Hold Your Buy

Here's a copy of our pre-market commentary first:

"With a 'count' of only 1 to the put bias did not appear to be established in any way yesterday. Futures at 6 a.m., however, show a strong futures bias of -83, a sign of a strong opening downside.

We will not issue a new position with the 'knife falling' to the put; however, Dow projections show potential stops at 12,100 and 12,050

Second buys have been made to our open June630C and no further buys should be made. We'll continue to hold this position for # of days stop loss. Conservative traders only could consider a stop loss on this issue at 40% from averaged costs.

We believe market conditions will shift over the very short term and an upside run will again be established, with Dow stops at 12,470 and 12,540

The call may be our first losing signal in some time, but it's too soon to worry or speculate. Hold your buy, and allow market conditions to sort themselves."

Here's the first email we received from a subscriber:

TP from Oregon:

"Hi Floyd,

Last week was evidence that I am learning some things. I played the 630 call so many times last week that its funny. I was the kinda person that would hold the darn thing all week and wonder how everyone else had so many trades as I watched my position in pain because I did not have a plan. Simply putting in the buy order then, sell order when buy is filled, then put in buy order again for same or lower then last buy and just wait. It was like fishing in a good hole. Just put the bait on and wait.

Anyway I played the call in and out with over 20% each trade three times on Wednesday. I was too tired to trade on Thursday although I looked at chart at the end of the day. Now I have purchased the 650 call at $1.5 and $1.2 and holding over weekend. It feels really scary with the fear the heads are spinning. I also look at P&F charts, and the ranges and see a real re-test of the April lows. This gives me a little peace until Monday that maybe this is the great fear that signals the real bottom. Never the less I have made so much last week and have won so many times now that getting this wrong would almost feel kinda good. I guess it would not hurt to win either. But I bet we don't have a dead cat bounce on Monday.

I have been around long enough with your service to laugh in an affectionate way when a new subscriber say "Your the Man Floyd" in many different variations. Now I am sure that you are a Master in my opinion"

Next, a reversing email from MA:

"After loosing thousands of $$$ on 630C today (as stopped loss at 40%), I'd like to NOW focus on short term day trading as you mentioned earlier by drawing the trend lines and scalping for quick and short profits...
Could you please guide me for this as being a Level 3 client?"

Floyd: The question I asked this trader I would ask any.
1. Why 1000's, and did you win on last trades?
2. Why change focus to "scalping" because you lost at owning something for three days? Why will this be "better"?
3. Are you losing money regularly, or was this the first time?

Next, an email from SD:
"Nice trades on the 630C. Still own on my two buys, and bought and sold for .70 scalp profits three times yesterday simply following your support lines. Easy money"

And lastly, what is happening is simple.
The Dow hit lows of 12,166 yesterday, and highs of 12,409. Time erosion exhausts our options, and the market moves are so slight only tight day trades are possible.

Bernanke has said that the weak USD is lifting inflation, and the rate cuts are over. Richmond, Va. Fed President Lacker just criticized the recent Bush led Fed loan programs as risky and distorting.

This political fodder is important. In our Blue Chip Options (www.bluechipoptions.com) portfolio we recently sold off partials on our hugely profitable TIPS (U.S. inflation treasury bonds), and VIPSX, our Vanguard version of these bonds) to lock in profits as the USD tumbles.

Lehmann Brothers at Blue Chip we owned a great long term put that returned 40 to 60% in a week of holding, all as we knew that Lehmann had false books (all investment bankers do), and it ended the week down 10%. The rumors are that they have sought a Federal loan. Lehmann denies this, so we know it's true. Watch LEH, as this could be a Bear Stearns, and will negatively affect any Dow projections, as any surprise news from LEH could act as a catalyst.

The Dow's drop Friday of 3.1% was worst since Feb 07; of interest, the S & P 500 also fell the exact same 3.1%.

______If you are offended by political rants in any way, do not read below.


And now, in my search for a free Blue Chip option subscriber, here's my first response from a reader on what Bush has done right.

Floyd questions are in bold

"Hey Floyd,

Nice commentary...I love the political stuff...I would agree with just about everything you say when you bash George Bush and his actions/policies (even though I voted for him). He has done some terrible things to our county and economy. That being said, in my opinion, there are still two things going for us:

#1 - Though you don't think this is legit ...we HAVE been living safely for the past eight years. You don't live 60 miles, as I do, from the great late World Trade center and you probably don't personally know individuals who lost their lives or were involved in that tragedy. But Sept. 11th truly hits home for the people in my community. Not having to experience something like that again feels comforting.

Proof this is because of Bush, or PROOF his policies have caused this or simply a parallel?

I find parallels like this disturbing. There is no proof in any way that our privacy invasions, trading of human rights, etc. have been instrumental in any way.

Just last week I went through security at the airport (just for fun) with a letter opener. Went right through, but I had to take my shoes and belt off:)

#2 - And more importantly (in my opinion), George Bush believes in ABSOLUTE TRUTH and supports the Judeo/Christian values that happened to establish this country of ours. Though I admit that Bush, and others like him, have made mistakes, if you honestly think that money hungry people like George Bush with hidden agendas are responsible for the downfall of this country, you have been deceived. Here are some facts that can be attributed to democratic liberalism:

* 48 million LEGAL abortions since Roe vs. Wade - that is 1 OUT OF EVERY 4 pregnancies
* 1.6 MILLION ABORTIONS PER YEAR - THAT IS 3 ABORTIONS PER MINUTE AND 1 EVERY 20 SECONDS!!

Please help me understand what abortion has to do with our Government? And what is ABSOLUTE truth? It's a scary statement for those that are not Christian to read this, isn't it? Is our nation Christian?

Over the last 30 years we have seen the following (Heritage Foundation 1993):

* 560% increase in violent crime
* 400% increase in illegitimate births
* 400% increase in divorce rate
* 300% increase in single-parent homes
* 200% increase in teenage suicides
* 75% drop in SAT scores

Did George Bush help any of these facts? Are these facts true? (Written by whom, who is Heritage Foundation?)

Here's who:

"Founded in 1973, The Heritage Foundation is a research and educational institute - a think tank - whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense." Facts from an organization that promotes any specific values, conservative or liberal, should be suspect.

* We lead the industrialized world in murder, rape and violent crime

George Bush has helped this? Hurt this? Where is the parallel?

* In elementary and secondary education, we are near the bottom in achievement scores (yet liberals spend more on education than most and do all we can to make sure that the Bible and prayer remain out of school)

If a Muslim, Jew, Buddhist or atheist a subscriber might be a bit upset to hear we do not separate Church and State, as outlined in our constitution?

Ask a schoolteacher what they think of "No Child Left Behind" or FCAT score teaching? What does the NEA think? This is what teachers think.

There is a coarseness, callousness, cynicism, banality, and vulgarity signaling the decivilization of our nation. I may not be in support of all of President Bush's military tactics or economic policies, but thank God that he stands for Biblical morals and convictions. With all due respect, I appreciate your commentaries, but I am more concerned with the morality of this nation as opposed to anything else. And yes, I can say most assuredly that I would rather have a conservative John McCain over a very liberal and morally loose Barack Obama. The only PERSON who is going to save this county is God himself. And that is the last thing Senator Obama will allow to happen.

How is Obama morally loose? Where is this information gathered? Although I do not promote Obama, it is a scary and judgmental statement to consider someone "morally loose" because they are, God forbid, "liberal."

By the time Obama's 8 years are up..."In God we Trust" will be off our nation's currency, gay marriages will be legal, full blown pornography will aired on prime time television, and it will probably be illegal to wear a cross...and you think we have problems now? If those are values that you support Floyd, please let us know. My wife and I will add you to our prayer journal

Please read this statement above twice and help me follow how the premise is concluded? Seems as if all "false fear" to me.....I've read nothing like this from Obama. Should we separate church and state? What does religion have to do with politics, and why? In fact, "In God we Trust" was not originally on our nation's currency in part for that very separation. It was not added fully until the 1950s, during much of the McCarthyism scare. Isn't the original, de facto motto that existed long before more apt for our country? "E pluribus unum," Latin meaning, "Out of Many, One."


What you are reading above is PART of why our economy suffers. We do not anticipate or analyze, we use our beliefs as what others might and should believe.

My apologies to the subscriber that wrote the above, but I have yet to follow how gay marriage or abortion, or porno on TV, have one iota of detail to our country's economics, national defense, or government programs.

When I read "Christian" to any political narrative I know in my heart it's simply a sales pitch to those that believe, and it's a sad pitch. We have fair evidence of this from the last 8 years:)