Do NOT become optimistic. Nothing is better. This is simply a great response to a Dow bottom, as we articulate in our new Dow Projections article, and we are now experiencing a 580 overall point move up.
Economic data, which assuredly will be "corrected" in 60 days, shows a stronger second quarter than anticipated, and it was this trigger that led a 200 point run, to a 11,742 top.
If history repeats itself, the hurricane will soon strike, oil will jump, and a few more banks will be caught with no money and fake books. A bear phase will soon, following patterns, hit, to move the market back down with the same trade range.
There is euphoria with the Democratic National Convention. Fully half of the American people are anxious to vote, are fed up, and believe things can change. Next week will be an interesting next step, as "lower taxes" will lead the charge, and "making sure we are safe".
Calls were wildly profitable yesterday, with the Sept600C and Sept590C both returning top bucks. The testimonials we received for this were extraordinary, but several also evidenced greed.
Some traders lamented that they sold too early, or others, buying in, settling for 50% profits, cried that they missed more profits.
Remember, leaving money on the table, my core rule, means: NEVER sell at the top, always allow the market to potentially move higher after you profit, and always take reasonable profits. I think 30 to 60% in a day is more than reasonable:)
From a subscriber:
Hey Floyd...
I've been watching your DOW projection videos...It amazes me how simple yet how complex your whole system is. I liken it to a professional athlete who makes their sport look so easy.....but it is only after years of hard work and discipline that they are able to preform with such ease. When I was at my best as a college and minor league baseball player...I would hit balls off of the batting tee so many times that I could do it with my eyes closed. LITERALLY...I got to the point that I would set up two batting tees...I would line one up in front of the other...and close my eyes and hit one ball into the other. That is how "easy" hitting off the tee became for me. I wanted my swing to be completely "kink free"...meaning...that when I stepped into the batters box..I "KNEW" that my swing was there...I "KNEW" that the only way I was going to make an out was because either the defense made a good play (nothing I can do about that) or the pitcher just beat me (nothing I could do about that either)...the point was to not beat myself by making "errors" from lack of preparation (bad mechanics) or lack of discipline (swing at a bad pitch). Sounds like you doesn't it?...When you lose a trade...it isn't because you were not prepared and it isn't because you made a bad decision...the only reason why you lose...if and when that happens...it is because the market just beat you that day...the defense did their job...and because of that...you are able to tip your hat and get ready for the next at bat...with confidence that you will prevail!
I admire you very much. You are an inspiration to me. I have begun Dorsey's book and I can't imagine reading it 5 times let alone 40X like you have done. But then again...I use to swing the bat until my hands bled. I guess you do what you have to do to get to that next level!!
2 questions:
1. In one of your videos...you mention calculating support and resistance...I never though of plugging in the DOW numbers (open, close, high, low) into the pivot point calculator. Does doing that work just like it works for the OEX and is doing that more helpful then just using the numbers that you give us each day?
Yes, this is a valuable tool to use.
2. Unfortunately...I did not have a great price for the 600 call and I am still holding my position with a price of 6.55 - should I have got out yesterday at break even? I was thinking about doing so but I just couldn't pull the trigger...what do you think? Did I make a mistake by holding?
It increases your risk to hold. I'd sell by stop loss date of Friday on this. We did hit market tops yesterday, a 50 dma, which could have supported selling at cost
Friday, August 29, 2008
Thursday, August 28, 2008
The Market was Ripe for a Turn
From BD:
"I'm out. Top sells 590 Call to 11.80, 33% and 600 Call to 6.5, 13%....
I've modified my exit strategy by not holding out for top % gain all of the time, its a judgement call. When I start to look at % gains, I get greedy, or think well I've risked this much, I should be rewarded with this much. Not so. Trading pivots, supp/res and the short term bb/ma for confirmation of moves. My patience is much better too.
Following the VIX has helped my trading as well for overall direction."
From NBW:
"Nice. Bought the 590 at 8.00 and took it to 11.70, one day. Sold 600C also tighter profits. Profitable all week".
What happened?
1. The market moved right to 11594. (See Dow projections below)
2. Everyone got excited because Fannie and Freddie sold some paper, meaning that a bail out may not occur.
(This means that Fannie and Freddie continued to cook the books, and bought some time. I believe a bail out will be required over time as the books get analyzed.)
3. The market was RIPE for a turn. We have gone from a 6 bell curve count to the call, to a 6 bell curve count to the put, and back and forth. It's a market in pure whipsaw.
More upside remains likely, around whipsaw.
Market conditions could easily shift to two way trades. We will not yet trade puts, watching for a higher Dow top prior to our first entry, but watch futures carefully.
"I'm out. Top sells 590 Call to 11.80, 33% and 600 Call to 6.5, 13%....
I've modified my exit strategy by not holding out for top % gain all of the time, its a judgement call. When I start to look at % gains, I get greedy, or think well I've risked this much, I should be rewarded with this much. Not so. Trading pivots, supp/res and the short term bb/ma for confirmation of moves. My patience is much better too.
Following the VIX has helped my trading as well for overall direction."
From NBW:
"Nice. Bought the 590 at 8.00 and took it to 11.70, one day. Sold 600C also tighter profits. Profitable all week".
What happened?
1. The market moved right to 11594. (See Dow projections below)
2. Everyone got excited because Fannie and Freddie sold some paper, meaning that a bail out may not occur.
(This means that Fannie and Freddie continued to cook the books, and bought some time. I believe a bail out will be required over time as the books get analyzed.)
3. The market was RIPE for a turn. We have gone from a 6 bell curve count to the call, to a 6 bell curve count to the put, and back and forth. It's a market in pure whipsaw.
More upside remains likely, around whipsaw.
Market conditions could easily shift to two way trades. We will not yet trade puts, watching for a higher Dow top prior to our first entry, but watch futures carefully.
Wednesday, August 27, 2008
Barry Dunham for President!!
It's time for a bit of teaching. All is NOT as it appears.
Barry Dunham is running for President. Obama's Mother's maiden name was Dunham, and she almost went back to her maiden name while raising her son. And, as a child, Barack was called Barry. So, Barry Dunham is running for President.
Hmm. Sounds less "Muslim" and "terrorist" now? Not as exciting?
It is ALL in how we SEE things, not as how things actually are.
____
Most of the day on Tuesday the market held at support lines. Oil became the new trophy as fears of hurricane took over, and the FOMC led the day's fears, as the FEDS continued to politic on just how bad the financial crisis is, and who will do what. Bernanke is now in battle with other economists, and the "uncertainty" of the situation continues to unfold.
Floyd will say it again: we will have to bail out Freddie and Fannie. The numbers have been falsified for years, and the house of cards will utterly collapse without financial intervention. Oil, if we do not begin to understand the situation, will hit $200 a barrel, and the world economies will be devastated...ALL if we do not get a control over our thinking, our spending, and our understanding of what really is important.
Historically make note that we have seen this same pattern occur now a number of times over the past 6 months and that market upturns have typically been just under 500 points for the total upswing. We see this same situation likely occurring again within the next 7 market days. Some "event" (speech, oil, commentary) will trigger upside. It is also likely for downturn to take place, to our lower Dow projections, requiring a longer wait time for the call rebound.
Make careful note we are not suggesting a "bull run", but a "bull move"..... a short time trade range burst to the upside.
The Sept590C was easily day trade material on 8/26 for quick 1.00 per contract profits, as the market struggled around a 30 point range.
Barry Dunham is running for President. Obama's Mother's maiden name was Dunham, and she almost went back to her maiden name while raising her son. And, as a child, Barack was called Barry. So, Barry Dunham is running for President.
Hmm. Sounds less "Muslim" and "terrorist" now? Not as exciting?
It is ALL in how we SEE things, not as how things actually are.
____
Most of the day on Tuesday the market held at support lines. Oil became the new trophy as fears of hurricane took over, and the FOMC led the day's fears, as the FEDS continued to politic on just how bad the financial crisis is, and who will do what. Bernanke is now in battle with other economists, and the "uncertainty" of the situation continues to unfold.
Floyd will say it again: we will have to bail out Freddie and Fannie. The numbers have been falsified for years, and the house of cards will utterly collapse without financial intervention. Oil, if we do not begin to understand the situation, will hit $200 a barrel, and the world economies will be devastated...ALL if we do not get a control over our thinking, our spending, and our understanding of what really is important.
Historically make note that we have seen this same pattern occur now a number of times over the past 6 months and that market upturns have typically been just under 500 points for the total upswing. We see this same situation likely occurring again within the next 7 market days. Some "event" (speech, oil, commentary) will trigger upside. It is also likely for downturn to take place, to our lower Dow projections, requiring a longer wait time for the call rebound.
Make careful note we are not suggesting a "bull run", but a "bull move"..... a short time trade range burst to the upside.
The Sept590C was easily day trade material on 8/26 for quick 1.00 per contract profits, as the market struggled around a 30 point range.
Tuesday, August 26, 2008
Your Taxes Have Already Been Raised, Citizens!
Facts from Stock Traders Almanac:
8/26 – Last 5 days of August much better; up 4 years in a row
"Floyd, sometimes it is not enough when I make $4000 on a trade. I want more. I get upset. Is this normal?"
This subscriber helped me in showing you as students GREED. $4000 on a trade, or a typical 20% return, as this subscriber had written, is huge money, and very profitable. Where else can one earn 20% in an hour or two, sitting down, "doing nothing".
Learn what is, not what should be.
And, from another subscriber in journals:
"Floyd:
I, like your other trader like to journal emails to you. I'm sure it also helps you judge the sentiment of traders. I try not to hold back any emotions, but lately my emotions have been in check. Reason why, I've reduced my risk by trading less contracts.
Friday I watched the vix move down along the trendline, euphoria on BS and decided to trade the 580 put. Scalped a trade mid afternoon and took a position to hold over the weekend at an average cost of 6.1. GTC sell orders in place. Partials sold 6.50 at opening reading the tape to make a determination of further weakness. Sold final partials at 7.00. Love leaving money on the table when I already made mine....
BTW: I love to trade puts, buy low volitility sell high volitility.
I will now look for entry into Call signal.
Regards, BD"
Republicans for Obama/Biden......"
______________
Monday fear of the banks and the never ending messes, and oil prices, led a decline to 11,322. We do not believe this was the market move down that we next expect, however, and that upside could now occur, before a deeper bottom.
Traders should have made two buys to the open call recommended yesterday.
My favorite news of Monday is that the FEDS themselves now cannot figure out what to do, or to agree on the Fannie/Freddie mess;
the bottom line: the numbers are far worse than we have been told, we have been lied to by our government, and a complete government bail out will occur.
Your taxes have already been raised, citizens.
8/26 – Last 5 days of August much better; up 4 years in a row
"Floyd, sometimes it is not enough when I make $4000 on a trade. I want more. I get upset. Is this normal?"
This subscriber helped me in showing you as students GREED. $4000 on a trade, or a typical 20% return, as this subscriber had written, is huge money, and very profitable. Where else can one earn 20% in an hour or two, sitting down, "doing nothing".
Learn what is, not what should be.
And, from another subscriber in journals:
"Floyd:
I, like your other trader like to journal emails to you. I'm sure it also helps you judge the sentiment of traders. I try not to hold back any emotions, but lately my emotions have been in check. Reason why, I've reduced my risk by trading less contracts.
Friday I watched the vix move down along the trendline, euphoria on BS and decided to trade the 580 put. Scalped a trade mid afternoon and took a position to hold over the weekend at an average cost of 6.1. GTC sell orders in place. Partials sold 6.50 at opening reading the tape to make a determination of further weakness. Sold final partials at 7.00. Love leaving money on the table when I already made mine....
BTW: I love to trade puts, buy low volitility sell high volitility.
I will now look for entry into Call signal.
Regards, BD"
Republicans for Obama/Biden......"
______________
Monday fear of the banks and the never ending messes, and oil prices, led a decline to 11,322. We do not believe this was the market move down that we next expect, however, and that upside could now occur, before a deeper bottom.
Traders should have made two buys to the open call recommended yesterday.
My favorite news of Monday is that the FEDS themselves now cannot figure out what to do, or to agree on the Fannie/Freddie mess;
the bottom line: the numbers are far worse than we have been told, we have been lied to by our government, and a complete government bail out will occur.
Your taxes have already been raised, citizens.
Monday, August 25, 2008
What Makes it Difficult is the Emotion in your Mind
First, here is how Mike Gibbons at Breakout Watch sees the markets:
Although the major indexes slipped this week, they did so on lighter volume indicating consolidation rather than panic selling. The slippage was caused by a resurgence in oil prices as the recently improving dollar resumed its fall. The consequent rebound in energy stocks cushioned the losses in the large cap DJI and S&P 500 indexes while the smaller cap NASDAQ and Russell 2000 relinquished the leading role they have played for the last six weeks. Nevertheless, the Russell 2000 found support at its 200 dma level on Thursday while the NASDAQ, which is again below its 200 dma level found support at the 50 dma level.
The week's trend was reversed on Friday as oil fell by over $6 a barrel and the dollar recovered. Adding to the good news on Friday was rumor of a probable capital injection into Lehman Brothers by the Korean Development Bank. Oil prices are likely to continue to fall as the 'geopolitical risk premium' abates as the tensions subside in Georgia. Supplies are also improving due to the reopening of a pipeline throughTurkey and OPEC is expected to increase production by 1.4% next month.
If energy costs continue to fall, we will see a reduction in inflation and the US consumer will have more disposable income to support economic sectors outside of energy. This augers well for a continuance of the current upward trend.
Second, from an Advanced Mentoring student "journalling" his trades and emotions, a well kept study in what thinking occurs:
Hi Floyd,
I know you are fishing today and I am not expecting a response.
I am just going to use this forum as my journaling for today. Feel free to respond if and when you would like. Actually, there is no need to respond at all. I just want to get my thoughts down and have you read them as well to give you an idea of how I think. I hope you enjoy the weekend.
When I saw the futures up this morning...I was feeling a bit angry to be honest. Thoughts like..."I should have held my position" ran through my head. I noticed that I WAS ALLOWING these feelings of regret to cause me anxiety - which was effecting the way I was interacting with Christine and the girls. I did not like how I was feeling. Especially when the futures hit 90+...then I began to get even more irritated b/c of the potential profit that I "could" have taken home. I tried to remind myself that the futures could have been down just as easily and that I should be grateful for what I did have. That helped a little.
After an unpleasant conversation with the phone company, a trip to the bank and some more chaos at home...I was feeling itchy to trade. I felt that if I won some money it would make myself "feel better." (a very dangerous place to be).
By the time Christine took the girls out, the market was up 180+ points and I was sitting there (a bit perturbed b/c I missed the profit) and I was ready to find some kind of edge to trade.
"What should I do?"
"Bernanke's comments were not too bad...not too good either."
Reuters:
"Stocks finished the week on a strong note, but the lack of volume suggested there was little conviction behind the buying. Moreover, despite the strong finish, the major indices concluded the week with a loss."
Hey Floyd...
At about 3 pm...the DOW was still sitting around 11,600 and I was "convinced" that it was going to fall back down to the mid 500's by the end of the day...I decided to scalp some puts towards the end of the day. I bought the Sept. 600 put for 14.00...Unfortunately...I never closed the deal and she finished up at about 13.40...I decided not to take the loss and to let her ride over the weekend preparing to make a second buy if I have to...
I know this was not a signal of yours therefore I realize that you most likely would not have played this option at this time...BUT...On a scale of 1-10...how good or bad would you rate this play?
Still looking for the 11,800's before downside?
Besides oil and the dollar...what is making this market move up?
Have a great weekend!
Michael
"Can I scalp a few cents here and there?"
"I should have held my calls"
"Can I find an edge to trade?"
"Will we hit our high DOW projections?"
These are what I was pondering.
I sat there and watched the market sit still at around 180+...since the DOW did slowly rise after Bernanke spoke and being that the futures were still over 200+ (I don't even though if that is significant or not...to me it was)..I felt as though the market was poised for more upside...
So what do I do...I purchase 10 AUG. exp calls for 2.20...about 7 minutes later...I could have sold them for 2.60 and made a quick $400...Instead...I waited another half hour only to watch the market slowly drop...I ended up selling them for 1.80 and losing $400...I was not a happy camper. A few things were bothering me...
#1 - I was saying to myself..."Floyd would probably not do this"
#2 - "I should have took my 40 cents when I had the chance"
#3 - "You know better than to hold an option like that for too long...time decay is much to fast on the last day"
#4 - ON THE ONE MINUTE CHART...I RECOGNIZED A NICE ROUND DOUBLE TOP FORMING...WHICH WAS A GOOD INDICATOR OF SOME DOWNSIDE POTENTIAL...PLUS MACD WAS SHOWING BIG TIME DIVERGENCE.
The charts were showing edge to the downside...yet I just sat there and waited. Eventually...after I took my $400 loss...I stopped sulking and came back to my senses. I then said to myself..."why don't you get in on the downside?"..."If you are so sure of your technical analysis...why not just get in?"
My response..."Because I'm only sure when I DON'T ENTER THE TRADE!" I felt that if I did get in the trade...it would reverse on me...Like the market has a personal vendetta against me.
So I watched...and it kept slowly falling...just like I predicted it would. And it got me more irritated.
So I said to a quick prayer to God...I asked for a calm spirit...I apologized for acting like a jerk this morning and I asked God to help me see the market for what it is...not what I think...
When I came back to the screen...a thought came to me..."This is probably just a 50% Fibo retracement like the other day. I used my charting tool on the OEX and the DOW...and noticed that both were a significant distance away from the 38-50% retracement line. I felt as though that I still had a good edge so I bought 10 Sept. puts for 14.90 (expensive play...but was only for a scalp). I used the theoretical pricer on my broker platform and at the 50% line of the OEX...price was projected to be at 15.50. I placed my sell order and waited.
About 12 minutes later...I sold for 15.50...a nice $600 profit...canceling out my $400 loss earlier and leaving me with $200 profit on the day.
A few things that stuck out to me:
1. I have to admit that I was a bit frustrated when I place the second trade and I may have been trading out of anger and risked too much money. I don't know if I would have had the guts to take another $400 loss...I may have left my $14,900 out there for a while with the hope of downside...If I am going to use that much for a scalp...I would like a better edge. Even so...I did not feel as uncomfortable as I did with the first trade. I actually felt more uncomfortable with my first trade of ($2200) b/c of the time decay. I don't want to trade options on the last day of expiration anymore.
2. The OEX did bounce off of the 50% retracement line and move to the upside which made me feel even better about my technical analysis. Plus my exit price was pretty much dead on. That made me feel good as well. If I had a some pair of balls I would have purchased some calls after the bounce....BUT...I was glad that I had a profit for the day and I just didn't want to take any more risk. My brain needed a rest. At this point...I would rather not trade and make no money vs. trade and have a chance of losing. I just wasn't feeling in the mood.
3. I noticed that the 50% retracement on the OEX was actually the 38% on the DOW...something I need to remember for the future. They are not always the same...when in doubt...take the shorter target.
I feel pretty good about myself today. I've learned some good lessons. My goal is to feel good about myself all the time...regardless of winning or losing. I noticed that the good majority of trades that I've ever placed so far (using technical analysis) are often times correct. The problem I have is taking profits. I tend to take them too early when I should have waited OR not take them quick enough. Today...I waited too long on the 1st trade and took profits exactly when I was supposed to the second time. So I'm getting there...my goal is to just keep taking profits...leave money on the table and not look back.
It was a good day.
Should I try to grab one more trade before the bell? We may have a double top again!!"
Floyd comments: This trader is learning himself well. Note the emotional struggles as he watched the market, began to trade using the alert as a tool, not the full endgame, and began trading from his knowledge.
Third, we hit profits on each of our new signals last week. Every signal could have been bought and sold profitably.
What makes it difficult to achieve is the emotion in your mind as a trader as to "what should happen" or wanting the "validity of fact" to prove why something is occurring. On Friday our open Sept590C hit 15.48 in top sells, and the Sept600C was also profitable.
This last week especially I noted many subscribers "writing to confirm". Worrries about futures, or the FEDS, or what they had "read", confusion over "how soon will the market hit the tops you suggest", etc.
Trading is interpreting facts and other traders emotions.
NOTE: Level 3 and Advanced Mentoring subscribers: the password protected area of our website has many new videos that Terry took of Floyd teaching the market. Take the time to study and learn from these videos.
There is also a new Dow article, 35 pages of training on how Floyd projects the Dow, available FREE to all Advanced Mentoring and Level 3 subscribers.
Although the major indexes slipped this week, they did so on lighter volume indicating consolidation rather than panic selling. The slippage was caused by a resurgence in oil prices as the recently improving dollar resumed its fall. The consequent rebound in energy stocks cushioned the losses in the large cap DJI and S&P 500 indexes while the smaller cap NASDAQ and Russell 2000 relinquished the leading role they have played for the last six weeks. Nevertheless, the Russell 2000 found support at its 200 dma level on Thursday while the NASDAQ, which is again below its 200 dma level found support at the 50 dma level.
The week's trend was reversed on Friday as oil fell by over $6 a barrel and the dollar recovered. Adding to the good news on Friday was rumor of a probable capital injection into Lehman Brothers by the Korean Development Bank. Oil prices are likely to continue to fall as the 'geopolitical risk premium' abates as the tensions subside in Georgia. Supplies are also improving due to the reopening of a pipeline throughTurkey and OPEC is expected to increase production by 1.4% next month.
If energy costs continue to fall, we will see a reduction in inflation and the US consumer will have more disposable income to support economic sectors outside of energy. This augers well for a continuance of the current upward trend.
Second, from an Advanced Mentoring student "journalling" his trades and emotions, a well kept study in what thinking occurs:
Hi Floyd,
I know you are fishing today and I am not expecting a response.
I am just going to use this forum as my journaling for today. Feel free to respond if and when you would like. Actually, there is no need to respond at all. I just want to get my thoughts down and have you read them as well to give you an idea of how I think. I hope you enjoy the weekend.
When I saw the futures up this morning...I was feeling a bit angry to be honest. Thoughts like..."I should have held my position" ran through my head. I noticed that I WAS ALLOWING these feelings of regret to cause me anxiety - which was effecting the way I was interacting with Christine and the girls. I did not like how I was feeling. Especially when the futures hit 90+...then I began to get even more irritated b/c of the potential profit that I "could" have taken home. I tried to remind myself that the futures could have been down just as easily and that I should be grateful for what I did have. That helped a little.
After an unpleasant conversation with the phone company, a trip to the bank and some more chaos at home...I was feeling itchy to trade. I felt that if I won some money it would make myself "feel better." (a very dangerous place to be).
By the time Christine took the girls out, the market was up 180+ points and I was sitting there (a bit perturbed b/c I missed the profit) and I was ready to find some kind of edge to trade.
"What should I do?"
"Bernanke's comments were not too bad...not too good either."
Reuters:
"Stocks finished the week on a strong note, but the lack of volume suggested there was little conviction behind the buying. Moreover, despite the strong finish, the major indices concluded the week with a loss."
Hey Floyd...
At about 3 pm...the DOW was still sitting around 11,600 and I was "convinced" that it was going to fall back down to the mid 500's by the end of the day...I decided to scalp some puts towards the end of the day. I bought the Sept. 600 put for 14.00...Unfortunately...I never closed the deal and she finished up at about 13.40...I decided not to take the loss and to let her ride over the weekend preparing to make a second buy if I have to...
I know this was not a signal of yours therefore I realize that you most likely would not have played this option at this time...BUT...On a scale of 1-10...how good or bad would you rate this play?
Still looking for the 11,800's before downside?
Besides oil and the dollar...what is making this market move up?
Have a great weekend!
Michael
"Can I scalp a few cents here and there?"
"I should have held my calls"
"Can I find an edge to trade?"
"Will we hit our high DOW projections?"
These are what I was pondering.
I sat there and watched the market sit still at around 180+...since the DOW did slowly rise after Bernanke spoke and being that the futures were still over 200+ (I don't even though if that is significant or not...to me it was)..I felt as though the market was poised for more upside...
So what do I do...I purchase 10 AUG. exp calls for 2.20...about 7 minutes later...I could have sold them for 2.60 and made a quick $400...Instead...I waited another half hour only to watch the market slowly drop...I ended up selling them for 1.80 and losing $400...I was not a happy camper. A few things were bothering me...
#1 - I was saying to myself..."Floyd would probably not do this"
#2 - "I should have took my 40 cents when I had the chance"
#3 - "You know better than to hold an option like that for too long...time decay is much to fast on the last day"
#4 - ON THE ONE MINUTE CHART...I RECOGNIZED A NICE ROUND DOUBLE TOP FORMING...WHICH WAS A GOOD INDICATOR OF SOME DOWNSIDE POTENTIAL...PLUS MACD WAS SHOWING BIG TIME DIVERGENCE.
The charts were showing edge to the downside...yet I just sat there and waited. Eventually...after I took my $400 loss...I stopped sulking and came back to my senses. I then said to myself..."why don't you get in on the downside?"..."If you are so sure of your technical analysis...why not just get in?"
My response..."Because I'm only sure when I DON'T ENTER THE TRADE!" I felt that if I did get in the trade...it would reverse on me...Like the market has a personal vendetta against me.
So I watched...and it kept slowly falling...just like I predicted it would. And it got me more irritated.
So I said to a quick prayer to God...I asked for a calm spirit...I apologized for acting like a jerk this morning and I asked God to help me see the market for what it is...not what I think...
When I came back to the screen...a thought came to me..."This is probably just a 50% Fibo retracement like the other day. I used my charting tool on the OEX and the DOW...and noticed that both were a significant distance away from the 38-50% retracement line. I felt as though that I still had a good edge so I bought 10 Sept. puts for 14.90 (expensive play...but was only for a scalp). I used the theoretical pricer on my broker platform and at the 50% line of the OEX...price was projected to be at 15.50. I placed my sell order and waited.
About 12 minutes later...I sold for 15.50...a nice $600 profit...canceling out my $400 loss earlier and leaving me with $200 profit on the day.
A few things that stuck out to me:
1. I have to admit that I was a bit frustrated when I place the second trade and I may have been trading out of anger and risked too much money. I don't know if I would have had the guts to take another $400 loss...I may have left my $14,900 out there for a while with the hope of downside...If I am going to use that much for a scalp...I would like a better edge. Even so...I did not feel as uncomfortable as I did with the first trade. I actually felt more uncomfortable with my first trade of ($2200) b/c of the time decay. I don't want to trade options on the last day of expiration anymore.
2. The OEX did bounce off of the 50% retracement line and move to the upside which made me feel even better about my technical analysis. Plus my exit price was pretty much dead on. That made me feel good as well. If I had a some pair of balls I would have purchased some calls after the bounce....BUT...I was glad that I had a profit for the day and I just didn't want to take any more risk. My brain needed a rest. At this point...I would rather not trade and make no money vs. trade and have a chance of losing. I just wasn't feeling in the mood.
3. I noticed that the 50% retracement on the OEX was actually the 38% on the DOW...something I need to remember for the future. They are not always the same...when in doubt...take the shorter target.
I feel pretty good about myself today. I've learned some good lessons. My goal is to feel good about myself all the time...regardless of winning or losing. I noticed that the good majority of trades that I've ever placed so far (using technical analysis) are often times correct. The problem I have is taking profits. I tend to take them too early when I should have waited OR not take them quick enough. Today...I waited too long on the 1st trade and took profits exactly when I was supposed to the second time. So I'm getting there...my goal is to just keep taking profits...leave money on the table and not look back.
It was a good day.
Should I try to grab one more trade before the bell? We may have a double top again!!"
Floyd comments: This trader is learning himself well. Note the emotional struggles as he watched the market, began to trade using the alert as a tool, not the full endgame, and began trading from his knowledge.
Third, we hit profits on each of our new signals last week. Every signal could have been bought and sold profitably.
What makes it difficult to achieve is the emotion in your mind as a trader as to "what should happen" or wanting the "validity of fact" to prove why something is occurring. On Friday our open Sept590C hit 15.48 in top sells, and the Sept600C was also profitable.
This last week especially I noted many subscribers "writing to confirm". Worrries about futures, or the FEDS, or what they had "read", confusion over "how soon will the market hit the tops you suggest", etc.
Trading is interpreting facts and other traders emotions.
NOTE: Level 3 and Advanced Mentoring subscribers: the password protected area of our website has many new videos that Terry took of Floyd teaching the market. Take the time to study and learn from these videos.
There is also a new Dow article, 35 pages of training on how Floyd projects the Dow, available FREE to all Advanced Mentoring and Level 3 subscribers.
Friday, August 22, 2008
ALWAYS Sell Partials Profitably
What we saw yesterday was the beginning of a trade range move, as the market bottomed again at 11,275, before heading to a 11,476 top, and regressing.
The Sept590C could have been bought as low as 9.10 and sold to highs of 12.00
Recently I have been not issuing as many subscriber testimonials, and have been focusing in on the "thinking" of the market.
Yesterday however I had 7 emails from subscribers asking one of two questions:
1. How soon will the market hit your top sales ranges of 11,820
-Floyd-only a crystal ball ever knows when.
2. I can sell my calls for 25% profit now, but if I wait til the 11,820 I could double my money?
-Floyd-ALWAYS sell at least partials profitably!!!
___________
Obama continues to raise money from corporate sponsors, and not just the small donor that he evidences so in his campaigns, and the general move to the right he is making should be watched, not for its shrewd centering to win, but for the beginning of collusion with special interest.
Floyd is investigating for real facts. Some things are starting to smell. I can find already how completely dirty McCain is from the contributions he has from lobbyists, but Obama seems right on the bus, already with a front row seat.
The Reuters/Univ of Michigan consumer sentiment index edged up to 61.7 in early August from 61.2 in July. Economists had expected 62. The 1 year inflation outlook cooled to 4.8% from 5.1%.
It is these kind of facts that leads the market. Take, for instance, that historical back testing and validity on the CSI are not valid, and the study simply one that has "gained an edge" and is "popular". This is indeed the case. It's a more scientific version of Floyd's 10 point Bell Curve to the put or call. When the CSI is 62 it's similar to the bullish percents available in point and figure charting, that indicate the public mood on supply and demand.
_
McCain advises that he is "learning to use email". This is a cute statement, but sadly prophetic. It is OK that our poor citizenry do not yet use the internet, but it is NOT OK THAT THE LEADER OF THE FREE WORLD IS NOT INTERNET SAVVY.
75% of Americans of McCain's race, gender, and occupation are internet friendly.
What it means to me is not that he delegates "the internet" but has found no reality of importance in the use of the internet.
Within 20 years I believe our worldwide economy may be led by the computer and internet. To me, we're reading about a man far from touch with reality, a perfect pawn for corporate and wealthy Americans to continue supporting "their way"
Much of our dialogue recently has involved politics, specifically because what Bush and Congress have accomplished in 8 years is huge, hugely destroying our economy. We must think smart, not listen to ads about "raising taxes". It's not that simple
---
Bankruptcy's are up 30% over the prior year in the United States. How have the tax cuts helped us? Are taxes really cut if bankruptcy is up 30%? and housing down 30%?
The Sept590C could have been bought as low as 9.10 and sold to highs of 12.00
Recently I have been not issuing as many subscriber testimonials, and have been focusing in on the "thinking" of the market.
Yesterday however I had 7 emails from subscribers asking one of two questions:
1. How soon will the market hit your top sales ranges of 11,820
-Floyd-only a crystal ball ever knows when.
2. I can sell my calls for 25% profit now, but if I wait til the 11,820 I could double my money?
-Floyd-ALWAYS sell at least partials profitably!!!
___________
Obama continues to raise money from corporate sponsors, and not just the small donor that he evidences so in his campaigns, and the general move to the right he is making should be watched, not for its shrewd centering to win, but for the beginning of collusion with special interest.
Floyd is investigating for real facts. Some things are starting to smell. I can find already how completely dirty McCain is from the contributions he has from lobbyists, but Obama seems right on the bus, already with a front row seat.
The Reuters/Univ of Michigan consumer sentiment index edged up to 61.7 in early August from 61.2 in July. Economists had expected 62. The 1 year inflation outlook cooled to 4.8% from 5.1%.
It is these kind of facts that leads the market. Take, for instance, that historical back testing and validity on the CSI are not valid, and the study simply one that has "gained an edge" and is "popular". This is indeed the case. It's a more scientific version of Floyd's 10 point Bell Curve to the put or call. When the CSI is 62 it's similar to the bullish percents available in point and figure charting, that indicate the public mood on supply and demand.
_
McCain advises that he is "learning to use email". This is a cute statement, but sadly prophetic. It is OK that our poor citizenry do not yet use the internet, but it is NOT OK THAT THE LEADER OF THE FREE WORLD IS NOT INTERNET SAVVY.
75% of Americans of McCain's race, gender, and occupation are internet friendly.
What it means to me is not that he delegates "the internet" but has found no reality of importance in the use of the internet.
Within 20 years I believe our worldwide economy may be led by the computer and internet. To me, we're reading about a man far from touch with reality, a perfect pawn for corporate and wealthy Americans to continue supporting "their way"
Much of our dialogue recently has involved politics, specifically because what Bush and Congress have accomplished in 8 years is huge, hugely destroying our economy. We must think smart, not listen to ads about "raising taxes". It's not that simple
---
Bankruptcy's are up 30% over the prior year in the United States. How have the tax cuts helped us? Are taxes really cut if bankruptcy is up 30%? and housing down 30%?
Thursday, August 21, 2008
Everything in the U.S. is For Sale
The market moved to 11,494 in an uphill battle yesterday, with mild whipsaw, before closing 68 points up.
The Sept590P was available below prior day close, at 9.40 up and hit highs of 12.10. We'll continue to hold and recommend on this issue. Risk traders that took entry to the Sept600C earlier this week should sell this issue when the September590C is sold.
Upside may be in whipsaw, but is not over.
Thirty six percent of Washington, DC citizens are functionally illiterate. The national average is 21%. This is called internal self terrorism. Perhaps before we worry if a candidate is Muslim or not (he is not), we might consider teaching our own people how to read :)
_______________________________
Everything in the U.S. is for sale. Merrill Lynch, slime of Wall Street, sold part of its assets (all falsified) for 6.6 billion, Mellenium Pharmaceutical sold for 8.8 billion.
There are reasons this is happening:
Belgian based, Brazilian controlled InBEV bought BUD. GE is selling off its appliance division, and China's Haler and Korea's LG (formerly RCA Victor) lead the buying frenzy.
Investors from Dubai are behind the purchase of the GM building in NYC, for 2.8 billion.
Swiss pharma Roche Holdings is on track to buy the remaining 44% of U.S. Biotech company Genetech that it doesn't already own.
The falling USD, and our deepening credit risk, fuels these buys. Some 55% of foreign direct investment in the U.S. came from Europe last year, much because of the currency advantage, and more because owning it "real" is more valid now than holding debt. Our suitors don't even trust our debt, and now want the real asset.
The Sept590P was available below prior day close, at 9.40 up and hit highs of 12.10. We'll continue to hold and recommend on this issue. Risk traders that took entry to the Sept600C earlier this week should sell this issue when the September590C is sold.
Upside may be in whipsaw, but is not over.
Thirty six percent of Washington, DC citizens are functionally illiterate. The national average is 21%. This is called internal self terrorism. Perhaps before we worry if a candidate is Muslim or not (he is not), we might consider teaching our own people how to read :)
_______________________________
Everything in the U.S. is for sale. Merrill Lynch, slime of Wall Street, sold part of its assets (all falsified) for 6.6 billion, Mellenium Pharmaceutical sold for 8.8 billion.
There are reasons this is happening:
Belgian based, Brazilian controlled InBEV bought BUD. GE is selling off its appliance division, and China's Haler and Korea's LG (formerly RCA Victor) lead the buying frenzy.
Investors from Dubai are behind the purchase of the GM building in NYC, for 2.8 billion.
Swiss pharma Roche Holdings is on track to buy the remaining 44% of U.S. Biotech company Genetech that it doesn't already own.
The falling USD, and our deepening credit risk, fuels these buys. Some 55% of foreign direct investment in the U.S. came from Europe last year, much because of the currency advantage, and more because owning it "real" is more valid now than holding debt. Our suitors don't even trust our debt, and now want the real asset.
Wednesday, August 20, 2008
Floydian Facts
Recent oil spills forced McCain to cancel a photo op to promote "safe" offshore drilling.
This is a Floydian fact.
FEMA is seeking immunity for housing Katrina evacuees in toxic trailers. Another Floydian fact.
And another: in McCain's tax policies corporate American will save $175 billion a year.
The decision now must be made by the American voters whether this is truly good for their pocketbooks and for the overall economy. Often we are misled by the obvious, while the less obvious is much more important.
This is true in the stock market also.
1 of very 43 homes in the State of Nevada is in foreclosure.
And from a FOX News push poll: "Some people believe Barack Obama, despite his professed Christianity, is secretly a Muslim.
What do you believe-is Obama a Muslim or a Christian?"
Read this twice. This is how false facts are created. We believe in what we think, and make it real.
____
The market hit bottom yesterday, hitting a theoretical Dow bottom at 11,278 (We had suggested 11,270 in our pre market alert).
It is now very likely for a 550 overall rise, over a short period of time, creating a new trading range.
This is a Floydian fact.
FEMA is seeking immunity for housing Katrina evacuees in toxic trailers. Another Floydian fact.
And another: in McCain's tax policies corporate American will save $175 billion a year.
The decision now must be made by the American voters whether this is truly good for their pocketbooks and for the overall economy. Often we are misled by the obvious, while the less obvious is much more important.
This is true in the stock market also.
1 of very 43 homes in the State of Nevada is in foreclosure.
And from a FOX News push poll: "Some people believe Barack Obama, despite his professed Christianity, is secretly a Muslim.
What do you believe-is Obama a Muslim or a Christian?"
Read this twice. This is how false facts are created. We believe in what we think, and make it real.
____
The market hit bottom yesterday, hitting a theoretical Dow bottom at 11,278 (We had suggested 11,270 in our pre market alert).
It is now very likely for a 550 overall rise, over a short period of time, creating a new trading range.
Tuesday, August 19, 2008
Something Smells
The Euro fell 1.27 cents last week, and is 8% off its July 15th high. Gold has fallen to 792.10 an ounce, last Friday, and Silver 10% in drops, its lowest in 9 months.
Other big losers include grains, cattle, cotton, cocoa, coffee and sugar.
Hummer stock must be up, as gas is now 3.60 a gallon.
Inflation hits all time highs, but the FEDS insist inflation is under control, and that interest rates may be able to be held.
Airline stocks are up.
What smells and reads wrong with what you are reading?
____
It was fun to watch Monday. After a week of hearing the analysts tell us the end was near, and the market ready for rebound, of course the market tanked over 200 points, and allowed us profits of 25% and higher on the open Sept590P.
The market hit 11,394 in afternoon trading, very close to our Dow projections low. We are projecting one further potential market bottom, less likely. The market is NOT yet ripe for rebound.
Other big losers include grains, cattle, cotton, cocoa, coffee and sugar.
Hummer stock must be up, as gas is now 3.60 a gallon.
Inflation hits all time highs, but the FEDS insist inflation is under control, and that interest rates may be able to be held.
Airline stocks are up.
What smells and reads wrong with what you are reading?
____
It was fun to watch Monday. After a week of hearing the analysts tell us the end was near, and the market ready for rebound, of course the market tanked over 200 points, and allowed us profits of 25% and higher on the open Sept590P.
The market hit 11,394 in afternoon trading, very close to our Dow projections low. We are projecting one further potential market bottom, less likely. The market is NOT yet ripe for rebound.
Monday, August 18, 2008
A Rally Without Steam
This trader sees as I see, a commentary from him on Friday during trading hours:
"Floyd:
With your commentary in today's alert of the market potentially making 12,000 I tend to agree and here is why.
1. Technically, Dow 12,000 should coincide with a Vix trendline and a short term trend reversal to the downside but a continuation of the overall market trend up until September.
2. Psychologically speaking, "everything is great," bailout city, USD rising, oil falling, but we all know nothing has changed. Gas is still $3.50 a gallon and inflation is still rising eroding profits and buying power. Foreclosures are rising and home values are falling, so if banks are repo'ing homes they are worth even less than they were when they take possession. It's like a dog chewing on his own leg.
Just looking at a 6 month vix chart it is easy to see the trend and reversal points, both intermediate and major points.
Major Market bottom March 17
Major Market top May 17
Major Market bottom July 16
Next intermediate top August next week 15th or 16th.
Next Major top September
If all goes according to the cycles of manipulation....
Needless to say, I didn't enter yesterday after the pullback or this morning.
Hey but what do I know, I'm just a dumb ass structural engineer......:) You're the expert.....
Cheers"
And conversely, from Mike Gibbons:
"The NASDAQ Composite index closed above its 200 day moving average on Thursday and we are now declaring the NASDAQ to be in a confirmed rally. The NASDAQ index has risen 13% from its July low and some would say that we should have called the confirmed rally sooner but our market model, backtested to the opening of the NASDAQ exchange in 1984, stubbornly refuses to believe a rally has legs unless the index is above the 200 dma level. Additionally, the model also requires that the day of confirmation should be an accumulation day (which Thursday was not) but we are overriding the model on this occasion as we think there are sufficient reasons to do so:
This was the fifth consecutive positive week for the index.
The index is trading between the 1 and 2 standard deviation Bollinger Bands indicating strength but that it is not yet over extended.
The average volume trend is up although we would have liked to see volume this week at or above the moving average.
Oil has fallen 23% from its July 11 high which will lift consumer confidence and a rising dollar will continue to lower inflationary pressure.
And, from Floyd:
The market went back to the 11,750 area Friday, before falling. It's likely for another upsurge attempt, to our Dow projections, but we believe the entire rally short term, and without enough steam. Nothing is really any better. No news or events are truly positive enough, with true scrutiny, to hold the upside long term....so far.
We have our first buy in to the put, and will continue to recommend tight profit taking to the call upside potential.
"Floyd:
With your commentary in today's alert of the market potentially making 12,000 I tend to agree and here is why.
1. Technically, Dow 12,000 should coincide with a Vix trendline and a short term trend reversal to the downside but a continuation of the overall market trend up until September.
2. Psychologically speaking, "everything is great," bailout city, USD rising, oil falling, but we all know nothing has changed. Gas is still $3.50 a gallon and inflation is still rising eroding profits and buying power. Foreclosures are rising and home values are falling, so if banks are repo'ing homes they are worth even less than they were when they take possession. It's like a dog chewing on his own leg.
Just looking at a 6 month vix chart it is easy to see the trend and reversal points, both intermediate and major points.
Major Market bottom March 17
Major Market top May 17
Major Market bottom July 16
Next intermediate top August next week 15th or 16th.
Next Major top September
If all goes according to the cycles of manipulation....
Needless to say, I didn't enter yesterday after the pullback or this morning.
Hey but what do I know, I'm just a dumb ass structural engineer......:) You're the expert.....
Cheers"
And conversely, from Mike Gibbons:
"The NASDAQ Composite index closed above its 200 day moving average on Thursday and we are now declaring the NASDAQ to be in a confirmed rally. The NASDAQ index has risen 13% from its July low and some would say that we should have called the confirmed rally sooner but our market model, backtested to the opening of the NASDAQ exchange in 1984, stubbornly refuses to believe a rally has legs unless the index is above the 200 dma level. Additionally, the model also requires that the day of confirmation should be an accumulation day (which Thursday was not) but we are overriding the model on this occasion as we think there are sufficient reasons to do so:
This was the fifth consecutive positive week for the index.
The index is trading between the 1 and 2 standard deviation Bollinger Bands indicating strength but that it is not yet over extended.
The average volume trend is up although we would have liked to see volume this week at or above the moving average.
Oil has fallen 23% from its July 11 high which will lift consumer confidence and a rising dollar will continue to lower inflationary pressure.
And, from Floyd:
The market went back to the 11,750 area Friday, before falling. It's likely for another upsurge attempt, to our Dow projections, but we believe the entire rally short term, and without enough steam. Nothing is really any better. No news or events are truly positive enough, with true scrutiny, to hold the upside long term....so far.
We have our first buy in to the put, and will continue to recommend tight profit taking to the call upside potential.
Friday, August 15, 2008
I Just Hit 90 Percent!
"I just hit 90% on a call trade. Not too bad :). Otherwise I have noticed that the fear and greed I had trouble with is just gone. I didn't really notice when it happened. Maybe it can come back so I will keep it quiet. It has taken over a year but worth it all the way. Have not had any great news to report but when I hit 90% I will toot the horn. Say hi to Lacey from another dog lover."
Ya know, I was thinking that 90 % would not make sense unless I mentioned that I bought the Aug 600 call for .75 cents and sold for $1.4. I was going to sit back and not trade until the futures tanked. At 90% I was overwhelmed. I saw that it has hit $3.5 and did not care. That's the part that was good, not caring.-T in Oregon
"Floyd:
Evaluating todays action.
Low 11450
High 11718
Difference 268
50% retrace occured around 3 pm at 11585
Is this to short of a timeframe to consider another buy opportunity for a move to top projection 11840"
Bill D.
Yesterday allowed a perfect trade to the September590Call, with entry possible at 15.00, and sales to a high of 19.70.
We begin the day profitable on each signal so far this week.
The Dow hit tops of 11,748 by afternoon trading, and lows in the morning of 11,410. We believe it is possible for yet another upside run, right to the top of our Dow projections, but the longer term bullish run will not last.
As Bill notes above....the market retraced. We consider upside potential still likely, but very close to topping. News will drive the final trigger. 12,000 is not likely. Just below it, could happen. But, puts are almost a buy, and the market may still surprise the bulls, as we consider the rally fleeting.
Floyd's Rant:
Whenever I hear that the Democrats will raise taxes, I smile. For those of you not yet initiated to how economics works:), our taxes have already been raised. The trick is on us.
Although we pay less in taxes, and have received refunds, nothing in Congress has been slowed in spending, and the cost of our food, gas and general products have surged with inflationary cost. Thusly, we have less money, and a USD that is worth less money.
Our taxes are already raised.
In some time our citizenry will begin to understand what the cost of the deficit really is.
As commodities fall we continue to buy Gold and Silver.
"The delusion that there are stable things out there is like seeing a whirlpool in a river and thinking that it is a solid, permanent thing, when in reality it is constantly changing flow that just looks like a stable and constant thing."
When we can understand that a rock is not hard, we can begin to trade the market.
_____
Gold is off 11% from its recent high. Commodities are off by 20% or more. Oil has dropped to 112.00 a barrel this week in its first correction.
Oil speculators now believe that as European and Japanese economies continue to weaken the dollar's new strength will push down prices of commodities that are USD led.
Floyd remains suspicious of the USD move, and of just how long oil will remain "low". Most analysts believe we've broken barriers and upside will now be muted. However, some economists believe this demand weakness is only temporary, and that a bounce back will take place.
Ya know, I was thinking that 90 % would not make sense unless I mentioned that I bought the Aug 600 call for .75 cents and sold for $1.4. I was going to sit back and not trade until the futures tanked. At 90% I was overwhelmed. I saw that it has hit $3.5 and did not care. That's the part that was good, not caring.-T in Oregon
"Floyd:
Evaluating todays action.
Low 11450
High 11718
Difference 268
50% retrace occured around 3 pm at 11585
Is this to short of a timeframe to consider another buy opportunity for a move to top projection 11840"
Bill D.
Yesterday allowed a perfect trade to the September590Call, with entry possible at 15.00, and sales to a high of 19.70.
We begin the day profitable on each signal so far this week.
The Dow hit tops of 11,748 by afternoon trading, and lows in the morning of 11,410. We believe it is possible for yet another upside run, right to the top of our Dow projections, but the longer term bullish run will not last.
As Bill notes above....the market retraced. We consider upside potential still likely, but very close to topping. News will drive the final trigger. 12,000 is not likely. Just below it, could happen. But, puts are almost a buy, and the market may still surprise the bulls, as we consider the rally fleeting.
Floyd's Rant:
Whenever I hear that the Democrats will raise taxes, I smile. For those of you not yet initiated to how economics works:), our taxes have already been raised. The trick is on us.
Although we pay less in taxes, and have received refunds, nothing in Congress has been slowed in spending, and the cost of our food, gas and general products have surged with inflationary cost. Thusly, we have less money, and a USD that is worth less money.
Our taxes are already raised.
In some time our citizenry will begin to understand what the cost of the deficit really is.
As commodities fall we continue to buy Gold and Silver.
"The delusion that there are stable things out there is like seeing a whirlpool in a river and thinking that it is a solid, permanent thing, when in reality it is constantly changing flow that just looks like a stable and constant thing."
When we can understand that a rock is not hard, we can begin to trade the market.
_____
Gold is off 11% from its recent high. Commodities are off by 20% or more. Oil has dropped to 112.00 a barrel this week in its first correction.
Oil speculators now believe that as European and Japanese economies continue to weaken the dollar's new strength will push down prices of commodities that are USD led.
Floyd remains suspicious of the USD move, and of just how long oil will remain "low". Most analysts believe we've broken barriers and upside will now be muted. However, some economists believe this demand weakness is only temporary, and that a bounce back will take place.
Thursday, August 14, 2008
USD is Making a Comeback - That's Good and Bad
Historically the summer rally is the weakest rally of all seasons. We saw this yesterday as the bears took back over, and the market went right to our first Dow projected bottom at 11,413.00.
The September590P was profitable right to highs of 16.50, for top profits. The new September550P recommendation was available for quick 1.00 per contract profits.
8/15 – August expiration day, Dow up 4 in a row, down 10 of 13 prior to recent bullishness
Aug. 8 (Bloomberg) -- A year after central banks started to pump trillions of dollars into the financial system to end a seizure in credit markets caused by subprime mortgages, cash is about as tight as it's ever been.
The U.S. market for commercial paper, or short-term IOUs, backed by assets such as mortgages has shrunk 40 percent from its peak in July 2007. The amount borrowed in pounds between banks in the U.K. fell by 70 percent in June from a record in February 2007. The European Central Bank received $100 billion of bids for the $25 billion it offered to financial institutions on July 29, the most since the sales began in December.
Efforts by the Federal Reserve, ECB and Swiss National Bank to shore up the world's biggest banks and promote lending have had limited success. TheLondon interbank offered rate, the basis for at least $150 trillion of financial products, is within 0.06 percent of the highest since November 1999 compared with the Fed's benchmark interest rate. The largest financial companies have lost almost $500 billion from subprime-linked securities.
______
In true tasteless behavior McCain has a web ad that accuses Obama of being the Antichrist. Reported last week in the Wall Street Journal I read with clear understanding that the Republicans are now moving to the FEAR tactic that led Bush to victory in the last election, and the use of religion to twist information. Nicknaming Obama "The One" McCain tries to minimize him, emphasize that he (McCain) is the true one protecting us from evil, and tries to characterize Obama as the Antichrist.
This has been already been circulating for months in Bible Study groups in towns like Chillicothe, Oh where congregates compare his remarks and biography with verses from the Bible.
I for one am frightened with this thinking, and the behavior of a Presidential candidate in making use of fervor and fear.
No matter who you vote for, PLEASE, don't let fear, intimidation, or "good vs. evil" and the end of the world religious opinions enter a political decision. Barack Obama is not the antiChrist :) Get a grip on reality.
___________________
Now, for the good news: the USD is making a comeback.
And, the bad news: the USD is making a comeback.
The dollar has cracked its 200 day moving average against the EURO for the first time in two Bushian years. And, if it persists, the U.S. consumer will have more buying power, inflation could ease, and the idiots at the FED might then be less itchy to raise interest rates.
But, in our naivety, the negatives of the gain are not yet considered: the weaker dollar has made U.S. Goods cheaper and thus more attractive to buyers overseas, which has shrunk our trade deficit.
U.S. exporters have gained with the weak Bushian dollar, despite a 37^ decline against major trading partners.
The rising dollar will also affect our imports, how we truly fuel our economy, and prices will rise, as from oil's transport cost, and the USD.
Both of these scenarios can short term affect corporate earnings, the fuel of our economy.
And, if investors were truly snatching up USD's because they saw an economic boom coming, it would be a good sign.
They are not. None of this, longer term, bodes well for the U.S. exports or the profits of multinationals. Economist Steven Wieting says it well, " You can't repatriate profits at a favorable exchange rate if you don't earn them in the first place".
The September590P was profitable right to highs of 16.50, for top profits. The new September550P recommendation was available for quick 1.00 per contract profits.
8/15 – August expiration day, Dow up 4 in a row, down 10 of 13 prior to recent bullishness
Aug. 8 (Bloomberg) -- A year after central banks started to pump trillions of dollars into the financial system to end a seizure in credit markets caused by subprime mortgages, cash is about as tight as it's ever been.
The U.S. market for commercial paper, or short-term IOUs, backed by assets such as mortgages has shrunk 40 percent from its peak in July 2007. The amount borrowed in pounds between banks in the U.K. fell by 70 percent in June from a record in February 2007. The European Central Bank received $100 billion of bids for the $25 billion it offered to financial institutions on July 29, the most since the sales began in December.
Efforts by the Federal Reserve, ECB and Swiss National Bank to shore up the world's biggest banks and promote lending have had limited success. TheLondon interbank offered rate, the basis for at least $150 trillion of financial products, is within 0.06 percent of the highest since November 1999 compared with the Fed's benchmark interest rate. The largest financial companies have lost almost $500 billion from subprime-linked securities.
______
In true tasteless behavior McCain has a web ad that accuses Obama of being the Antichrist. Reported last week in the Wall Street Journal I read with clear understanding that the Republicans are now moving to the FEAR tactic that led Bush to victory in the last election, and the use of religion to twist information. Nicknaming Obama "The One" McCain tries to minimize him, emphasize that he (McCain) is the true one protecting us from evil, and tries to characterize Obama as the Antichrist.
This has been already been circulating for months in Bible Study groups in towns like Chillicothe, Oh where congregates compare his remarks and biography with verses from the Bible.
I for one am frightened with this thinking, and the behavior of a Presidential candidate in making use of fervor and fear.
No matter who you vote for, PLEASE, don't let fear, intimidation, or "good vs. evil" and the end of the world religious opinions enter a political decision. Barack Obama is not the antiChrist :) Get a grip on reality.
___________________
Now, for the good news: the USD is making a comeback.
And, the bad news: the USD is making a comeback.
The dollar has cracked its 200 day moving average against the EURO for the first time in two Bushian years. And, if it persists, the U.S. consumer will have more buying power, inflation could ease, and the idiots at the FED might then be less itchy to raise interest rates.
But, in our naivety, the negatives of the gain are not yet considered: the weaker dollar has made U.S. Goods cheaper and thus more attractive to buyers overseas, which has shrunk our trade deficit.
U.S. exporters have gained with the weak Bushian dollar, despite a 37^ decline against major trading partners.
The rising dollar will also affect our imports, how we truly fuel our economy, and prices will rise, as from oil's transport cost, and the USD.
Both of these scenarios can short term affect corporate earnings, the fuel of our economy.
And, if investors were truly snatching up USD's because they saw an economic boom coming, it would be a good sign.
They are not. None of this, longer term, bodes well for the U.S. exports or the profits of multinationals. Economist Steven Wieting says it well, " You can't repatriate profits at a favorable exchange rate if you don't earn them in the first place".
Wednesday, August 13, 2008
More Bad News
The market fell over 150 points yesterday, led by a financial services sell off as more bad news from the slimes intensified.
It is important we recognize that it is that. Slimey behavior. These are financial giants with every acumen to perform. It was GREED that sunk this boat. And greed will sink the next boat also, as it always does. And that greed....the consumer was part of.
Just as we want "lower taxes" we never think out what "lower taxes" may really mean, and where things are raised to cover this. At times, our lack of thinking and our "believing" leads our destruction.
Now 1/3 of all U.S. homeowners owe more on their home than they have in equity. The equilibrium has turned.
Two primary commentaries will lead this week's analsyis. First, several months ago Floyd began analyzing when the EURO was finally contained what might happen to the USD. At that time I shared that the EURO and its' catapult rise might actually help the Bush dollar.
It is important we recognize that it is that. Slimey behavior. These are financial giants with every acumen to perform. It was GREED that sunk this boat. And greed will sink the next boat also, as it always does. And that greed....the consumer was part of.
Just as we want "lower taxes" we never think out what "lower taxes" may really mean, and where things are raised to cover this. At times, our lack of thinking and our "believing" leads our destruction.
Now 1/3 of all U.S. homeowners owe more on their home than they have in equity. The equilibrium has turned.
Two primary commentaries will lead this week's analsyis. First, several months ago Floyd began analyzing when the EURO was finally contained what might happen to the USD. At that time I shared that the EURO and its' catapult rise might actually help the Bush dollar.
Tuesday, August 12, 2008
The Euro Dropped
First, the great bull run did not run long, so far. The market moved to tops of 11,907 in Monday's trading, with just another good whipsaw to allow traders 1.50 per contract profits on the September630C, and to make a second buy to the September590P.
Some traders profited already on the put:
"2nd buys made at 8.90.
Running out of steam yet?
sold partials at 10.30
wait till morning to place final sells....."
Some profited to the call and the put.
"Like clockwork, Floyd, I got a 1.00 on the OTM call, and already sold partials on the put, after my second buy".
We will list, again, a call for a potential buy, but will NOTE THE RISK, as we see the market near and at tops, and decline imminent.
Much is around oil, of course, but more around the USD, and the false hopes last week, we think, that the USD is rising for the longer term. Study our work this week on the USD, as we believe it is being falsely manipulated to raise its' value, and that it won't last.
Aug. 9 (Bloomberg) -- The euro dropped the most in more than three years this week, pushing the currency to a six-month low against the U.S. dollar, as traders pared bets the European Central bank will raise interest rates as the economy slows.
The currency fell the most in almost eight years yesterday, dropping below $1.50 for the first time since February, after ECB President Jean-Claude Trichet said Aug. 7 economic growth will be ``particularly weak'' through the third quarter. Crude oil fell to a three-month low, silver reached its cheapest since January and copper fell to its biggest weekly drop since May 2007, easing inflation concerns.
``What we have seen over the last few days is the recognition in Europe, in Australia, all around the world, that growth is slowing everywhere,'' saidMohamed El-Erian, co-chief executive officer of Newport Beach, California-based Pacific Investment Management Co., in a Bloomberg Radio interview. ``The euro is no longer as attractive as people once thought.''
Some traders profited already on the put:
"2nd buys made at 8.90.
Running out of steam yet?
sold partials at 10.30
wait till morning to place final sells....."
Some profited to the call and the put.
"Like clockwork, Floyd, I got a 1.00 on the OTM call, and already sold partials on the put, after my second buy".
We will list, again, a call for a potential buy, but will NOTE THE RISK, as we see the market near and at tops, and decline imminent.
Much is around oil, of course, but more around the USD, and the false hopes last week, we think, that the USD is rising for the longer term. Study our work this week on the USD, as we believe it is being falsely manipulated to raise its' value, and that it won't last.
Aug. 9 (Bloomberg) -- The euro dropped the most in more than three years this week, pushing the currency to a six-month low against the U.S. dollar, as traders pared bets the European Central bank will raise interest rates as the economy slows.
The currency fell the most in almost eight years yesterday, dropping below $1.50 for the first time since February, after ECB President Jean-Claude Trichet said Aug. 7 economic growth will be ``particularly weak'' through the third quarter. Crude oil fell to a three-month low, silver reached its cheapest since January and copper fell to its biggest weekly drop since May 2007, easing inflation concerns.
``What we have seen over the last few days is the recognition in Europe, in Australia, all around the world, that growth is slowing everywhere,'' saidMohamed El-Erian, co-chief executive officer of Newport Beach, California-based Pacific Investment Management Co., in a Bloomberg Radio interview. ``The euro is no longer as attractive as people once thought.''
Monday, August 11, 2008
We Bought Right
We bought right. As the market boomed Friday we missed the upside, which was a true bear rally as we see it, and bought our opening positions to the September put. We believe the market is set to the top, in a market that 300 point whipsaw moves daily are becoming the norm, and that no news is really good.
Read our Dow projections carefully. There are other perspectives to last week's rally. Volume DID increase while a similar move in April, volume did not. Commodity prices, the revolver to stocks, have dropped 20% And last, the USD is short term gaining traction. A strong dollar would allow the FEDS to keep the interest rates low, and control inflation.
With this, note that the Dow is now above it's 50 day moving average. On this Monday before August expiration, the Dow is up 10 of the last 12. We'll continue to watch the Dow to hold above the 200 day moving average before we become bullish, and will instead watch the market this week for continued confirmation, with suspicion.
Read our Dow projections carefully. There are other perspectives to last week's rally. Volume DID increase while a similar move in April, volume did not. Commodity prices, the revolver to stocks, have dropped 20% And last, the USD is short term gaining traction. A strong dollar would allow the FEDS to keep the interest rates low, and control inflation.
With this, note that the Dow is now above it's 50 day moving average. On this Monday before August expiration, the Dow is up 10 of the last 12. We'll continue to watch the Dow to hold above the 200 day moving average before we become bullish, and will instead watch the market this week for continued confirmation, with suspicion.
Friday, August 8, 2008
Alway Leave Profits on the Table
First, let's start with two traders and their dialogue to me on yesterday's signal:
1. Hey Floyd...
I am assuming that you did not play the put today since you would have paid much more than prior day close. Am I correct...or did you get in?
I'm having a bit of a problem with that rule in particular.
Don't get me wrong...I love the rule...BUT do you ever make exceptions to the rule...as in a day like today.
The DOW opens 80+ pts. to the downside and hits -160 in 5 minutes. Early afternoon the DOW hits a double top. at about 11,580 area ...after that I just KNEW she would drop again and this time take off below the morning lows...especially after the 300+ day the other day, the 60+ day yesterday and the fact that we did have puts as our signal. .
So what do I do? I purchase (15) 585 puts for 4.20...this was a one afternoon trade...no second buy allowed...with a stop loss for about $600-$800...
Long story short...I held out all the way to S3 and sold this puppy for 6.80...made $3900 on the day (62% profit).
I should be celebrating correct? WRONG!!! I feel like I got lucky!
Because I don't KNOW anything about what the market is going to do. And the problem is that there are times when I think I know...like today...and I'm actually correct in my thinking...which makes me feel like I can do this again tomorrow BUT I know I could just as easily lost my cute little rear end tomorrow!!!
All I keep thinking about is how that trade was ANTI-Floydian...would you be in support of that trade...why or why not? And what do you recommend about a trade like this in the future? As far as I can see...the only "bad" thing about the trade was the I paid more than prior day close...other than that...I believe there was good evidence for my decision..which is why I chose to take the edge...and it worked pretty good.
Your thoughts?
This trader read the market correctly and "broke" the rules because of extenuating conditions. It worked.
2. This trader works the market professionally:
Started scaling into a position yesterday, at an average cost of 5.9. Sold partials this morning up to 7.5. Purchased more on the up tick at 5.3. Top sells today at 8.5.
Vix dropping below 20.00 yesterday confirmating Dow projected tops and PF double tops......
Very nice profits this week.
Cheers....Bill
__________________
This comment below is enough to open your eyes. Bill Gross is the Warren Buffett of bonds, and the greatest bond manager of all time. This person I would trust, not the kids in government still arguing about recession:
"Aug. 6 (Bloomberg) -- Bill Gross, who manages the world's biggest bond fund, said the U.S. Treasury will probably be forced to buy as much as $30 billion of preferred shares in both Fannie Mae and Freddie Mac to help shore up their capital.
``By the end of the third quarter, the preferred stock in Fannie and Freddie will be issued, the Treasury will have bought it,'' Gross, co-chief investment officer at Pacific Investment Management Co., said today in an interview on Bloomberg Television. ``We'll be on our way toward a joint Treasury-agency combination.''
Gross adds to a growing chorus of investors and analysts predicting U.S. Treasury Secretary Henry Paulson will need to use his newly won power to prop up Freddie and Fannie. Freddie posted a second-quarter loss that was three times wider than analysts estimated and said credit losses doubled in three months, heightening concerns it may not be able to weather the worst housing slump since the Great Depression"
____
Floyd's recent comments on FEAR and GREED hit home.
First a testimonial from Indonesia:
Always leave profits on the table, and NEVER sell at the high. This is GREED in action and will fail you.
When I saw your e-mail ev'ry time... I usually look at your comment about yesterday trades.
last Tuesday for example the Aug Call , I hold from $ 9.00 and set as per your top sell less 15 % . but the greed within and seeing the market euphoria waiting for FOMC annoucement , I re-set at full top sell @ $ 14.90 , and the greedy bear came again , slide to $ 15.50 and the market quickly grab that 3 minutes after FOMC announcement at 2.18. and i slept after all my order done.
in the morning when i rcvd your alert and seeing the high-low-close OEX on Thinkorswim i saw about $ 18 something....
Frankly speaking there's a natural mankind feeling ........... why didn;t we reach that point for higher profit..
But this is what we still learn from you.. Floyd.
I am learning and learning everyday when i read your e-mail.
I didn't wrote you for 2 or 3 weeks .
That is the time where I feel I am "Done...... Finish ........ with my Option trading Career...
And feel maybe this is not my way in these fierce investment world.
As you know I am start with minimum $ 4850 .... and in the first 2 month it boosted to about $ 14200 in my account with your help.
Suddenly .. June and July became a nightmare...
I didn't do well in cutting my loss early ... plus being a naughty student on playing on RIMM earning.
My account in TOS ended in $ 900....... mid of July..
I was very shocked, ashamed ( b/c i have a good teacher but still loose........ ) , and didn't know what to do next......
I stopped... step back . and started to view .....
Even today my losses is still not paid back,
( Yesterday it reach $ 3000 again.... , without top-up any new investment )
Thank God I 'am still in those fierce option world with you...( Once i thought , to stop my subscription on OEX.... because low of those low option buying power .....)
Greed and fear ,,,,is that we have to fight most .....
regards
BK
_______
And second...
I've got several questions for you my brother...the expert psychologist!
NEVER look back. I NEVER let greed enter my mind on "what I could have done." Instead, I review what I did do, and what money I did make, and do analyze if I left too early, but not to think what I could have earned, rather to understand what I could do better.
Always leave profits on the table, and NEVER sell at the high. This is GREED in action and will fail you.
Hey Floyd, You sound like the Apostle Paul when he wrote, "But one thing I do: Forgetting what is behind and straining toward what is ahead, I press on toward the goal..." (Philippians 3:13-14).
"
When you wrote in the manual (confessions story...when you lost 250K)...you mentioned that you had "patterns and rituals for failure." Can you remember or share what some of those patters or rituals were?
Floyd: I traded when I did not know what to trade, and Just to WIN. I broke rules by holding too long. I traded as I "knew" what would happen" because it "should".
You also wrote that you "quit focusing on what you were doing wrong and started focusing on what you were doing right." Initially, what was the main thing you did correctly?
Floyd: When I followed the rules I succeeded more than failed, and profited well.
I am finding that one day I do wonderfully as a trader...the next day...I make the most immature and inexperienced mistakes (yet I know better). There seems to be a real lack of discipline in my life in general...let alone trading...What did you find most difficult on your road to success as an OEX options trader? Was is figuring yourself out? Coming up with the rules of engagement OR actually following those rules with consistency?
Floyd: Actually following the rules
What part of your personality was most detrimental to trading and hardest to overcome?
Floyd: I learned that "being right" has nothing to do with the market. When I thought the market "should go up" because....I began studying what made me think I was right vs. "what is".
I know that you lose trades...because we cannot be perfect. But at this point in your career...do you ever lose because of "poor" trading decisions. Since I've been a subscriber...several months...you've had few losses and none of them were really "bad" decisions because of the edge that you played...they just didn't work. What is your record since April by the way?
Floyd: We are at 88% win ratio for the year.
I've been talking to my brother about you (he is in California...breaking into the film industry...not a trader at all) and he is really rooting for me! He is aware of my lack of experience and he knows of your success. All he keeps reiterating to me is that I should just do exactly what you do. He keeps asking me the question..What are you paying this man for if you are not going to listen to what he tells you?" A question that I don't have answer to.
So my final question to you is..."WHY the hell would an idiot like myself decide to place trades that I KNOW for a fact you wouldn't place? WHY would I do such a thing?"
(Your answer cannot be "Because you're an idiot!")
Give me something legit here!
Floyd: Ha ha. Often we self sabotage our behaviors and actions subconsciously. One must learn by identification when this occurs.
1. Hey Floyd...
I am assuming that you did not play the put today since you would have paid much more than prior day close. Am I correct...or did you get in?
I'm having a bit of a problem with that rule in particular.
Don't get me wrong...I love the rule...BUT do you ever make exceptions to the rule...as in a day like today.
The DOW opens 80+ pts. to the downside and hits -160 in 5 minutes. Early afternoon the DOW hits a double top. at about 11,580 area ...after that I just KNEW she would drop again and this time take off below the morning lows...especially after the 300+ day the other day, the 60+ day yesterday and the fact that we did have puts as our signal. .
So what do I do? I purchase (15) 585 puts for 4.20...this was a one afternoon trade...no second buy allowed...with a stop loss for about $600-$800...
Long story short...I held out all the way to S3 and sold this puppy for 6.80...made $3900 on the day (62% profit).
I should be celebrating correct? WRONG!!! I feel like I got lucky!
Because I don't KNOW anything about what the market is going to do. And the problem is that there are times when I think I know...like today...and I'm actually correct in my thinking...which makes me feel like I can do this again tomorrow BUT I know I could just as easily lost my cute little rear end tomorrow!!!
All I keep thinking about is how that trade was ANTI-Floydian...would you be in support of that trade...why or why not? And what do you recommend about a trade like this in the future? As far as I can see...the only "bad" thing about the trade was the I paid more than prior day close...other than that...I believe there was good evidence for my decision..which is why I chose to take the edge...and it worked pretty good.
Your thoughts?
This trader read the market correctly and "broke" the rules because of extenuating conditions. It worked.
2. This trader works the market professionally:
Started scaling into a position yesterday, at an average cost of 5.9. Sold partials this morning up to 7.5. Purchased more on the up tick at 5.3. Top sells today at 8.5.
Vix dropping below 20.00 yesterday confirmating Dow projected tops and PF double tops......
Very nice profits this week.
Cheers....Bill
__________________
This comment below is enough to open your eyes. Bill Gross is the Warren Buffett of bonds, and the greatest bond manager of all time. This person I would trust, not the kids in government still arguing about recession:
"Aug. 6 (Bloomberg) -- Bill Gross, who manages the world's biggest bond fund, said the U.S. Treasury will probably be forced to buy as much as $30 billion of preferred shares in both Fannie Mae and Freddie Mac to help shore up their capital.
``By the end of the third quarter, the preferred stock in Fannie and Freddie will be issued, the Treasury will have bought it,'' Gross, co-chief investment officer at Pacific Investment Management Co., said today in an interview on Bloomberg Television. ``We'll be on our way toward a joint Treasury-agency combination.''
Gross adds to a growing chorus of investors and analysts predicting U.S. Treasury Secretary Henry Paulson will need to use his newly won power to prop up Freddie and Fannie. Freddie posted a second-quarter loss that was three times wider than analysts estimated and said credit losses doubled in three months, heightening concerns it may not be able to weather the worst housing slump since the Great Depression"
____
Floyd's recent comments on FEAR and GREED hit home.
First a testimonial from Indonesia:
Always leave profits on the table, and NEVER sell at the high. This is GREED in action and will fail you.
When I saw your e-mail ev'ry time... I usually look at your comment about yesterday trades.
last Tuesday for example the Aug Call , I hold from $ 9.00 and set as per your top sell less 15 % . but the greed within and seeing the market euphoria waiting for FOMC annoucement , I re-set at full top sell @ $ 14.90 , and the greedy bear came again , slide to $ 15.50 and the market quickly grab that 3 minutes after FOMC announcement at 2.18. and i slept after all my order done.
in the morning when i rcvd your alert and seeing the high-low-close OEX on Thinkorswim i saw about $ 18 something....
Frankly speaking there's a natural mankind feeling ........... why didn;t we reach that point for higher profit..
But this is what we still learn from you.. Floyd.
I am learning and learning everyday when i read your e-mail.
I didn't wrote you for 2 or 3 weeks .
That is the time where I feel I am "Done...... Finish ........ with my Option trading Career...
And feel maybe this is not my way in these fierce investment world.
As you know I am start with minimum $ 4850 .... and in the first 2 month it boosted to about $ 14200 in my account with your help.
Suddenly .. June and July became a nightmare...
I didn't do well in cutting my loss early ... plus being a naughty student on playing on RIMM earning.
My account in TOS ended in $ 900....... mid of July..
I was very shocked, ashamed ( b/c i have a good teacher but still loose........ ) , and didn't know what to do next......
I stopped... step back . and started to view .....
Even today my losses is still not paid back,
( Yesterday it reach $ 3000 again.... , without top-up any new investment )
Thank God I 'am still in those fierce option world with you...( Once i thought , to stop my subscription on OEX.... because low of those low option buying power .....)
Greed and fear ,,,,is that we have to fight most .....
regards
BK
_______
And second...
I've got several questions for you my brother...the expert psychologist!
NEVER look back. I NEVER let greed enter my mind on "what I could have done." Instead, I review what I did do, and what money I did make, and do analyze if I left too early, but not to think what I could have earned, rather to understand what I could do better.
Always leave profits on the table, and NEVER sell at the high. This is GREED in action and will fail you.
Hey Floyd, You sound like the Apostle Paul when he wrote, "But one thing I do: Forgetting what is behind and straining toward what is ahead, I press on toward the goal..." (Philippians 3:13-14).
"
When you wrote in the manual (confessions story...when you lost 250K)...you mentioned that you had "patterns and rituals for failure." Can you remember or share what some of those patters or rituals were?
Floyd: I traded when I did not know what to trade, and Just to WIN. I broke rules by holding too long. I traded as I "knew" what would happen" because it "should".
You also wrote that you "quit focusing on what you were doing wrong and started focusing on what you were doing right." Initially, what was the main thing you did correctly?
Floyd: When I followed the rules I succeeded more than failed, and profited well.
I am finding that one day I do wonderfully as a trader...the next day...I make the most immature and inexperienced mistakes (yet I know better). There seems to be a real lack of discipline in my life in general...let alone trading...What did you find most difficult on your road to success as an OEX options trader? Was is figuring yourself out? Coming up with the rules of engagement OR actually following those rules with consistency?
Floyd: Actually following the rules
What part of your personality was most detrimental to trading and hardest to overcome?
Floyd: I learned that "being right" has nothing to do with the market. When I thought the market "should go up" because....I began studying what made me think I was right vs. "what is".
I know that you lose trades...because we cannot be perfect. But at this point in your career...do you ever lose because of "poor" trading decisions. Since I've been a subscriber...several months...you've had few losses and none of them were really "bad" decisions because of the edge that you played...they just didn't work. What is your record since April by the way?
Floyd: We are at 88% win ratio for the year.
I've been talking to my brother about you (he is in California...breaking into the film industry...not a trader at all) and he is really rooting for me! He is aware of my lack of experience and he knows of your success. All he keeps reiterating to me is that I should just do exactly what you do. He keeps asking me the question..What are you paying this man for if you are not going to listen to what he tells you?" A question that I don't have answer to.
So my final question to you is..."WHY the hell would an idiot like myself decide to place trades that I KNOW for a fact you wouldn't place? WHY would I do such a thing?"
(Your answer cannot be "Because you're an idiot!")
Give me something legit here!
Floyd: Ha ha. Often we self sabotage our behaviors and actions subconsciously. One must learn by identification when this occurs.
Thursday, August 7, 2008
Nothing is Really Better
The market, bolstered by the FEDS decision to hold rates, spent yesterday in slight retreat, and the euphoric buy slowed. A follow through day, on high volume, would have indicated stronger upside potential. As it stood, the market may easily top at our Dow projections, and lead to trade range retreat.
Nothing is really better. Downside may occur again simply on the lack of real news of merit.
The Federal Reserve, out of control, and years of excess, have led us to our own lack of controls. Bush has taken a "terrorist attack" and turned it to a 10 billion a month fiasco of world confusion, with few even supporting us now (do you know what countries still "work and help" in Iraq?), an utter abandon of environmental proactive thinking, and a unique support of oil that has allowed prices to rise.
Of course no administration is to blame for all of what so hurts us, but the thinking of such an administration, and how it affects the average Joe American, is.
For the first four years Bush was the hero. We were winning the war. He was our war President. He pumped for privatized Social Security on the first month of the second four years, and even dumber Americans that voted for him twice began to wonder if this was smart.
Imagine if it had happened. We have "almost" forgotten this as the new round of babbles begin, and McCain tells us that the Democrats will raise taxes, that the Capital Gains tax will be eliminated, and that we must be powerful.
Perhaps it is time to not be powerful? But, to be smart?
I write this to help us know WHY facts are being manipulated, WHY oil is at highs, WHY debt has never been higher, WHY the dollar at all time lows. These are the real discussions of our economics and politics, and what affect health care will have on our citizenry without a solution to our issues. The real issues are NOT terrorism in Iraq, but our own terrorism by lack of action for our citizenry. The terrorists are within. Strip mining Wyoming for coal is terrorism by self sabotage.
A Floydian lesson:
Trader "R" wrote yesterday to ask "do you ever kick yourself for selling too early and missing profits".
My response is quite serious and very important: I NEVER look back. I NEVER let greed enter my mind on "what I could have done." Instead, I review what I did do, and what money I did make, and do analyze if I left too early, but not to think what I could have earned, rather to understand what I could do better.
Always leave profits on the table, and NEVER sell at the high. This is GREED in action and will fail you.
Nothing is really better. Downside may occur again simply on the lack of real news of merit.
The Federal Reserve, out of control, and years of excess, have led us to our own lack of controls. Bush has taken a "terrorist attack" and turned it to a 10 billion a month fiasco of world confusion, with few even supporting us now (do you know what countries still "work and help" in Iraq?), an utter abandon of environmental proactive thinking, and a unique support of oil that has allowed prices to rise.
Of course no administration is to blame for all of what so hurts us, but the thinking of such an administration, and how it affects the average Joe American, is.
For the first four years Bush was the hero. We were winning the war. He was our war President. He pumped for privatized Social Security on the first month of the second four years, and even dumber Americans that voted for him twice began to wonder if this was smart.
Imagine if it had happened. We have "almost" forgotten this as the new round of babbles begin, and McCain tells us that the Democrats will raise taxes, that the Capital Gains tax will be eliminated, and that we must be powerful.
Perhaps it is time to not be powerful? But, to be smart?
I write this to help us know WHY facts are being manipulated, WHY oil is at highs, WHY debt has never been higher, WHY the dollar at all time lows. These are the real discussions of our economics and politics, and what affect health care will have on our citizenry without a solution to our issues. The real issues are NOT terrorism in Iraq, but our own terrorism by lack of action for our citizenry. The terrorists are within. Strip mining Wyoming for coal is terrorism by self sabotage.
A Floydian lesson:
Trader "R" wrote yesterday to ask "do you ever kick yourself for selling too early and missing profits".
My response is quite serious and very important: I NEVER look back. I NEVER let greed enter my mind on "what I could have done." Instead, I review what I did do, and what money I did make, and do analyze if I left too early, but not to think what I could have earned, rather to understand what I could do better.
Always leave profits on the table, and NEVER sell at the high. This is GREED in action and will fail you.
Wednesday, August 6, 2008
The Market Got Happy ; )
Yesterday the market got happy:) Everything is now okay, the world is stable, and everything is good....for a day or two. Euphoria led, and the market hit 11,656 (our first top at 11,670). The July580C went well above our top sell, and hit 19.00. Profits were huge, and the testimonials from subscribers were never ending.
With this said, the market will soon top. Trust nothing. When the feds kept its interest rate at 2% the market euphoria never stopped. The FEDS explained to us that inflation is lessening:). For those of you with an education over 2nd grade, I"m sure you know this to be true, just as there are WMD in Iraq.
Oil dropped. The market was ripe for upturn. This is what turned the market. Readiness for an event that "moved" the market.
And now for a dose of non-partisan reality. The United States of America has a government it can no longer afford. The latest budget projections are calling for a $ 500 billion budget deficit for the coming fiscal year. The mantra on Capitol Hill is "Spend, spend, spend." After Congress passed a $ 150 billion stimulus package earlier in this election year, some politicians are calling for yet another stimulus package. And the Senate is now considering a bill that would increase foreign aid by $ 700 billion over the next ten years. How much will the housing bill passed last week cost? $ 100 billion? Is it any wonder that the euro is worth $ 1.60? Just recently, Dallas Federal Reserve Bank head Richard Fisher said that the unfunded liabilities from Social Security and Medicare come to $ 99.2 trillion! These numbers are mind boggling and pretty frightening. You can certainly see why the dollar is rapidly losing its status as the world's reserve currency. Yields on U. S. treasuries can only rise.
There are rumors of a rebellion within the ranks of Ben Bernanke's Federal Reserve Bank, led by Dallas Fed chief Fisher. Fisher is apparently joined by Gary Stern of Minneapolis and Charles Plosser of Philadelphia in calling for a rate hike at the Fed's next meeting in August. Said Stern, "The Fed cannot wait until financial and housing markets stabilize before raising interest rates. Headline inflation is clearly too high, and could feed through to core prices." And Plosser said, "Real interest rates are negative, and can't stay there indefinitely. We've got price pressures clearly throughout the economy. Ultimately, rates are going to have to go up, and the only question is the timing. It's important that we act before inflation expectations become unhinged. We need to reverse course. I anticipate the reversal will need to be started sooner rather than later. But don't expect these rebels, who are in the minority, to convince Bernanke and and his cohorts to raise rates before the election. At least there is some discipline at the European Central Bank.
With this said, the market will soon top. Trust nothing. When the feds kept its interest rate at 2% the market euphoria never stopped. The FEDS explained to us that inflation is lessening:). For those of you with an education over 2nd grade, I"m sure you know this to be true, just as there are WMD in Iraq.
Oil dropped. The market was ripe for upturn. This is what turned the market. Readiness for an event that "moved" the market.
And now for a dose of non-partisan reality. The United States of America has a government it can no longer afford. The latest budget projections are calling for a $ 500 billion budget deficit for the coming fiscal year. The mantra on Capitol Hill is "Spend, spend, spend." After Congress passed a $ 150 billion stimulus package earlier in this election year, some politicians are calling for yet another stimulus package. And the Senate is now considering a bill that would increase foreign aid by $ 700 billion over the next ten years. How much will the housing bill passed last week cost? $ 100 billion? Is it any wonder that the euro is worth $ 1.60? Just recently, Dallas Federal Reserve Bank head Richard Fisher said that the unfunded liabilities from Social Security and Medicare come to $ 99.2 trillion! These numbers are mind boggling and pretty frightening. You can certainly see why the dollar is rapidly losing its status as the world's reserve currency. Yields on U. S. treasuries can only rise.
There are rumors of a rebellion within the ranks of Ben Bernanke's Federal Reserve Bank, led by Dallas Fed chief Fisher. Fisher is apparently joined by Gary Stern of Minneapolis and Charles Plosser of Philadelphia in calling for a rate hike at the Fed's next meeting in August. Said Stern, "The Fed cannot wait until financial and housing markets stabilize before raising interest rates. Headline inflation is clearly too high, and could feed through to core prices." And Plosser said, "Real interest rates are negative, and can't stay there indefinitely. We've got price pressures clearly throughout the economy. Ultimately, rates are going to have to go up, and the only question is the timing. It's important that we act before inflation expectations become unhinged. We need to reverse course. I anticipate the reversal will need to be started sooner rather than later. But don't expect these rebels, who are in the minority, to convince Bernanke and and his cohorts to raise rates before the election. At least there is some discipline at the European Central Bank.
Tuesday, August 5, 2008
Lesson From Level 3 Subscriber
Trader MP, Level 3 subscriber, sums up his trading for the day on Monday. Let's use it as a lesson:
"Hey Floyd,
I am using this email as some of my journaling.
Today was an interesting day.
First of all...this was the first day that your signal was the same exact option that I planned on using for my scalp trades. So that was a bit weird for me. I wanted to keep them separate but today I decided to use them together to see what would happen.
Let's begin with your signal. Your best buy was 9.10 or less. I bought one contract for 9.00 because when I try to hold out for a better price...I usually get burned. So I bought 1 contract for 9.00 only to see the price drop. That got me a little frustrated but I was OK with it since I was prepared to make a second purchase if necessary.
The DOW dropped to 11,240 and sat there a little bit. I felt that this would be a good time to scalp 5 contracts b/c we were at good support and significantly below prior day close and best buy. I was able to buy 5 contracts for 8.40.
The DOW actually dropped further and the 580 call hit 7.90 in price...at this time I was looking at a $400 loss and I was a bit concerned. But I hung in there.
Originally..."something" told me to put my sell order in at 10.50 for all 6 contracts...that would be a $1200 profit and I'd be done for the day. Because price wasn't moving too much...slowly creeping upward..I "sense" the voice in my head telling me that I am getting greedy by looking for a $2 profit. These thoughts were telling me that I am supposed to be only "scalping" five contracts and only letting one contract ride...and again...that by looking for a $2 profit on an option is greedy.
So I changed my scalp order to sell at 9.00...5 minutes later she shot up and filled that for a $250 profit. I was ticked off because the DOW went up pretty sharp after that. So now I am here sitting with $250 profit as well as 1 contract (about another $200) but all I keep thinking about is that I could have made $1200!!
Anyway...this made me want more. It was like I was not satisfied with 400-$500 (which I would be more than happy with..until I actually get it...such greed).
So I began to look where I could scalp again. I watched the DOW tiptoe along the 11,300 support level and so I tried to nickel and dime the market to death so I could get the perfect price. It never happened. I got so angry because I couldn't get filled at the price I wanted. I just wanted to scalp for another 50 cents but I was being too fine with my BID prices and I watched the 580 call go from 9.40 to 11.20 and never get filled b/c I was being too cheap.
THEN... I was just sure that after the DOW hit 11,380...there would be a slight pullback before she shot up again...so what do I do...I let price come down from 11,20 to mid 10 dollar range and I went for it...because I KNEW that she was going to keep going up!! Anyway, I THOUGHT that I bought buy 5 contracts for 10.60. Thank God I messed up and only purchased one contract. So now I have 1 at 8.40 and 1 at 10.60...average price of 9.50...guess what...I sold them for a loss at 9.30. Now I am really pissed off b/c my total profit on the day is only $200!!!
I went into the other room to play with my girls and cool off a bit. I felt pretty good 1/2 hour later and looked at the chart. Well it wasso obvious to me that the market was poised for a rebound since it was sitting above S1...I thought "What an easy way to make money and finish the day....I can buy some calls again for less than prior day close and cash in a quick profit for the day!" I buy 5 contracts for 9.10 and I'm feeling like I just outsmarted the market and that I can smile all the way down to the bank....WHAM!!
She continued to drop and I lost $550 on that trade..
So where does that leave me? 1 for 3 today with a net loss of $340!!
If I would have followed my intuition earlier...I would have made $1200 combined on two trades. Even if I didn't..I could have easily made $400-$500 today...I actually had that money on the table and lost it all. Now I walk away with a $340 loss.
I can't tell you how frustrated, angry and confused I am right now Floyd. This is what is bothering me.
#1 - I didn't listen to myself this morning. I was nice and calm. I placed a good trade this morning but then I second guessed myself, changed my plan and I fell apart after that.
#2 - I left money on the table - TWICE - and that bothers me a lot!
#3 - I could not see the sell off at 3pm because I was so convinced that the market was going to go up in the afternoon. It amazes me how bad my presuppositions blind me from reality.
We see things not as they are, but as we want them to be. It can't work in the market.
#4 - My confidence was shaken a bit today. I have this underlying sense that I will NEVER figure out how and when to take profits.
#5 - I don't like the fact that it appears as though I'm never satisfied. If you asked me last week if I would be happy if I made $400/day trading...I'd tell you that I would be thrilled. Yet when I have an opportunity to get $400...I don't take it...all of a sudden $400 is not enough. I don't understand that. I don't want to be greedy like that but I don't know how to break those thoughts? Is the solution to just take small profits and quit for the day?
Find what works to YOU and utilize it.
#6 - I don't like the fact that losses bother me so much. I understand that I can't win every trade so then why does it bother me so much when I lose?
Losing is part of trading.
#7 - The enemy within continues to tell me the following: "If you can't win on paper money...how will you be able to do this with real money?" OR (when I do win) "The only reason why you won today is because you weren't using real money...you'll never win with real money."
Self esteem issues. Analyze why you are having them.
How do you get rid of those thoughts?
Michael
PS...I trust you did well today?
I'd like to share the above with subscribers to help traders see the steps.
Conversely, here's an interesting trade from JW:
"Floyd, bought the 580 at 8.00 and sold at 10.50. Bought it again at day end, and will hold. I watched the bottom again, and the first top to the market. The support and resistance worked like clockwork. Nice 2.50 a contract and I hold issues for the a.m."
Two way trades are likely around the FOMC today. We will trade to the upside potential, suggesting whipsaw could occur, but that a call position will rebound to new and stronger highs before end of week.
"Hey Floyd,
I am using this email as some of my journaling.
Today was an interesting day.
First of all...this was the first day that your signal was the same exact option that I planned on using for my scalp trades. So that was a bit weird for me. I wanted to keep them separate but today I decided to use them together to see what would happen.
Let's begin with your signal. Your best buy was 9.10 or less. I bought one contract for 9.00 because when I try to hold out for a better price...I usually get burned. So I bought 1 contract for 9.00 only to see the price drop. That got me a little frustrated but I was OK with it since I was prepared to make a second purchase if necessary.
The DOW dropped to 11,240 and sat there a little bit. I felt that this would be a good time to scalp 5 contracts b/c we were at good support and significantly below prior day close and best buy. I was able to buy 5 contracts for 8.40.
The DOW actually dropped further and the 580 call hit 7.90 in price...at this time I was looking at a $400 loss and I was a bit concerned. But I hung in there.
Originally..."something" told me to put my sell order in at 10.50 for all 6 contracts...that would be a $1200 profit and I'd be done for the day. Because price wasn't moving too much...slowly creeping upward..I "sense" the voice in my head telling me that I am getting greedy by looking for a $2 profit. These thoughts were telling me that I am supposed to be only "scalping" five contracts and only letting one contract ride...and again...that by looking for a $2 profit on an option is greedy.
So I changed my scalp order to sell at 9.00...5 minutes later she shot up and filled that for a $250 profit. I was ticked off because the DOW went up pretty sharp after that. So now I am here sitting with $250 profit as well as 1 contract (about another $200) but all I keep thinking about is that I could have made $1200!!
Anyway...this made me want more. It was like I was not satisfied with 400-$500 (which I would be more than happy with..until I actually get it...such greed).
So I began to look where I could scalp again. I watched the DOW tiptoe along the 11,300 support level and so I tried to nickel and dime the market to death so I could get the perfect price. It never happened. I got so angry because I couldn't get filled at the price I wanted. I just wanted to scalp for another 50 cents but I was being too fine with my BID prices and I watched the 580 call go from 9.40 to 11.20 and never get filled b/c I was being too cheap.
THEN... I was just sure that after the DOW hit 11,380...there would be a slight pullback before she shot up again...so what do I do...I let price come down from 11,20 to mid 10 dollar range and I went for it...because I KNEW that she was going to keep going up!! Anyway, I THOUGHT that I bought buy 5 contracts for 10.60. Thank God I messed up and only purchased one contract. So now I have 1 at 8.40 and 1 at 10.60...average price of 9.50...guess what...I sold them for a loss at 9.30. Now I am really pissed off b/c my total profit on the day is only $200!!!
I went into the other room to play with my girls and cool off a bit. I felt pretty good 1/2 hour later and looked at the chart. Well it wasso obvious to me that the market was poised for a rebound since it was sitting above S1...I thought "What an easy way to make money and finish the day....I can buy some calls again for less than prior day close and cash in a quick profit for the day!" I buy 5 contracts for 9.10 and I'm feeling like I just outsmarted the market and that I can smile all the way down to the bank....WHAM!!
She continued to drop and I lost $550 on that trade..
So where does that leave me? 1 for 3 today with a net loss of $340!!
If I would have followed my intuition earlier...I would have made $1200 combined on two trades. Even if I didn't..I could have easily made $400-$500 today...I actually had that money on the table and lost it all. Now I walk away with a $340 loss.
I can't tell you how frustrated, angry and confused I am right now Floyd. This is what is bothering me.
#1 - I didn't listen to myself this morning. I was nice and calm. I placed a good trade this morning but then I second guessed myself, changed my plan and I fell apart after that.
#2 - I left money on the table - TWICE - and that bothers me a lot!
#3 - I could not see the sell off at 3pm because I was so convinced that the market was going to go up in the afternoon. It amazes me how bad my presuppositions blind me from reality.
We see things not as they are, but as we want them to be. It can't work in the market.
#4 - My confidence was shaken a bit today. I have this underlying sense that I will NEVER figure out how and when to take profits.
#5 - I don't like the fact that it appears as though I'm never satisfied. If you asked me last week if I would be happy if I made $400/day trading...I'd tell you that I would be thrilled. Yet when I have an opportunity to get $400...I don't take it...all of a sudden $400 is not enough. I don't understand that. I don't want to be greedy like that but I don't know how to break those thoughts? Is the solution to just take small profits and quit for the day?
Find what works to YOU and utilize it.
#6 - I don't like the fact that losses bother me so much. I understand that I can't win every trade so then why does it bother me so much when I lose?
Losing is part of trading.
#7 - The enemy within continues to tell me the following: "If you can't win on paper money...how will you be able to do this with real money?" OR (when I do win) "The only reason why you won today is because you weren't using real money...you'll never win with real money."
Self esteem issues. Analyze why you are having them.
How do you get rid of those thoughts?
Michael
PS...I trust you did well today?
I'd like to share the above with subscribers to help traders see the steps.
Conversely, here's an interesting trade from JW:
"Floyd, bought the 580 at 8.00 and sold at 10.50. Bought it again at day end, and will hold. I watched the bottom again, and the first top to the market. The support and resistance worked like clockwork. Nice 2.50 a contract and I hold issues for the a.m."
Two way trades are likely around the FOMC today. We will trade to the upside potential, suggesting whipsaw could occur, but that a call position will rebound to new and stronger highs before end of week.
Monday, August 4, 2008
Pros and Cons
We hit profit goals on another trade Friday, with the August540P hitting near our top profit goals of 1.40 per contract, as the market whipsawed and reacted to bad economic news.
First, a comment technically from the street last Thursday evening:
"- As U.S. stocks enter the month of August, Friday's July jobs report may provide some needed upward momentum for this traditionally-slow period of the year.
"Tomorrow's jobs report is going to be critical" for the market, said Paul Mendelsohn, chief investment strategist at Windham Financial Services.
It's not that the market expects employment to have rebounded, pointing to an economic rebound.
Instead, investors have been increasingly betting that enough bad news -- from ailing financial firms, to the slumping housing market, and surging oil prices -- might have been priced into stocks for now.
"You can rally in here because we're extremely oversold," Mendelsohn said. "We're still in a bear market, there's no question about that, but technicals are pointing to a short-term bottom.""
Floyd believes the market has been in a recession since last October. The market is RIPE for euphoria, and continues to try to find something good (there is little) in which to build a bull momentum.
But, a word from one of the primary idiots that got us in this mess, first:
Without a doubt "Bubbles Greenspan", the famed economist who actually led us on the housing path of destruction, has shocked even old Floyd with this:
July 31 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said falling U.S. home prices are ``nowhere near the bottom'' and the resulting market turmoil isn't showing signs of abating.
While the odds of a recession are 50-50, achieving stable markets will ``take a while,'' Greenspan said today in a CNBC interview.
Floyd-the economy has been in a recession since last October. Housing prices are crashing because of easy money, free credit, and no controls. The government (Clinton first, then Bush) led the bubble to keep the house of cards up. At least Clinton used the government surplus from the bubbles to balance the budget. Bush spent more than we had. And continues to.
Congress and Bush continue the babble of further tax stimulus packages, when in reality, these have NOT been tax cuts, but simply a shift of asset taking to other avenues. "I will not raise taxes" mantra that we read and hear from political candidates is a LIE, or blind stupidity. The Middle Class, who pays for it all, are paying MORE in taxes and outside costs now than ever before, NOT less. The levying of taxes is simply different.
From a level 3 trader, MP, that is learning himself, I'm copying a complete email from last Friday, with a comment that this trader, despite failures or successes, is learning to trade:
"Hey Floyd,
I hope you had a good day on Friday....I had a day packed with lessons learned.
I am ashamed and embarrassed to write about what happened today. But I feel like if I don't tell you what I did today...my whole trading career may spin out of control.
Let me preface by saying that it has been 1 week since you suggested that I try my new system of trading. My plan was the following:
1. When playing strictly off the alert...I was going to keep my purchases to 1-2 contracts (1st buy..depending on price) and 2-4 contracts for the second buy. since I have limited capital (30K) we felt that trading small contracts and looking for quick profits was the best way to begin.
2. I discussed my desire to make $500-$1000 per day and that using more money to trade (5 contracts up to $5000) but keeping my stop loss at 1.00 max ($500) would give me the best opportunity to make a quick .50-1.50 each day. You told me that many people try to make a quick 50 cents (scalp) and then get out of there. It is a good way to make a living. HOWEVER...you recommended that I practice this method for at least 1 month on paper...So far it has been 1 full week.
Here are my results thus far:
Day 1...last Friday...2 for 2 Trades $750 profit
Day 2...1 for 3 trades...$150 profit
Day 3...1 for 4 trades...-$550 LOSS
Day 4...5 for 5 Trades for $2100 profit
Day 5...4 for 6 Trades for $750 profit
TODAY...Day 6...SIX for ELEVEN TRADES...for -$350 LOSS
Over the past six days...since I've started this new plan...I've placed 31 trades and won 20 of them..that is a 64.5% winning percentage and a total profit of $2850 profit...in 6 days...which averages to $475/day
PROS
* I'm making money...and as far as I'm concerned...that is pretty good money for a new trader
* I'm learning something new about myself and about the market every day
* For the most part, I've been placing pretty good trades...what I mean by that is that all of my winner were pretty good trades...not just lucky...and some of my losers were even pretty good trades that just didn't happen to move in the direction I anticipated. I'm not just blind guessing here. MOST of the time...there are legitimate reasons for my entering a trade
* The cons are forcing me to come up with strict rules for scalping.
CONS
* I think I am working way too hard for $475/day...what I mean by that is that I feel like I am placing way too many trades
* I have entered some trades when I was not right mentally or emotionally
* I've traded compulsively...especially last Friday
* I've traded when I was angry, prideful, fearful and greedy...it has caused me to lose and if I continue to do that...I will lose it all
* I'm having trouble picking exit targets...I could have easily made more money if I would have took profits differently
* I'm struggling to stay calm...my highs are too high and my lows are too low.
* The compulsive trades, coupled with losses, has negatively affected my disposition which has not proven good for my family
I'm working on some strict rules and/or guidelines to help me take the emotion out of my trades which will hopefully keep me calm and disciplined...any suggestions would be greatly appreciated.
I'll let you know what I come up before I begin my second week of practice.
Thanks Floyd,"
First, a comment technically from the street last Thursday evening:
"- As U.S. stocks enter the month of August, Friday's July jobs report may provide some needed upward momentum for this traditionally-slow period of the year.
"Tomorrow's jobs report is going to be critical" for the market, said Paul Mendelsohn, chief investment strategist at Windham Financial Services.
It's not that the market expects employment to have rebounded, pointing to an economic rebound.
Instead, investors have been increasingly betting that enough bad news -- from ailing financial firms, to the slumping housing market, and surging oil prices -- might have been priced into stocks for now.
"You can rally in here because we're extremely oversold," Mendelsohn said. "We're still in a bear market, there's no question about that, but technicals are pointing to a short-term bottom.""
Floyd believes the market has been in a recession since last October. The market is RIPE for euphoria, and continues to try to find something good (there is little) in which to build a bull momentum.
But, a word from one of the primary idiots that got us in this mess, first:
Without a doubt "Bubbles Greenspan", the famed economist who actually led us on the housing path of destruction, has shocked even old Floyd with this:
July 31 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said falling U.S. home prices are ``nowhere near the bottom'' and the resulting market turmoil isn't showing signs of abating.
While the odds of a recession are 50-50, achieving stable markets will ``take a while,'' Greenspan said today in a CNBC interview.
Floyd-the economy has been in a recession since last October. Housing prices are crashing because of easy money, free credit, and no controls. The government (Clinton first, then Bush) led the bubble to keep the house of cards up. At least Clinton used the government surplus from the bubbles to balance the budget. Bush spent more than we had. And continues to.
Congress and Bush continue the babble of further tax stimulus packages, when in reality, these have NOT been tax cuts, but simply a shift of asset taking to other avenues. "I will not raise taxes" mantra that we read and hear from political candidates is a LIE, or blind stupidity. The Middle Class, who pays for it all, are paying MORE in taxes and outside costs now than ever before, NOT less. The levying of taxes is simply different.
From a level 3 trader, MP, that is learning himself, I'm copying a complete email from last Friday, with a comment that this trader, despite failures or successes, is learning to trade:
"Hey Floyd,
I hope you had a good day on Friday....I had a day packed with lessons learned.
I am ashamed and embarrassed to write about what happened today. But I feel like if I don't tell you what I did today...my whole trading career may spin out of control.
Let me preface by saying that it has been 1 week since you suggested that I try my new system of trading. My plan was the following:
1. When playing strictly off the alert...I was going to keep my purchases to 1-2 contracts (1st buy..depending on price) and 2-4 contracts for the second buy. since I have limited capital (30K) we felt that trading small contracts and looking for quick profits was the best way to begin.
2. I discussed my desire to make $500-$1000 per day and that using more money to trade (5 contracts up to $5000) but keeping my stop loss at 1.00 max ($500) would give me the best opportunity to make a quick .50-1.50 each day. You told me that many people try to make a quick 50 cents (scalp) and then get out of there. It is a good way to make a living. HOWEVER...you recommended that I practice this method for at least 1 month on paper...So far it has been 1 full week.
Here are my results thus far:
Day 1...last Friday...2 for 2 Trades $750 profit
Day 2...1 for 3 trades...$150 profit
Day 3...1 for 4 trades...-$550 LOSS
Day 4...5 for 5 Trades for $2100 profit
Day 5...4 for 6 Trades for $750 profit
TODAY...Day 6...SIX for ELEVEN TRADES...for -$350 LOSS
Over the past six days...since I've started this new plan...I've placed 31 trades and won 20 of them..that is a 64.5% winning percentage and a total profit of $2850 profit...in 6 days...which averages to $475/day
PROS
* I'm making money...and as far as I'm concerned...that is pretty good money for a new trader
* I'm learning something new about myself and about the market every day
* For the most part, I've been placing pretty good trades...what I mean by that is that all of my winner were pretty good trades...not just lucky...and some of my losers were even pretty good trades that just didn't happen to move in the direction I anticipated. I'm not just blind guessing here. MOST of the time...there are legitimate reasons for my entering a trade
* The cons are forcing me to come up with strict rules for scalping.
CONS
* I think I am working way too hard for $475/day...what I mean by that is that I feel like I am placing way too many trades
* I have entered some trades when I was not right mentally or emotionally
* I've traded compulsively...especially last Friday
* I've traded when I was angry, prideful, fearful and greedy...it has caused me to lose and if I continue to do that...I will lose it all
* I'm having trouble picking exit targets...I could have easily made more money if I would have took profits differently
* I'm struggling to stay calm...my highs are too high and my lows are too low.
* The compulsive trades, coupled with losses, has negatively affected my disposition which has not proven good for my family
I'm working on some strict rules and/or guidelines to help me take the emotion out of my trades which will hopefully keep me calm and disciplined...any suggestions would be greatly appreciated.
I'll let you know what I come up before I begin my second week of practice.
Thanks Floyd,"
Friday, August 1, 2008
A Rock is Not Hard
Trading was fun to watch yesterday. The market dropped to 11,324, a 200 point plus drop on Exxon having record profits, Motorola showing surprise profits, and the GDP suddenly rising. Traders weren't impressed, and the August580P, our OTM trade, hit profit goals at 1.15, with one day left today for sale, and more potential downside. Here's how an astute Level 3 trader played it:
"Got 20 filled at 1.15 after hours.....holding 30 for tomorrow.
Another 50 gone @ 1.00
Holding 50 @ 0.85 sell order in for 1.25."
And, by popular demand from our Blue Chip service:
A rock is not hard is a tough statement to understand. Even tougher...all rocks are soft.
This type of new age mumbo gumbo frustrates many thinkers, as it is obvious a rock is hard. We emphasis understanding facts in our study of the market, however, and believe that most facts are falsely interpreted, thus leading to a market that is lead and influenced by a lack of reason. It is the astute trader that sees past this.
Using the rock:
1. It is our rules of solidity that define a rock is hard. Other rules might define it another way. We see our rules as absolute, yet have no fact that the true definition of hard is a rock, only our fact definition.
2. If a rock is hard to our definition, it's clear cut. However, if a rock were perceived by particle, atom, or neutron, or compared in a non gravity field, or....etc., etc., etc....the core definition of a rock would change.
Devout Christians might argue that oral sex is immoral. Other devout Christians have recently been promoting healthy marital sex as part of their devotionals (Time Magazine, July 2008), however, and quote lines from scripture that describe a healthy heterosexual oral sex practice. What is "absolute" is only what we SEE as absolute.
Uncomfortable as this discussion may be, it is paramount to successful trading. One must divorce him/her self from perceptions and interpretations, and use logic only in analysis.
____
We use Relative Strength as defined by IBD's CANSLIM in our stock analysis methodology for Blue Chip Options (www.bluechipoptions.com), for example. We use relative strength in point and figure charting that point out sells when there is a violation of the 45 degree bullish support line and a triple bottom sell off occurs.
Clay Allen, Winning the Performance Game, summarizes several visual Relative Strength approaches that are age old point and figure methodologies. Traders may want to consider study here.
"Got 20 filled at 1.15 after hours.....holding 30 for tomorrow.
Another 50 gone @ 1.00
Holding 50 @ 0.85 sell order in for 1.25."
And, by popular demand from our Blue Chip service:
A rock is not hard is a tough statement to understand. Even tougher...all rocks are soft.
This type of new age mumbo gumbo frustrates many thinkers, as it is obvious a rock is hard. We emphasis understanding facts in our study of the market, however, and believe that most facts are falsely interpreted, thus leading to a market that is lead and influenced by a lack of reason. It is the astute trader that sees past this.
Using the rock:
1. It is our rules of solidity that define a rock is hard. Other rules might define it another way. We see our rules as absolute, yet have no fact that the true definition of hard is a rock, only our fact definition.
2. If a rock is hard to our definition, it's clear cut. However, if a rock were perceived by particle, atom, or neutron, or compared in a non gravity field, or....etc., etc., etc....the core definition of a rock would change.
Devout Christians might argue that oral sex is immoral. Other devout Christians have recently been promoting healthy marital sex as part of their devotionals (Time Magazine, July 2008), however, and quote lines from scripture that describe a healthy heterosexual oral sex practice. What is "absolute" is only what we SEE as absolute.
Uncomfortable as this discussion may be, it is paramount to successful trading. One must divorce him/her self from perceptions and interpretations, and use logic only in analysis.
____
We use Relative Strength as defined by IBD's CANSLIM in our stock analysis methodology for Blue Chip Options (www.bluechipoptions.com), for example. We use relative strength in point and figure charting that point out sells when there is a violation of the 45 degree bullish support line and a triple bottom sell off occurs.
Clay Allen, Winning the Performance Game, summarizes several visual Relative Strength approaches that are age old point and figure methodologies. Traders may want to consider study here.
Subscribe to:
Posts (Atom)