This is Not a Healthy Market

The Dow hit tops of 11,944, and bottoms of 11,685 in one day. Whipsaw, as we suggested, began.

Our open put was profitable in morning trading to highs of 9.00. For traders that held the July600C we hit 13.70 on good day trading. The market had just enough hesitancy to allow traders a bit of "perhaps it's over".

This is NOT a healthy market, as we know, but a bottom may have been reached from our March lows. Data, FOMC and oil will and can trigger whipsaw.

A few comments from subscribers:

"Floyd...I don't fully understand how you pick these support and resistance lines on the DOW but it absolutely amazes me. Seriously, how do you come out this morning and tell us to sell puts at 11,740 and then buy calls...only to see the DOW act EXACTLY as you predict. How do you do this!!!! Seriously, is this intuitive stuff or are you calculating something over there?


I had to take my daughter to the store and I couldn't watch the market from about 9:50-10:30.

I owned 2 puts at 7.50 from yesterday. I originally placed an order to sell at 9.80 (which was your original top sell target). As the DOW dropped this morning, at about 9:45 - The DOW was hanging around 11,760 and the price of my puts were still in the low to mid 8 dollar range. I had to leave and figured that if the DOW did drop it would only go another 30-50 pts. (according to your predictions) and that 9.80 was probably too expensive of a price. By studying prices and support levels, I decided that 9.00 would be a more realistic sell price so I changed my order to 9.00. I also watched the 600 call option and noticed that it was valued at the low 10 dollar range. Again, looking at the distance the DOW was "supposed" to travel, I estimated that 9.20 was a good buy price for the 600 call. I placed an order for 2 calls at 9.20.

When I returned home at 10:30...I had sold my puts for a nice $300 profit and was already up $100 on the calls!!!

I checked the prices on the day and discovered that I was filled on both positions (which at the time) was the near best price of the day!! It does not get much better than this Floyd!! "

"Now I understand that I cannot expect this to happen everyday...but the point is that, WITH YOUR HELP, I am learning to think like a trader and make "smart" money management decisions.

I truly appreciate all that you are doing for me and my family."

____

" When you say that a correction to a correction could/will occur, that will depend upon certain "NEWS" coming out and triggering it right ? If the "WRONG" type of news comes out, the market will fall even further, if the "RIGHT" type of news comes out for the market, then there will be euphoria and the market will "upswing" ? I'm just wandering if there is no good news at all in the economy, then will the DOW just keep on dropping without correcting ? If the DOW is "triggered" by data/statistics, etc., isn't this very random and cannot be predicted ? Or do you suggest that there is a cycle to the market which is stronger than data/statistics and this CAN be predicted ? ie cycles are more important than data/statistics."

it's best here to explain that market moves gravitate around support/resistance and tops and bottoms, and "news" leads triggers, depending upon the emotional mood of the market. If the market is already fearful, news will be negative.

If the market wants to be UP, showing an overextended market, news may be ignored.

"I just sold my 600 calls for a 30% profit today. I now see that I could have got more...How do you know when to sell at R1 or S1 OR let them go to R2 or S2? We were stuck at R1 this morning for a little bit and I had 30% profits. Did I make the right decision to sell? I bought my 600 calls this morning at S2 but sold them at R1...should I have waited for R2? (one of your rules is to buy and sell at the R2 and S2 levels).


Anyway...let's stay positive...Do you know that I made $890 this morning and I wasn't even at my computer for more than an hour!!! Unbelievable. And the best part about it is that this market is considered a high risk and difficult market to trade. And here you are showing us how to pull profits daily!! Obviously we are going to lose from time to time...but the key is money management."

This is key. If traders are bleeding from two call losses in recent weeks it shows an over allocation to a trade, and a "betting" methodology. Always, take prudent risk.