same Dow projection potential bottoms for the short term, and NOT issue a new signal for market opening.
As noted above I plan to "fish" a few hours. For those of you that are new to my style, FISHING means I will not watch the market, will do NOTHING, and will let the dust settle a bit. As I see futures, and appropriate bias clarification, I'll watch for entry to the call. Read our Dow projections carefully.
Lastly, one subscriber wrote yesterday with the question "Is George Soros right?". Soros is a billionaire investor that I believe as astute as Buffett, and like Buffett, he believes that the "worse may be over" and the "recession controlled". Meanwhile, back at the political ranch, the economists and children of government still argue when the recession has begun, or if we are in one. Just as most do not understand that the price of oil has NOTHING to do with supply or demand, or the oil companies, but with oil traders and how they've bet futures, and with how Bush took it from $32.00 a barrel to $120.00 a barrel in his eight years of idiocy, by how he bet our lives on "democracy in the Middle East", and the control of Iraqi oil.
As I teach: ALL is not as it appears.
And one last trader who made my day – “Hey Floyd, My kids are vying for my attention right now so I don't have much time. There is so much I'd like to write to you about.
At this point, all I can say is that I think you are a freakin' genius. Utterly amazing. I cannot believe how someone can predict the market with this kind of accuracy. I realize that you cannot be correct 100% of the time...but I'm telling you right now - I will NEVER doubt you again.
I am studying your manual, watching your videos, and reading your articles. I am only 34 and I know you are older than me. I will have a membership for as long as you are offering your services. However, I want to make sure that on the day you retire, I'm not left with my thumb up my rear not having a clue as to what to do. I am so glad that I signed up for Level 3.
I can't wait to hear what you have to say next. One happy camper!” – MP
Floyd: Thanks MP
Wednesday, May 7, 2008
May655P Hit Profits
The Dow moved to a high, again, of 13,050, and a low of 12,820 yesterday. The May655P hit profits at 14.20. Many emails, from many subscribers, should help us all:
1. I'd love to hear your comments with regards to the following statements made today in the news :
"Stocks reversed early losses to trade modestly higher Tuesday, as investors monitored the movements of record-high oil prices but still laid bets that the economy and companies are in recovery mode."
Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, said it is a good sign that stock traders started buying back in again when the Standard & Poor's briefly dipped below the technically significant 1,400 mark.
"We had some negative news this morning, and we've shaken it off. It's encouraging," Detrick said.
"I think overall, the strength in stocks right now is on fairly firm footing," said JPMorgan equities analyst Thomas J. Lee...."The credit markets keep showing increased appetite for risk".... "In some ways, first-quarter earnings are yesterday's news," Lee said.
Huge quarterly losses from three major players in the financial and homebuilding industries initially sparked some stock selling Tuesday, but those dips were soon met by bargain-hunters, who are betting that those sectors are a good buy right now given their low prices.
3PM - THE BULLS ARE OUT!..."All ten of the economic sectors are in positive territory for the first time this session."
Are you still sticking with the following predictions? And is this supposed to happen by the time we exercise out stop loss?
Floyd - “12,660 first strong bottom, leading to a potential bottom of 12,540
There is also a distinct possibility of a softer bottom at 12,760."
2. “Nice move this morning and yesterday. I would have never been able to have the faith and discipline I did to hold out in this put before. It took a long road to get to this point in my trading career. I just made back all my loss on XAU and then some. I figure it would take me a month of so of small gains to get back to break even. It is almost like we have some unfair knowledge that Jim Cramer does not and all the other "professionals" on CNBC don't have.
I did modify the trade a little, let me know if it was flawed. My 2nd buy at the top around 13100 I bought a more in the money option the 665 put as opposed to the 655 puts I was holding inventory on. I made up ground very quick and closed out this morning at a 50% profit, 1 of my 655 contracts sold at $14 and am my last 2 for $14. Buying the higher option was a wise move this time, but want to make sure it is something you see as being ok to do. I only did it because it appeared we were at an extreme level and wanted to take advantage of the downside once it started. Anyway, thanks for the guidance.”
3. “Floyd, I am just a novice at trading so I am trying to get my arms around what the market did today. Did we have the complete reversal because the Federal Govt reduced the restrictions on Fannie and Freddie enabling them to potentially make more bad loans and lose MORE money? And that was
considered good news?
I am going to have to stop loss till the 9th. My "you know what" is puckering just a bit now : )
I guess if I wanted security I would be in T-bills. Kind Regards, RC"
4. “Yeah, I got overconfident as I made $18k in just one trade on Wednesday, but I didn't sell it the 640put cos I thought it was gonna go lower !!! So no profit =(. Thanks very much for your help Floyd, I know I put myself in this mess, but now I need to get out. Thanks Floyd, your prediction that it will go down is true =).
“I really need your advice and help today. Can you please from your vast experience suggest a price for me to sell today my following puts:
1. 640 May Put(bought @$7.00), bought last Wednesday
2. 650 May Put(bought @15.60), bought last Thursday
The longer I hold it, is it the longer the options decrease in value ? As last time I could sell them for around $8.00 of DOW of 12,850. I see in the ThinkOrSwim platform that this price has reduced now. Why is that ? Now if I want to get $7.00 the DOW has to drop to like 12,750. Hope to hear back from you soon before market opens thanks very much Floyd. Regards,
D”
5. “Hey Floyd, Got in May655p @ $11.50 on Thur sold this morning @ $14.00. Got in again in the last half hour @ $7.30 and sold @ $7.90.
Thanks again, D”
The answers are simple:
1. There is little good news, but the bulls are trying to hold the market up. The risk increases by the day, and the market count bias is now 0. This means neither put or call show strength, despite what talking heads say, despite what a chartist will interpret. No trades will show strength until a true move takes place that "identifies" strength.
2. The talking heads are just that. Remember, these are the same boys that bankrupted Bear Stearns.
3. Some of our traders above obviously don't yet understand even the basics of trading options. Are you one of them? Looking for a signal without knowledge of how to trade?
Last week the FEDS gave us the 7th rate cut in as many months, and the easy money policies continued. This time Bernanke clarified, "this might be the end", and it's important to watch this.
The Central bank is hopefully now more concerned about inflation. Concerns over our housing downturn and credit disaster has taken priority to the FEDS, and the incessant babbles about "in recession". In the 1970's Jimmy Carter was labeled the "worst President" only because he had inherited the easy money and weak dollar policies of prior administrations. As always, the American people stupidly believed Carter was the culprit, when in actuality it was the easy money of the past that created the situation that he and the Reserve Chairman Burns had to deal with.
Former President Clinton led during a stock market bubble, and wisely used the capital to pay down the prior administrations (Bush Idiot #1) excessive spending; however, Clinton did little to control the interest rate games, and allowed the great American hero, Bubbles Greenspan, to push for creative financing, and even condone "unique methods to sponsor American home ownership".
Along came Bushy idiot #2, who had never run a business successfully, and was determined to avenge his Father's Middle East fate, we used a terror attack without any logic begin to "build democracy" in a region at war for years. When this occurred, the free money began, and we printed dollars. Remember, Communist China and other foreign countries buy over 51% of our Treasury bills. The "oil strategy" failed (get Iraq pipeline), but the lobbyist efforts by the oil companies, Halliburton, et al brought wealth to many. Exactly what was planned.
Halliburton, who was never bid out on any contracts, now has their core corporate offices in Dubai. Have we said enough?
How are we doing in Afghanistan, where the terror began. Opium sales have doubled, the Taliban are back, and anyone remember Osama Bin Laden?
The rants above lead to what now must occur: The FEDS will have to stop the interest rate games IN CASE we will truly need to lower rates again.
The tax rebates are out. The economy will now burst to the upside, say the stupid, and even have pointed out that the recent runs above 13,100 were led by the tax rebates.
1. I'd love to hear your comments with regards to the following statements made today in the news :
"Stocks reversed early losses to trade modestly higher Tuesday, as investors monitored the movements of record-high oil prices but still laid bets that the economy and companies are in recovery mode."
Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, said it is a good sign that stock traders started buying back in again when the Standard & Poor's briefly dipped below the technically significant 1,400 mark.
"We had some negative news this morning, and we've shaken it off. It's encouraging," Detrick said.
"I think overall, the strength in stocks right now is on fairly firm footing," said JPMorgan equities analyst Thomas J. Lee...."The credit markets keep showing increased appetite for risk".... "In some ways, first-quarter earnings are yesterday's news," Lee said.
Huge quarterly losses from three major players in the financial and homebuilding industries initially sparked some stock selling Tuesday, but those dips were soon met by bargain-hunters, who are betting that those sectors are a good buy right now given their low prices.
3PM - THE BULLS ARE OUT!..."All ten of the economic sectors are in positive territory for the first time this session."
Are you still sticking with the following predictions? And is this supposed to happen by the time we exercise out stop loss?
Floyd - “12,660 first strong bottom, leading to a potential bottom of 12,540
There is also a distinct possibility of a softer bottom at 12,760."
2. “Nice move this morning and yesterday. I would have never been able to have the faith and discipline I did to hold out in this put before. It took a long road to get to this point in my trading career. I just made back all my loss on XAU and then some. I figure it would take me a month of so of small gains to get back to break even. It is almost like we have some unfair knowledge that Jim Cramer does not and all the other "professionals" on CNBC don't have.
I did modify the trade a little, let me know if it was flawed. My 2nd buy at the top around 13100 I bought a more in the money option the 665 put as opposed to the 655 puts I was holding inventory on. I made up ground very quick and closed out this morning at a 50% profit, 1 of my 655 contracts sold at $14 and am my last 2 for $14. Buying the higher option was a wise move this time, but want to make sure it is something you see as being ok to do. I only did it because it appeared we were at an extreme level and wanted to take advantage of the downside once it started. Anyway, thanks for the guidance.”
3. “Floyd, I am just a novice at trading so I am trying to get my arms around what the market did today. Did we have the complete reversal because the Federal Govt reduced the restrictions on Fannie and Freddie enabling them to potentially make more bad loans and lose MORE money? And that was
considered good news?
I am going to have to stop loss till the 9th. My "you know what" is puckering just a bit now : )
I guess if I wanted security I would be in T-bills. Kind Regards, RC"
4. “Yeah, I got overconfident as I made $18k in just one trade on Wednesday, but I didn't sell it the 640put cos I thought it was gonna go lower !!! So no profit =(. Thanks very much for your help Floyd, I know I put myself in this mess, but now I need to get out. Thanks Floyd, your prediction that it will go down is true =).
“I really need your advice and help today. Can you please from your vast experience suggest a price for me to sell today my following puts:
1. 640 May Put(bought @$7.00), bought last Wednesday
2. 650 May Put(bought @15.60), bought last Thursday
The longer I hold it, is it the longer the options decrease in value ? As last time I could sell them for around $8.00 of DOW of 12,850. I see in the ThinkOrSwim platform that this price has reduced now. Why is that ? Now if I want to get $7.00 the DOW has to drop to like 12,750. Hope to hear back from you soon before market opens thanks very much Floyd. Regards,
D”
5. “Hey Floyd, Got in May655p @ $11.50 on Thur sold this morning @ $14.00. Got in again in the last half hour @ $7.30 and sold @ $7.90.
Thanks again, D”
The answers are simple:
1. There is little good news, but the bulls are trying to hold the market up. The risk increases by the day, and the market count bias is now 0. This means neither put or call show strength, despite what talking heads say, despite what a chartist will interpret. No trades will show strength until a true move takes place that "identifies" strength.
2. The talking heads are just that. Remember, these are the same boys that bankrupted Bear Stearns.
3. Some of our traders above obviously don't yet understand even the basics of trading options. Are you one of them? Looking for a signal without knowledge of how to trade?
Last week the FEDS gave us the 7th rate cut in as many months, and the easy money policies continued. This time Bernanke clarified, "this might be the end", and it's important to watch this.
The Central bank is hopefully now more concerned about inflation. Concerns over our housing downturn and credit disaster has taken priority to the FEDS, and the incessant babbles about "in recession". In the 1970's Jimmy Carter was labeled the "worst President" only because he had inherited the easy money and weak dollar policies of prior administrations. As always, the American people stupidly believed Carter was the culprit, when in actuality it was the easy money of the past that created the situation that he and the Reserve Chairman Burns had to deal with.
Former President Clinton led during a stock market bubble, and wisely used the capital to pay down the prior administrations (Bush Idiot #1) excessive spending; however, Clinton did little to control the interest rate games, and allowed the great American hero, Bubbles Greenspan, to push for creative financing, and even condone "unique methods to sponsor American home ownership".
Along came Bushy idiot #2, who had never run a business successfully, and was determined to avenge his Father's Middle East fate, we used a terror attack without any logic begin to "build democracy" in a region at war for years. When this occurred, the free money began, and we printed dollars. Remember, Communist China and other foreign countries buy over 51% of our Treasury bills. The "oil strategy" failed (get Iraq pipeline), but the lobbyist efforts by the oil companies, Halliburton, et al brought wealth to many. Exactly what was planned.
Halliburton, who was never bid out on any contracts, now has their core corporate offices in Dubai. Have we said enough?
How are we doing in Afghanistan, where the terror began. Opium sales have doubled, the Taliban are back, and anyone remember Osama Bin Laden?
The rants above lead to what now must occur: The FEDS will have to stop the interest rate games IN CASE we will truly need to lower rates again.
The tax rebates are out. The economy will now burst to the upside, say the stupid, and even have pointed out that the recent runs above 13,100 were led by the tax rebates.
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