The first trading day in September the market was up 5 straight years 2003-2007, and off 4.2% alone in 2002.
* Some traders limit buying in sectors that are over 50% in an Point and figure Bullish Percent Chart. When a Bullish Percent is over 70% tops are being reached, that may be “steps to breakout”, but with higher risk of being overbought. Note again we have a bullish % over 80, a traditional sign of an overbought market.
Friday we saw enough downturn to make our puts profitable for many subscribers, and calls could have been bought on the downswing, again selling for nice profits same day. Thusly, we will open trading today with one open put, that has been profitable 3 days now, but not to the highs we think it can reach, and one new put. We continue to hold the call open also, despite it being profitable on Friday, for traders waiting for more maximum profits; note that calls may losing their edge.
The bull/bear argument is becoming tiring, as is the euphoria and constant last minute Plunge Protection Team coming in. The constant upswing has made many investors "nervous" that they have missed out on the "action," and increased the buying of now the individual trader, intent on not missing out on profits. We continue to see upside to 10,400 to 10,600 and a potential strong year end, BUT continue to believe we must have consolidation of merit to break this bubble in order for that to happen.
Some facts:
1. http://www.bloomberg.com/apps/news?pid=20601087&sid=aSdMMGzkt1do
2. http://www.bloomberg.com/apps/news?pid=20601087&sid=axhtJ0oKv7Xc
This second article speaks to risking U.S. Treasuries, as more question the viability of long term recovery.
Lastly, our call profits over the past three weeks have been simply extraordinary, and we've lost on 4 puts. Our loss ratio is actually higher than normal because of the capital to the second buys, but still averaging over 28% profits for this period. For those of you new to trading that are with us, and to our stockbrokers and long term subscribers, I'll share that the extended range we've experienced has been quite unusual, and now the study of many technicians, and thusly more and more difficult to option trade because the moves became almost "not believable".
Monday, August 31, 2009
Friday, August 28, 2009
Double Profits
Prior to the market opening, for only the second time in 8 weeks of run up, I watched futures fluctuate up/down, and just before opening actually at 0, no futures definition, to suddenly begin a run up of 21 points UP at 9.25 a.m.
And then...the market opened and moved to lows of 9419, allowing best buy on calls, and great profits noted below under our open signals. First we made money on our open put, with sales to highs of 5.40, while having the opportunity to best buy the call as low as 3.00, and to simply wait out the end of the day Plunge Protection Team run up that allowed it profits to 4.70.
Whew. Double profits.
This market is ready to hit it's top and consolidate. We'll keep both signals open today, and buy no new signals. It's possible to have two way trades again. If possible, and high risk, we ideally would like to own only a put for Monday's opening, but let's see how the market behaves today.
The market data on the table prior to opening was confusing, much conjecture, good news, and excitement that began on the GDP data. There is no doubt that this market, and the American people, want good news, and "want to believe" and this optimism has been part of the massive upswing we've experienced.
Traders recently have been writing with either huge successes in day trading calls, or frustrations that they missed the fast in/out of the move, and lost money on the hedges.
There is no doubt that the normal methodology that built OEX Options successfully, where one typically holds a trade 2 to 4 days, has been short term replaced with either massive swings within a day, or a market that gaps up at opening, or is massively gapped up (by whom or how one might wonder) near the end of the 3 p.m. hour.
Double trading as we have done takes a day traders mentality, and is ABNORMAL to the market. From recent days, and what we saw in Asia and Japan yesterday, I believe market tops, support/resistance, Dow projections....all of it....will soon, if nothing changes, be taken over by buyer fatigue.
August's next to last trading day the S & P has been up only ONCE in the last 12 years. We'll see if history repeats itself; it has not done so once this month so far.
We'll end the week with some stock projections we'll be sharing with www.bluechipoptions.com Preferred Subscribers, as a part of your learning experience for how we trade most everything we have in life.
Supply and demand. Cause and effect. That's all it is.
With a proper consolidation, 9250 or lower, I personally will feel there is rational to the market, and not manipulation. If this type of sell off takes place, I will feel less of the GREED that overtakes us right now, as the market hit new highs.
From there, I'm with Harry Dent, not Roubini, and I can see a short term move in this market to Fibonnaci tops of 10,400, to 10,700.
Last year at Blue Chip Options we began selling our stock portfolio, core and speculative, at Dow 14,100. Following our rules we sold 1/3 of our positions. At Dow 11,100 we sold another 1/3, all still profitable trades.
Then, we let it "run." Our remaining one third of core and speculative stocks fell to new lows, and we began buying again at 7400, and made more buys at 6500. We did not add any new stocks, but only increased our holdings in our existing positions. Preferred Blue Chip subscribers can see our portfolio live, but we're making very good money.
We then trade index options, OEX here, and DIA options over at Blue Chip, and we trade other options that we would normally invest in the stocks in.
Here's an example: I like McDonalds (MCD) and it's underperforming. I figured out how much money I would invest in the stock, and thusly with stop loss, how much I was willing to lose on the investment.
I used the stop loss money (what I would have been willing to lose) and am investing in a LEAP option on McD, allowing two buys. I'll hold it long term, and be hopeful to double my money or more, or lose it all, as I had been willing to lose it anyway.
These are some of the ways I use Floydian logic to control emotions in trading.
I never sell at the top. Always leave money on the table.
I always sell when I can make some money, especially in volatile times.
All of these lessons are exactly how to "think" to trade the OEX, or bananas, or anything you are distributing.
You might review my thinking on trading as the art of selling fruit: http://www.oexoptions.com/pages/fruit.html
So, we've sold no stocks yet. There could be new highs. Just a bit of sanity to the market would make me feel a great deal like a bull market was truly emerging. It simply all seems too soon to me.
And I'm confused by "real events," as the nation is at war with itself right now over false facts
And, now on to a few false facts:
1. Reported in Bloomberg, and this is accurate:
This report shows a drop in recent unemployment findings. Hip hip hooray!
2. Reported in Brietbarts, and equally factually: http://www.breitbart.com/article.php?id=CNG.4452bed82adf3124e5884678e236d7fb.361&show_article=1
This report estimates actual unemployment at 16%. Floyd projects it at over 20%
Personally, I am beginning to wonder if it's the market top of the year, with the euphoria building. Oh happy days:)
And then...the market opened and moved to lows of 9419, allowing best buy on calls, and great profits noted below under our open signals. First we made money on our open put, with sales to highs of 5.40, while having the opportunity to best buy the call as low as 3.00, and to simply wait out the end of the day Plunge Protection Team run up that allowed it profits to 4.70.
Whew. Double profits.
This market is ready to hit it's top and consolidate. We'll keep both signals open today, and buy no new signals. It's possible to have two way trades again. If possible, and high risk, we ideally would like to own only a put for Monday's opening, but let's see how the market behaves today.
The market data on the table prior to opening was confusing, much conjecture, good news, and excitement that began on the GDP data. There is no doubt that this market, and the American people, want good news, and "want to believe" and this optimism has been part of the massive upswing we've experienced.
Traders recently have been writing with either huge successes in day trading calls, or frustrations that they missed the fast in/out of the move, and lost money on the hedges.
There is no doubt that the normal methodology that built OEX Options successfully, where one typically holds a trade 2 to 4 days, has been short term replaced with either massive swings within a day, or a market that gaps up at opening, or is massively gapped up (by whom or how one might wonder) near the end of the 3 p.m. hour.
Double trading as we have done takes a day traders mentality, and is ABNORMAL to the market. From recent days, and what we saw in Asia and Japan yesterday, I believe market tops, support/resistance, Dow projections....all of it....will soon, if nothing changes, be taken over by buyer fatigue.
August's next to last trading day the S & P has been up only ONCE in the last 12 years. We'll see if history repeats itself; it has not done so once this month so far.
We'll end the week with some stock projections we'll be sharing with www.bluechipoptions.com Preferred Subscribers, as a part of your learning experience for how we trade most everything we have in life.
Supply and demand. Cause and effect. That's all it is.
With a proper consolidation, 9250 or lower, I personally will feel there is rational to the market, and not manipulation. If this type of sell off takes place, I will feel less of the GREED that overtakes us right now, as the market hit new highs.
From there, I'm with Harry Dent, not Roubini, and I can see a short term move in this market to Fibonnaci tops of 10,400, to 10,700.
Last year at Blue Chip Options we began selling our stock portfolio, core and speculative, at Dow 14,100. Following our rules we sold 1/3 of our positions. At Dow 11,100 we sold another 1/3, all still profitable trades.
Then, we let it "run." Our remaining one third of core and speculative stocks fell to new lows, and we began buying again at 7400, and made more buys at 6500. We did not add any new stocks, but only increased our holdings in our existing positions. Preferred Blue Chip subscribers can see our portfolio live, but we're making very good money.
We then trade index options, OEX here, and DIA options over at Blue Chip, and we trade other options that we would normally invest in the stocks in.
Here's an example: I like McDonalds (MCD) and it's underperforming. I figured out how much money I would invest in the stock, and thusly with stop loss, how much I was willing to lose on the investment.
I used the stop loss money (what I would have been willing to lose) and am investing in a LEAP option on McD, allowing two buys. I'll hold it long term, and be hopeful to double my money or more, or lose it all, as I had been willing to lose it anyway.
These are some of the ways I use Floydian logic to control emotions in trading.
I never sell at the top. Always leave money on the table.
I always sell when I can make some money, especially in volatile times.
All of these lessons are exactly how to "think" to trade the OEX, or bananas, or anything you are distributing.
You might review my thinking on trading as the art of selling fruit: http://www.oexoptions.com/pages/fruit.html
So, we've sold no stocks yet. There could be new highs. Just a bit of sanity to the market would make me feel a great deal like a bull market was truly emerging. It simply all seems too soon to me.
And I'm confused by "real events," as the nation is at war with itself right now over false facts
And, now on to a few false facts:
1. Reported in Bloomberg, and this is accurate:
This report shows a drop in recent unemployment findings. Hip hip hooray!
2. Reported in Brietbarts, and equally factually: http://www.breitbart.com/article.php?id=CNG.4452bed82adf3124e5884678e236d7fb.361&show_article=1
This report estimates actual unemployment at 16%. Floyd projects it at over 20%
Personally, I am beginning to wonder if it's the market top of the year, with the euphoria building. Oh happy days:)
Thursday, August 27, 2009
Sen Kennedy and Socialism
Quick 20% profits were available on the call in the morning downside,buying below prior day close, and out in 40 minutes or less. What we saw up until the 3 p.m. hour was classic flat lining, where we held above the pivot, but it was barely possible to even watch the market struggle, let alone trade. Flat lining always leads to a major move, and many believe 9700 and up are possible before September.
And many believe a move to 9150 over steps is just as likely. Covering economist Roubini (academic) he sees a potential second wave of recession equal to the first, and is not convinced of the rise, and counter it with Geitner (Goldman boy) that knows the moves, and Bernanke both saying we have made the step, and covered what could have been the financial ruins at the end of the year 08 and as we hit bottoms in early 2009.
As you browse our open and new signals, we're in a "holding pattern" that is always "saved" in some way by the end of a trading day by the PPT. We've seen just a bit less of this, but on lower volume.
In studying the "socialism" that I hear takes over our country I smile, as Sen Kennedy's passing reminds me of when he created the COBRA laws that allow terminated employees the right to health insurance, or unemployment which so many of our people are on, or LBJ, who so smartly never predicted the long term projected cost of Medicare over the long term because "who the hell really knows," and "if we told em they'd never do it, but this country needs Medicare".
Social security, medicare, Obamacare, economic stimulus, banks raising credit card rates so that soon no person that needs to borrow will ever borrow....there is no doubt this country is going through a major period of change.
This emotionally also affects the market. We as a people usually MUST find something that is going right. And the market always precedes the general economy.
Both of our trades are still open , and we'll watch for more chances to profit 20% a day, and try to limit our losses: what an option trader is.
And many believe a move to 9150 over steps is just as likely. Covering economist Roubini (academic) he sees a potential second wave of recession equal to the first, and is not convinced of the rise, and counter it with Geitner (Goldman boy) that knows the moves, and Bernanke both saying we have made the step, and covered what could have been the financial ruins at the end of the year 08 and as we hit bottoms in early 2009.
As you browse our open and new signals, we're in a "holding pattern" that is always "saved" in some way by the end of a trading day by the PPT. We've seen just a bit less of this, but on lower volume.
In studying the "socialism" that I hear takes over our country I smile, as Sen Kennedy's passing reminds me of when he created the COBRA laws that allow terminated employees the right to health insurance, or unemployment which so many of our people are on, or LBJ, who so smartly never predicted the long term projected cost of Medicare over the long term because "who the hell really knows," and "if we told em they'd never do it, but this country needs Medicare".
Social security, medicare, Obamacare, economic stimulus, banks raising credit card rates so that soon no person that needs to borrow will ever borrow....there is no doubt this country is going through a major period of change.
This emotionally also affects the market. We as a people usually MUST find something that is going right. And the market always precedes the general economy.
Both of our trades are still open , and we'll watch for more chances to profit 20% a day, and try to limit our losses: what an option trader is.
Wednesday, August 26, 2009
Making Use of our Dow Projections
Bernanke was nominated for reelection, and the projected national deficit is 9 trillion. America has their panties all wadded up on healthcare, homes are selling a bit better (check the facts, they are short sales and foreclosures) and the stock market, which always precedes the economy, simply can't stop going up. We did a recalculation at 10 am today because of the large gap up and sent it out by Twitter (sign up, this is a really useful tool). At that time r1 had become 9648.09 and the theoretical Dow reached 9660, very close again to our top resistance lines.
The U.S. consumer confidence and home sale forecasts came in good, but oil began to drop. Gold began a slow move down as the market hesitated. For our Blue Chip traders Gold (GLD) has been immensely profiable, but our work with SSRI and SLV, which are ETF's on silver, are up 26% for the year. (Sales pitch: www.bluechipoptions.com-check out our new site and daily blog. Much is free, and you'll see how we Twittter, and how much more you could be working with.
Traders already held OXBIP Sept 480 Call which hit highs of 10.40, allowing for 35 to 45% returns in one day.
Our open hedge put hit stop loss, but many traders reported day trading OXBUL Sept440 Put from 3.30 buys to highs of 4.50 during market dips mid day. Of interest , we had more day trader testimonials yesterday on trading puts for profits than calls, all traders making use of our Dow projections.
Another profitable day for call trading, with financials, retail, airline stocks all leading the rise, as the euphoria continues. We won't say a thing, just continue to lock in our daily profits on the calls.
A fact: There is a one in six chance that both members of a married U.S. couple are obese, and 1 in 13 chance if they are a couple, but unmarried.
The U.S. consumer confidence and home sale forecasts came in good, but oil began to drop. Gold began a slow move down as the market hesitated. For our Blue Chip traders Gold (GLD) has been immensely profiable, but our work with SSRI and SLV, which are ETF's on silver, are up 26% for the year. (Sales pitch: www.bluechipoptions.com-check out our new site and daily blog. Much is free, and you'll see how we Twittter, and how much more you could be working with.
Traders already held OXBIP Sept 480 Call which hit highs of 10.40, allowing for 35 to 45% returns in one day.
Our open hedge put hit stop loss, but many traders reported day trading OXBUL Sept440 Put from 3.30 buys to highs of 4.50 during market dips mid day. Of interest , we had more day trader testimonials yesterday on trading puts for profits than calls, all traders making use of our Dow projections.
Another profitable day for call trading, with financials, retail, airline stocks all leading the rise, as the euphoria continues. We won't say a thing, just continue to lock in our daily profits on the calls.
A fact: There is a one in six chance that both members of a married U.S. couple are obese, and 1 in 13 chance if they are a couple, but unmarried.
Tuesday, August 25, 2009
Choppiness is Beginning
This is a market wanting to be happy, and a kid with too much candy. The swings are lessening, but the market topped at 9628 by early afternoon. We re-calculated the Dow by 10 a.m. on the moves, and the OEX and Dow both moved to a new r2 by 11 a.m.
Choppiness is beginning to enter the market. Premiums remain higher for calls, and puts are still the weak string. Watch our Dow projections carefully this week. The bell curve bias remains massively skewed. Everyone is now predicting a bull run, or a bear crash, and it's actually getting boring.
There's reality in these articles:
http://www.wsj.com/article/SB125106232283552019.html
http://www.ft.com/cms/s/0/90227fdc-900d-11de-bc59-00144feabdc0.html
Do not believe false facts. We need this skill in the market, and just watching the deceptions going on now, we need to know how to recognize "games" as they are played.
Because it is almost necessary to day trade at this point we could see the market tighten on our OXBIP Sept 480 Call and took profits of only 15 to 20%. We'll continue to hold this trade, and not issue a new trade with two open positions.
Choppiness is beginning to enter the market. Premiums remain higher for calls, and puts are still the weak string. Watch our Dow projections carefully this week. The bell curve bias remains massively skewed. Everyone is now predicting a bull run, or a bear crash, and it's actually getting boring.
There's reality in these articles:
http://www.wsj.com/article/SB125106232283552019.html
http://www.ft.com/cms/s/0/90227fdc-900d-11de-bc59-00144feabdc0.html
Do not believe false facts. We need this skill in the market, and just watching the deceptions going on now, we need to know how to recognize "games" as they are played.
Because it is almost necessary to day trade at this point we could see the market tighten on our OXBIP Sept 480 Call and took profits of only 15 to 20%. We'll continue to hold this trade, and not issue a new trade with two open positions.
Monday, August 24, 2009
This Marks Our 25th Straight Call Profit
From Advanced mentoring student MR:
I guess there is a lesson learned along with this week - it ties in to "there is no black and white" We have rules we follow when trading. The market does not realize that we have rules. It is going to act in it's own way and won't always blaze a path that allows us to follow the rules. Sometimes it's going to be "messy" and "fuzzy" or downright dirty - but you have to pay to play. You're not going to make money if you're sitting on the sidelines waiting for the perfect "discount" buy price - especially if you intend to play the hedge - you have to play the trend to some extent just on the principle of the matter.
Friday we saw the market hit theoretical Dow tops of 9559. Our Dow projected tops were 9529.75, so we've hit each of our Dow upward projections, and last Monday hit the one downside move in consolidation.
With the slight sell off last Monday we saw a strong support line emerge at 9116, and 978 in the S&P 500. Friday the S &P exceeded its' two top resistance areas at 1014 and 1022. Our recalculated Dow projections for the day Friday showed 9609-9689 as the next potential market tops.
The option we have "fallen in love with" is -OXBIO OEX.X SEP 2009 475.0000 CALL, which we were able to buy as low as 8.10 in early trading, and sell to highs of 11.20 by day end. Many traders sold out at our projected sales top of 7.90 while others followed our recalculations and held out through the day for the maximum 38% gains that were possible.
This marks our 25th straight call profit, with three hedge put losses. We're far ahead.
Which leads me to the key question those of you that have not hit these 25 call profits have? Your question is: WHY did I over invest in the puts, WHY did I not play the calls, and WHY did I let my own opinion influence my trading?
The question is also your answer.
It is KEY that we do NOT believe ourselves, and what should be, but instead what is.
As an example, I am an experienced 31 year trader that actively believes the market is massively high risk and overbought, yet I've personally played 23 of these 25 calls for profits.
The market is obviously at an irrational top, from manipulation, high frequency trading, or pure investor euphoria-perhaps all.
It's also following Fibonnacci to the T, rising near it's second level (our predicted overall 2009 year top at 10,400 to 10,600) in massive velocity TOO fast moves.
Following Fibonnaci we'll now retrace 38% near our projected tops, just as soon as all of us believe the stock market is healthy again.
But regardless, and this is the key, TRADE the conditions. Be contrarian by nature, and suspicious of false facts but play both the trend, and the reversing of a trend.
I guess there is a lesson learned along with this week - it ties in to "there is no black and white" We have rules we follow when trading. The market does not realize that we have rules. It is going to act in it's own way and won't always blaze a path that allows us to follow the rules. Sometimes it's going to be "messy" and "fuzzy" or downright dirty - but you have to pay to play. You're not going to make money if you're sitting on the sidelines waiting for the perfect "discount" buy price - especially if you intend to play the hedge - you have to play the trend to some extent just on the principle of the matter.
Friday we saw the market hit theoretical Dow tops of 9559. Our Dow projected tops were 9529.75, so we've hit each of our Dow upward projections, and last Monday hit the one downside move in consolidation.
With the slight sell off last Monday we saw a strong support line emerge at 9116, and 978 in the S&P 500. Friday the S &P exceeded its' two top resistance areas at 1014 and 1022. Our recalculated Dow projections for the day Friday showed 9609-9689 as the next potential market tops.
The option we have "fallen in love with" is -OXBIO OEX.X SEP 2009 475.0000 CALL, which we were able to buy as low as 8.10 in early trading, and sell to highs of 11.20 by day end. Many traders sold out at our projected sales top of 7.90 while others followed our recalculations and held out through the day for the maximum 38% gains that were possible.
This marks our 25th straight call profit, with three hedge put losses. We're far ahead.
Which leads me to the key question those of you that have not hit these 25 call profits have? Your question is: WHY did I over invest in the puts, WHY did I not play the calls, and WHY did I let my own opinion influence my trading?
The question is also your answer.
It is KEY that we do NOT believe ourselves, and what should be, but instead what is.
As an example, I am an experienced 31 year trader that actively believes the market is massively high risk and overbought, yet I've personally played 23 of these 25 calls for profits.
The market is obviously at an irrational top, from manipulation, high frequency trading, or pure investor euphoria-perhaps all.
It's also following Fibonnacci to the T, rising near it's second level (our predicted overall 2009 year top at 10,400 to 10,600) in massive velocity TOO fast moves.
Following Fibonnaci we'll now retrace 38% near our projected tops, just as soon as all of us believe the stock market is healthy again.
But regardless, and this is the key, TRADE the conditions. Be contrarian by nature, and suspicious of false facts but play both the trend, and the reversing of a trend.
Friday, August 21, 2009
Why We Use Dow Calculations
The August expiry has been bullish, with the Dow up 5 in a row 2003-2007, and up 1.8% in 2007. Yesterday we listed as a new signal: "We often speak of falling in "love with an option" and show videos in our password protected area on how we day trade by just watching the option itself.
If the market is showing only slightly negative futures, or slight upside, consider this overbought and high risk trade:
-OXBIO OEX.X SEP 2009 475.0000 CALL". The option never was available (as of 2.15p.m.) at any price lower than 6.40, was extremely low volume, and had only hit highs of 6.80.
We recalculated the Dow at 10.30 a.m. and the numbers were so close it wasn't worth sending out. We recalculate again at 2.00 p.m. and R2 was 9378.27, right at our strong resistance line of 9376 where the market went yesterday.
A subscriber asked yesterday why I do Dow calculations, or rather, why we even offer OEX calculations. It's important to understand that the Dow correlates the OEX well, and is simply easier to track and find.
Either using the Dow or the OEX for re-calculations is fine, but note my overall projections for the market are always on the Dow.
Another subscriber asked why we use the bullish percent indicators for the OEX instead of just the OEX. We don't. We do PNF charts, in many varieties,on the OEX,and we use the Bullish percent indicators for a number of indices. For example ($BPNYA) shows the bullish percent for the NYSE.
If the market is showing only slightly negative futures, or slight upside, consider this overbought and high risk trade:
-OXBIO OEX.X SEP 2009 475.0000 CALL". The option never was available (as of 2.15p.m.) at any price lower than 6.40, was extremely low volume, and had only hit highs of 6.80.
We recalculated the Dow at 10.30 a.m. and the numbers were so close it wasn't worth sending out. We recalculate again at 2.00 p.m. and R2 was 9378.27, right at our strong resistance line of 9376 where the market went yesterday.
A subscriber asked yesterday why I do Dow calculations, or rather, why we even offer OEX calculations. It's important to understand that the Dow correlates the OEX well, and is simply easier to track and find.
Either using the Dow or the OEX for re-calculations is fine, but note my overall projections for the market are always on the Dow.
Another subscriber asked why we use the bullish percent indicators for the OEX instead of just the OEX. We don't. We do PNF charts, in many varieties,on the OEX,and we use the Bullish percent indicators for a number of indices. For example ($BPNYA) shows the bullish percent for the NYSE.
Thursday, August 20, 2009
Frankly, We're Hesitant
This was our typo in the Dow Projections, quite obvious: "8376-Repeated area of "market whipsaw" in the past. It should make you laugh.
Many subscribers wrote to rib me as the market moved right to 9376, the market whipsaw in the past, all before the 3.00 p.m. hour -OXBIO OEX.X SEP 2009 475.0000 CALL was available for day traders as low as 4.10, with sales to 6.25, and easy 1.25 per contract profits were possible.
Put traders increased their hedge position. The market resurgence has been profitable for us, but frankly, we're hesitant without more consolidation.
For traders truly studying how I trade Support and Resistance:
-10 a.m. did a recalculation of the Dow. The market hit both the new r1 9201.19, and s1 9124.22 and allowed call buys to be made.
-We recalculated and sent by twitter in the early afternoon where the new r1 was 9354.63, very close to our OEX calculated 9376. s1 at this point became 9184.06.
In a market that has such moves in a day...it's important to remember that less than 15 months ago we traders called moves on the Dow of over 100 points a "big bump day."
Because we have moves that counter a day the counts remain low. Counts are our "bell curve analysis" of overbought and oversold conditions. 10 is extremely overbought/oversold.
Bullish indicators remain at all time highs, just now slowing. This is abnormal as it reaches the Fib retracement numbers. We have hit a Fib top now.
Watching at 3 p.m. as the market attempted to go down was gradual.
Many subscribers wrote to rib me as the market moved right to 9376, the market whipsaw in the past, all before the 3.00 p.m. hour -OXBIO OEX.X SEP 2009 475.0000 CALL was available for day traders as low as 4.10, with sales to 6.25, and easy 1.25 per contract profits were possible.
Put traders increased their hedge position. The market resurgence has been profitable for us, but frankly, we're hesitant without more consolidation.
For traders truly studying how I trade Support and Resistance:
-10 a.m. did a recalculation of the Dow. The market hit both the new r1 9201.19, and s1 9124.22 and allowed call buys to be made.
-We recalculated and sent by twitter in the early afternoon where the new r1 was 9354.63, very close to our OEX calculated 9376. s1 at this point became 9184.06.
In a market that has such moves in a day...it's important to remember that less than 15 months ago we traders called moves on the Dow of over 100 points a "big bump day."
Because we have moves that counter a day the counts remain low. Counts are our "bell curve analysis" of overbought and oversold conditions. 10 is extremely overbought/oversold.
Bullish indicators remain at all time highs, just now slowing. This is abnormal as it reaches the Fib retracement numbers. We have hit a Fib top now.
Watching at 3 p.m. as the market attempted to go down was gradual.
Wednesday, August 19, 2009
This is Abnormal
This was our typo in the Dow Projections, quite obvious: "8376-Repeated area of "market whipsaw" in the past. It should make you laugh.
Many subscribers wrote to rib me as the market moved right to 9376, the market whipsaw in the past, all before the 3.00 p.m. hour -OXBIO OEX.X SEP 2009 475.0000 CALL was available for day traders as low as 4.10, with sales to 6.25, and easy 1.25 per contract profits were possible.
Put traders increased their hedge position. The market resurgence has been profitable for us, but frankly, we're hesitant without more consolidation.
For traders truly studying how I trade Support and Resistance:
-10 a.m. did a recalculation of the Dow. The market hit both the new r1 9201.19, and s1 9124.22 and allowed call buys to be made.
-We recalculated and sent by twitter in the early afternoon where the new r1 was 9354.63, very close to our OEX calculated 9376. s1 at this point became 9184.06.
In a market that has such moves in a day...it's important to remember that less than 15 months ago we traders called moves on the Dow of over 100 points a "big bump day."
Because we have moves that counter a day the counts remain low. Counts are our "bell curve analysis" of overbought and oversold conditions. 10 is extremely overbought/oversold.
Bullish indicators remain at all time highs, just now slowing. This is abnormal as it reaches the Fib retracement numbers. We have hit a Fib top now.
Watching at 3 p.m. as the market attempted to go down was gradual.
Many subscribers wrote to rib me as the market moved right to 9376, the market whipsaw in the past, all before the 3.00 p.m. hour -OXBIO OEX.X SEP 2009 475.0000 CALL was available for day traders as low as 4.10, with sales to 6.25, and easy 1.25 per contract profits were possible.
Put traders increased their hedge position. The market resurgence has been profitable for us, but frankly, we're hesitant without more consolidation.
For traders truly studying how I trade Support and Resistance:
-10 a.m. did a recalculation of the Dow. The market hit both the new r1 9201.19, and s1 9124.22 and allowed call buys to be made.
-We recalculated and sent by twitter in the early afternoon where the new r1 was 9354.63, very close to our OEX calculated 9376. s1 at this point became 9184.06.
In a market that has such moves in a day...it's important to remember that less than 15 months ago we traders called moves on the Dow of over 100 points a "big bump day."
Because we have moves that counter a day the counts remain low. Counts are our "bell curve analysis" of overbought and oversold conditions. 10 is extremely overbought/oversold.
Bullish indicators remain at all time highs, just now slowing. This is abnormal as it reaches the Fib retracement numbers. We have hit a Fib top now.
Watching at 3 p.m. as the market attempted to go down was gradual.
Tuesday, August 18, 2009
Lagging Indicators
-OXBUL OEX.X SEP 2009 460.0000 PUT was our pick as the put for yesterday morning's 200 point run down. Futures were so negative, with other countries all down, and with a "just a bit of reality setting in " (more on this later) that traders entered only at market and made little too any money. We'll open trading today with another potential position to the put, with the following observation:
-The market is "due" for a more complete consolidation.
-The rise has been a bubble. Euphoria took over.
-High frequency trading has dramatically influenced the market.
-Every leader and talking head has been discussing the bull market, and the "reasons" for it.
-I received a subscription letter from a prestigious charting service notifying me that "charts" now showed breaking down at support lines and that more downside was possible.
(These letters are great to me to get the day the market has fallen :); my point being that the lagging indicator chart techniques usually only show us what has happened. We study Pnf Charts so we can see only the supply and demand, and the cause and effect.)
The market by 2.30 p.m. had penetrated s2 from the alert's calculation, but not come near s1 from our morning calculation showing the dramatic drop.
http://www.marketwatch.com/story/banks-miners-pace-losses-for-europe-2009-08-17
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZkutdK.J00U
Follow our Dow projections, updated, carefully. Our goal is now to gain entry into what we believe will be a short term declining market, before a return to upside.
And please remember back to the last three weeks on what you've heard about our economy, and the bull run.
-The market is "due" for a more complete consolidation.
-The rise has been a bubble. Euphoria took over.
-High frequency trading has dramatically influenced the market.
-Every leader and talking head has been discussing the bull market, and the "reasons" for it.
-I received a subscription letter from a prestigious charting service notifying me that "charts" now showed breaking down at support lines and that more downside was possible.
(These letters are great to me to get the day the market has fallen :); my point being that the lagging indicator chart techniques usually only show us what has happened. We study Pnf Charts so we can see only the supply and demand, and the cause and effect.)
The market by 2.30 p.m. had penetrated s2 from the alert's calculation, but not come near s1 from our morning calculation showing the dramatic drop.
http://www.marketwatch.com/story/banks-miners-pace-losses-for-europe-2009-08-17
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZkutdK.J00U
Follow our Dow projections, updated, carefully. Our goal is now to gain entry into what we believe will be a short term declining market, before a return to upside.
And please remember back to the last three weeks on what you've heard about our economy, and the bull run.
Monday, August 17, 2009
Do Not Over Invest In Any One Signal
Monday before August expiry the Dow has been up 10 of the last 13 years, and in 2007 broke records on a four year bull run.
It will be interesting to see if history repeats itself. The Dow hit tops of 9401 on Friday, again, and bottom tested at 9193, right within our former Dow projection lows.
Some believe this will be the market bottom, and more bullish fever will occur. Repeating our Dow recalculation on the large downturn in the a.m. the market moved to s1, and returned to r1 by the end of the day.
This allowed profits to the call for best buy trades. with lows of 6.40 during the day to highs of 8.40. This signal was easily tradeable by buys on the way to s1, and sells on the way to r1. 20 profitable calls in a row, one put at break even to slight profit (Friday) and 3 hedge put losses in recent weeks. We're performing extraordinarily well.
Our August 455Put hedge hit highs of 3.40, more than doubling from prior day close, allowing most traders exit at break even.
A few testimonials and thoughts:
DP, the trader that wrote for "putting all his eggs in one basket, and losing on the calls," writes Friday:
"Floyd,
Bought and Sold
a. OEX 460 AUG Puts from 2.6 to 3.5;
b. OEX 440 SEPT Puts from 4.6 to 5.2;
Doesn't look like day for tight profits, may go lower based on eco news and market breadth, but cannot afford to take risk in this market where high freq. traders come out from no where and pull the market up.
And then later in the day DP wrote:
I had that greed in me which said this morning - You closed position too soon deepam.
But looking at the close today - Yes I did exactly what I should in this market.
Have a good week-end.
40 minutes in the AM with good returns, could recover by end of year if I follow guidelines.
Regards,
DP"
*It’s not being smart or lucky. It’s following rules.-Floydian Rule 7890
And from trader Jon:
Floyd
Essentially, I did the same as this guy from the Wed alert:
"Trader DP recently lost big bucks on his holding only puts, and not playing the calls."
How was there a chance to get into the calls? The market never went down enough to get into the calls over the past two weeks at a decent price. Also, if you are supposed to get in at s2, it seems like it never went there. I'm lost."
Jon"
Here's my response to Jon, and to help all of us understand how fast trades take place in this type of market
1. I know it was possible to get in and be profitable on 17 of the 19 calls, Jon, as both my daughter and myself did this, from separate locations.
She got 18.
2. There were plenty of times to get in. On new calculations intraday (provided to you on Twitter) we would hit s1 to r1 repeatedly, which was also r2 on the recalculation.
3. Decent price is the key word. Under many circumstances,because of these market conditions, i suggested following specific advise in the alert to watch futures and to buy "at opening or market', meaning pay what the market opens with, and to then sell for up to X% profits. This was how we made profits many times.
We would also see the market move to s1 or s2 (depending on calculation) and often buy at "decent price" or UP to prior day close. Because of the volatility of the market (or lack of on some days) we watched futures carefully and bought either as "market", or when available near best buy.
Market Update: We list new Dow projections this week that are very short term, and add potential "deeper bottoms" if the market sobers and takes any of the real news hitting the market seriously, such as the biggest bank failure of the year taking place Friday with Georgia's Colonial Bank Group going down. Two months ago this would have caused a 200 point drop in the market. Friday came close, along with softer CPI, but the mysterious end of the day boys came in to move the market right back up, allowing us the call profits.
One trader wrote me mid day "time to trade the call?", which we had already listed as a potential trade. My response was personal, that I would not be doing so, and it's important you all know as subscribers that I make these trades with you, and just like you, there are times I am just too nervous with the bias of the market to make the move. This is not my own bias as much as the concern on support and resistance and Dow projections that we keep exceeding tops, on low VIX. Something is up.
We'll issue dual trades again. Be cautious. Do not over invest in any one signal or bias on your beliefs, or to "lower your cost" Follow the rules. It's the sum of the parts.
It will be interesting to see if history repeats itself. The Dow hit tops of 9401 on Friday, again, and bottom tested at 9193, right within our former Dow projection lows.
Some believe this will be the market bottom, and more bullish fever will occur. Repeating our Dow recalculation on the large downturn in the a.m. the market moved to s1, and returned to r1 by the end of the day.
This allowed profits to the call for best buy trades. with lows of 6.40 during the day to highs of 8.40. This signal was easily tradeable by buys on the way to s1, and sells on the way to r1. 20 profitable calls in a row, one put at break even to slight profit (Friday) and 3 hedge put losses in recent weeks. We're performing extraordinarily well.
Our August 455Put hedge hit highs of 3.40, more than doubling from prior day close, allowing most traders exit at break even.
A few testimonials and thoughts:
DP, the trader that wrote for "putting all his eggs in one basket, and losing on the calls," writes Friday:
"Floyd,
Bought and Sold
a. OEX 460 AUG Puts from 2.6 to 3.5;
b. OEX 440 SEPT Puts from 4.6 to 5.2;
Doesn't look like day for tight profits, may go lower based on eco news and market breadth, but cannot afford to take risk in this market where high freq. traders come out from no where and pull the market up.
And then later in the day DP wrote:
I had that greed in me which said this morning - You closed position too soon deepam.
But looking at the close today - Yes I did exactly what I should in this market.
Have a good week-end.
40 minutes in the AM with good returns, could recover by end of year if I follow guidelines.
Regards,
DP"
*It’s not being smart or lucky. It’s following rules.-Floydian Rule 7890
And from trader Jon:
Floyd
Essentially, I did the same as this guy from the Wed alert:
"Trader DP recently lost big bucks on his holding only puts, and not playing the calls."
How was there a chance to get into the calls? The market never went down enough to get into the calls over the past two weeks at a decent price. Also, if you are supposed to get in at s2, it seems like it never went there. I'm lost."
Jon"
Here's my response to Jon, and to help all of us understand how fast trades take place in this type of market
1. I know it was possible to get in and be profitable on 17 of the 19 calls, Jon, as both my daughter and myself did this, from separate locations.
She got 18.
2. There were plenty of times to get in. On new calculations intraday (provided to you on Twitter) we would hit s1 to r1 repeatedly, which was also r2 on the recalculation.
3. Decent price is the key word. Under many circumstances,because of these market conditions, i suggested following specific advise in the alert to watch futures and to buy "at opening or market', meaning pay what the market opens with, and to then sell for up to X% profits. This was how we made profits many times.
We would also see the market move to s1 or s2 (depending on calculation) and often buy at "decent price" or UP to prior day close. Because of the volatility of the market (or lack of on some days) we watched futures carefully and bought either as "market", or when available near best buy.
Market Update: We list new Dow projections this week that are very short term, and add potential "deeper bottoms" if the market sobers and takes any of the real news hitting the market seriously, such as the biggest bank failure of the year taking place Friday with Georgia's Colonial Bank Group going down. Two months ago this would have caused a 200 point drop in the market. Friday came close, along with softer CPI, but the mysterious end of the day boys came in to move the market right back up, allowing us the call profits.
One trader wrote me mid day "time to trade the call?", which we had already listed as a potential trade. My response was personal, that I would not be doing so, and it's important you all know as subscribers that I make these trades with you, and just like you, there are times I am just too nervous with the bias of the market to make the move. This is not my own bias as much as the concern on support and resistance and Dow projections that we keep exceeding tops, on low VIX. Something is up.
We'll issue dual trades again. Be cautious. Do not over invest in any one signal or bias on your beliefs, or to "lower your cost" Follow the rules. It's the sum of the parts.
Saturday, August 15, 2009
Not Wanting to Miss Out
Mid-August is stronger in the beginning then the end, says Stock Almanac. As I watched the market yesterday I allowed myself to actually watch a few business TV channels, and read too much about the market, because I cannot fathom how our country is acting these days, from a record high stock market, to town hall meetings calling Obama a Nazi, and the insurance companies "negative campaigning" with brilliance, to Sarah Palin, or that Britney may be getting married again.....my mind hit overload. And the market opens tightly. I receive many emails from subscribers all day and as I filter through them a series of events, of thinking, of learning, simply permeated MR, Level 3 Subscriber. I think this volley of emails from MR to me will show you his focus on the market. By the way he is doing this all from a Blackberry while working a full time job, studying the market at home in the evening.
It gives me goosebumps.
First, my impressions of MR, as I have impressions of each of you that write me.
1. He writes me often. He tells me what he is learning.
2. He asks me questions regularly.
3. He learns from mistakes, and probably as only broken even for his hard work.
4. He gets is. This man will succeed as as trader. In his short time at Level 3 I've watched his progression in question/answer, and in about learning about himself.
So, we'll report the day by MR: These are his emails sequentially:
"The news is funny:
Talking head A - "We are only on a Fib retracement of March's oversold condition and could see a return to the downside as deep as March's lows"
Talking head B - "We are in a bull market and will only see a 7%-10% correction from here"
Or points within the same article-
Talking Head C - "We are definitely in a bull market, if you're long right now your in the right spot.... We definitely have a large risk of a deep second dip"
I guess truth be told - nobody really knows anything about the future and we can only place our bets carefully and follow the rules."
Later in the morning....
"Interesting read... Fuzzy numbers, etc.
Aug. 13 (Bloomberg) -- It’s amazing what a little sunshine can accomplish.
Check out the footnotes to Regions Financial Corp.’s latest quarterly report, and you’ll see a remarkable disclosure. There, in an easy-to-read chart, the company divulged that the loans on its books as of June 30 were worth $22.8 billion less than what its balance sheet said. The Birmingham, Alabama-based bank’s shareholder equity, by comparison, was just $18.7 billion.
So, if it weren’t for the inflated loan values, Regions’ equity would be less than zero. Meanwhile, the government continues to classify Regions as “well capitalized.”
While disclosures of this sort aren’t new, their frequency is. This summer’s round of interim financial reports marked the first time U.S. companies had to publish the fair market values of all their financial instruments on a quarterly basis. Before, such disclosures had been required only annually under the Financial Accounting Standards Board’s rules.
The timing of the revelations is uncanny. Last month, in a move that has the banking lobby fuming, the FASB said it would proceed with a plan to expand the use of fair-value accounting for financial instruments. In short, all financial assets and most financial liabilities would have to be recorded at market values on the balance sheet each quarter, although not all fluctuations in their values would count in net income. A formal proposal could be released by year’s end.
Recognizing Loan Losses
The biggest change would be to the treatment of loans. The FASB’s current rules let lenders carry most of the loans on their books at historical cost, by labeling them as held-to- maturity or held-for-investment. Generally, this means loan losses get recognized only when management deems them probable, which may be long after they are foreseeable. Using fair-value accounting would speed up the recognition of loan losses, resulting in lower earnings and reduced book values.
While Regions may be an extreme example of inflated loan values, it’s not unique. Bank of America Corp. said its loans as of June 30 were worth $64.4 billion less than its balance sheet said. The difference represented 58 percent of the company’s Tier 1 common equity, a measure of capital used by regulators that excludes preferred stock and many intangible assets, such as goodwill accumulated through acquisitions of other companies.
Wells Fargo & Co. said the fair value of its loans was $34.3 billion less than their book value as of June 30. The bank’s Tier 1 common equity, by comparison, was $47.1 billion.
Widening Gaps
The disparities in those banks’ loan values grew as the year progressed. Bank of America said the fair-value gap in its loans was $44.6 billion as of Dec. 31. Wells Fargo’s was just $14.2 billion at the end of 2008, less than half what it was six months later. At Regions, it had been $13.2 billion.
Other lenders with large divergences in their loan values included SunTrust Banks Inc. It showed a $13.6 billion gap as of June 30, which exceeded its $11.1 billion of Tier 1 common equity. KeyCorp said its loans were worth $8.6 billion less than their book value; its Tier 1 common was just $7.1 billion.
When a loan’s market value falls, it might be that the lender would charge higher borrowing costs for the same loan today. It also could be that outsiders perceive a greater chance of default than management is assuming. Perhaps the underlying collateral has collapsed in value, even if the borrower hasn’t missed a payment.
The trend in banks’ loan values is not uniform. Twelve of the 24 companies in the KBW Bank Index, including Citigroup Inc., said their loans’ fair values were within 1 percent of their carrying amounts, more or less. Citigroup said the fair value of its loans was $601.3 billion, just $1.3 billion less than their book value. The gap had been $18.2 billion at the end of 2008.
Covering Liabilities
History provides some lessons here. A common problem at savings-and-loans that failed during the 1980s was that they relied on short-term funding at market rates to finance their operations, which consisted mainly of issuing long-term, fixed- rate mortgages. When rates rose sharply, the thrifts fell in a trap where their assets weren’t generating sufficient returns to cover their liabilities.
The accounting rules also left open the opportunity for gains-trading, whereby companies post profits by selling their winners and keeping losers on the books at their old, inflated values. Had the thrifts been marking loans to market values on their balance sheets, their troubles would have been clearer to outsiders much sooner. (The FASB didn’t require annual fair- value footnote disclosures until 1993.)
Arbitrary Accounting
If nothing else, today’s fair-value gaps highlight the arbitrariness of book values and regulatory capital. Banks already have the option to carry loans at fair value under the accounting rules. For the vast majority of loans, most banks elect not to, on the grounds that they intend to keep them until maturity and hope the cash rolls in.
Consequently, the difference between being well capitalized and woefully under capitalized may come down to nothing more than some highly paid chief executive’s state of mind.
Fair-value estimates in the short-term can be a poor indicator of an asset’s eventual worth, especially when markets aren’t functioning smoothly. The problem with relying on management’s intentions is that they may be even less reliable.
At least now we’re getting some real numbers, even if you have to dig through the footnotes to get them."
And reporting in later:
"Made a quick 10% on the call today. Could have bought cheaper, but any profit is good profit.
I could work on letting profits run... But I like locking them in when I can. It makes for less suspense. I like quick trades."
And a bit later:
Just made 10% on the put as well. Not a bad day"
MR followed all the rules. He questions facts, sees the various expert opinions, and traded for tight profits. The way he is learning, using our videos and the Manual, and beginning to trade in other ways, and his attitude and resolve.
To do this requires expertise.
Yesterday we saw a hesitant market, with the usual drifts to either side of the pivot point, the ability to tightly day trade to 14% if astute, and watch. SPX 1014 is a strong resistance line. OEX 470 is.
The market WANTS to go up. The public is driven by "not wanting to miss out."
It gives me goosebumps.
First, my impressions of MR, as I have impressions of each of you that write me.
1. He writes me often. He tells me what he is learning.
2. He asks me questions regularly.
3. He learns from mistakes, and probably as only broken even for his hard work.
4. He gets is. This man will succeed as as trader. In his short time at Level 3 I've watched his progression in question/answer, and in about learning about himself.
So, we'll report the day by MR: These are his emails sequentially:
"The news is funny:
Talking head A - "We are only on a Fib retracement of March's oversold condition and could see a return to the downside as deep as March's lows"
Talking head B - "We are in a bull market and will only see a 7%-10% correction from here"
Or points within the same article-
Talking Head C - "We are definitely in a bull market, if you're long right now your in the right spot.... We definitely have a large risk of a deep second dip"
I guess truth be told - nobody really knows anything about the future and we can only place our bets carefully and follow the rules."
Later in the morning....
"Interesting read... Fuzzy numbers, etc.
Aug. 13 (Bloomberg) -- It’s amazing what a little sunshine can accomplish.
Check out the footnotes to Regions Financial Corp.’s latest quarterly report, and you’ll see a remarkable disclosure. There, in an easy-to-read chart, the company divulged that the loans on its books as of June 30 were worth $22.8 billion less than what its balance sheet said. The Birmingham, Alabama-based bank’s shareholder equity, by comparison, was just $18.7 billion.
So, if it weren’t for the inflated loan values, Regions’ equity would be less than zero. Meanwhile, the government continues to classify Regions as “well capitalized.”
While disclosures of this sort aren’t new, their frequency is. This summer’s round of interim financial reports marked the first time U.S. companies had to publish the fair market values of all their financial instruments on a quarterly basis. Before, such disclosures had been required only annually under the Financial Accounting Standards Board’s rules.
The timing of the revelations is uncanny. Last month, in a move that has the banking lobby fuming, the FASB said it would proceed with a plan to expand the use of fair-value accounting for financial instruments. In short, all financial assets and most financial liabilities would have to be recorded at market values on the balance sheet each quarter, although not all fluctuations in their values would count in net income. A formal proposal could be released by year’s end.
Recognizing Loan Losses
The biggest change would be to the treatment of loans. The FASB’s current rules let lenders carry most of the loans on their books at historical cost, by labeling them as held-to- maturity or held-for-investment. Generally, this means loan losses get recognized only when management deems them probable, which may be long after they are foreseeable. Using fair-value accounting would speed up the recognition of loan losses, resulting in lower earnings and reduced book values.
While Regions may be an extreme example of inflated loan values, it’s not unique. Bank of America Corp. said its loans as of June 30 were worth $64.4 billion less than its balance sheet said. The difference represented 58 percent of the company’s Tier 1 common equity, a measure of capital used by regulators that excludes preferred stock and many intangible assets, such as goodwill accumulated through acquisitions of other companies.
Wells Fargo & Co. said the fair value of its loans was $34.3 billion less than their book value as of June 30. The bank’s Tier 1 common equity, by comparison, was $47.1 billion.
Widening Gaps
The disparities in those banks’ loan values grew as the year progressed. Bank of America said the fair-value gap in its loans was $44.6 billion as of Dec. 31. Wells Fargo’s was just $14.2 billion at the end of 2008, less than half what it was six months later. At Regions, it had been $13.2 billion.
Other lenders with large divergences in their loan values included SunTrust Banks Inc. It showed a $13.6 billion gap as of June 30, which exceeded its $11.1 billion of Tier 1 common equity. KeyCorp said its loans were worth $8.6 billion less than their book value; its Tier 1 common was just $7.1 billion.
When a loan’s market value falls, it might be that the lender would charge higher borrowing costs for the same loan today. It also could be that outsiders perceive a greater chance of default than management is assuming. Perhaps the underlying collateral has collapsed in value, even if the borrower hasn’t missed a payment.
The trend in banks’ loan values is not uniform. Twelve of the 24 companies in the KBW Bank Index, including Citigroup Inc., said their loans’ fair values were within 1 percent of their carrying amounts, more or less. Citigroup said the fair value of its loans was $601.3 billion, just $1.3 billion less than their book value. The gap had been $18.2 billion at the end of 2008.
Covering Liabilities
History provides some lessons here. A common problem at savings-and-loans that failed during the 1980s was that they relied on short-term funding at market rates to finance their operations, which consisted mainly of issuing long-term, fixed- rate mortgages. When rates rose sharply, the thrifts fell in a trap where their assets weren’t generating sufficient returns to cover their liabilities.
The accounting rules also left open the opportunity for gains-trading, whereby companies post profits by selling their winners and keeping losers on the books at their old, inflated values. Had the thrifts been marking loans to market values on their balance sheets, their troubles would have been clearer to outsiders much sooner. (The FASB didn’t require annual fair- value footnote disclosures until 1993.)
Arbitrary Accounting
If nothing else, today’s fair-value gaps highlight the arbitrariness of book values and regulatory capital. Banks already have the option to carry loans at fair value under the accounting rules. For the vast majority of loans, most banks elect not to, on the grounds that they intend to keep them until maturity and hope the cash rolls in.
Consequently, the difference between being well capitalized and woefully under capitalized may come down to nothing more than some highly paid chief executive’s state of mind.
Fair-value estimates in the short-term can be a poor indicator of an asset’s eventual worth, especially when markets aren’t functioning smoothly. The problem with relying on management’s intentions is that they may be even less reliable.
At least now we’re getting some real numbers, even if you have to dig through the footnotes to get them."
And reporting in later:
"Made a quick 10% on the call today. Could have bought cheaper, but any profit is good profit.
I could work on letting profits run... But I like locking them in when I can. It makes for less suspense. I like quick trades."
And a bit later:
Just made 10% on the put as well. Not a bad day"
MR followed all the rules. He questions facts, sees the various expert opinions, and traded for tight profits. The way he is learning, using our videos and the Manual, and beginning to trade in other ways, and his attitude and resolve.
To do this requires expertise.
Yesterday we saw a hesitant market, with the usual drifts to either side of the pivot point, the ability to tightly day trade to 14% if astute, and watch. SPX 1014 is a strong resistance line. OEX 470 is.
The market WANTS to go up. The public is driven by "not wanting to miss out."
Thursday, August 13, 2009
Oh Happy Days
Let's lead off with some subscriber commentary/testimonial. Trader DP recently lost big bucks on his holding only puts, and not playing the calls. He's a seasoned trader that kept his hope with his opinion, not with "no matter what" watch the market breathe. Here's what he wrote me yesterday:
"Floyd,
What advantage of sitting on sideline, I didn't play anything this morning.
However, I learned one more lesson - Never get married to 'MOB - my own bias":-)
Flow with the stream and get ready to switch gears, which I do in my IT profession, but not in trading. Looks like these bulls wants to go to 1044 (S&P) before Aug Option Expiration, again just my thoughts...
Let see what afternoon bring us...
Thanks,
DP"
"Floyd, it's been an incredible run of calls for me, including yesterday, and I've lost now on three puts. I've followed the rules straight through, and not jumped for massive profits, just taken advantage of the market bias. Thanks for the teaching on emotions, and 'sum of parts'"-LVD, Georgia
"
Floyd,
My attention has been away from trading for several months These are my welcome home results..On closing 8/10 I purchased the 465 put for $8.10 and sold for $12.40 before noon central time 8/11 for a 53% return.I also brought the 465 call for $4.70. Sold 1/2 for $5.20.
Thanks for all your time and energy.
Kevin"
Next, a few facts to help us understand "oh happy days' of the FOMC: "A RECOVERY ONLY A STATISTICIAN CAN LOVE"
Traders enjoyed a great run up on the FOMC yesterday, Macy's earnings, and really nothing else. It's a market led by optimism, while more vigilante groups are gathering guns and our town hall meetings are a shamble of lies and "Rove" attempts at not recognizing facts.
The bottom line:
1. Traders were able to get into -OXBHM OEX.X AUG 2009 465.0000 CALL as low as 4.50 and sell to highs of 8.30 by 3 p.m. Entry at prior day close was easy, with the immediate market downturn. Calls were profitable for us once again.!!!
2. Traders that chose to "two way trade" were able to take entry to -OXBTK OEX.X AUG 2009 455.0000 PUT at an average two buy assumption at 2.75
3. The market repeatedly stopped at what Floyd calls a "breakline", a very strong resistance area that could easily run up another 100 points to our next Dow top. Note that there is also retracement often after the FOMC and a "negative rebound".
"Floyd,
What advantage of sitting on sideline, I didn't play anything this morning.
However, I learned one more lesson - Never get married to 'MOB - my own bias":-)
Flow with the stream and get ready to switch gears, which I do in my IT profession, but not in trading. Looks like these bulls wants to go to 1044 (S&P) before Aug Option Expiration, again just my thoughts...
Let see what afternoon bring us...
Thanks,
DP"
"Floyd, it's been an incredible run of calls for me, including yesterday, and I've lost now on three puts. I've followed the rules straight through, and not jumped for massive profits, just taken advantage of the market bias. Thanks for the teaching on emotions, and 'sum of parts'"-LVD, Georgia
"
Floyd,
My attention has been away from trading for several months These are my welcome home results..On closing 8/10 I purchased the 465 put for $8.10 and sold for $12.40 before noon central time 8/11 for a 53% return.I also brought the 465 call for $4.70. Sold 1/2 for $5.20.
Thanks for all your time and energy.
Kevin"
Next, a few facts to help us understand "oh happy days' of the FOMC: "A RECOVERY ONLY A STATISTICIAN CAN LOVE"
Traders enjoyed a great run up on the FOMC yesterday, Macy's earnings, and really nothing else. It's a market led by optimism, while more vigilante groups are gathering guns and our town hall meetings are a shamble of lies and "Rove" attempts at not recognizing facts.
The bottom line:
1. Traders were able to get into -OXBHM OEX.X AUG 2009 465.0000 CALL as low as 4.50 and sell to highs of 8.30 by 3 p.m. Entry at prior day close was easy, with the immediate market downturn. Calls were profitable for us once again.!!!
2. Traders that chose to "two way trade" were able to take entry to -OXBTK OEX.X AUG 2009 455.0000 PUT at an average two buy assumption at 2.75
3. The market repeatedly stopped at what Floyd calls a "breakline", a very strong resistance area that could easily run up another 100 points to our next Dow top. Note that there is also retracement often after the FOMC and a "negative rebound".
Wednesday, August 12, 2009
The Market Opened Right to our Support Line
The market yesterday opened right to our support line at 9176 before beginning hesitation. We re-calculated the Dow at 10.30 a.m., sent a Twit to all subscribers, and then watched the market struggle between s1 at 9228, just below 9250 which acts as support and resistance, and struggling to hit R1 at 9309.79. The detail to our projections are important now as it is harder to make money trading without watching tight profits on the low VIX we have. Subscribers fortunately bought the -OXBTN OEX.X AUG 2009 470.0000 PUT at 8.60 or less on Monday, with sales to highs of 13.10, simply by following s1. This is a one day profit of over 50%. :)
Some subscribers bought in at market opening and also reported up to 2.00 per contract profits. This brings our win ratio to 19:3 right now, and prudent traders are watching the market and our Dow projections carefully.
Prior to FOMC babbles at 2.15 p.m. there is typically a retracement, and around noon EST a lull where the market beings to drop, before rising around the FED, and whipsawing in the afternoon.
For long term traders with OEX we often see it as a dual trade profit day. With the market as it stands right now there is strong upsurge potential that could move the market to 9500 up on any good news, as VIX remains low and each afternoon, for whatever reason, the market is buoyed up.
Bollinger Bands, which are simply band views of VIX, are tightening, a clear sign something "big" is about to happen.
So, as we list two trades for FOMC madness day, note the extreme high risk to an overbought market that doesn' t stop, and a series of technical indicators that are all being shred, as they have not handled this length of a trading range.
Here's step #1 in the need for additional stimulus money:
http://online.wsj.com/article/SB124970470294516541.html
And here's the reason for the Fear and Greed, and the trade range market:
http://online.wsj.com/article/SB124990251697719147.html
Floydian Therapy: Many new subscribers have asked us about this service. For traders wanting to work on the emotions behind the decisions that lead their trading, and their lives, we offer a unique email service with a transpersonal psychology approach from our classical training. View a video on Floyd on this: http://www.oexoptions.com/FloydTherapy/TheBlankScreen.swf or at http://www.oexoptions.com/pages/FloydianTherapy.html
www.bluechipoptions.com has new information online each day, updated articles on the market, blogs by Floyd, and option recommendations. There is also a Preferred Blue Chip subscription service.
Visit us at www.bluechipoptions.com
Floyd's Blog: http://bluechipoptions.blogspot.com/
Floyd is on Twitter: http://twitter.com/Bluechipoptions
Some subscribers bought in at market opening and also reported up to 2.00 per contract profits. This brings our win ratio to 19:3 right now, and prudent traders are watching the market and our Dow projections carefully.
Prior to FOMC babbles at 2.15 p.m. there is typically a retracement, and around noon EST a lull where the market beings to drop, before rising around the FED, and whipsawing in the afternoon.
For long term traders with OEX we often see it as a dual trade profit day. With the market as it stands right now there is strong upsurge potential that could move the market to 9500 up on any good news, as VIX remains low and each afternoon, for whatever reason, the market is buoyed up.
Bollinger Bands, which are simply band views of VIX, are tightening, a clear sign something "big" is about to happen.
So, as we list two trades for FOMC madness day, note the extreme high risk to an overbought market that doesn' t stop, and a series of technical indicators that are all being shred, as they have not handled this length of a trading range.
Here's step #1 in the need for additional stimulus money:
http://online.wsj.com/article/SB124970470294516541.html
And here's the reason for the Fear and Greed, and the trade range market:
http://online.wsj.com/article/SB124990251697719147.html
Floydian Therapy: Many new subscribers have asked us about this service. For traders wanting to work on the emotions behind the decisions that lead their trading, and their lives, we offer a unique email service with a transpersonal psychology approach from our classical training. View a video on Floyd on this: http://www.oexoptions.com/FloydTherapy/TheBlankScreen.swf or at http://www.oexoptions.com/pages/FloydianTherapy.html
www.bluechipoptions.com has new information online each day, updated articles on the market, blogs by Floyd, and option recommendations. There is also a Preferred Blue Chip subscription service.
Visit us at www.bluechipoptions.com
Floyd's Blog: http://bluechipoptions.blogspot.com/
Floyd is on Twitter: http://twitter.com/Bluechipoptions
Tuesday, August 11, 2009
Experts Are Far Apart
We saw a beginning of downturn for most of the day on Monday, with some upside returning to the market after 3 p.m., and with the Dow struggling around the pivot point all day.
We'll have to watch what bias is created, but should be entertained by the talking heads:
Health care in America, a great blog: http://mobile.salon.com/opinion/walsh/politics/2009/08/08/palin_death_panels/index.html
About a month ago I shared an excellent piece of journalism by Matt Taibbi on the sins of Goldman Sachs and how they have engineered much of the lopsided economics of the past twenty years.
And this article adds to the thinking: Questions Linger Over Paulson's Calls To Goldman During Crisis
And an update from Bloomberg yesterday morning, appropriate to this week:
> Wall Street has spiked nearly 50% in less than five months -- and that's both good and bad.
>
> The advance has been driven by factors including relief that the financial system is not about to implode, signs that the economy is recovering, and most recently, a spate of positive earnings surprises. On Friday, the July jobs report showed the labor market is starting to show signs of bottoming.
>
> The advance has left the major stock gauges at more than 9 month highs, but it's also left stocks vulnerable to a bigger pullback as some investors consider bailing out after such a big run.
>
> "We've gone from pricing in a depression, a recession, and now a recovery, in only five months," said Jeff Kleintop, chief market strategist at LPL Financial.
>
> He said that investors are feeling more enthusiastic, but some of the enthusiasm is going to be capped by the fact that the market has already gone a long way toward accounting for those recovery hopes.
>
> In addition, the recent spike in commodity prices has reintroduced the topic of inflation, something the Federal Reserve may address at its policy-meeting this week.
>
> Other than a brief pullback in late June-early July on jitters ahead of the quarterly results, the market has basically been on the rise since bottoming on March 9. After closing at more than 12-year lows, the S&P 500 has now risen just shy of 50% as of Thursday's close.
>
> Fed meeting: The central bank holds its two-day policy meeting this week, with a decision on interest rates and a statement due for release Wednesday at around 2:15 p.m. ET.
>
> The central bank is widely expected to keep the fed funds rate, a key overnight bank lending rate, at historic lows near zero. But as always, the bank's statement has the power to move markets.
>
> Fed chief Ben Bernanke has said that the bank will keep taking steps to assure a bottom in markets and the economy, but will stay mindful of inflation, said Wan-Chong Kung, senior fixed-income portfolio manager at FAF Advisors. The statement Wednesday is likely to echo that theme.
>
> "I think they'll continue to assure investors that the Fed won't fall asleep at the switch on inflation, but also won't take away what's been helping to support the recovery," she said.
>
> Quarterly results: Dow component Wal-Mart Stores leads the list of retailers reporting quarterly results this week, as the profit reporting period winds down.
>
> "This week is heavy with retailers and with the consumer in focus for the markets, it will be important," said John Butters, senior research analyst at Thomson Reuters.
>
> He said Wal-Mart's earnings in particular will be closely watched, as it is something of a proxy for the consumer.
>
> Currently, 73% of companies have reported better-than-expected results versus the long-term average of 61% of companies. Should that number hold up, the second quarter would tie with the first of 2004 for the highest percentage of positive earnings surprises.
>
> But better-than-expected results doesn't mean corporate profits are recovering just yet. With 85% of the S&P having reported results, profits are currently on track to have fallen 28.3% from a year ago, according to earnings tracker Thomson Reuters.
>
> That stretches the number of consecutive quarters of profit declines to 8, the worst in Thomson's 15 years of tracking, said John Butters, senior research analyst at Thomson Reuters.
>
> Treasury auctions: The U.S. government is auctioning $75 billion in debt as it works to fuel the budget deficit and economic recovery efforts. Treasury will offer $37 billion in 3-year notes Tuesday, $23 billion in 10-year notes on Wednesday and $15 billion in 30-year bonds on Friday.
>
> Investors will be watching to see what kind of demand the auctions get, particularly as the government was initially expected to announce a larger offering.
>
> On the docket
>
> Monday: There are no market-moving economic reports scheduled for Monday.
>
> Tuesday: The Labor Department releases the initial reading on second-quarter productivity in the morning. Business productivity is expected to have gained 4.9% after rising 1.6% in the previous month, according to a Briefing.com survey of economists. Unit labor costs are expected to have fallen 1.9% in the quarter after rising 3% in the first quarter.
>
> The June wholesale inventories report from the Commerce Department, due in the morning, is expected to show a decline for the 10th month in a row, dropping 0.9% after falling 0.8% in May.
>
> The Fed meeting gets underway in the morning, concluding Tuesday.
>
> After the close, Applied Materials releases results. The chipmaker is expected to report a loss of 8 cents per share, according to Thomson Reuters. Applied Materials earned 15 cents a year ago.
>
> Wednesday: Due in the morning, the June trade gap, from the Commerce Department, is expected to have widened to $28.5 billion from $26 billion in May, a 10-year low.
>
> The weekly oil inventories report from the Energy Information Administration is due in the morning and the July Treasury budget is due in the afternoon.
>
> The Fed decision is due at around 2:15 p.m. ET.
>
> Thursday: July retail sales, released by the Commerce Department, are expected to show modest growth. Sales likely rose 0.3% after rising 0.6% in June. Sales excluding volatile autos are expected to have written 0.1% after rising 0.3% in June.
>
> The weekly jobless claims report from the Labor Department is also due in the morning, along with readings on July import and export prices and June business inventories.
>
> Wal-Mart Stores releases its quarterly results before the start of trade. The Dow component is expected to have earned 86 cents per share, just as it did a year ago.
>
> Friday: The Consumer Price Index (CPI) for July is expected to come in unchanged, as inflationary pressure remains benign. CPI rose 0.7% in June. The so-called Core CPI, which strips out volatile food and energy prices, is expected to have risen 0.2% after rising 0.2% in June. The Labor Department releases the report.
>
> After the start of trading, the University of Michigan releases its initial reading on consumer sentiment in August. The index is expected to have risen to 68.5 from 66 in late July.
>
> Readings on July industrial production and capacity utilization are also due.
Now, just for giggles, read the other side of Bloomberg, and economist predictions around VIX and Sept: http://www.bloomberg.com/apps/news?pid=20601103&sid=aV6OGPHTAuH8
It's pretty clear from the summaries that the experts are far apart. We'll continue to only hold a put, profitable yesterday, and will issue an intraday alert if we see market conditions shift.
We'll have to watch what bias is created, but should be entertained by the talking heads:
Health care in America, a great blog: http://mobile.salon.com/opinion/walsh/politics/2009/08/08/palin_death_panels/index.html
About a month ago I shared an excellent piece of journalism by Matt Taibbi on the sins of Goldman Sachs and how they have engineered much of the lopsided economics of the past twenty years.
And this article adds to the thinking: Questions Linger Over Paulson's Calls To Goldman During Crisis
And an update from Bloomberg yesterday morning, appropriate to this week:
> Wall Street has spiked nearly 50% in less than five months -- and that's both good and bad.
>
> The advance has been driven by factors including relief that the financial system is not about to implode, signs that the economy is recovering, and most recently, a spate of positive earnings surprises. On Friday, the July jobs report showed the labor market is starting to show signs of bottoming.
>
> The advance has left the major stock gauges at more than 9 month highs, but it's also left stocks vulnerable to a bigger pullback as some investors consider bailing out after such a big run.
>
> "We've gone from pricing in a depression, a recession, and now a recovery, in only five months," said Jeff Kleintop, chief market strategist at LPL Financial.
>
> He said that investors are feeling more enthusiastic, but some of the enthusiasm is going to be capped by the fact that the market has already gone a long way toward accounting for those recovery hopes.
>
> In addition, the recent spike in commodity prices has reintroduced the topic of inflation, something the Federal Reserve may address at its policy-meeting this week.
>
> Other than a brief pullback in late June-early July on jitters ahead of the quarterly results, the market has basically been on the rise since bottoming on March 9. After closing at more than 12-year lows, the S&P 500 has now risen just shy of 50% as of Thursday's close.
>
> Fed meeting: The central bank holds its two-day policy meeting this week, with a decision on interest rates and a statement due for release Wednesday at around 2:15 p.m. ET.
>
> The central bank is widely expected to keep the fed funds rate, a key overnight bank lending rate, at historic lows near zero. But as always, the bank's statement has the power to move markets.
>
> Fed chief Ben Bernanke has said that the bank will keep taking steps to assure a bottom in markets and the economy, but will stay mindful of inflation, said Wan-Chong Kung, senior fixed-income portfolio manager at FAF Advisors. The statement Wednesday is likely to echo that theme.
>
> "I think they'll continue to assure investors that the Fed won't fall asleep at the switch on inflation, but also won't take away what's been helping to support the recovery," she said.
>
> Quarterly results: Dow component Wal-Mart Stores leads the list of retailers reporting quarterly results this week, as the profit reporting period winds down.
>
> "This week is heavy with retailers and with the consumer in focus for the markets, it will be important," said John Butters, senior research analyst at Thomson Reuters.
>
> He said Wal-Mart's earnings in particular will be closely watched, as it is something of a proxy for the consumer.
>
> Currently, 73% of companies have reported better-than-expected results versus the long-term average of 61% of companies. Should that number hold up, the second quarter would tie with the first of 2004 for the highest percentage of positive earnings surprises.
>
> But better-than-expected results doesn't mean corporate profits are recovering just yet. With 85% of the S&P having reported results, profits are currently on track to have fallen 28.3% from a year ago, according to earnings tracker Thomson Reuters.
>
> That stretches the number of consecutive quarters of profit declines to 8, the worst in Thomson's 15 years of tracking, said John Butters, senior research analyst at Thomson Reuters.
>
> Treasury auctions: The U.S. government is auctioning $75 billion in debt as it works to fuel the budget deficit and economic recovery efforts. Treasury will offer $37 billion in 3-year notes Tuesday, $23 billion in 10-year notes on Wednesday and $15 billion in 30-year bonds on Friday.
>
> Investors will be watching to see what kind of demand the auctions get, particularly as the government was initially expected to announce a larger offering.
>
> On the docket
>
> Monday: There are no market-moving economic reports scheduled for Monday.
>
> Tuesday: The Labor Department releases the initial reading on second-quarter productivity in the morning. Business productivity is expected to have gained 4.9% after rising 1.6% in the previous month, according to a Briefing.com survey of economists. Unit labor costs are expected to have fallen 1.9% in the quarter after rising 3% in the first quarter.
>
> The June wholesale inventories report from the Commerce Department, due in the morning, is expected to show a decline for the 10th month in a row, dropping 0.9% after falling 0.8% in May.
>
> The Fed meeting gets underway in the morning, concluding Tuesday.
>
> After the close, Applied Materials releases results. The chipmaker is expected to report a loss of 8 cents per share, according to Thomson Reuters. Applied Materials earned 15 cents a year ago.
>
> Wednesday: Due in the morning, the June trade gap, from the Commerce Department, is expected to have widened to $28.5 billion from $26 billion in May, a 10-year low.
>
> The weekly oil inventories report from the Energy Information Administration is due in the morning and the July Treasury budget is due in the afternoon.
>
> The Fed decision is due at around 2:15 p.m. ET.
>
> Thursday: July retail sales, released by the Commerce Department, are expected to show modest growth. Sales likely rose 0.3% after rising 0.6% in June. Sales excluding volatile autos are expected to have written 0.1% after rising 0.3% in June.
>
> The weekly jobless claims report from the Labor Department is also due in the morning, along with readings on July import and export prices and June business inventories.
>
> Wal-Mart Stores releases its quarterly results before the start of trade. The Dow component is expected to have earned 86 cents per share, just as it did a year ago.
>
> Friday: The Consumer Price Index (CPI) for July is expected to come in unchanged, as inflationary pressure remains benign. CPI rose 0.7% in June. The so-called Core CPI, which strips out volatile food and energy prices, is expected to have risen 0.2% after rising 0.2% in June. The Labor Department releases the report.
>
> After the start of trading, the University of Michigan releases its initial reading on consumer sentiment in August. The index is expected to have risen to 68.5 from 66 in late July.
>
> Readings on July industrial production and capacity utilization are also due.
Now, just for giggles, read the other side of Bloomberg, and economist predictions around VIX and Sept: http://www.bloomberg.com/apps/news?pid=20601103&sid=aV6OGPHTAuH8
It's pretty clear from the summaries that the experts are far apart. We'll continue to only hold a put, profitable yesterday, and will issue an intraday alert if we see market conditions shift.
Monday, August 10, 2009
The Controlling Price Factor
August is the worst Dow and S & P month since 1988. In the past farm harvesting made August the best Dow month 1901 through 1951 in a row. And now.....
On Friday the market hit all time highs for 09, showing a theoretical Dow top of 9478, and an opening low of 9218. The S&P500 has an important resistance 1014, which the market ran by, and held over, on a true bull run. This was sparked by unemployment showing at 9.4, not worse than before, truly the signs of either manipulation in the market or gross stupidity on the part of the American public.
> Arthur Delaney Why There's Really Nothing To Celebrate In The Unemployment Rate Drop
Something we teach at www.bluechipoptions.com is appropriate to the situation we are in:
*The Controlling Price Factor:
The distinction/difference between supply and demand has been the controlling price factor throughout the ages of mankind.
Only the medium of exchange has been different.
If we have something that no one wants, we call it worthless; if everybody wants it we call it priceless. This is the law of supply and demand.
Right now the stock market is priceless, and investors can't get enough. Our Dow projections below are NEW, and for the very short term, studying the longer range of trends.
Although the count is 4 to the call we consider the market too difficult to read to issue a safe trade. New Signal instructions are thusly a bit different than usual.
On Friday, just to keep the winning streak up, our trust OXBHM August call moved from lows of 7.70 to 11.50!!!! It was easily traded from opening at market price for a 2.00 per contract profit.
Our daily call profits have been extraordinary, for traders keeping their eyes on the market and playing the edges.
And the key Friday that we saw is that near day end, when the market always moves up, it did not. It actually declined. Tops?
For readers wanting some outstanding journalism on those truly evaluating and trying to build the Obama Plan, and fair evaluations of efforts, we highly recommend this outstanding piece of journalism: http://www.rollingstone.com/politics/story/29551986/barack_obama_so_far
Remember, you can follow us on Twitter. We are recalculating the Dow at least once during the day
http://twitter.com/Bluechipoptions
Floydian Therapy: Many new subscribers have asked us about this service. For traders wanting to work on the emotions behind the decisions that lead their trading, and their lives, we offer a unique email service with a trans-personal psychology approach from our classical training. View a video on Floyd on this: http://www.oexoptions.com/FloydTherapy/TheBlankScreen.swf or at http://www.oexoptions.com/pages/FloydianTherapy.html
www.bluechipoptions.com has new information online each day, updated articles on the market, blogs by Floyd, and option recommendations. There is also a Preferred Blue Chip subscription service.
Visit us at www.bluechipoptions.com
Floyd's Blog: http://bluechipoptions.blogspot.com/
Floyd is on Twitter: http://twitter.com/Bluechipoptions
On Friday the market hit all time highs for 09, showing a theoretical Dow top of 9478, and an opening low of 9218. The S&P500 has an important resistance 1014, which the market ran by, and held over, on a true bull run. This was sparked by unemployment showing at 9.4, not worse than before, truly the signs of either manipulation in the market or gross stupidity on the part of the American public.
> Arthur Delaney Why There's Really Nothing To Celebrate In The Unemployment Rate Drop
Something we teach at www.bluechipoptions.com is appropriate to the situation we are in:
*The Controlling Price Factor:
The distinction/difference between supply and demand has been the controlling price factor throughout the ages of mankind.
Only the medium of exchange has been different.
If we have something that no one wants, we call it worthless; if everybody wants it we call it priceless. This is the law of supply and demand.
Right now the stock market is priceless, and investors can't get enough. Our Dow projections below are NEW, and for the very short term, studying the longer range of trends.
Although the count is 4 to the call we consider the market too difficult to read to issue a safe trade. New Signal instructions are thusly a bit different than usual.
On Friday, just to keep the winning streak up, our trust OXBHM August call moved from lows of 7.70 to 11.50!!!! It was easily traded from opening at market price for a 2.00 per contract profit.
Our daily call profits have been extraordinary, for traders keeping their eyes on the market and playing the edges.
And the key Friday that we saw is that near day end, when the market always moves up, it did not. It actually declined. Tops?
For readers wanting some outstanding journalism on those truly evaluating and trying to build the Obama Plan, and fair evaluations of efforts, we highly recommend this outstanding piece of journalism: http://www.rollingstone.com/politics/story/29551986/barack_obama_so_far
Remember, you can follow us on Twitter. We are recalculating the Dow at least once during the day
http://twitter.com/Bluechipoptions
Floydian Therapy: Many new subscribers have asked us about this service. For traders wanting to work on the emotions behind the decisions that lead their trading, and their lives, we offer a unique email service with a trans-personal psychology approach from our classical training. View a video on Floyd on this: http://www.oexoptions.com/FloydTherapy/TheBlankScreen.swf or at http://www.oexoptions.com/pages/FloydianTherapy.html
www.bluechipoptions.com has new information online each day, updated articles on the market, blogs by Floyd, and option recommendations. There is also a Preferred Blue Chip subscription service.
Visit us at www.bluechipoptions.com
Floyd's Blog: http://bluechipoptions.blogspot.com/
Floyd is on Twitter: http://twitter.com/Bluechipoptions
Friday, August 7, 2009
I'm Stunned
By 10.30 a.m. the market had moved to S1 and R1, which I recalculated at that time. Day traders struggled to make any profits, until 3 p.m. This high frequency computer trading that has been taking over the market appears to manipulate both the open and the close. All I know, as I study up on this, is that this new high frequency computer trading is extending trade ranges.
Simply put, this means traditional lagging or technical indicators appear less accurate, concerning Wall Street more.
Months ago I predicted that from the lowest low (6400 average) it would be likely to have a Fibonnaci retracement of 68%, by year end hits highs at 10, 400 to 10,750 and a bull market under normal market conditions could achieve this, and I still see it.
But, I'm stunned by the trade range. We've been overbought far too long, without showing an accurate bell curve count, and healthy markets need healthy consolidations or distributions to allow the market to breathe.
We'll close out a put today, our third put loss, and our 18th call gain, and not recommend a new signal today unless risk traders want to try the same call signal we've used for 7 days, we're falling in love with it, as the PPT or someone daily moves the market up late in the day.
Our call recommendation was profitable only day trading for tight profits.
Simply put, this means traditional lagging or technical indicators appear less accurate, concerning Wall Street more.
Months ago I predicted that from the lowest low (6400 average) it would be likely to have a Fibonnaci retracement of 68%, by year end hits highs at 10, 400 to 10,750 and a bull market under normal market conditions could achieve this, and I still see it.
But, I'm stunned by the trade range. We've been overbought far too long, without showing an accurate bell curve count, and healthy markets need healthy consolidations or distributions to allow the market to breathe.
We'll close out a put today, our third put loss, and our 18th call gain, and not recommend a new signal today unless risk traders want to try the same call signal we've used for 7 days, we're falling in love with it, as the PPT or someone daily moves the market up late in the day.
Our call recommendation was profitable only day trading for tight profits.
Thursday, August 6, 2009
The Four Legged Stool
We each have our own handwriting. Think on this statement, as it defines the uniqueness in who we are, and in how we trade. As a trainer I teach FOCUS first, and thought you might gain as traders from the logic in which I approach a trade, or a business, or life.
The Four Legged Stool Concept
It has been proven that the human mind can only truly handle 5 large projects or situations at a time. Multi-tasking may “sound good,” but does not really happen. We end up doing some things without completing them, while doing other jobs without complete thinking. As speed takes over our universe, and we have “instantaneous communication it’s our natural tendency to begin to “overload,” or to hit our threshold.
To develop a business, a plan, or a project, it is always best to organize the effort. Most companies fail here because they have so many people multi tasking that it is impossible to sit down, prioritize, and then execute.
We fail at the execution.
To organize that effort I work at a consultant teaching organizations to focus on no more than 5 core objectives at one time. Each objective has a “seat,” or a core issue, shown in the 4- legged stool pictured below. This “seat” is defined as the WHAT (what must be done, what the issue is, what opportunity is being considered) and 4 legs hold up that seat, or the core issue.
One by one, we replace, bolster or rebuild four legs of a stool. We assign people to the tasks associated with the issues for each seat of the stool. You can build the four legs at one time, just not too fast on any one leg, and with projects that work in harmony. Or, some smart organizations may do the “research leg” before they even consider building a 4 legged stool.
Think of it as having rungs up a ladder, or multiple chair rails to build from the bottom of each stool leg to get to the top. You may not have to work on four legs at the same time, but the goal is strong support (the legs) for the concept (the seat)’.
This is a simple drawing that simply says:
-Identify (the seat)
-Define the issues and the how to’s (the legs)
It’s thinking this simply that can allow the complexity of a project to be completed perfectly. And, that project can be YOU, or YOU trading.
_________________________________________________________
The first nine trading days of August are historically weak. Interesting, they certainly have not been this time. Yesterday we saw the first real move to the downside, with the Theoretical Dow hitting 9166 before noon.
We re-calculated the Dow by 10.30 a.m. and had a pivot of 9250.61. For much of the day, despite downside, the market then struggled at or around the pivot point.
IMPORTANT NOTE: WE ARE UPDATING OUR DOW OR OEX PIT PIVOT Calculators in both Level 2 and Level 3 over the next few days, and you'll note we are providing an Intraday calculator that lists Open/High//Low/Close.
These are all calculations you take from the current day's Dow, and the close is defined as the "last" price of the Dow, or the OEX.
The market yesterday showed the fear and the greed in the market. Many chartists see a high at 9500 and up, and others sit back dumbfounded the trading range (The # of days a bias typically continues) has extended moving averages.
Watching the market at up until 2.30 p.m., before whatever "action" begins puts had gained considerable ground. We saw a market move from a pivot to r1 and s1.
Yesterday's instructions on the call again noted the high risk, but reports came in from many subscribers that traded again for profit. We said: -OXBHM OEX.X AUG 2009 465.0000 CALL
"I feel like a record. Watch futures, is up over 50 points, be ready to "pay to market" at open and try to sell by day end for 30% profits.
If futures are only moderately down, and you remain open to high risk, take a best buy trade on the signal at no higher than prior day close, 20% under best buy, and sell for 30% to 54%.
Calls increase in risk in second buys, and are "beyond bell curve analysis."
"Floyd, I still saw the hesitancy so waited for best buy on the call today and got it at 7.40 during the morning downturn, and sold when it hit R1 for 8.90. Wow, nice signal"-NBW, Kansas City
Yet again, at 3 pm. the market had upside swung to only a 24 point loss for the day.
So, here we are: we hold a put to the hedge, and are making money on calls daily, and some of us are seeing this as too high risk at this point, and are actually afraid to buy to the trend again.
That's what the market feels, coupled with this high frequency computer trading info I've been forwarding. The boys on Wall Street are up to something again, and I already know there are games, and even the conspiracist in me doesn't believe it's the government, but Wall Street back in action.
The Four Legged Stool Concept
It has been proven that the human mind can only truly handle 5 large projects or situations at a time. Multi-tasking may “sound good,” but does not really happen. We end up doing some things without completing them, while doing other jobs without complete thinking. As speed takes over our universe, and we have “instantaneous communication it’s our natural tendency to begin to “overload,” or to hit our threshold.
To develop a business, a plan, or a project, it is always best to organize the effort. Most companies fail here because they have so many people multi tasking that it is impossible to sit down, prioritize, and then execute.
We fail at the execution.
To organize that effort I work at a consultant teaching organizations to focus on no more than 5 core objectives at one time. Each objective has a “seat,” or a core issue, shown in the 4- legged stool pictured below. This “seat” is defined as the WHAT (what must be done, what the issue is, what opportunity is being considered) and 4 legs hold up that seat, or the core issue.
One by one, we replace, bolster or rebuild four legs of a stool. We assign people to the tasks associated with the issues for each seat of the stool. You can build the four legs at one time, just not too fast on any one leg, and with projects that work in harmony. Or, some smart organizations may do the “research leg” before they even consider building a 4 legged stool.
Think of it as having rungs up a ladder, or multiple chair rails to build from the bottom of each stool leg to get to the top. You may not have to work on four legs at the same time, but the goal is strong support (the legs) for the concept (the seat)’.
This is a simple drawing that simply says:
-Identify (the seat)
-Define the issues and the how to’s (the legs)
It’s thinking this simply that can allow the complexity of a project to be completed perfectly. And, that project can be YOU, or YOU trading.
_________________________________________________________
The first nine trading days of August are historically weak. Interesting, they certainly have not been this time. Yesterday we saw the first real move to the downside, with the Theoretical Dow hitting 9166 before noon.
We re-calculated the Dow by 10.30 a.m. and had a pivot of 9250.61. For much of the day, despite downside, the market then struggled at or around the pivot point.
IMPORTANT NOTE: WE ARE UPDATING OUR DOW OR OEX PIT PIVOT Calculators in both Level 2 and Level 3 over the next few days, and you'll note we are providing an Intraday calculator that lists Open/High//Low/Close.
These are all calculations you take from the current day's Dow, and the close is defined as the "last" price of the Dow, or the OEX.
The market yesterday showed the fear and the greed in the market. Many chartists see a high at 9500 and up, and others sit back dumbfounded the trading range (The # of days a bias typically continues) has extended moving averages.
Watching the market at up until 2.30 p.m., before whatever "action" begins puts had gained considerable ground. We saw a market move from a pivot to r1 and s1.
Yesterday's instructions on the call again noted the high risk, but reports came in from many subscribers that traded again for profit. We said: -OXBHM OEX.X AUG 2009 465.0000 CALL
"I feel like a record. Watch futures, is up over 50 points, be ready to "pay to market" at open and try to sell by day end for 30% profits.
If futures are only moderately down, and you remain open to high risk, take a best buy trade on the signal at no higher than prior day close, 20% under best buy, and sell for 30% to 54%.
Calls increase in risk in second buys, and are "beyond bell curve analysis."
"Floyd, I still saw the hesitancy so waited for best buy on the call today and got it at 7.40 during the morning downturn, and sold when it hit R1 for 8.90. Wow, nice signal"-NBW, Kansas City
Yet again, at 3 pm. the market had upside swung to only a 24 point loss for the day.
So, here we are: we hold a put to the hedge, and are making money on calls daily, and some of us are seeing this as too high risk at this point, and are actually afraid to buy to the trend again.
That's what the market feels, coupled with this high frequency computer trading info I've been forwarding. The boys on Wall Street are up to something again, and I already know there are games, and even the conspiracist in me doesn't believe it's the government, but Wall Street back in action.
Wednesday, August 5, 2009
The Woods Within
This worked like a top yesterday again. Our pre market instructions were "-OXBHM OEX.X AUG 2009 465.0000 CALL Watch futures. Pay "to market" only if futures up 50 points. Sell for 34 to 43% profits, trying for same day."
The position was available for day traders as low a buy as 7.90, with top sells of 9.60. Futures watchers saw a volatile and "hesitant" futures, whipsawing itself in advance of the market. This call was again a profitable one, and day traders reported two profits on tight .50 contracts.
The market showed us every sign of not knowing what to do. S&P500 has a strong resistance line at 1014 and our Dow projections remain as the highs we see the market potentially hitting. The resistance we saw throughout the day as the market hit our theoretical Dow top at 9361 several times before faltering.
Do calls have more of a range, and could it go on? With the euphoria we've seen and the new high frequency computer trading, it's possible, as the trading ranges are now so extended Floyd is doing new studies in his Point and Figure long term charting.
We'll continue to list a day trade call, and continue to warn of the risk. We count 15 straight call profits now, two put losses. Sum of all parts. We'll continue to hold our hedge put, and will watch for the trigger downturn that will surprise al.
* How to measure effective trading: The size of your winners vs. the size of your losers. It is okay to lose, if you are gaining more J
We'll lead off with an essay we soon plan for a blog at Blue Chip Options.com. Check out what we have there: http://www.bluechipoptions.com/
Two generations of lopsided capitalism. That's how I see it. We've spent 20 years, in various administrations, building an infrastructure of no controls, and the few richer. A study of who got rich over the past 20 years would be a study in what was "done."
We're paying for it, and I still don't believe we even know how deep the woods are that we are within.
The position was available for day traders as low a buy as 7.90, with top sells of 9.60. Futures watchers saw a volatile and "hesitant" futures, whipsawing itself in advance of the market. This call was again a profitable one, and day traders reported two profits on tight .50 contracts.
The market showed us every sign of not knowing what to do. S&P500 has a strong resistance line at 1014 and our Dow projections remain as the highs we see the market potentially hitting. The resistance we saw throughout the day as the market hit our theoretical Dow top at 9361 several times before faltering.
Do calls have more of a range, and could it go on? With the euphoria we've seen and the new high frequency computer trading, it's possible, as the trading ranges are now so extended Floyd is doing new studies in his Point and Figure long term charting.
We'll continue to list a day trade call, and continue to warn of the risk. We count 15 straight call profits now, two put losses. Sum of all parts. We'll continue to hold our hedge put, and will watch for the trigger downturn that will surprise al.
* How to measure effective trading: The size of your winners vs. the size of your losers. It is okay to lose, if you are gaining more J
We'll lead off with an essay we soon plan for a blog at Blue Chip Options.com. Check out what we have there: http://www.bluechipoptions.com/
Two generations of lopsided capitalism. That's how I see it. We've spent 20 years, in various administrations, building an infrastructure of no controls, and the few richer. A study of who got rich over the past 20 years would be a study in what was "done."
We're paying for it, and I still don't believe we even know how deep the woods are that we are within.
Tuesday, August 4, 2009
Bernie, Ebbers, and the Boys
The Dow passed norms, but the S&P500 hit the magic 1000 mark. Upturn continued. Read our new Dow projections, with notes on tops, and bottoms. Nothing in the market can be seen as bad, and all data is good. The economy is rebounding. This is what it seems with what we are seeing in the market.
Futures were up over 50 points so traders paid to market for -OXBHM OEX.X AUG 2009 465.0000 CALL. Most traders got in by 10 a.m. for 8.40 area, selling to highs of 10.00 by mid day.
It should be noticed that call premiums to not rise in proportion to profits, a sign of fear for call traders. But, before the magic 3 p.m. hour we had up to $1.60 per contract of profits on the call, and took a second buy to our hedge put.
Remember, do NOT overbalance a risk portfolio (trading options) to any one balance. Option trading successfully is managing the "sum of the parts" in buying and selling.
________________________________________________________
Nine lenders that got government aid paid at least 1 million to 5000 employees. These are banks that last year, under the first Paulson bribe, got 33 billion. The nine firms in the report had combined 2008 losses of nearly 100 billion.
Sadly this is a grey line. Surprise you? Of course, Congress, which initially approved this whole bail out, pre Obama, we know were all on this graft, as the banks got money that seemed to go nowhere, everything collapsed, and all of us were paying consultants to figure out what the actuaries had actually done for all the brokerages and companies betting derivatives.
Some of this stuff was actually legitimate banking, and most of it how the guys have the country club prison down there in N.C. Bernie, Ebbers, and the boys.
Goldman just rapes during the second quarter, and we're all amazed how much money is being made.
But some argue we have to pay these top people to either 1) Analyze and get us out of our lies (Blackwater), or 2) Create new ways for the banks to make money, or continue legitimate trading.
I'll leave it here today. Think of this:
1. The banks are making money.
2. Corporate profits appear to be up. Much are from continued write offs of bad investments, but much because of cost cutting.
The market has been marvelously up for so many days. Wall Street is coming back. The economy is improving. We hear this each day, and are able to interpret the data we receive to prove that this is true.
Just a fact to sober your euphoria: In 2007 the U.S. Government sold $450 billion in debt. THIS WEEK the government is selling 200 billion of new debt.
Jog on over to www.bluechipoptions.com and read our blog on "There is No Black and White"
Meanwhile, the market is being manipulated. And the stories being told on "cash for clunkers" and "raising taxes on the middle classs", sigh.......go over to our FREE blogs at http://www.bluechipoptions.com/
Here's the new game in town, that is causing this euphoric uproar, and may soon cause the downturn. High Frequency Computer Trading.
http://online.wsj.com/article/SB124908601669298293.html#mod=todays_us_money_and_investing
____________________________________________
And, next from Advanced Mentoring client MR, who is studying how to study. My comments in bold as we share this dialogue:
Per floyd's recommendation I started reading roubini this weekend. I read as many free articles as I could find on the RGE Moniter. Excellent reading. I like the perspective it gave. Excellent reading. This is a recommendation I give all subscribers. Want to get the true economic issues of our times, read Roubini and Krugman.
I have been thinking more about the silent witness at home, working around the house. Starting to give myself feedback rather than being so focused and ingrained in myself.
I think allot of times I live life like a kid with his face 2 inches from the TV screen. I can't see anything except for what's thrown in my face. I see how that can happen as a trader, as an employee, as a parent.
Taking that step back - giving myself some space helps to build an observatory gap between myself and I. I am beginning to grasp how this can allow clarity and reason an opportunity to flourish.
The silent witness is a simple way of putting "you as an observer" on your shoulder. Let "you" watch your behavior. It can be eye opening.
I remember Floyd referring to himself as our provacateur - the instigator of thought. I'm taking some of the seeds of insite and digging into them. Asking my own questions. What is a double dip recession? Why is the market climbing so high? Why are revenues up, but sales down - and how long can that sort of performance provide a springboard for stock market recovery? When will the lack of sales start to show in earnings, creating the flurry of selling that seems impending at some point.
Maybe I am starting to see the puzzle. Rather than just scattered pieces.
There are many articles on our website, and the new FREE blogs at www.bluechipoptions.com are techniques and thoughts I don't have time to share in this alert. Again, check our blogs.
______________
What's next for the market? Whipsaw. Our top projections would cause many shorts to go broke, and many traders "buying" the downside to buckle, and it would be THEN in the market's breathing that a consolidation began, when the brokerages are ready.
Floydian Therapy: Many new subscribers have asked us about this service. For traders wanting to work on the emotions behind the decisions that lead their trading, and their lives, we offer a unique email service with a transpersonal psychology approach from our classical training. View a video on Floyd on this: http://www.oexoptions.com/FloydTherapy/TheBlankScreen.swf or at http://www.oexoptions.com/pages/FloydianTherapy.html
www.bluechipoptions.com has new information online each day, updated articles on the market, blogs by Floyd, and option recommendations. There is also a Preferred Blue Chip subscription service.
Visit us at www.bluechipoptions.com
Floyd's Blog: http://bluechipoptions.blogspot.com/
Floyd is on Twitter: http://twitter.com/Bluechipoptions
Futures were up over 50 points so traders paid to market for -OXBHM OEX.X AUG 2009 465.0000 CALL. Most traders got in by 10 a.m. for 8.40 area, selling to highs of 10.00 by mid day.
It should be noticed that call premiums to not rise in proportion to profits, a sign of fear for call traders. But, before the magic 3 p.m. hour we had up to $1.60 per contract of profits on the call, and took a second buy to our hedge put.
Remember, do NOT overbalance a risk portfolio (trading options) to any one balance. Option trading successfully is managing the "sum of the parts" in buying and selling.
________________________________________________________
Nine lenders that got government aid paid at least 1 million to 5000 employees. These are banks that last year, under the first Paulson bribe, got 33 billion. The nine firms in the report had combined 2008 losses of nearly 100 billion.
Sadly this is a grey line. Surprise you? Of course, Congress, which initially approved this whole bail out, pre Obama, we know were all on this graft, as the banks got money that seemed to go nowhere, everything collapsed, and all of us were paying consultants to figure out what the actuaries had actually done for all the brokerages and companies betting derivatives.
Some of this stuff was actually legitimate banking, and most of it how the guys have the country club prison down there in N.C. Bernie, Ebbers, and the boys.
Goldman just rapes during the second quarter, and we're all amazed how much money is being made.
But some argue we have to pay these top people to either 1) Analyze and get us out of our lies (Blackwater), or 2) Create new ways for the banks to make money, or continue legitimate trading.
I'll leave it here today. Think of this:
1. The banks are making money.
2. Corporate profits appear to be up. Much are from continued write offs of bad investments, but much because of cost cutting.
The market has been marvelously up for so many days. Wall Street is coming back. The economy is improving. We hear this each day, and are able to interpret the data we receive to prove that this is true.
Just a fact to sober your euphoria: In 2007 the U.S. Government sold $450 billion in debt. THIS WEEK the government is selling 200 billion of new debt.
Jog on over to www.bluechipoptions.com and read our blog on "There is No Black and White"
Meanwhile, the market is being manipulated. And the stories being told on "cash for clunkers" and "raising taxes on the middle classs", sigh.......go over to our FREE blogs at http://www.bluechipoptions.com/
Here's the new game in town, that is causing this euphoric uproar, and may soon cause the downturn. High Frequency Computer Trading.
http://online.wsj.com/article/SB124908601669298293.html#mod=todays_us_money_and_investing
____________________________________________
And, next from Advanced Mentoring client MR, who is studying how to study. My comments in bold as we share this dialogue:
Per floyd's recommendation I started reading roubini this weekend. I read as many free articles as I could find on the RGE Moniter. Excellent reading. I like the perspective it gave. Excellent reading. This is a recommendation I give all subscribers. Want to get the true economic issues of our times, read Roubini and Krugman.
I have been thinking more about the silent witness at home, working around the house. Starting to give myself feedback rather than being so focused and ingrained in myself.
I think allot of times I live life like a kid with his face 2 inches from the TV screen. I can't see anything except for what's thrown in my face. I see how that can happen as a trader, as an employee, as a parent.
Taking that step back - giving myself some space helps to build an observatory gap between myself and I. I am beginning to grasp how this can allow clarity and reason an opportunity to flourish.
The silent witness is a simple way of putting "you as an observer" on your shoulder. Let "you" watch your behavior. It can be eye opening.
I remember Floyd referring to himself as our provacateur - the instigator of thought. I'm taking some of the seeds of insite and digging into them. Asking my own questions. What is a double dip recession? Why is the market climbing so high? Why are revenues up, but sales down - and how long can that sort of performance provide a springboard for stock market recovery? When will the lack of sales start to show in earnings, creating the flurry of selling that seems impending at some point.
Maybe I am starting to see the puzzle. Rather than just scattered pieces.
There are many articles on our website, and the new FREE blogs at www.bluechipoptions.com are techniques and thoughts I don't have time to share in this alert. Again, check our blogs.
______________
What's next for the market? Whipsaw. Our top projections would cause many shorts to go broke, and many traders "buying" the downside to buckle, and it would be THEN in the market's breathing that a consolidation began, when the brokerages are ready.
Floydian Therapy: Many new subscribers have asked us about this service. For traders wanting to work on the emotions behind the decisions that lead their trading, and their lives, we offer a unique email service with a transpersonal psychology approach from our classical training. View a video on Floyd on this: http://www.oexoptions.com/FloydTherapy/TheBlankScreen.swf or at http://www.oexoptions.com/pages/FloydianTherapy.html
www.bluechipoptions.com has new information online each day, updated articles on the market, blogs by Floyd, and option recommendations. There is also a Preferred Blue Chip subscription service.
Visit us at www.bluechipoptions.com
Floyd's Blog: http://bluechipoptions.blogspot.com/
Floyd is on Twitter: http://twitter.com/Bluechipoptions
Monday, August 3, 2009
When Greed Takes Over
The first trading day in August is typically weak, with the Dow down 8 of the last 11 years, and up only 1.1% in 2007. The extended ranges we are now seeing, 21 day up periods, or lengthier consolidations, around often reducing VIX, help confirm to me that the high velocity computer trading, and our famed Plunge Protection Team, have done a great job holding the market up.
It might go up more. When greed takes over, as we now know, nothing stops it, until.....
The August 480C was day tradeable for .50 profits Friday, in a market that moved from a low of 9133.45 to a high of 9218.77, a hundred points of excruciating struggles around support and resistance lines.
We had good profits on the August 455 Put, day trading for up to a 1.00 per contract, and able to buy first inventory to this new hedge position as low as 6.70.
Many traders wrote in, with the highly overbought market, asking if it was wise to hold the August 440Put or take stop loss.
My answer here is always complicated, yet simple:
1. Our 4 day stop loss is meant to work best around monthly options, that will erode more each Friday as they progress towards expiry.
2. There are always times that holding several days longer can allow the move to take place, and bring the option to break even, or profitability.
3. The risk, however, increases, with erosion and a typically now OTM strike point.
The bottom line: holding longer depends entirely on how you follow the system rules, and your risk orientation.
And,as a comment on one of the best economic moves I've seen, is the response to cash for clunkers. Good that we put 2 billion more to this; we are seeing that big government, done right, can create long term industrial development by consumer spending. And for the Republicans immediately arguing about "big government," let's not forget The Emperor and The Shooter from the last 8 years, that built one of the largest of all governments, with massive debt.
* One Basic Rule – Let the Winners Run, Cut the Losses Quickly. You've now read what usually happens, last week, where we let the losses run, so now focus on "rules" of selling, even if those rules involve your losing, because you can always lose more.
"Floyd, Just signed up for your Blue Chip new service. I've been reading your Blue Chip blogs, and as I trade daily on the OEX and what else you've taught me, and read that new subscribers ask these questions I have memories of when I began this trading odyssey with you 18 months ago.
After spending big bucks for Advanced Mentoring, and being on waiting list for three months, I was paper trading and learning at level 3 service. Since I have joined you, and costed in all I have paid for the services, I have earned over $141k. In 20 years of trading different ways, I hesitate to even wonder if I ever made money, except for money in my 401k from a job I had.
You are a very astute teacher, and I wish you luck with the new Blue Chip service. Thanks for teaching me. AON, Chicago"
It might go up more. When greed takes over, as we now know, nothing stops it, until.....
The August 480C was day tradeable for .50 profits Friday, in a market that moved from a low of 9133.45 to a high of 9218.77, a hundred points of excruciating struggles around support and resistance lines.
We had good profits on the August 455 Put, day trading for up to a 1.00 per contract, and able to buy first inventory to this new hedge position as low as 6.70.
Many traders wrote in, with the highly overbought market, asking if it was wise to hold the August 440Put or take stop loss.
My answer here is always complicated, yet simple:
1. Our 4 day stop loss is meant to work best around monthly options, that will erode more each Friday as they progress towards expiry.
2. There are always times that holding several days longer can allow the move to take place, and bring the option to break even, or profitability.
3. The risk, however, increases, with erosion and a typically now OTM strike point.
The bottom line: holding longer depends entirely on how you follow the system rules, and your risk orientation.
And,as a comment on one of the best economic moves I've seen, is the response to cash for clunkers. Good that we put 2 billion more to this; we are seeing that big government, done right, can create long term industrial development by consumer spending. And for the Republicans immediately arguing about "big government," let's not forget The Emperor and The Shooter from the last 8 years, that built one of the largest of all governments, with massive debt.
* One Basic Rule – Let the Winners Run, Cut the Losses Quickly. You've now read what usually happens, last week, where we let the losses run, so now focus on "rules" of selling, even if those rules involve your losing, because you can always lose more.
"Floyd, Just signed up for your Blue Chip new service. I've been reading your Blue Chip blogs, and as I trade daily on the OEX and what else you've taught me, and read that new subscribers ask these questions I have memories of when I began this trading odyssey with you 18 months ago.
After spending big bucks for Advanced Mentoring, and being on waiting list for three months, I was paper trading and learning at level 3 service. Since I have joined you, and costed in all I have paid for the services, I have earned over $141k. In 20 years of trading different ways, I hesitate to even wonder if I ever made money, except for money in my 401k from a job I had.
You are a very astute teacher, and I wish you luck with the new Blue Chip service. Thanks for teaching me. AON, Chicago"
Saturday, August 1, 2009
The Good News
Let's start with the good news. Here's from yesterday's open signal on the alert:
"-OXBHM OEX.X AUG 2009 465.0000 CALL Two buys now made, average cost 4.50". We sold this position on Thursday's early euphoric run up to highs of 9.20. 100% profits were possible.
Subscriber testimonials, to say the least, were "knock out" for this strong a call win.
So now let's think:
*The market goes up 2/3’s of the time.
* A 50% loss on a $100 stock means the trader must have a percentage gain of 100%
> 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.
And, it says it all that at 8250, our projected top, the market closed only up 83.74 points. :)
"-OXBHM OEX.X AUG 2009 465.0000 CALL Two buys now made, average cost 4.50". We sold this position on Thursday's early euphoric run up to highs of 9.20. 100% profits were possible.
Subscriber testimonials, to say the least, were "knock out" for this strong a call win.
So now let's think:
*The market goes up 2/3’s of the time.
* A 50% loss on a $100 stock means the trader must have a percentage gain of 100%
> 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.
And, it says it all that at 8250, our projected top, the market closed only up 83.74 points. :)
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