> There are many conspiracy theories on how an economy doing so overall poorly could have good earnings reports, and construe the same facts we’ve been hearing about or a year into yet another almost 1000 point run up.
>
> It’s been great news for some www.bluechipoption.com investors, as our portfolios have really gained, and probably ‘”oh, gee, I’ve lost not as much last year” for others, and “the cash is rolling in” for the few.
>
> I suspect that most of the American public are excited, as the stock market is coming back. But again, most of the American public believed in WMD in Iraq, and that the bank debacles that led us down were not in part planned and ways for the few to get rich, even led by the government.
>
> My Dad had a ticker tape in his office, a huge investment, so he could call his broker as he watched the market and charted out of the newspaper each evening on the closing price.
>
> As computers came to trading the laws of efficiencies were first released. This is Floydian Rule 876-When a new model is introduced its efficiencies outweigh any concerns, and the model is then built on the new efficiency, without regard to “next step."
>
> As a consultant for years it’ all I saw. And right now, we’ve hit the unregulated securities game (still far from under control) , but many believe that computer trading can manipulate stocks.
>
> With a global network of all types of brokerages, and the ability to trade for all who are “high frequency trading” (HTF). Regulators are already adding this game to the many other games already leading our market at all times. When the market is ready to gather just enough in, a fair consolidation is always in order, to allow profits.
>
> When the market can move in near1000 point increments it can be attributed to high frequency trading, which could extend trading ranges.
>
> This is what we are seeing, meaning Dow projections must be always pre market and intraday on big moves, as pivots change constantly.
Friday, July 31, 2009
Thursday, July 30, 2009
Re-Calculation is Necessary
Market conditions truly require intraday analysis of pivot and support and resistance. Use our online calculation models by signing on to the website: http://www.oexoptions.com to use the pivot point and Fibonnaci calculator to review changing market moves. This can make your trading more effective.
Market conditions of now typical 100 plus point moves necessitate this re-calculation to catch the shifting of the market.
Fibonacci shows 38%/62/50 Retracements. Support and resistance lines are often built around where the market first moves in this tightening. Pay careful attention to Retracements in relation to support and resistance lines. The 50% retracement area should be noted first for where these new support and resistance lines could be created.
Market conditions of now typical 100 plus point moves necessitate this re-calculation to catch the shifting of the market.
Fibonacci shows 38%/62/50 Retracements. Support and resistance lines are often built around where the market first moves in this tightening. Pay careful attention to Retracements in relation to support and resistance lines. The 50% retracement area should be noted first for where these new support and resistance lines could be created.
Wednesday, July 29, 2009
The Market Needs to Move
We need the market to really move, to return to volatility, and and end to flat lining to make some money again :)
This is a market in which support become resistance, resistance support, and each day the market hovers. Yesterday's immediate drop off was an indicator of why puts are at such a high premium, and the rebound at 2.00 p.m. was again as we now grow to expect it.
A trader wrote me today to ask if I was trading the call, and wasn't because I was "busy on working on Blue Chip Options" website, but also simply favored the put. By the way, the call was profitable to a buck a contract, right to our rules. And all before the magic 3 p.m. hour when the great bull, or plunge protection team, or Goldman Sachs, or a fairy comes in to suddenly build the market back up to resistance lines.
If any "summer rally" takes place note that it s historically the weakest rally of all seasons. “The number of workers on jobless rolls is declining is an encouraging sign for the U.S. Economy, although the decrease partly reflects people exhausting their state benefits.“ Some economists say this is consistent with what happens near an end of a recession. The FEDS say new claims, when smoothed out over four week averages, are actually declining. With this, there’s no doubt we’ll hit double digits, over 10% in unemployment later this year, which doubles to over 20% when those that are unemployable, still cannot find jobs, and are caught in declining industries, the homeless….you name it. Each % of unemployment the American people pay for.
* Overbuying and overstudying the market confuses your thinking. Limit your input. But, at the same time, learn well. I find that I know what I should read, what is valuable to me, and I read everything about it.
Make best use of this alert which has a process of analysis for both index options, and how to trade ETF's and stocks.
And please, I need to pitch again:
I have created a website www.bluechipoptions.com with the help of daughter Jenn, and artist in residence Terry Brown, our webmaster. It is filled with blogs, articles, videos and ways that I also trade the stock market, from ETF's to core stock recommendations, to stock options.
Friends, this is the best work I have in me, and it's just beginning. I need your subscription:
http://www.oexoptions.com/BlueChip/BCO-Subscribe.html
When I now see something important I may recalculate the Dow for us, and it's available to everyone on Twitter: http://twitter.com/Bluechipoption
Interesting as we Twitted out re-calculations by noon and the market hovered at the new pivot point much of the afternoon.
In recent days I've been performing a test on your reading and comprehension ability, and how many of you actually read my "dribble," which I hope you do.
I used a line, "We cut our winners short and let our losses run." A few bright subscribers wrote: "Other trading services teach the opposite...let winners run and cut losses short."
What I was writing was what HAPPENS, not what should be. Joe the Trader, most of all investors, "cut winners short (to make profits) and hold something too long ("let losses run") because they are "sure it will turn around."
The point of my exercise is for you to not "read a maxim," but analyze what you are reading. This is how you will become a trader.
I will make this promise: if you think it is easy to do this, and you will get rich, you are guaranteed to lose. If you trade to learn, practicing and studying, you can learn to make good profits every day.
Trader JK wrote:
> Hi Floyd,
>
> In the OEX alert Theoretical Dow Projections, why do you label numbers as resistance that are below the current Dow price? (e.g., 8574-Resistance & 8860-Resistance)
>
> Normally one would consider these as potential support, but my assumption, perhaps incorrect, has been that if the Dow falls below those numbers then they would become resistance if the Dow began to move back up. Is this correct, or do you have a different reason for calling them "resistance"?
>
> Thanks,
>
> Johnny
My answer: Good question. Right now I am seeing a shift in support and resistance, for the first time, and probably because of an overbought market.
Right now support and resistance lines are actually intermingling. I"ve never seen anything like it before.
This is a market in which support become resistance, resistance support, and each day the market hovers. Yesterday's immediate drop off was an indicator of why puts are at such a high premium, and the rebound at 2.00 p.m. was again as we now grow to expect it.
A trader wrote me today to ask if I was trading the call, and wasn't because I was "busy on working on Blue Chip Options" website, but also simply favored the put. By the way, the call was profitable to a buck a contract, right to our rules. And all before the magic 3 p.m. hour when the great bull, or plunge protection team, or Goldman Sachs, or a fairy comes in to suddenly build the market back up to resistance lines.
If any "summer rally" takes place note that it s historically the weakest rally of all seasons. “The number of workers on jobless rolls is declining is an encouraging sign for the U.S. Economy, although the decrease partly reflects people exhausting their state benefits.“ Some economists say this is consistent with what happens near an end of a recession. The FEDS say new claims, when smoothed out over four week averages, are actually declining. With this, there’s no doubt we’ll hit double digits, over 10% in unemployment later this year, which doubles to over 20% when those that are unemployable, still cannot find jobs, and are caught in declining industries, the homeless….you name it. Each % of unemployment the American people pay for.
* Overbuying and overstudying the market confuses your thinking. Limit your input. But, at the same time, learn well. I find that I know what I should read, what is valuable to me, and I read everything about it.
Make best use of this alert which has a process of analysis for both index options, and how to trade ETF's and stocks.
And please, I need to pitch again:
I have created a website www.bluechipoptions.com with the help of daughter Jenn, and artist in residence Terry Brown, our webmaster. It is filled with blogs, articles, videos and ways that I also trade the stock market, from ETF's to core stock recommendations, to stock options.
Friends, this is the best work I have in me, and it's just beginning. I need your subscription:
http://www.oexoptions.com/BlueChip/BCO-Subscribe.html
When I now see something important I may recalculate the Dow for us, and it's available to everyone on Twitter: http://twitter.com/Bluechipoption
Interesting as we Twitted out re-calculations by noon and the market hovered at the new pivot point much of the afternoon.
In recent days I've been performing a test on your reading and comprehension ability, and how many of you actually read my "dribble," which I hope you do.
I used a line, "We cut our winners short and let our losses run." A few bright subscribers wrote: "Other trading services teach the opposite...let winners run and cut losses short."
What I was writing was what HAPPENS, not what should be. Joe the Trader, most of all investors, "cut winners short (to make profits) and hold something too long ("let losses run") because they are "sure it will turn around."
The point of my exercise is for you to not "read a maxim," but analyze what you are reading. This is how you will become a trader.
I will make this promise: if you think it is easy to do this, and you will get rich, you are guaranteed to lose. If you trade to learn, practicing and studying, you can learn to make good profits every day.
Trader JK wrote:
> Hi Floyd,
>
> In the OEX alert Theoretical Dow Projections, why do you label numbers as resistance that are below the current Dow price? (e.g., 8574-Resistance & 8860-Resistance)
>
> Normally one would consider these as potential support, but my assumption, perhaps incorrect, has been that if the Dow falls below those numbers then they would become resistance if the Dow began to move back up. Is this correct, or do you have a different reason for calling them "resistance"?
>
> Thanks,
>
> Johnny
My answer: Good question. Right now I am seeing a shift in support and resistance, for the first time, and probably because of an overbought market.
Right now support and resistance lines are actually intermingling. I"ve never seen anything like it before.
Tuesday, July 28, 2009
We Cut Our Winners
"We cut our winners short and let our losses run." Think of this as you trade. I have many theories being thrown at me on a market that hits new highs, and as we watched the struggle yesterday between bull and bear, here's jus a few:
-Floyd's Chinese conspiracy theory...buy us up, short us, and be ready for the fall. Insure your U.S. Treasury debt :)
-You're Goldman and gold, and have even more new product offerings, and there's a reason everyone there makes $900,000 a year. I don't trust how much control you have over the market.
-Or it could be Dow Theorists: "July 24 (Bloomberg) -- U.S. stocks may climb further after rallying to an eight-month high, according to followers of the century-old Dow Theory.
As the Dow Jones Industrial Average climbed to the highest level since Nov. 5 yesterday, the Dow Jones Transportation Average, a measure for airlines, shipping companies and railroads, broke through a May peak as it surged to the best level in six months. Dow Theory says that when the measures of industrial and transportation companies both post new highs, equities are likely to gain.
'I consider the primary trend of the market as having turned bullish under the Dow Theory,' said Nick Batsford, a technical analyst at Hobart Capital Markets Ltd. in London.
Dow Theory is named for the developer of Dow Jones & Co.’s averages, Charles H. Dow, who died in 1902. Both gauges reaching new highs is considered a sign of strength in the U.S. economy, under the assumption that when companies are expanding, they ship more goods.
The Dow industrials gained 2.1 percent to 9,069.29 yesterday while the transportation index, which includes companies such as FedEx Corp. and Burlington Northern Santa Fe Corp., added 3.3 percent to 3,506.12."
We've had 13 successful call trades and 2 put losses, a good win ratio in the last 10 days. We continue to hold a put as a hedge, but make note that we're seeing puts not lose as much value when the market moves up.
Yesterday we were able to buy our recommended call at a 5.25 average, but sell only to break even or tight profits, with a market that just didn't move at all. We're now situated to put and call. Both could return up to 45% if moves are dramatic.
The rise of the emerging markets concerns me also, with investors simply pouring 35.5 billion in the first half of 2009. This is a global world, with a U.S. nation caught up in Sarah Palin, the idiocy of the politics around what could be a simple healthcare solution, and proof that the "same old politics" rolls on, with just reading about the government officials on corruption and selling body parts.
We are a CSI: Criminal Intent franchise at times. Think of this sentence twice, and think about in your own life.
-Floyd's Chinese conspiracy theory...buy us up, short us, and be ready for the fall. Insure your U.S. Treasury debt :)
-You're Goldman and gold, and have even more new product offerings, and there's a reason everyone there makes $900,000 a year. I don't trust how much control you have over the market.
-Or it could be Dow Theorists: "July 24 (Bloomberg) -- U.S. stocks may climb further after rallying to an eight-month high, according to followers of the century-old Dow Theory.
As the Dow Jones Industrial Average climbed to the highest level since Nov. 5 yesterday, the Dow Jones Transportation Average, a measure for airlines, shipping companies and railroads, broke through a May peak as it surged to the best level in six months. Dow Theory says that when the measures of industrial and transportation companies both post new highs, equities are likely to gain.
'I consider the primary trend of the market as having turned bullish under the Dow Theory,' said Nick Batsford, a technical analyst at Hobart Capital Markets Ltd. in London.
Dow Theory is named for the developer of Dow Jones & Co.’s averages, Charles H. Dow, who died in 1902. Both gauges reaching new highs is considered a sign of strength in the U.S. economy, under the assumption that when companies are expanding, they ship more goods.
The Dow industrials gained 2.1 percent to 9,069.29 yesterday while the transportation index, which includes companies such as FedEx Corp. and Burlington Northern Santa Fe Corp., added 3.3 percent to 3,506.12."
We've had 13 successful call trades and 2 put losses, a good win ratio in the last 10 days. We continue to hold a put as a hedge, but make note that we're seeing puts not lose as much value when the market moves up.
Yesterday we were able to buy our recommended call at a 5.25 average, but sell only to break even or tight profits, with a market that just didn't move at all. We're now situated to put and call. Both could return up to 45% if moves are dramatic.
The rise of the emerging markets concerns me also, with investors simply pouring 35.5 billion in the first half of 2009. This is a global world, with a U.S. nation caught up in Sarah Palin, the idiocy of the politics around what could be a simple healthcare solution, and proof that the "same old politics" rolls on, with just reading about the government officials on corruption and selling body parts.
We are a CSI: Criminal Intent franchise at times. Think of this sentence twice, and think about in your own life.
"We cut our winners short and let our losses run." Think of this as you trade. I have many theories being thrown at me on a market that hits new highs, and as we watched the struggle yesterday between bull and bear, here's jus a few:
-Floyd's Chinese conspiracy theory...buy us up, short us, and be ready for the fall. Insure your U.S. Treasury debt :)
-You're Goldman and gold, and have even more new product offerings, and there's a reason everyone there makes $900,000 a year. I don't trust how much control you have over the market.
-Or it could be Dow Theorists: "July 24 (Bloomberg) -- U.S. stocks may climb further after rallying to an eight-month high, according to followers of the century-old Dow Theory.
As the Dow Jones Industrial Average climbed to the highest level since Nov. 5 yesterday, the Dow Jones Transportation Average, a measure for airlines, shipping companies and railroads, broke through a May peak as it surged to the best level in six months. Dow Theory says that when the measures of industrial and transportation companies both post new highs, equities are likely to gain.
'I consider the primary trend of the market as having turned bullish under the Dow Theory,' said Nick Batsford, a technical analyst at Hobart Capital Markets Ltd. in London.
Dow Theory is named for the developer of Dow Jones & Co.’s averages, Charles H. Dow, who died in 1902. Both gauges reaching new highs is considered a sign of strength in the U.S. economy, under the assumption that when companies are expanding, they ship more goods.
The Dow industrials gained 2.1 percent to 9,069.29 yesterday while the transportation index, which includes companies such as FedEx Corp. and Burlington Northern Santa Fe Corp., added 3.3 percent to 3,506.12."
We've had 13 successful call trades and 2 put losses, a good win ratio in the last 10 days. We continue to hold a put as a hedge, but make note that we're seeing puts not lose as much value when the market moves up.
Yesterday we were able to buy our recommended call at a 5.25 average, but sell only to break even or tight profits, with a market that just didn't move at all. We're now situated to put and call. Both could return up to 45% if moves are dramatic.
The rise of the emerging markets concerns me also, with investors simply pouring 35.5 billion in the first half of 2009. This is a global world, with a U.S. nation caught up in Sarah Palin, the idiocy of the politics around what could be a simple healthcare solution, and proof that the "same old politics" rolls on, with just reading about the government officials on corruption and selling body parts.
We are a CSI: Criminal Intent franchise at times. Think of this sentence twice, and think about in your own life.
-Floyd's Chinese conspiracy theory...buy us up, short us, and be ready for the fall. Insure your U.S. Treasury debt :)
-You're Goldman and gold, and have even more new product offerings, and there's a reason everyone there makes $900,000 a year. I don't trust how much control you have over the market.
-Or it could be Dow Theorists: "July 24 (Bloomberg) -- U.S. stocks may climb further after rallying to an eight-month high, according to followers of the century-old Dow Theory.
As the Dow Jones Industrial Average climbed to the highest level since Nov. 5 yesterday, the Dow Jones Transportation Average, a measure for airlines, shipping companies and railroads, broke through a May peak as it surged to the best level in six months. Dow Theory says that when the measures of industrial and transportation companies both post new highs, equities are likely to gain.
'I consider the primary trend of the market as having turned bullish under the Dow Theory,' said Nick Batsford, a technical analyst at Hobart Capital Markets Ltd. in London.
Dow Theory is named for the developer of Dow Jones & Co.’s averages, Charles H. Dow, who died in 1902. Both gauges reaching new highs is considered a sign of strength in the U.S. economy, under the assumption that when companies are expanding, they ship more goods.
The Dow industrials gained 2.1 percent to 9,069.29 yesterday while the transportation index, which includes companies such as FedEx Corp. and Burlington Northern Santa Fe Corp., added 3.3 percent to 3,506.12."
We've had 13 successful call trades and 2 put losses, a good win ratio in the last 10 days. We continue to hold a put as a hedge, but make note that we're seeing puts not lose as much value when the market moves up.
Yesterday we were able to buy our recommended call at a 5.25 average, but sell only to break even or tight profits, with a market that just didn't move at all. We're now situated to put and call. Both could return up to 45% if moves are dramatic.
The rise of the emerging markets concerns me also, with investors simply pouring 35.5 billion in the first half of 2009. This is a global world, with a U.S. nation caught up in Sarah Palin, the idiocy of the politics around what could be a simple healthcare solution, and proof that the "same old politics" rolls on, with just reading about the government officials on corruption and selling body parts.
We are a CSI: Criminal Intent franchise at times. Think of this sentence twice, and think about in your own life.
Monday, July 27, 2009
Something is Up
July typically closes well, but can end poorly if a bear market is in progress.
*Bernanke is not planning to turn the spigot off at the Central Bank, that interest rates would stay low. So following this World Bank Chief Economist Just Lin says that a “surge in excess capacity world wide could lead to a global 'deflationary downward spiral.'"
Japan is forecasting two years of price declines, which showed us how to mess up back in the 1990’s when they had a blowup in the banking sector and a collapse in the real estate market.
I see deflation, not inflation, as the enemy. Unless the economic engine in the U.S., and now over the world, can get cranking, with money being spent, deflation could keep occurring.
-OXBHM OEX.X AUG 2009 465.0000 CALL was our recommendation for Friday. This was a hard position to trade. Some day traders were able to buy to near the lows at 4.30 area, and sell to 5.90 near day end, while others paid up to 5.00, to sell by day end for up to .90 profits. Calls won again.
The market is at a turning point beyond discussion. It's vastly overbought, and the argument "a true bull market" or the "greatest new bubble, ready to burst" proliferate conversation.
Study the economic calendar and earnings reports out for the week. Watch for "news triggers" that will burst overbought conditions, or take the market to new highs.
We now see potential stopping points on any consolidation at perhaps only 8750, but see the potential for downturn to 8376 on any bad news. Yet again, we believe, the market has moved up too quickly.
The market held above 9000 Friday. That is a market statement. The bull/bear battle is in full gear. Lots of shorting going on in the market, lots of puts players, and the masses have now become the masses, both ways.
Something is up.
*Bernanke is not planning to turn the spigot off at the Central Bank, that interest rates would stay low. So following this World Bank Chief Economist Just Lin says that a “surge in excess capacity world wide could lead to a global 'deflationary downward spiral.'"
Japan is forecasting two years of price declines, which showed us how to mess up back in the 1990’s when they had a blowup in the banking sector and a collapse in the real estate market.
I see deflation, not inflation, as the enemy. Unless the economic engine in the U.S., and now over the world, can get cranking, with money being spent, deflation could keep occurring.
-OXBHM OEX.X AUG 2009 465.0000 CALL was our recommendation for Friday. This was a hard position to trade. Some day traders were able to buy to near the lows at 4.30 area, and sell to 5.90 near day end, while others paid up to 5.00, to sell by day end for up to .90 profits. Calls won again.
The market is at a turning point beyond discussion. It's vastly overbought, and the argument "a true bull market" or the "greatest new bubble, ready to burst" proliferate conversation.
Study the economic calendar and earnings reports out for the week. Watch for "news triggers" that will burst overbought conditions, or take the market to new highs.
We now see potential stopping points on any consolidation at perhaps only 8750, but see the potential for downturn to 8376 on any bad news. Yet again, we believe, the market has moved up too quickly.
The market held above 9000 Friday. That is a market statement. The bull/bear battle is in full gear. Lots of shorting going on in the market, lots of puts players, and the masses have now become the masses, both ways.
Something is up.
Saturday, July 25, 2009
It's Amazing
Two weeks ago doomsayers saw 7700 (and we were close) and two weeks later we're looking at over 9100. It's amazing to see what I believe is a manipulated market, with the buyers now Joe The Trader trying to get in to "not lose any of the money that he could have been making." Despite my bearish and contrarian read on a vastly overbought market, however, we had some incredible profits with yet another call -OXBHI (445 Call) which went from an $11.00 buy earlier this week to top sells of 17.80. This gives us profits on 11 straight calls, one stop loss to the put, and a put we are holding that is now far OTM.
We've projected what the market could now go to in our new Dow Projections, and also note that we went from a low strength 3 to 4 to the call, to vastly overbought conditions. The stock market is like a rubber band.
Some bull markets, like the internet, will stretch the rubber band until it become a giant bubble, and we've just experienced other bubbles. I find 1000 point moves just "WTF" and can see China buying us up to short the market, and get Treasury markets moving to their direction. Many subscribers wrote in with their theories on China, or market makers just running it up, Wall Street on fire, and sitting on Wall Street with long planned puts for the fall.
Who knows? It's nuts at this point, and you've read enough hyperbole in the news to thoroughly confuse you. I know we made up 62% on the calls yesterday, and hold a good long term hedge in BGZ, now moved to arsenal.
This risk trade will surprise traders with its massive rise on any downturn, or be "lost money." Our last Blue Chip option trade like this returned 1400% in 17 days.
And at the same time, there is just enough nuts euphoria out there to drive this market further up, to draw everyone in, before the next bear market.
So, new trades again, let's keep the profit trend up!
We've projected what the market could now go to in our new Dow Projections, and also note that we went from a low strength 3 to 4 to the call, to vastly overbought conditions. The stock market is like a rubber band.
Some bull markets, like the internet, will stretch the rubber band until it become a giant bubble, and we've just experienced other bubbles. I find 1000 point moves just "WTF" and can see China buying us up to short the market, and get Treasury markets moving to their direction. Many subscribers wrote in with their theories on China, or market makers just running it up, Wall Street on fire, and sitting on Wall Street with long planned puts for the fall.
Who knows? It's nuts at this point, and you've read enough hyperbole in the news to thoroughly confuse you. I know we made up 62% on the calls yesterday, and hold a good long term hedge in BGZ, now moved to arsenal.
This risk trade will surprise traders with its massive rise on any downturn, or be "lost money." Our last Blue Chip option trade like this returned 1400% in 17 days.
And at the same time, there is just enough nuts euphoria out there to drive this market further up, to draw everyone in, before the next bear market.
So, new trades again, let's keep the profit trend up!
Thursday, July 23, 2009
Pay Careful Attention to Retracements
Market conditions truly require intraday analysis of pivot and support and resistance. Use our online calculation models by signing on to the website: http://www.oexoptions.com to use the pivot point and Fibonnaci calculator to review changing market moves. This can make your trading more effective.
Market conditions of now typical 100 plus point moves necessitate this re-calculation to catch the shifting of the market.
Fibonacci shows 38%/62/50 Retracements. Support and resistance lines are often built around where the market first moves in this tightening. Pay careful attention to Retracements in relation to support and resistance lines. The 50% retracement area should be noted first for where these new support and resistance lines could be created.
Rule #1: If the day's price action starts above the pivot point within the first 30 to 60 minutes of trading the market will typically stay above the pivot for the trading day. Conversely, if the first 30 to 60 minutes of trading is below the pivot it is typically a session where it stays below the pivot, or a bear day.
Rule #2: If the market opens and "trades the edges" (R2 or R3, or S2 and S3) the market tends to trade the day "back" towards the pivot.
Rule #3: The further the price moves from the pivot the more we avoid buying the high or selling the low.
A strong up day can cause a low to come early and a high to come late; a strong down day can cause a high to come early and a low to come late.
Market conditions of now typical 100 plus point moves necessitate this re-calculation to catch the shifting of the market.
Fibonacci shows 38%/62/50 Retracements. Support and resistance lines are often built around where the market first moves in this tightening. Pay careful attention to Retracements in relation to support and resistance lines. The 50% retracement area should be noted first for where these new support and resistance lines could be created.
Rule #1: If the day's price action starts above the pivot point within the first 30 to 60 minutes of trading the market will typically stay above the pivot for the trading day. Conversely, if the first 30 to 60 minutes of trading is below the pivot it is typically a session where it stays below the pivot, or a bear day.
Rule #2: If the market opens and "trades the edges" (R2 or R3, or S2 and S3) the market tends to trade the day "back" towards the pivot.
Rule #3: The further the price moves from the pivot the more we avoid buying the high or selling the low.
A strong up day can cause a low to come early and a high to come late; a strong down day can cause a high to come early and a low to come late.
Wednesday, July 22, 2009
Every Sign is Bullish
Every sign is bullish. The 50 day moving average crossed the 200 day moving average, and the ominous head and shoulder pattern that we saw as the downside risk has been passed.
Caterpillar earnings took it up, and Apple could belatedly.
We've revised our Dow projections, with a lesser downside because of this momentum, but remain bearish on the market without a consolidation. Yet again, the rise has been too euphoric, and without reason.
We took stop loss on our August 370P, but regained some of the profits with up to $1.00 a contract profits on our OTM Call.
With all these facts.....head and shoulders, 50 and 200 day moving average, I remain suspicious because again the euphoric "little reason" rise. If we can have effective consolidation, to allow traders to profit, the market can be healthier.
And the conspiracist in me just knows Goldman Sachs has been building the market long, and now has puts on the S&P 500 after they and the plunge protection team have done their job.
Follow futures carefully. Two way trades and good profits may be available.
Many new subscribers on trial have asked if it is necessary to be online all day to trade with us. I use an Iphone32G and trade 1/3 of the time from the phone. Blackberry's work well.
One must at least "watch" the Dow and "read the market" during the trading day, even if using "limit orders," which can successfully work well, but we highly recommend not considering option trading if one can't have some access during the trading day, even if limited to two or three times.
Caterpillar earnings took it up, and Apple could belatedly.
We've revised our Dow projections, with a lesser downside because of this momentum, but remain bearish on the market without a consolidation. Yet again, the rise has been too euphoric, and without reason.
We took stop loss on our August 370P, but regained some of the profits with up to $1.00 a contract profits on our OTM Call.
With all these facts.....head and shoulders, 50 and 200 day moving average, I remain suspicious because again the euphoric "little reason" rise. If we can have effective consolidation, to allow traders to profit, the market can be healthier.
And the conspiracist in me just knows Goldman Sachs has been building the market long, and now has puts on the S&P 500 after they and the plunge protection team have done their job.
Follow futures carefully. Two way trades and good profits may be available.
Many new subscribers on trial have asked if it is necessary to be online all day to trade with us. I use an Iphone32G and trade 1/3 of the time from the phone. Blackberry's work well.
One must at least "watch" the Dow and "read the market" during the trading day, even if using "limit orders," which can successfully work well, but we highly recommend not considering option trading if one can't have some access during the trading day, even if limited to two or three times.
Tuesday, July 21, 2009
You Can't Make This Stuff Up
In 1998 the week after July expiry the down fell 4.3%, a large amount for that time period, and hit 4.2% off in this week in 2007. Last week the first wave of quarterly corporate earnings reports arrived stronger than expected, and investors were further soothed on the economic crisis and the Dow gained 7.3% alone last week, it's biggest since March. It should be noted that even lackluster earnings were "ignored" and that only 11% of major companies have reported so far. But, 71% of those quarterly reports that have been issued have beaten analysts expectations.
This is conflicting news. Unemployment is rising. Savings is going up. People are spending less. Yet again we've seen a market take meteoric rises, and typically slow consolidations, and "events" seem to trigger whipsaw.
This is why we have been saying the higher the market had gone last week, and now, the deeper the potential decline. If the market can absorb good gains in a more normal fashion, see quarterly's that are not so stellar, or begin to wonder "why all is so good when it is not" then consolidation can be healthy.
For example, GE's profits fell 49% as the recession took its toll on its industrial businesses and its struggling finance unit. Citi and Bank of America had second quarter profits on hefty one time gains, and it's Floyd's bet that we will soon mounting credit card losses from banks, despite the rape of America with rising fees to return them to profitability, with our money.
You really can't make this stuff up. And the market gains on rising hope. CIT, as the example, in is process of obtaining debt refinancing from its bondholders, and this triggered the early morning rise. Imagine, a bank close to bankruptcy buys some "time", and it's good news :)
And from our Floydian Blog at www.bluechipoptions.com:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aHcr2O3tkOCo
1. The obvious will show that "things are improving.".
2. The market may take this as "the real estate market is gaining ground."
Oops. One in every two homes being sold in the U.S. is sold out of foreclosure.
Skews those "happy facts" a bit, doesn't it.
The Floydian Lesson: Read information, but do not believe interpretation.
In fact, within the euphoria, answer:
1. Record Foreclosures
2. Record Chapter 11 Filings
3. Record Unemployment - not that BS the Gubermit puts out.
4. Record expanse of the money Supply
5. Record Price declines in Housing
6. Record Insider Selling
7. Record low volumes in NYSE trading for Retail - not Black Box Goldman
8. Record Secondary Equity Offerings
9. Record FED and Gubermit false dating of statistics.
You really can't make this stuff up :)
_____________
So, with all this: the S &P 500 hit new highs, and the market hit theoretical Dow tops of 8895, at our top, and lows of 8705. We project below Dow moves possible to just under 9000, but see the market at overbought tops.
Our recommendation for the OXBHM August 465C is an excellent example. It opened at 2.800, moved down to the prior day close at 2.40, and moved up only .60 to highs of 3.00. This is classic sign that an OTM call was not rising in value because the market acted overbought.
We'll list the signal today as "open" for any last minute profits. We are a market led by euphoria. Let's keep taking the profits!
This is conflicting news. Unemployment is rising. Savings is going up. People are spending less. Yet again we've seen a market take meteoric rises, and typically slow consolidations, and "events" seem to trigger whipsaw.
This is why we have been saying the higher the market had gone last week, and now, the deeper the potential decline. If the market can absorb good gains in a more normal fashion, see quarterly's that are not so stellar, or begin to wonder "why all is so good when it is not" then consolidation can be healthy.
For example, GE's profits fell 49% as the recession took its toll on its industrial businesses and its struggling finance unit. Citi and Bank of America had second quarter profits on hefty one time gains, and it's Floyd's bet that we will soon mounting credit card losses from banks, despite the rape of America with rising fees to return them to profitability, with our money.
You really can't make this stuff up. And the market gains on rising hope. CIT, as the example, in is process of obtaining debt refinancing from its bondholders, and this triggered the early morning rise. Imagine, a bank close to bankruptcy buys some "time", and it's good news :)
And from our Floydian Blog at www.bluechipoptions.com:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aHcr2O3tkOCo
1. The obvious will show that "things are improving.".
2. The market may take this as "the real estate market is gaining ground."
Oops. One in every two homes being sold in the U.S. is sold out of foreclosure.
Skews those "happy facts" a bit, doesn't it.
The Floydian Lesson: Read information, but do not believe interpretation.
In fact, within the euphoria, answer:
1. Record Foreclosures
2. Record Chapter 11 Filings
3. Record Unemployment - not that BS the Gubermit puts out.
4. Record expanse of the money Supply
5. Record Price declines in Housing
6. Record Insider Selling
7. Record low volumes in NYSE trading for Retail - not Black Box Goldman
8. Record Secondary Equity Offerings
9. Record FED and Gubermit false dating of statistics.
You really can't make this stuff up :)
_____________
So, with all this: the S &P 500 hit new highs, and the market hit theoretical Dow tops of 8895, at our top, and lows of 8705. We project below Dow moves possible to just under 9000, but see the market at overbought tops.
Our recommendation for the OXBHM August 465C is an excellent example. It opened at 2.800, moved down to the prior day close at 2.40, and moved up only .60 to highs of 3.00. This is classic sign that an OTM call was not rising in value because the market acted overbought.
We'll list the signal today as "open" for any last minute profits. We are a market led by euphoria. Let's keep taking the profits!
Friday, July 17, 2009
Retirement Accounts
For an serious read on objectivism, the philosophy of Ayn Rand, and how it has led our government for years: http://www.nytimes.com/2007/09/15/business/15atlas.html?pagewanted=1&_r=2&th&emc=th
And, as we watch performance in our retirement accounts, 70% of funds under-perform their benchmark every year. It's sad. On average, an actively managed fund returns 2% less (after fees) than the index it's measured against. A $100,000 portfolio that compounds 10% per year will grow to $1.7 million in 30 years. The fund with a 2% drag? Just $1 million. That's a $700,000 difference.
The gig is too obvious. The guys that manage the fund get 1 to 2% of your investment every year, no matter how they perform. More important, mutual fund regulations meant to protect investors actually make matters worse. For example, some rules mandate diversification. So instead of owning his 10 favorite stocks, a mutual fund manager may be forced to own more than 100 stocks... and dilute returns in the process.
Rules can also force managers to sell winning stocks prematurely, as their increased presence in the portfolio violates the diversification mandate. Also, size rules prohibit large-cap mutual funds from owning mid- or small-cap stocks, even if it's the best thing to do at the time.
For starters, the compensation structure is flawed. Mutual fund managers get a slice of your investment (typically 1%-2%) every year, no matter how they perform. Because they're paid based on total assets under management, not performance, managers shift focus from returns to fundraising.
Other rules prevent funds from buying companies in the midst of corporate restructuring or those temporarily losing money... or owning a stock that trades too few shares a day... or shorting stocks.
So, then we watch Wall Street, which devastated the world economy, and a few of the slime (like Goldman Sachs) are raking in 900k a year for each employee, and BlackRock has 42 million in billings already in being in charge of figuring out part of the derivative mess.
We're soon introducing another website, www.bluechipoptions.com that helps trade in more market volatility, as there is truly money to be made in the market today.
Just look at our call successes last week. We made serious money.
And, it's harder to understand the volatility. I consider VIX a statistical indicator now, and nothing more. Too many anomalies. While the DJIA,S&P, and NASDAQ each surged about 3% or more, triggered by euphoria, the ViX moved up from 25.02 to 25.89. This wasn't supposed to happen, it's the opposite, so it was a rarity in the fear gauge. Jason Goepert said that, "this was the only time in history that both the Vix and S&P500 rose more than 2.5% on the same."
In the other two instances, the markets declined soon thereafter.
What i see in this ViX anomaly is a unique combination of optimism (not greed) and fear, battling it out.
This shows Friday well. A market that hit highs of 8794 on the theoretical Dow twice, but hovered for the day in the 8600-8700 resistance area. Calls were available and tightly profitable. Puts were also available, and we now have open signals.
Study our Dow projections. We update through the week, and should be used in conjunction with the Dow or OEX projections you take throughout the day.
Last week we made crazy money. Let's start with prudent risk on our open trades.
Do NOT trust false facts, or be led by optimism or pessimism, but realism, with a sense of "what the ___?"
And, as we watch performance in our retirement accounts, 70% of funds under-perform their benchmark every year. It's sad. On average, an actively managed fund returns 2% less (after fees) than the index it's measured against. A $100,000 portfolio that compounds 10% per year will grow to $1.7 million in 30 years. The fund with a 2% drag? Just $1 million. That's a $700,000 difference.
The gig is too obvious. The guys that manage the fund get 1 to 2% of your investment every year, no matter how they perform. More important, mutual fund regulations meant to protect investors actually make matters worse. For example, some rules mandate diversification. So instead of owning his 10 favorite stocks, a mutual fund manager may be forced to own more than 100 stocks... and dilute returns in the process.
Rules can also force managers to sell winning stocks prematurely, as their increased presence in the portfolio violates the diversification mandate. Also, size rules prohibit large-cap mutual funds from owning mid- or small-cap stocks, even if it's the best thing to do at the time.
For starters, the compensation structure is flawed. Mutual fund managers get a slice of your investment (typically 1%-2%) every year, no matter how they perform. Because they're paid based on total assets under management, not performance, managers shift focus from returns to fundraising.
Other rules prevent funds from buying companies in the midst of corporate restructuring or those temporarily losing money... or owning a stock that trades too few shares a day... or shorting stocks.
So, then we watch Wall Street, which devastated the world economy, and a few of the slime (like Goldman Sachs) are raking in 900k a year for each employee, and BlackRock has 42 million in billings already in being in charge of figuring out part of the derivative mess.
We're soon introducing another website, www.bluechipoptions.com that helps trade in more market volatility, as there is truly money to be made in the market today.
Just look at our call successes last week. We made serious money.
And, it's harder to understand the volatility. I consider VIX a statistical indicator now, and nothing more. Too many anomalies. While the DJIA,S&P, and NASDAQ each surged about 3% or more, triggered by euphoria, the ViX moved up from 25.02 to 25.89. This wasn't supposed to happen, it's the opposite, so it was a rarity in the fear gauge. Jason Goepert said that, "this was the only time in history that both the Vix and S&P500 rose more than 2.5% on the same."
In the other two instances, the markets declined soon thereafter.
What i see in this ViX anomaly is a unique combination of optimism (not greed) and fear, battling it out.
This shows Friday well. A market that hit highs of 8794 on the theoretical Dow twice, but hovered for the day in the 8600-8700 resistance area. Calls were available and tightly profitable. Puts were also available, and we now have open signals.
Study our Dow projections. We update through the week, and should be used in conjunction with the Dow or OEX projections you take throughout the day.
Last week we made crazy money. Let's start with prudent risk on our open trades.
Do NOT trust false facts, or be led by optimism or pessimism, but realism, with a sense of "what the ___?"
It's Basic Math
On July expiry the Dow has been down 6 of the last 8 years, and off 4.6% alone in 2002. We will add to this that our bell curve count has approached 10 for two days, clear signs of a massively overbought market. So, the market will go up again, perhaps, for no good reason.
By noon the market had moved to our recalculated r1 and s1 three times. Classic flat lining. By 2.30 p.m. calls were profitable. Remember,we do not often trade at what we think are market tops, but some traders were risk oriented enough to buy in at 2.90 to 3.00 on the August 460 Call, and sell to 3.67 And by 3.30 the market had topped at 8747.
Fed minutes showed officials are preparing for an unusual recovery in which the economy improves, but unemployment worsens.
U.S. consumer prices jumped last month, led by energy and autos, thought compared annually they fell by the fastest rate since 1950.
In a euphoria driven market we continue to see the summation indexes operating off sell signals, slow stastics shows overbought, and chartists that believe in the head and shoulders pattern are watching now to see if a rally can be created, or if the pattern is being violated. This may lessen the downside, and we're revising our Dow projections.
Yet again, although profitable to the call another day this week, we remain both suspicious and surprised. We make massive moves down, up, and never really make headway. Stock traders are not making money "guessing" this, only option traders that are playing the overbought and oversold conditions.
For traders learning our moves with 3X bear and bull funds, that we'll be discussing more, a good comment from a subscriber:
"I've been reading about BGZ and double and triple leveraged ETF's...some of it is quite confusing BUT I did find this blog that spoke in "layman's terms" and I understand the severity of the risk...
Below is a quick excerpt that makes sense to me...
As posted on my blog July 11, 2009, after reading a lot of blog posts and comments, tweets on twitter, Facebook comments, and emails, I decided it was time to figure out if there was any real decay behind the leveraged ETFs, both long and short. I wanted to revisit this issue of the double and triple leveraged ETFs, and why investors should stay away from them, and to clear up some confusion. With the popularity of ETFs came these funds which use 200% and 300% leverage. Yes in any steady trend they can grow like weeds, but in a correction they will give back much of their gains. This is simple, and basic math.
First of all, these are extremely risky, and investors shouldn't hold on to any leveraged ETF(s) for the "long run", they are almost sure to lose money. These instruments are ideal for traders not investors!
Second of all, let's identify what a leveraged ETF does. A double leveraged ETF uses 200% (triple uses 300%) leverage to capture a specific basket, sector, or index move. Let's take the very popular SDS, which is a 2X inverse tracking the S&P 500; for every 1% move up in the S&P 500 index, SDS will move down by 2%, and for every 1% move down in the index, SDS will move up by 2%. Similarly is the SSO, which is the 2X tracking the S&P 500; for every 1% move up in the S&P 500 index, SSO will move up by 2%, and for every 1% move down in the index, SSO will move down by 2%.
If you're the person who says "It's a great way to hedge my portfolio, so what's the problem with them?", then clear all your other thoughts and read this post carefully - it may save you some money.
It's basic math that so many people overlook! Let's use the benchmark S&P 500 index for an example. Let's say we start off on the S&P 500 at 1000 and a double and triple leveraged ETF both at $100 per. If the benchmark index moves down 10% in 1 week to 900, and assuming both ETFs track perfectly it would put the double leveraged ETF at $80 per share, and the triple leveraged ETF at $70 per share.
Here is where some investors don't use those basic math skills they learned so many years ago, and assume that when the S&P gets back to 1000, the leveraged ETF will trade at the identical value as before, when the S&P was at 1000... THIS IS FALSE!
Basic math tells us this is impossible. In order for the benchmark to get back to 1000 it will need to go up by 11.11% which will correlate to a 22.22% and 33.33% move in the double and triple ETFs respectively.
As we can see, in order to get the double leveraged ETF back to 100 from 80, the benchmark will need to increase by 12.5% correlating to a 25% increase in the double ETF. The triple leveraged ETF will need an even greater move to get back to 100. In order for the triple ETF to get back to 100 from 70, the benchmark will need to increase by 14.283% correlating to a 42.85% increase in the triple ETF."
We have now had 5 profitable call trades in a row, and hold one of two hedge put positions.
And a note from subscriber JK:
> "Floyd,
> An interesting letter in the Australian Shooter Magazine this week, which quoted: "If you consider that there has been an average of 160,000 troops in the Iraq theater of operations during the past 22 months, and a total of 2112 deaths, that gives a firearm death rate of 60 per 100,000 soldiers."
>
> The firearm death rate in Washington , DC is 80.6 per 100,000 for the same period. That means you are about 25 per cent more likely to be shot and killed in the US capital, which has some of the strictest gun control laws in the US, than you are in Iraq.
>
> Conclusion: The US should pull out of Washington.
>
> Just a thought...
>
> Johnny
By noon the market had moved to our recalculated r1 and s1 three times. Classic flat lining. By 2.30 p.m. calls were profitable. Remember,we do not often trade at what we think are market tops, but some traders were risk oriented enough to buy in at 2.90 to 3.00 on the August 460 Call, and sell to 3.67 And by 3.30 the market had topped at 8747.
Fed minutes showed officials are preparing for an unusual recovery in which the economy improves, but unemployment worsens.
U.S. consumer prices jumped last month, led by energy and autos, thought compared annually they fell by the fastest rate since 1950.
In a euphoria driven market we continue to see the summation indexes operating off sell signals, slow stastics shows overbought, and chartists that believe in the head and shoulders pattern are watching now to see if a rally can be created, or if the pattern is being violated. This may lessen the downside, and we're revising our Dow projections.
Yet again, although profitable to the call another day this week, we remain both suspicious and surprised. We make massive moves down, up, and never really make headway. Stock traders are not making money "guessing" this, only option traders that are playing the overbought and oversold conditions.
For traders learning our moves with 3X bear and bull funds, that we'll be discussing more, a good comment from a subscriber:
"I've been reading about BGZ and double and triple leveraged ETF's...some of it is quite confusing BUT I did find this blog that spoke in "layman's terms" and I understand the severity of the risk...
Below is a quick excerpt that makes sense to me...
As posted on my blog July 11, 2009, after reading a lot of blog posts and comments, tweets on twitter, Facebook comments, and emails, I decided it was time to figure out if there was any real decay behind the leveraged ETFs, both long and short. I wanted to revisit this issue of the double and triple leveraged ETFs, and why investors should stay away from them, and to clear up some confusion. With the popularity of ETFs came these funds which use 200% and 300% leverage. Yes in any steady trend they can grow like weeds, but in a correction they will give back much of their gains. This is simple, and basic math.
First of all, these are extremely risky, and investors shouldn't hold on to any leveraged ETF(s) for the "long run", they are almost sure to lose money. These instruments are ideal for traders not investors!
Second of all, let's identify what a leveraged ETF does. A double leveraged ETF uses 200% (triple uses 300%) leverage to capture a specific basket, sector, or index move. Let's take the very popular SDS, which is a 2X inverse tracking the S&P 500; for every 1% move up in the S&P 500 index, SDS will move down by 2%, and for every 1% move down in the index, SDS will move up by 2%. Similarly is the SSO, which is the 2X tracking the S&P 500; for every 1% move up in the S&P 500 index, SSO will move up by 2%, and for every 1% move down in the index, SSO will move down by 2%.
If you're the person who says "It's a great way to hedge my portfolio, so what's the problem with them?", then clear all your other thoughts and read this post carefully - it may save you some money.
It's basic math that so many people overlook! Let's use the benchmark S&P 500 index for an example. Let's say we start off on the S&P 500 at 1000 and a double and triple leveraged ETF both at $100 per. If the benchmark index moves down 10% in 1 week to 900, and assuming both ETFs track perfectly it would put the double leveraged ETF at $80 per share, and the triple leveraged ETF at $70 per share.
Here is where some investors don't use those basic math skills they learned so many years ago, and assume that when the S&P gets back to 1000, the leveraged ETF will trade at the identical value as before, when the S&P was at 1000... THIS IS FALSE!
Basic math tells us this is impossible. In order for the benchmark to get back to 1000 it will need to go up by 11.11% which will correlate to a 22.22% and 33.33% move in the double and triple ETFs respectively.
As we can see, in order to get the double leveraged ETF back to 100 from 80, the benchmark will need to increase by 12.5% correlating to a 25% increase in the double ETF. The triple leveraged ETF will need an even greater move to get back to 100. In order for the triple ETF to get back to 100 from 70, the benchmark will need to increase by 14.283% correlating to a 42.85% increase in the triple ETF."
We have now had 5 profitable call trades in a row, and hold one of two hedge put positions.
And a note from subscriber JK:
> "Floyd,
> An interesting letter in the Australian Shooter Magazine this week, which quoted: "If you consider that there has been an average of 160,000 troops in the Iraq theater of operations during the past 22 months, and a total of 2112 deaths, that gives a firearm death rate of 60 per 100,000 soldiers."
>
> The firearm death rate in Washington , DC is 80.6 per 100,000 for the same period. That means you are about 25 per cent more likely to be shot and killed in the US capital, which has some of the strictest gun control laws in the US, than you are in Iraq.
>
> Conclusion: The US should pull out of Washington.
>
> Just a thought...
>
> Johnny
Thursday, July 16, 2009
Nothing Was New
"A strong up day can cause a low to come early and a high to come late; a strong down day can cause a high to come early and a low to come late."
Wow, did we make some money! We had all bought OXBHI OEX.X AUG 2009 445.0000 CALL for costs of 3.37 up. This position was sold to highs of of 8.50, and most selling in the 7.50 to 7.80 range for a 100% return.
All it took, traders, was following our alert. Watching futures, seeing that they were up, checking Bloomberg (all the URLS we give you) and seeing good news, and being ready. By recalculating the Dow during the day the trader was able to see a new R 1 and R2 and sell accordingly.
We have numerous "thanks" from subscribers today that study our work, and have learned our system, and we've had 4 profitable call trades this week.
We own a hedge position in either an OTM put that we'll hold, or a new issue recommendation to an inverse ETF called BGZ that is a 3X bear fund, and when traded as an option (traded as a call) can be hugely profitable.
By 4 p.m. the market had climbed over 256 points. We had recalculated Dow projections mid day and saw the new R2 at 8616, and climbing. Everyone knows that nothing was new yesterday, and that "events" triggered euphoria, and a massive run up right to the top of our Dow projections. I see a classic head and shoulders pattern, and a market set up for a fall, because yet again, it rose without reason, but only emotion. We have hit all of our Dow projections. The reversal to the projections will now take place, where the former support becomes resistance.
Wow, did we make some money! We had all bought OXBHI OEX.X AUG 2009 445.0000 CALL for costs of 3.37 up. This position was sold to highs of of 8.50, and most selling in the 7.50 to 7.80 range for a 100% return.
All it took, traders, was following our alert. Watching futures, seeing that they were up, checking Bloomberg (all the URLS we give you) and seeing good news, and being ready. By recalculating the Dow during the day the trader was able to see a new R 1 and R2 and sell accordingly.
We have numerous "thanks" from subscribers today that study our work, and have learned our system, and we've had 4 profitable call trades this week.
We own a hedge position in either an OTM put that we'll hold, or a new issue recommendation to an inverse ETF called BGZ that is a 3X bear fund, and when traded as an option (traded as a call) can be hugely profitable.
By 4 p.m. the market had climbed over 256 points. We had recalculated Dow projections mid day and saw the new R2 at 8616, and climbing. Everyone knows that nothing was new yesterday, and that "events" triggered euphoria, and a massive run up right to the top of our Dow projections. I see a classic head and shoulders pattern, and a market set up for a fall, because yet again, it rose without reason, but only emotion. We have hit all of our Dow projections. The reversal to the projections will now take place, where the former support becomes resistance.
Wednesday, July 15, 2009
An Upside Run
After three successful call trades in a day we made the moves to enter the market at the strong resistance line 8376 area that held the market yesterday, and then sat back on our hands.
Slimey Goldman Sachs made record profits. Oil begin to rise, even while gas demand lowers. Retail sales reports, always misleading and silly, point to the "recession may be easing."
U.S Treasuries dropped. And by 3 p.m. just read the market moves, to the theoretical Dow: Highs of 8401, fleeting, and lows of 8245, also fleeting, and then a day of minor moves around the zero point on the Dow, showing no real bias.
OXBHI August 445 Call was bought as low as 3.37, and barely moved all day. This was true with our put position also, all up until the 3 p.m. hour when a bit of action took place.
I'll make this simple: The market is at a crossroads. Upside is absolutely going to occur, and to our market tops, but we think or "wish" to occur in a bit of slow moving periods, where silly euphoria does not reign. Hitting a resistance line in a market waiting for second quarter results, and living in the "news of Sarah, Michael, and by the way, a declining economy" has the market in hesitancy.
We are hedging with dual trades, and don't know even which way we are hedging. Watch carefully, as another downside run on reality could take place, or an upside run to "there must be a way to make money."
The market is "flat lining." This always means something "big" will happen, just a matter of when. :)
Slimey Goldman Sachs made record profits. Oil begin to rise, even while gas demand lowers. Retail sales reports, always misleading and silly, point to the "recession may be easing."
U.S Treasuries dropped. And by 3 p.m. just read the market moves, to the theoretical Dow: Highs of 8401, fleeting, and lows of 8245, also fleeting, and then a day of minor moves around the zero point on the Dow, showing no real bias.
OXBHI August 445 Call was bought as low as 3.37, and barely moved all day. This was true with our put position also, all up until the 3 p.m. hour when a bit of action took place.
I'll make this simple: The market is at a crossroads. Upside is absolutely going to occur, and to our market tops, but we think or "wish" to occur in a bit of slow moving periods, where silly euphoria does not reign. Hitting a resistance line in a market waiting for second quarter results, and living in the "news of Sarah, Michael, and by the way, a declining economy" has the market in hesitancy.
We are hedging with dual trades, and don't know even which way we are hedging. Watch carefully, as another downside run on reality could take place, or an upside run to "there must be a way to make money."
The market is "flat lining." This always means something "big" will happen, just a matter of when. :)
Tuesday, July 14, 2009
The Market Listened
The market listened to Floyd. It hit it's bottom and for no good reason :) began the climb up. All calls we held were profitable. THREE for THREE in one day! Here's some examples:
1, -OXBHD OEX.X AUG 2009 420.0000 CALL was bought as low as 9.60, and on average at 10.80, last week and hit highs of 14.10
2. -OXBHT OEX.X AUG 2009 400.0000 CALL was bought at 22.50, and sold to highs of 27.00
3. -OXBHI OEX.X AUG 2009 445.0000 CALL was our recommendation today, under $2.00, and traders only got in at 2.13 or better, selling to highs of 3.62 by midday.
We consider all three of these trades profitable. What a great start to the week.
And by 3.45 p.m. the profits had increased even more, when the Dow hit 8365 right at our 8376 top that is strong resistance.
Many new trial subscribers we know struggle to under our daily alert. Letters today from subscribers might help us understand. I've included comments from seasoned Level 2 and Level 3 traders, and new subscribers:
-"Floyd, I recalculated the Dow three times and held out the August 400 call for max profits. I saw the count, and watched futures, and knew what was on the economic agenda.
I even knew to watch the market at 11.30 a.m. and 1.30 p.m. around economic calendars, and I had set buys and sells. For your information, I've made $41,000 trading OEX options in the past three month and I would recommend your Level 3 service to anyone. I paper traded three months, and studied the manual. I wanted to be the perfect student. You're an incredible trader, Floyd, and you've taught me a lot." JW, Kansas City
Floyd, nice play on he Aug420call, in at 10.80, out at 13.10, and did a good 20% on the 400 Call. Right to your Dow projections, brother. I've also been day trading for .50 increments all of last Thursday and Friday.
-JWK, South Bend, Indiana
And some questions from subscribers:
I’m a trial member and I had a quick question: Can I day trade these option contracts... for example purchase 1 contract in the morning and sell that same contract in the afternoon? or does one have to allow the option price to settle for one day to realize the gain in price"
-Floyd- Yes, this is what day trading is. You can sell in minutes. The SEC mandates that traders that show consistent trades to the same options may be considered pattern day traders (we are) and will require a $25,000 balance in your trading account
From Trader MP, NJ: Good afternoon my friend...
Sold my calls at the 8250 area...R2 from the alert...looks like I may have jumped the gun with selling...but what can you do...gotta take the profits when I can correct?
When you write: At 8376 to 8400 is a strong resistance, and we'll watch volatility, earnings, and volume for what could be a reversal to 8050 area,
What exactly are you looking for before issuing puts? How much volume is HIGH and what number is LOW? What numbers do you look for? Do you ever watch $TICK? I read somewhere that $TICK is a good indicator for volume...And what about the VIX? What number indicates FEAR?
Floyd: Three things: 1. The mood of that day. If euphoria ran, or it was a hesitant rise. I watch only the Dow and the OEX, and the options I am trading.
Floyd: I posted a great article on trading the Tick and on Vix at www.bluechiptoptions.com
Lots of new blogs at
http://bluechipoptions.blogspot.com/
"The Monday before July expiry the Dow has been up five years in a row."
How important or significant are stats like this? I guess today makes it six years in a row huh?
Floyd: I use historical data often and find that the "psychology" fascinating. When I list this kind of thing, pay attention.
We are seeing a great deal of "carve outs" at larger companies, as they "divest"non core assets. These are big words. What it means is: "they are getting rid of the shit they should not have bought to begin with," and the financials may look better short term, but they are "cash flowing" out. When carve outs occur the market is affected, in both fear and greed, and as they slow it will affect the market.
Part of why so many economists and talking heads think the third quarter will breakout stocks again is because "carve outs" will be large in this quarter. Examples are Bristol Myers, in recent months, when it spun off Mead Johnson Nutrition. Mead had a nice 35% gain on its' IPO during the carve out, Bristol gained, and in the long run both could lose. The bad news for stocks is that markets often fall after carve outs, also known as false financial games to make slowing production look good.
Be watchful. A good market will move slowly and steadily up, on increasing volume. We are a market barely above last October's lows, after yet again a bubble rise. And Goldman Sachs has record profits.
And Sarah Palin is writing a book, and may be losing her hair from the stress.
Enjoy the show.
1, -OXBHD OEX.X AUG 2009 420.0000 CALL was bought as low as 9.60, and on average at 10.80, last week and hit highs of 14.10
2. -OXBHT OEX.X AUG 2009 400.0000 CALL was bought at 22.50, and sold to highs of 27.00
3. -OXBHI OEX.X AUG 2009 445.0000 CALL was our recommendation today, under $2.00, and traders only got in at 2.13 or better, selling to highs of 3.62 by midday.
We consider all three of these trades profitable. What a great start to the week.
And by 3.45 p.m. the profits had increased even more, when the Dow hit 8365 right at our 8376 top that is strong resistance.
Many new trial subscribers we know struggle to under our daily alert. Letters today from subscribers might help us understand. I've included comments from seasoned Level 2 and Level 3 traders, and new subscribers:
-"Floyd, I recalculated the Dow three times and held out the August 400 call for max profits. I saw the count, and watched futures, and knew what was on the economic agenda.
I even knew to watch the market at 11.30 a.m. and 1.30 p.m. around economic calendars, and I had set buys and sells. For your information, I've made $41,000 trading OEX options in the past three month and I would recommend your Level 3 service to anyone. I paper traded three months, and studied the manual. I wanted to be the perfect student. You're an incredible trader, Floyd, and you've taught me a lot." JW, Kansas City
Floyd, nice play on he Aug420call, in at 10.80, out at 13.10, and did a good 20% on the 400 Call. Right to your Dow projections, brother. I've also been day trading for .50 increments all of last Thursday and Friday.
-JWK, South Bend, Indiana
And some questions from subscribers:
I’m a trial member and I had a quick question: Can I day trade these option contracts... for example purchase 1 contract in the morning and sell that same contract in the afternoon? or does one have to allow the option price to settle for one day to realize the gain in price"
-Floyd- Yes, this is what day trading is. You can sell in minutes. The SEC mandates that traders that show consistent trades to the same options may be considered pattern day traders (we are) and will require a $25,000 balance in your trading account
From Trader MP, NJ: Good afternoon my friend...
Sold my calls at the 8250 area...R2 from the alert...looks like I may have jumped the gun with selling...but what can you do...gotta take the profits when I can correct?
When you write: At 8376 to 8400 is a strong resistance, and we'll watch volatility, earnings, and volume for what could be a reversal to 8050 area,
What exactly are you looking for before issuing puts? How much volume is HIGH and what number is LOW? What numbers do you look for? Do you ever watch $TICK? I read somewhere that $TICK is a good indicator for volume...And what about the VIX? What number indicates FEAR?
Floyd: Three things: 1. The mood of that day. If euphoria ran, or it was a hesitant rise. I watch only the Dow and the OEX, and the options I am trading.
Floyd: I posted a great article on trading the Tick and on Vix at www.bluechiptoptions.com
Lots of new blogs at
http://bluechipoptions.blogspot.com/
"The Monday before July expiry the Dow has been up five years in a row."
How important or significant are stats like this? I guess today makes it six years in a row huh?
Floyd: I use historical data often and find that the "psychology" fascinating. When I list this kind of thing, pay attention.
We are seeing a great deal of "carve outs" at larger companies, as they "divest"non core assets. These are big words. What it means is: "they are getting rid of the shit they should not have bought to begin with," and the financials may look better short term, but they are "cash flowing" out. When carve outs occur the market is affected, in both fear and greed, and as they slow it will affect the market.
Part of why so many economists and talking heads think the third quarter will breakout stocks again is because "carve outs" will be large in this quarter. Examples are Bristol Myers, in recent months, when it spun off Mead Johnson Nutrition. Mead had a nice 35% gain on its' IPO during the carve out, Bristol gained, and in the long run both could lose. The bad news for stocks is that markets often fall after carve outs, also known as false financial games to make slowing production look good.
Be watchful. A good market will move slowly and steadily up, on increasing volume. We are a market barely above last October's lows, after yet again a bubble rise. And Goldman Sachs has record profits.
And Sarah Palin is writing a book, and may be losing her hair from the stress.
Enjoy the show.
Monday, July 13, 2009
Stocks are NOT to be held Forever
The Monday before July expiry the Dow has been up five years in a row. We saw tight profits on the day trade put on Friday, and watched the market hit highs of 8224 and lows of 8053 on the theoretical Dow.
Bottom testing may not be complete, as earnings are still coming out, but a more moderate move to the upside on any event that can be construed positively. Market moves, if muted, could show the slow signs of economic recovery.
Much of the market is based on reaction to events, in a group emotion. For example, now after 5 months America is losing "faith" in the economic stimulus, a group emotion based on FEAR.
There will be a potential for downside to 7950 as a final bottom test, but a more likely market test at 8250 and then 8376. At 8376 to 8400 is a strong resistance, and we'll watch volatility, earnings, and volume for what could be a reversal to 8050 area.
Many subscribers ask why we discuss and use the Dow in our projections when we trade the OEX. Because we are day trading, and the Dow replicates the OEX almost perfectly we use the Dow because it's easy to keep up with in the day, and volume is discussed, unlike the OEX. We like to trade on high volume
"As of June 3rd, U.S. Stocks have underperformed long-term Treasury bonds for the past five, 10, 15, 20 and 25 years." We all have heard though "that there has never been a 30 year period since 1802 when stocks have underperformed bonds. This theory is unproved, and comes from Stocks for the Long Run, by economist Jeremy Siegel. As usual, this is an extrapolation of data that is "interpreted."
To Floyd thinking, stocks are not to be held forever, and are to be used as vehicles to "trade for profits," whether from index options, or actual stocks or stock options.
We suffered our fourth weekly decline in a row, the longest losing streak since the spring rally began in March, and lowest close since before April." WSJ
Please let me remind you of the unbridled optimism that has permeated our economy, and now the impatience that "the Obama plan is not working" (it's been five months), and that we are all enjoying Sarah Palin stake her position. This alone is the best comedy I've enjoyed in years. Personally, I vote for Shooter Cheney for President, and Maverick Sarah for VP in 2012. They will solve it all really fast :)
Bottom testing may not be complete, as earnings are still coming out, but a more moderate move to the upside on any event that can be construed positively. Market moves, if muted, could show the slow signs of economic recovery.
Much of the market is based on reaction to events, in a group emotion. For example, now after 5 months America is losing "faith" in the economic stimulus, a group emotion based on FEAR.
There will be a potential for downside to 7950 as a final bottom test, but a more likely market test at 8250 and then 8376. At 8376 to 8400 is a strong resistance, and we'll watch volatility, earnings, and volume for what could be a reversal to 8050 area.
Many subscribers ask why we discuss and use the Dow in our projections when we trade the OEX. Because we are day trading, and the Dow replicates the OEX almost perfectly we use the Dow because it's easy to keep up with in the day, and volume is discussed, unlike the OEX. We like to trade on high volume
"As of June 3rd, U.S. Stocks have underperformed long-term Treasury bonds for the past five, 10, 15, 20 and 25 years." We all have heard though "that there has never been a 30 year period since 1802 when stocks have underperformed bonds. This theory is unproved, and comes from Stocks for the Long Run, by economist Jeremy Siegel. As usual, this is an extrapolation of data that is "interpreted."
To Floyd thinking, stocks are not to be held forever, and are to be used as vehicles to "trade for profits," whether from index options, or actual stocks or stock options.
We suffered our fourth weekly decline in a row, the longest losing streak since the spring rally began in March, and lowest close since before April." WSJ
Please let me remind you of the unbridled optimism that has permeated our economy, and now the impatience that "the Obama plan is not working" (it's been five months), and that we are all enjoying Sarah Palin stake her position. This alone is the best comedy I've enjoyed in years. Personally, I vote for Shooter Cheney for President, and Maverick Sarah for VP in 2012. They will solve it all really fast :)
Thursday, July 9, 2009
Please Close Your Eyes
Two of the Founding Fathers were gay. South Korean scientists created beagles that glow. And 7 of 10 Republicans interviewed with vote for Maverick Sarah for President in 2012. It's always fun to gain perspective
Poll: 7 Out Of 10 Republicans Likely To Vote For Palin In 2012
And on the state of the economy:
http://us.mobile.reuters.com/m/FullArticle/p.rdt/CUSMKT/nusMktRpt_uUSN0733371020090707
And unbelievably, Karl Rove is still not in jail:
Rove Deposed In U.S. Attorney Probe
__________________
Please close your eyes and simply review the past month, the meteoric rise to the market, the bulls that saw easy recovery, and the optimists out spouting in all our medias. You are paying me to project correctly, and I'm proud to report in that my cynicism has won off, and we've now hit the Dow bottoms I've projected over the last 21 day period, after a prolonged run up, primarily led by the Plunge Protection Team (PPT).
All is not as it appears. A rock is not hard. Subscribers with us for years understand well these lessons from Floydian Therapy, from our Advanced Mentoring, and the mainstay of Floyd's philosophy of trading.
With this said, the market has now lost most of its gains, and the Dow hit lows of 8054 on the theoretical Dow by 2.32 p.m. EST. Study our Dow projections below carefully; we've updated what we see as the next steps.
Remember, those of you that have our Manual and study our videos that we are a variety of approaches to day trading, and it takes informed training to successfully trade in and out of the market.
We now will buy calls thinking market bottoms have or will soon be reached. It surely showed at market close as the market began a fast run up.
For traders following our buy on the Aug420C at Dow 8076 they bought at 10.30, and sold the option two hours later to highs of 11.80 to 12.30, in fast day trading. We continue to hold the signal.
Poll: 7 Out Of 10 Republicans Likely To Vote For Palin In 2012
And on the state of the economy:
http://us.mobile.reuters.com/m/FullArticle/p.rdt/CUSMKT/nusMktRpt_uUSN0733371020090707
And unbelievably, Karl Rove is still not in jail:
Rove Deposed In U.S. Attorney Probe
__________________
Please close your eyes and simply review the past month, the meteoric rise to the market, the bulls that saw easy recovery, and the optimists out spouting in all our medias. You are paying me to project correctly, and I'm proud to report in that my cynicism has won off, and we've now hit the Dow bottoms I've projected over the last 21 day period, after a prolonged run up, primarily led by the Plunge Protection Team (PPT).
All is not as it appears. A rock is not hard. Subscribers with us for years understand well these lessons from Floydian Therapy, from our Advanced Mentoring, and the mainstay of Floyd's philosophy of trading.
With this said, the market has now lost most of its gains, and the Dow hit lows of 8054 on the theoretical Dow by 2.32 p.m. EST. Study our Dow projections below carefully; we've updated what we see as the next steps.
Remember, those of you that have our Manual and study our videos that we are a variety of approaches to day trading, and it takes informed training to successfully trade in and out of the market.
We now will buy calls thinking market bottoms have or will soon be reached. It surely showed at market close as the market began a fast run up.
For traders following our buy on the Aug420C at Dow 8076 they bought at 10.30, and sold the option two hours later to highs of 11.80 to 12.30, in fast day trading. We continue to hold the signal.
Watching the Struggle
It is interesting to watch this struggle. The market needed a strong enough consolidation to justify the mystifying and meteoric rise we've seen over the past 6 months. When USA Today, Time, and all the major publications begin telling us "the bull market is roaring," we should all know it's not.
What we've seen this week is a struggle again around support lines, as the market interprets news or events (economic data) around its own psychology.
We have recently read that the Amish community was even taken by our "Hummer greed" and are suffering in our economy.
Biden's comments this weekend were sadly right. There is no way we can truly estimate the rot within the many walls within our economic and environmental blunders, our invasion of China for product, and the demise of our own auto industry.
At OEX we predicted a second and perhaps third stimulus package within 2009 and 2010 last fall, and we believe this is the right thing to do. Begin reviewing our website www.bluechipoptions.com for some other opinions, and trades.
This will cause pain, and the market is our barometer. Our Dow projections for this week are proving very accurate. It takes a watchful eye and tight trading, around re-calculated pivot and support and resistance lines to trade profitably.
Over 70% of our traders may trade for a living full time. Our goal is to attract subscribers who can learn to "read the emotions of the market" and short term trade.
As Floyd has been saying, all is not as it appears, and what is seen is seldom what is being shown.
With futures down most traders didn't take entry to a one day trade to the July call, and all open puts were sold profitably.
-OXBSB OEX.X JUL 2009 410.0000 PUT is a great example of being profitable on 7/5, and hitting highs of 6.20 on 7/6
As open calls had also been sold profitably the day before we're hitting on all cylinders this week. But, traders must have limit orders always in for both buy and sell. For any traders that did take entry to the call yesterday, it was a one day trade, sold by day end.
What we've seen this week is a struggle again around support lines, as the market interprets news or events (economic data) around its own psychology.
We have recently read that the Amish community was even taken by our "Hummer greed" and are suffering in our economy.
Biden's comments this weekend were sadly right. There is no way we can truly estimate the rot within the many walls within our economic and environmental blunders, our invasion of China for product, and the demise of our own auto industry.
At OEX we predicted a second and perhaps third stimulus package within 2009 and 2010 last fall, and we believe this is the right thing to do. Begin reviewing our website www.bluechipoptions.com for some other opinions, and trades.
This will cause pain, and the market is our barometer. Our Dow projections for this week are proving very accurate. It takes a watchful eye and tight trading, around re-calculated pivot and support and resistance lines to trade profitably.
Over 70% of our traders may trade for a living full time. Our goal is to attract subscribers who can learn to "read the emotions of the market" and short term trade.
As Floyd has been saying, all is not as it appears, and what is seen is seldom what is being shown.
With futures down most traders didn't take entry to a one day trade to the July call, and all open puts were sold profitably.
-OXBSB OEX.X JUL 2009 410.0000 PUT is a great example of being profitable on 7/5, and hitting highs of 6.20 on 7/6
As open calls had also been sold profitably the day before we're hitting on all cylinders this week. But, traders must have limit orders always in for both buy and sell. For any traders that did take entry to the call yesterday, it was a one day trade, sold by day end.
Tuesday, July 7, 2009
Front Month Options
Japanese scientists found higher levels of lithium in drinking water seemed to correlate with lower suicide rates.
"Bubbles" Alan Greenspan, the core culprit to our economic demise, recently announced that "hyperinflation" is a threat to the economy. From a Floydian contrarian and logical point of view this is proof we will not have hyperinflation. In fact, Floyd is more concerned about the third and fourth quarter 09 for all U.S. companies. The first quarter corporations were able to do huge write offs to their bubble induced mistakes and acquisitions, and the second quarter still has plenty of games that can be played in financials.
A small child can figure out that with unemployment at 9.5% and the true unemployment at over 20%, and a savings rate that has risen to 6.9%, that there is less money being spent.
This is deflation. Bubbles Greenspan is a free entreprise boy that trained under Ayn Rand. Want the detail of why "Bubbles" led many Presidents through the "good times" as he lowered interest rates, and promoted "creative mortgaging," and was not able to slow any bubble......simply pay Alan $100k for his speeches and he'll tell you his side. It's why he's talking hyperinflation now?
How can he talk about what he "did". :)
Study up. Here's how our economic crisis began, long ago.
http://www.nonfamous.com/wp/2008/10/23/alan-greenspan-is-an-idiot/
http://www.huffingtonpost.com/2008/10/24/greenspan-shrugged-how-di_n_137465.html
http://www.nytimes.com/2007/09/15/business/15atlas.html
http://www.commondreams.org/views/041800-106.htm
And as we know now, Clinton took advantage of the bubble economics to "look good" and "balance the budget." In came Emperor George and Shooter Cheney, and the neocons took over, influenced by Goldman Sachs, as they allowed oil to become a speculators game, stopped even watching Wall Street (their buddies getting rich, right up to Paulson's bail out to his friends before exit), and oh yeah, Iraq. Getting rid of the evil ones.
It's almost amazing it's not worse, isn't it?
Advanced Mentoring Student MP had a great deal of trouble learning "question false facts," Flodyian trading logic, and even more with "we only see what we see." MP wrote this weekend with an "ah ha." Please study:
"Often times, especially when I was just started as a trader, I was not able to "see" what was happening on a larger scale because I was so focused on the moment to moment activity or I was so convinced that the market was "going to" do something because it "had to" that I missed other opportunities to trade...
This three minute card trick video reminds me of two things that you constantly mention during trading...
1. All is not as it appears
2. We only see what we want to see...
Enjoy..."
http://www.youtube.com/watch?v=voAntzB7EwE
And another key question from subscriber LR:
"Hello Floyd,
A short question : it is not very risky to buy a PUT or a CALL that has expiration period in 12 days?
I mean, even if the market will move in the desired direction, in 4 days' time due to time decay an option will lose a lot from its initial value, am I right?
Or you suggest this because you are sure that the market will not be flat and will move strongly one way or another in a very short time ?
As far as I can remember, last year you didn't trade options from the current month, do I remember well?
I would also like to suggest to you to specify in your alerts why any of your previous recommendations shouldn't have been entered (even if the buy price was right, it was not recommended to enter a certain position etc).
thank you,
P.S. the last week had very good trades, I believe I'm starting to learn and the 90 days paper trading seems to me the most intelligent advise I should have taken long time ago."
At OEX we always use "front month" (meaning the same month) options typically until 8 to 10 days until expiry, at which time we begin looking at the next month issues. In recent months we've found low volume and high premiums on "next month" premiums during this period and have bought and held front month options successfully for an extended time period.
The following article might explain why:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAIJo685vdz4
And lastly, the market yesterday. Ahh, just ten days ago The New York Times, Time, and even the USA Today (complete with color comics) were showing us a true bull run market. We saw more immediate sell off yesterday to lows of 8166 Please note this in comparison to our overall Dow projections. It was also smart to recalculate the Dow yesterday by midday, noting that the "drop" had barely hit s1, and many call traders were rewarded by a best buy at 1.40 and sell to 2.20 as the market inched up after 1.30 p.m. By the end of the day it had reached 8347. Check those Dow projections again.
Puts were also available at a regular buy, as the market moved up, and this should answer a question that many new subscribers ask...."how long is a signal we give good for." The answer is: the day that we give the signal.
Entry at best buy may not take place at opening, and may take several hours to fill, or may never fill. We missed the initial run to the downside yesterday a.m., but were able to catch the upside for a day trade, and still buy a put.
The market remains at a crossroads. We are bearish and continue to see downside, around whipaw, to our lower Dow projections. However, there remains a 41% of bottoms and a return to an upside, hence why we're open (and already profitable) with two signals.
"Bubbles" Alan Greenspan, the core culprit to our economic demise, recently announced that "hyperinflation" is a threat to the economy. From a Floydian contrarian and logical point of view this is proof we will not have hyperinflation. In fact, Floyd is more concerned about the third and fourth quarter 09 for all U.S. companies. The first quarter corporations were able to do huge write offs to their bubble induced mistakes and acquisitions, and the second quarter still has plenty of games that can be played in financials.
A small child can figure out that with unemployment at 9.5% and the true unemployment at over 20%, and a savings rate that has risen to 6.9%, that there is less money being spent.
This is deflation. Bubbles Greenspan is a free entreprise boy that trained under Ayn Rand. Want the detail of why "Bubbles" led many Presidents through the "good times" as he lowered interest rates, and promoted "creative mortgaging," and was not able to slow any bubble......simply pay Alan $100k for his speeches and he'll tell you his side. It's why he's talking hyperinflation now?
How can he talk about what he "did". :)
Study up. Here's how our economic crisis began, long ago.
http://www.nonfamous.com/wp/2008/10/23/alan-greenspan-is-an-idiot/
http://www.huffingtonpost.com/2008/10/24/greenspan-shrugged-how-di_n_137465.html
http://www.nytimes.com/2007/09/15/business/15atlas.html
http://www.commondreams.org/views/041800-106.htm
And as we know now, Clinton took advantage of the bubble economics to "look good" and "balance the budget." In came Emperor George and Shooter Cheney, and the neocons took over, influenced by Goldman Sachs, as they allowed oil to become a speculators game, stopped even watching Wall Street (their buddies getting rich, right up to Paulson's bail out to his friends before exit), and oh yeah, Iraq. Getting rid of the evil ones.
It's almost amazing it's not worse, isn't it?
Advanced Mentoring Student MP had a great deal of trouble learning "question false facts," Flodyian trading logic, and even more with "we only see what we see." MP wrote this weekend with an "ah ha." Please study:
"Often times, especially when I was just started as a trader, I was not able to "see" what was happening on a larger scale because I was so focused on the moment to moment activity or I was so convinced that the market was "going to" do something because it "had to" that I missed other opportunities to trade...
This three minute card trick video reminds me of two things that you constantly mention during trading...
1. All is not as it appears
2. We only see what we want to see...
Enjoy..."
http://www.youtube.com/watch?v=voAntzB7EwE
And another key question from subscriber LR:
"Hello Floyd,
A short question : it is not very risky to buy a PUT or a CALL that has expiration period in 12 days?
I mean, even if the market will move in the desired direction, in 4 days' time due to time decay an option will lose a lot from its initial value, am I right?
Or you suggest this because you are sure that the market will not be flat and will move strongly one way or another in a very short time ?
As far as I can remember, last year you didn't trade options from the current month, do I remember well?
I would also like to suggest to you to specify in your alerts why any of your previous recommendations shouldn't have been entered (even if the buy price was right, it was not recommended to enter a certain position etc).
thank you,
P.S. the last week had very good trades, I believe I'm starting to learn and the 90 days paper trading seems to me the most intelligent advise I should have taken long time ago."
At OEX we always use "front month" (meaning the same month) options typically until 8 to 10 days until expiry, at which time we begin looking at the next month issues. In recent months we've found low volume and high premiums on "next month" premiums during this period and have bought and held front month options successfully for an extended time period.
The following article might explain why:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAIJo685vdz4
And lastly, the market yesterday. Ahh, just ten days ago The New York Times, Time, and even the USA Today (complete with color comics) were showing us a true bull run market. We saw more immediate sell off yesterday to lows of 8166 Please note this in comparison to our overall Dow projections. It was also smart to recalculate the Dow yesterday by midday, noting that the "drop" had barely hit s1, and many call traders were rewarded by a best buy at 1.40 and sell to 2.20 as the market inched up after 1.30 p.m. By the end of the day it had reached 8347. Check those Dow projections again.
Puts were also available at a regular buy, as the market moved up, and this should answer a question that many new subscribers ask...."how long is a signal we give good for." The answer is: the day that we give the signal.
Entry at best buy may not take place at opening, and may take several hours to fill, or may never fill. We missed the initial run to the downside yesterday a.m., but were able to catch the upside for a day trade, and still buy a put.
The market remains at a crossroads. We are bearish and continue to see downside, around whipaw, to our lower Dow projections. However, there remains a 41% of bottoms and a return to an upside, hence why we're open (and already profitable) with two signals.
Monday, July 6, 2009
The Patience of a Mule
Last Thursday we saw two weeks of Floyd on the soapbox that "all is not good" come true. Traders with the July415 and July420P both hit top profits, with the 420 hitting 8.20, for over a 50% return.
No traders would have taken entry to the newly recommended call on Thursday, after watching futures, and we enter the week profitable many trades in a row, with no stop losses. Many of our hedge (two way trades) have taken two buys and the patience of a mule, selling only profitably on last day of stop loss, but it is because we are in a whipsaw in low volume and a declining VIX that this is occurring.
Our Dow projections are simplified this week, as we see several steps developing to consolidation (good for the market) and potential upside profits.
Historically, there are huge market gyrations, both up and down, after the Fourth of July.
This is also historically beginning the worst four months for the NASDAQ.
The talking heads and finance geniuses have already filled your heads. Empty them. The bottom is not over. The renewal will begin. We need a healthy upside, not one based on pure GREED.
A bit of FEAR is quite good for the market right now.
Study: http://online.wsj.com/article/SB124645016745579363.html#mod
No traders would have taken entry to the newly recommended call on Thursday, after watching futures, and we enter the week profitable many trades in a row, with no stop losses. Many of our hedge (two way trades) have taken two buys and the patience of a mule, selling only profitably on last day of stop loss, but it is because we are in a whipsaw in low volume and a declining VIX that this is occurring.
Our Dow projections are simplified this week, as we see several steps developing to consolidation (good for the market) and potential upside profits.
Historically, there are huge market gyrations, both up and down, after the Fourth of July.
This is also historically beginning the worst four months for the NASDAQ.
The talking heads and finance geniuses have already filled your heads. Empty them. The bottom is not over. The renewal will begin. We need a healthy upside, not one based on pure GREED.
A bit of FEAR is quite good for the market right now.
Study: http://online.wsj.com/article/SB124645016745579363.html#mod
Thursday, July 2, 2009
An Important Lesson
The market is closed tomorrow for the 4th of July holiday. Trading will be very light today, as it was yesterday. The run up yesterday morning took back all of the prior day losses, and allowed no entry to the new call. Traders were able to take an easy first entry to the July 420P, as a new buy, as low as 3.00. This position will act as our new hedge, and we will hold through the holiday weekend if necessary. Any trade during the day today to the call should be sold by day end. Many day traders reported good profits on the new 420P, buying at 3.00 to 3.20 and selling to 4.20 by 3.45 p.m.
There is an important lesson. Traders that bought the put following resistance lines were able to sell profitably on a day that was UP and euphoric.
The Dow gained 838.08 for the quarter, and Blue Chips alone gained 11% as risk aversion became the mainstay. Institutional traders continue to push the market in buys, and this was the best quarter since 2003.
Okay, that's all true, but the market is at 8550, and the meteoric rise helped only a few. We saw the market hesitate again by early afternoon and give up half of its gains, again in the struggle from 8550 area to 8450.
It's simply a head and shoulders formation on low volume that will either burst past resistance lines and potentially run to 8750 or higher, OR a market finally willing to consolidate healthily. Floyd considers moves of over 220 points down in a day a sign of consolidation, if on high volume.
We recalculated the Dow midday and saw the market struggle at the new R2, 8574, before hesitancy began.
Today is a big day for reports. Employment Situation and Jobless Claims at 8.30 a.m, and Factory orders at 10 a.m. We believe it will depend upon the mood of the market as to how this "data" is interpreted.
Unemployment is a key issue in Floydian economics, and we believe the real picture is not being painted at all.
And real estate issues are NOT over: Study this: http://www.bloomberg.com/apps/news?pid=20601087&sid=aGDhz5w8ODrY
In our Blue Chip Option portfolio we own SRS, a double shorting inverse fund. We believe commercial real estate is next to fall.
Matt Tabbibi and the great Goldman Sachs expose made CNN Money today, it's good to see some true journalists hitting the newsblips.
And...from subscriber Cheryl...
"Floyd,
This is a good picture of employment / unemployment thru the years - play the animation
http://tipstrategies.com/archive/geography-of-jobs/
Cheryl"
Subscribers: Study this great link as it helps us get a feel for unemployment. Despite consumer sentiment, unemployment will live with us, as these people spend less, and we are now saving more.
This means the moving of money is slowing. It is key to capitalism.
Have a Great and Happy Fourth of July. Our next alert will be for Monday July 6th. Be well and do good.
There is an important lesson. Traders that bought the put following resistance lines were able to sell profitably on a day that was UP and euphoric.
The Dow gained 838.08 for the quarter, and Blue Chips alone gained 11% as risk aversion became the mainstay. Institutional traders continue to push the market in buys, and this was the best quarter since 2003.
Okay, that's all true, but the market is at 8550, and the meteoric rise helped only a few. We saw the market hesitate again by early afternoon and give up half of its gains, again in the struggle from 8550 area to 8450.
It's simply a head and shoulders formation on low volume that will either burst past resistance lines and potentially run to 8750 or higher, OR a market finally willing to consolidate healthily. Floyd considers moves of over 220 points down in a day a sign of consolidation, if on high volume.
We recalculated the Dow midday and saw the market struggle at the new R2, 8574, before hesitancy began.
Today is a big day for reports. Employment Situation and Jobless Claims at 8.30 a.m, and Factory orders at 10 a.m. We believe it will depend upon the mood of the market as to how this "data" is interpreted.
Unemployment is a key issue in Floydian economics, and we believe the real picture is not being painted at all.
And real estate issues are NOT over: Study this: http://www.bloomberg.com/apps/news?pid=20601087&sid=aGDhz5w8ODrY
In our Blue Chip Option portfolio we own SRS, a double shorting inverse fund. We believe commercial real estate is next to fall.
Matt Tabbibi and the great Goldman Sachs expose made CNN Money today, it's good to see some true journalists hitting the newsblips.
And...from subscriber Cheryl...
"Floyd,
This is a good picture of employment / unemployment thru the years - play the animation
http://tipstrategies.com/archive/geography-of-jobs/
Cheryl"
Subscribers: Study this great link as it helps us get a feel for unemployment. Despite consumer sentiment, unemployment will live with us, as these people spend less, and we are now saving more.
This means the moving of money is slowing. It is key to capitalism.
Have a Great and Happy Fourth of July. Our next alert will be for Monday July 6th. Be well and do good.
Wednesday, July 1, 2009
We Are On a Roll
Traders were able to buy the new recommendation to the July440P at 11.60, a full dollar below prior day close, and sell to highs of 16.70 by 2 p.m. This means the maximium profits available on this day trade were over 44%.
Many traders wrote with profitable trades also on the open July 415P. Depending on length of hold, and buy, traders broke even to making 24% average profits.
We are on a roll, and it's because we are suspicious. We saw the Plunge Protection Team come in again on the downside, not enough to truly consolidate, and close the market in another unclear bias.
To help new subscribers I thought you'd like two emails received today:
-"Floyd, whew, it's hard to do this. I am trying to keep track of everything, but my emotions are often in the way, and keep breaking the rules. I finally made a good profit today paper trading, and am starting to get the hang of it, but this ain't easy." - Washington, DC
-"Hey Floyd, another great profit day for me. I am only trading a few trades a week now, bigger contracts, and feel very much in control of what I do. I'm using the daily alert for stock trades, and for the OEX. This service is really paying off big time." Shreveport, LA
The first trading day in July the Dow is up 16 of the last 19 years, historically. After a happy six months for institutional funds and massive run ups, allow my cynicism to remind you all that we are not far from the original 7700 drop in the market that precipitated the downfall. For over six weeks now I've been bearish on the market, simply because of the massively overbought and plunge protection team run up. We've profited handsomely on these moves, and we don't care what the market does, but we do want to be ready.
From the following two charts we see a head and shoulders topping pattern developing, and using the S&P500 to chart some chartists can see a down move to 810 on the SPY.
Floyd is a student of Roubini and he says, "recent data from the U.S. and other advanced economies suggest that the recession may last through the end of the year. Worse, the recovery is likely to be anemic and sub-par. . . The recession is not going to be over today. It's going to last another 6 to 9 months."
But, with this soapbox on the downside, we'll continue to enjoy call and put profits, and let the market do what it wants. If we can get returns like we've been getting, who needs buy and hold :)?
_____________________________
Lastly, let us sadly remember Emperor George Bush and Shooter Cheney as we exit Iraq shamed, with nothing accomplished but deaths, and trillions in debt. War and death continued right up to our first "gentle exit." They killed us on our way out. What we can learn from the "period of George" as i call it , is not to be led by false facts, or innuendos of fear. As we built our bubble of greed the period of George led us in our fear of "the evil ones", only to find that perhaps we are them.
Many traders wrote with profitable trades also on the open July 415P. Depending on length of hold, and buy, traders broke even to making 24% average profits.
We are on a roll, and it's because we are suspicious. We saw the Plunge Protection Team come in again on the downside, not enough to truly consolidate, and close the market in another unclear bias.
To help new subscribers I thought you'd like two emails received today:
-"Floyd, whew, it's hard to do this. I am trying to keep track of everything, but my emotions are often in the way, and keep breaking the rules. I finally made a good profit today paper trading, and am starting to get the hang of it, but this ain't easy." - Washington, DC
-"Hey Floyd, another great profit day for me. I am only trading a few trades a week now, bigger contracts, and feel very much in control of what I do. I'm using the daily alert for stock trades, and for the OEX. This service is really paying off big time." Shreveport, LA
The first trading day in July the Dow is up 16 of the last 19 years, historically. After a happy six months for institutional funds and massive run ups, allow my cynicism to remind you all that we are not far from the original 7700 drop in the market that precipitated the downfall. For over six weeks now I've been bearish on the market, simply because of the massively overbought and plunge protection team run up. We've profited handsomely on these moves, and we don't care what the market does, but we do want to be ready.
From the following two charts we see a head and shoulders topping pattern developing, and using the S&P500 to chart some chartists can see a down move to 810 on the SPY.
Floyd is a student of Roubini and he says, "recent data from the U.S. and other advanced economies suggest that the recession may last through the end of the year. Worse, the recovery is likely to be anemic and sub-par. . . The recession is not going to be over today. It's going to last another 6 to 9 months."
But, with this soapbox on the downside, we'll continue to enjoy call and put profits, and let the market do what it wants. If we can get returns like we've been getting, who needs buy and hold :)?
_____________________________
Lastly, let us sadly remember Emperor George Bush and Shooter Cheney as we exit Iraq shamed, with nothing accomplished but deaths, and trillions in debt. War and death continued right up to our first "gentle exit." They killed us on our way out. What we can learn from the "period of George" as i call it , is not to be led by false facts, or innuendos of fear. As we built our bubble of greed the period of George led us in our fear of "the evil ones", only to find that perhaps we are them.
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