Do Not Become Optimistic

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