The world fears on Dubai banks and the "shell game of finance" being pulled hit the market hard last Friday, with theoretical Dow bottoms of 10,191 hit in early trading we may have had our consolidation. The market held and rebounded to our support area around 10,300. This puts the bias, believe it or not, as zero....enough gyrations in the market.
This coming week will better define Dubai's 60 billion of debt that they've asked for a 6 month extension on, and we believe the Dubai debacle MAY be the trigger that leads commercial real estate into the decline we have been projecting, and anticipating.
Study our new Dow projections carefully.
The first trading day in December the NASDAQ led the market up for 9 of 10 years through 2005, with back to back losses in 2006 and 2007. Over the Thanksgiving week we saw a market that held at higher highs, but struggled each time approaching the 10,550 resistance line. The argument goes that now the individual investor and more of the funds are going to move cash to the market, as they don't want to "miss out," and with more assurances that the economy is turning around (by the market again leading the public emotion).
We approach strong market tops, that show how fast we have returned 68% from our lowest low. 10,746 area is a strong testing ground.
In the prior 10 "recessions" the GDP dropped an average of 2.8. In this one it's been 3.8%.
In the prior 10 "recessions" unemployment dropped in total 1.8%. In this one it's been 5.1%.
In the prior 10 "recessions" increases to the public debt averaged 12.1 billion. In this one it's been 2.1 trillion
_________________________________
This is an interesting commentary, by an actor, yet as I read his blogs, there is sense to how he speaks, and what he says here, ....it's what happened to us:
http://www.huffingtonpost.com/alec-baldwin/the-republican-way-keepin_b_369123.html
Monday, November 30, 2009
Wednesday, November 25, 2009
A Nice Day for Experienced Day Traders
It was a nice day for an experienced trader yesterday. Just watching the mild whipsaw allowed moves to OEBLD DEC 2009 520.0000 CALL available as low as 5.30, sold to 6.30 same day,and hitting highs of 6.70 by 2.40 p.m. We'll keep this signal open and show it as a day trade also today and for traders that are watching the market Friday.
The market is closed tomorrow for Thanksgiving, and Friday is a shortened trading day.
Live peace and love in your Thanksgiving celebrations.
The FEDS publish minutes today, Tiffany and Deere report earnings before the market opens, and the U of M sentiment index is out.
6.25% share of U.S. Mortgage Loans that were 60 or more days past due at Sept 30th, a 58% increase from a year ago.
7.6% rise in delinquencies rate from the 2009 second quarter.
Bottom Line: The home are heading to foreclosure, and many are being foreclosed upon.
Retailers will very much watch Black Friday numbers for a sign of how much they will be discounting to gain holiday traffic.
There is less being built commercially, and there are far fewer construction projects. Less restaurants are opening. Most restaurants which historically do well in recessions are not, with the exception of MdDonalds, one of our core hodings :) in Blue Chip.
The market is closed tomorrow for Thanksgiving, and Friday is a shortened trading day.
Live peace and love in your Thanksgiving celebrations.
The FEDS publish minutes today, Tiffany and Deere report earnings before the market opens, and the U of M sentiment index is out.
6.25% share of U.S. Mortgage Loans that were 60 or more days past due at Sept 30th, a 58% increase from a year ago.
7.6% rise in delinquencies rate from the 2009 second quarter.
Bottom Line: The home are heading to foreclosure, and many are being foreclosed upon.
Retailers will very much watch Black Friday numbers for a sign of how much they will be discounting to gain holiday traffic.
There is less being built commercially, and there are far fewer construction projects. Less restaurants are opening. Most restaurants which historically do well in recessions are not, with the exception of MdDonalds, one of our core hodings :) in Blue Chip.
Saturday, November 21, 2009
A Bit of Reality
The market finally hit a bit of reality, and by noon had bottomed at 10,206, allowing us a fair break even to 15% loss on our December 490P.
We saw enough drop off to show a true consolidation beginning, and there IS possibility of more downturn.
Traders watching futures, of course, took no entry to the call as the sell off began.
For those of you that study our S/R lines, we twitted mid morning and the market moved right to 10,259 re-calculation before beginning upside return.
Because market conditions lightened in afternoon trading we'll issue a trade to the put but very specific in definition, and hold out on new positions, unless market conditions so warrant.
These are the "things" we must watch out for:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aFKrK5AcBecQ&pos=1
http://www.bloomberg.com/apps/news?pid=20601109&sid=awHX2QPENKgQ
It is interesting to me that the very "technicians" who struggled that the Dow could even return to 10,000 now struggle with the more magic "unemployment at 10%." What is important here is NOT the facts that the Dow hit 10,000, or the fact that real unemployment is over 20%, but how those facts translate to the open market. We are seeing a generally improving economy.
News: Some think Gold will hit $1300.000 before any pullback, and $2000.00 by year end. Much depends here upon the dollar weakening, or not. But The Wall Street Journal reports that governments around the globe are stepping up efforts to stem the greenback's slide.
If Playboy sells to Iconix (Playboy one of our Blue Chip recommendations) one of the largest assets being sold for the $300 million price tag is the rabbit ear logo.
Here it is proven that something worth nothing is worth something and that what is not real has value.
We saw enough drop off to show a true consolidation beginning, and there IS possibility of more downturn.
Traders watching futures, of course, took no entry to the call as the sell off began.
For those of you that study our S/R lines, we twitted mid morning and the market moved right to 10,259 re-calculation before beginning upside return.
Because market conditions lightened in afternoon trading we'll issue a trade to the put but very specific in definition, and hold out on new positions, unless market conditions so warrant.
These are the "things" we must watch out for:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aFKrK5AcBecQ&pos=1
http://www.bloomberg.com/apps/news?pid=20601109&sid=awHX2QPENKgQ
It is interesting to me that the very "technicians" who struggled that the Dow could even return to 10,000 now struggle with the more magic "unemployment at 10%." What is important here is NOT the facts that the Dow hit 10,000, or the fact that real unemployment is over 20%, but how those facts translate to the open market. We are seeing a generally improving economy.
News: Some think Gold will hit $1300.000 before any pullback, and $2000.00 by year end. Much depends here upon the dollar weakening, or not. But The Wall Street Journal reports that governments around the globe are stepping up efforts to stem the greenback's slide.
If Playboy sells to Iconix (Playboy one of our Blue Chip recommendations) one of the largest assets being sold for the $300 million price tag is the rabbit ear logo.
Here it is proven that something worth nothing is worth something and that what is not real has value.
Thursday, November 19, 2009
A Stock Tip
Yesterday says that no one knows. We saw the same light whipsaw between a 10,472 top and a higher bottom at 10,320. The market is now poised to "make a decision," with the bias still to the call, and more upside, but a more hesitant buyer.
Tomorrow is November expiration day, and the Dow has been up 5 of the last 6 years.
27 states have banned texting while driving, but 25 states offer traffic updates via Twitter :)
6% of British women say they have never had sex while sober.
Frightening, but these are facts.
As is this: http://www.nydailynews.com/opinions/2009/11/15/2009-11-15_the_worst_is_yet_to_come_unemployed_americans_should_hunker_down_for_more_job_lo.html
___________
We believe part of why the OEX has exceeded normal resistance trade ranges in the move up is because we have seen an influx and shift of funds to blue chips, which have driven the index up.
This drives up the Dow. This move to Blue Chips works well with how we trade at www.bluechipoptions.com, and it's interesting what a "blue chip stock" can be by definition.
As an example of our Blue Chip service we thought we would share a new recommendation, what a preferred subscriber would be receiving:
Here's your stock tip.
For investors seeking dividend and long term return we are ready to buy Leggett and Platt (LEG)
Study this company: http://www.leggett.com/
It's in classic restructuring:
1. No longer growing from acquisition, but from streamlining
2. Yields 5.1%, and company has raised dividend for 38 years
3. This could rise to the 28.00 range in a year, return a dividend, and be a great value stock investment.
4. Watch for any consolidation and slight dip and buy LEG at market price, with a stop loss at 17.00
Tomorrow is November expiration day, and the Dow has been up 5 of the last 6 years.
27 states have banned texting while driving, but 25 states offer traffic updates via Twitter :)
6% of British women say they have never had sex while sober.
Frightening, but these are facts.
As is this: http://www.nydailynews.com/opinions/2009/11/15/2009-11-15_the_worst_is_yet_to_come_unemployed_americans_should_hunker_down_for_more_job_lo.html
___________
We believe part of why the OEX has exceeded normal resistance trade ranges in the move up is because we have seen an influx and shift of funds to blue chips, which have driven the index up.
This drives up the Dow. This move to Blue Chips works well with how we trade at www.bluechipoptions.com, and it's interesting what a "blue chip stock" can be by definition.
As an example of our Blue Chip service we thought we would share a new recommendation, what a preferred subscriber would be receiving:
Here's your stock tip.
For investors seeking dividend and long term return we are ready to buy Leggett and Platt (LEG)
Study this company: http://www.leggett.com/
It's in classic restructuring:
1. No longer growing from acquisition, but from streamlining
2. Yields 5.1%, and company has raised dividend for 38 years
3. This could rise to the 28.00 range in a year, return a dividend, and be a great value stock investment.
4. Watch for any consolidation and slight dip and buy LEG at market price, with a stop loss at 17.00
Wednesday, November 18, 2009
So, The Stage is Set...
Usually after run ups as we have seen there is a historic retracement, often occurring on a Tuesday, just as you'll often some of the strongest upsurge days. Yesterday was so flat it could, yet again, be interpreted two ways: 1. The market is at a top, OR 2. The market held on a potential downturn and there wlll be more upside.
We could make no moves with either of our signals by 3 p.m., a market not even worth
We will lead today with some shared commentary from www.bluechipoptions.com:
“The idea that there is a competitive 'private sector’ in American is appealing, but generally false. No one hates competition more than the managers of corporations.
Competition does not enhance shareholder value, and smart managers all know they must work at ways at “controlling” government intervention.
This is is not new. This is not Obamaland. When Congress created the first regulatory ageny, the Interstate Commerce Commission, in 1887 the railroad barons quickly recognized they were to be subdued, but could benefit. “The older a commission gets to be the more inclined it will be take the business and the railroad and business point of view. It thus becomes a sort of barrier between the railroad corporations and the people and a sort of protection against hasty and crude legislation hostile to railroad actions.”
All the above from Richard Olney, a railroad lawyer during that time period that lived his thinking, as soon after this quote he got himself appointed to run the U.S. Justice Dep, where he spent his days busting railroad unions.
8 states in the U.S. consider “spousal abuse” a pre-existing medical condition.
As we trade this week remember that equity mutual fund flows remain in the red; the little guy isn't all in yet. This is key, as he must enter,and these trading dollars further stimulate the market, and will, we think, lead to greater upside.
Part of this is Fibonnanci, who's math tells us 10,700 is a normal retracement from the bottom we reached. And remember the stock market, for whatever reason, in emotions (upside or downside) ALWAYS precedes the public.
And yet, trader MR studies well and shares:
I was reading on the “History News Network” tonight about the 1987 stock market crash. Tonight I was curious what caused the crash and what the market conditions were at the time. One explanation was G7 policy and issues around US currency valuation. Other explanations were tied to computer trading, derivative securities, liquidity, trade and budget deficits and overvaluation.
Brief thoughts on each contributing cause of the 1987 crash in light of our current conditions:
The US dollar is currently in a free fall and if it ever gains support, that's GOING to affect the market. Granted today (11-16-09) it broke through strong support and made no signs of turning back, so we may not see that any time soon. Also it may not be undervalued at this point - due to the current flooding of the market from federal fiscal policy. If it ever finds support, there will be ripple effect felt around the world.
Computer trading - we've seen this in the news recently. The hyper trading programs of the market movers have been suspect of causing some of the run up - and certainly could contribute to a quick run down.
Derivative securities - we trade these :) but the derivatives market is growing exponentially, and is firmly embedded in commodity markets so that the effects of derivative trading can be far reaching.
Liquidity - In my mind that makes me think of some of the big banks that are still insolvent... (As are many of us) That can't be good.
Trade and budget deficits - Last week's recent international trade report showed just that the overall U.S. trade deficit widened by 6 billion dollars in one month's time. And our budget deficit needs no real comment, but here is a fun fact i found today: Of the $5 trillion in gold ever mined... in HISTORY- The U.S. debt is more than double that amount so far this year.
So the stage is set. There is no guarantee that a crash is coming, but there are certainly ingredients available. Some would argue that today's circumstances are unique to 1987, but at the same time I think many would agree that we can't separate the similarities.
We could make no moves with either of our signals by 3 p.m., a market not even worth
We will lead today with some shared commentary from www.bluechipoptions.com:
“The idea that there is a competitive 'private sector’ in American is appealing, but generally false. No one hates competition more than the managers of corporations.
Competition does not enhance shareholder value, and smart managers all know they must work at ways at “controlling” government intervention.
This is is not new. This is not Obamaland. When Congress created the first regulatory ageny, the Interstate Commerce Commission, in 1887 the railroad barons quickly recognized they were to be subdued, but could benefit. “The older a commission gets to be the more inclined it will be take the business and the railroad and business point of view. It thus becomes a sort of barrier between the railroad corporations and the people and a sort of protection against hasty and crude legislation hostile to railroad actions.”
All the above from Richard Olney, a railroad lawyer during that time period that lived his thinking, as soon after this quote he got himself appointed to run the U.S. Justice Dep, where he spent his days busting railroad unions.
8 states in the U.S. consider “spousal abuse” a pre-existing medical condition.
As we trade this week remember that equity mutual fund flows remain in the red; the little guy isn't all in yet. This is key, as he must enter,and these trading dollars further stimulate the market, and will, we think, lead to greater upside.
Part of this is Fibonnanci, who's math tells us 10,700 is a normal retracement from the bottom we reached. And remember the stock market, for whatever reason, in emotions (upside or downside) ALWAYS precedes the public.
And yet, trader MR studies well and shares:
I was reading on the “History News Network” tonight about the 1987 stock market crash. Tonight I was curious what caused the crash and what the market conditions were at the time. One explanation was G7 policy and issues around US currency valuation. Other explanations were tied to computer trading, derivative securities, liquidity, trade and budget deficits and overvaluation.
Brief thoughts on each contributing cause of the 1987 crash in light of our current conditions:
The US dollar is currently in a free fall and if it ever gains support, that's GOING to affect the market. Granted today (11-16-09) it broke through strong support and made no signs of turning back, so we may not see that any time soon. Also it may not be undervalued at this point - due to the current flooding of the market from federal fiscal policy. If it ever finds support, there will be ripple effect felt around the world.
Computer trading - we've seen this in the news recently. The hyper trading programs of the market movers have been suspect of causing some of the run up - and certainly could contribute to a quick run down.
Derivative securities - we trade these :) but the derivatives market is growing exponentially, and is firmly embedded in commodity markets so that the effects of derivative trading can be far reaching.
Liquidity - In my mind that makes me think of some of the big banks that are still insolvent... (As are many of us) That can't be good.
Trade and budget deficits - Last week's recent international trade report showed just that the overall U.S. trade deficit widened by 6 billion dollars in one month's time. And our budget deficit needs no real comment, but here is a fun fact i found today: Of the $5 trillion in gold ever mined... in HISTORY- The U.S. debt is more than double that amount so far this year.
So the stage is set. There is no guarantee that a crash is coming, but there are certainly ingredients available. Some would argue that today's circumstances are unique to 1987, but at the same time I think many would agree that we can't separate the similarities.
Tuesday, November 17, 2009
I Hate Banks
STOCKS AND COMMODITIES JUMP AS DOLLAR DROPS -- LARGE CAP INDEXES HIT NEW HIGHS FIRST -- SILVER, PLATINUM, AND COPPER BREAKOUT -- COAL STOCKS LEAD ENERY COMPLEX HIGHER -- BRISTOL MYERS SQUIBB BREAKS OUT -- CHINA LEADS EMERGING MARKETS HIGHER
This headline says it all. The market moved to tops of 10470 by noon on Monday. We are seeing higher highs, so consolidations are likely to be lesser, while the market moves to new highs.
Read our Dow projections for updates on my thoughts on yesterday's action.
The week before Thanksgiving the Dow has been up 13 of the last 15 years.
I have always hated banks, long before the debacle that we've seen. I do not keep any money in a local bank, never have, have always used brokerages, and refuse to do business with companies that appeal to consumers but keep "bankers hours." Now, you're seeing the many games they are playing. This is an ugly sector, filled with greed and avarice at the top, and a great deal of stupidity in the middle.
So, this brings me to John, my neighbor. He's a top banking official with Wachovia in Florida. He drives a very nice car, and leaves for work all suited up at 8 a.m. He returns each day no later than 5.30 p.m
Counting in that business lunch, this guy is working less than 8 hours a day. I'm sure earning 250k or more. He's a "lead dog" for a region.
And the poor guy knows Floyd.
Of course, he's a Republican. Big McCain signs, Bigger Bushy signs, during the elections, and strong on "no government intervention," and "too much debt" (Wachovia was swallowed up by another bank for having "too much debt," but that's beyond his scope).
John the dumb banker and I talk all the time. We both share having dogs, and the dogs are friends. So we talk.
And here's what I've learned:
*This top banker has no idea what cash or credit derivatives are.
*He believes that the over mortgaging was the fault of the American people going "over their means" and that the banks and mortgage companies were only responding to "demand"
*Wall Street will lose its top people if more controls are put in (but he has no idea what a credit derivative is)
*The USD is falling because Obama is a socialist. And this guy is a banker :)
Any trade, and any occupation, has its idiots. But John is a typical banker. When I tell him how hard it is for my consulting clients that own family businesses to gain any form of letter of credit or financing with banks he responds with "we have strong banking covenants to to control high risk lending."
And it's why I've never trusted banks, or the fraud of the FDIC, which doesn't have enough money (as we now know) to even fund the true bankruptcy of banks.
And what it leads me to...is this if John is the typical banker, is this whole debacle really down to a few thousand, that used many others?
These are my typical Floyd "how does this really work" questions. It's unanswerable.
This headline says it all. The market moved to tops of 10470 by noon on Monday. We are seeing higher highs, so consolidations are likely to be lesser, while the market moves to new highs.
Read our Dow projections for updates on my thoughts on yesterday's action.
The week before Thanksgiving the Dow has been up 13 of the last 15 years.
I have always hated banks, long before the debacle that we've seen. I do not keep any money in a local bank, never have, have always used brokerages, and refuse to do business with companies that appeal to consumers but keep "bankers hours." Now, you're seeing the many games they are playing. This is an ugly sector, filled with greed and avarice at the top, and a great deal of stupidity in the middle.
So, this brings me to John, my neighbor. He's a top banking official with Wachovia in Florida. He drives a very nice car, and leaves for work all suited up at 8 a.m. He returns each day no later than 5.30 p.m
Counting in that business lunch, this guy is working less than 8 hours a day. I'm sure earning 250k or more. He's a "lead dog" for a region.
And the poor guy knows Floyd.
Of course, he's a Republican. Big McCain signs, Bigger Bushy signs, during the elections, and strong on "no government intervention," and "too much debt" (Wachovia was swallowed up by another bank for having "too much debt," but that's beyond his scope).
John the dumb banker and I talk all the time. We both share having dogs, and the dogs are friends. So we talk.
And here's what I've learned:
*This top banker has no idea what cash or credit derivatives are.
*He believes that the over mortgaging was the fault of the American people going "over their means" and that the banks and mortgage companies were only responding to "demand"
*Wall Street will lose its top people if more controls are put in (but he has no idea what a credit derivative is)
*The USD is falling because Obama is a socialist. And this guy is a banker :)
Any trade, and any occupation, has its idiots. But John is a typical banker. When I tell him how hard it is for my consulting clients that own family businesses to gain any form of letter of credit or financing with banks he responds with "we have strong banking covenants to to control high risk lending."
And it's why I've never trusted banks, or the fraud of the FDIC, which doesn't have enough money (as we now know) to even fund the true bankruptcy of banks.
And what it leads me to...is this if John is the typical banker, is this whole debacle really down to a few thousand, that used many others?
These are my typical Floyd "how does this really work" questions. It's unanswerable.
Monday, November 16, 2009
Get the "Homeless Girl" for $95 : (
We will lead Monday’s commentary and alert with a summary of our NEW Dow projections.
1. The market has held three times now in 5 days at 10,350
2. The market hesitates and flat lines often around 10,200, with bottoms near 10,150 during the same whipsaw
3. Historically the market drops an average of 586 points from its highest high.
4. Using the whipsaw we’ve seen, and the bull resiliency, here’s how we see support and resistance lines
10,476-10,512- Highest top. 10, 550 strong area of former resistance
10,350-10,420-Likely top
10,150-Resistance
10,050-A strong “not sure area”
9764-9950-Potential support bottom
The Monday before November expiry, the Dow was down 6 of the last 9 years, and 2007 broke a 3 year bull run.
Friday, of course, on bad news, the market rose over a 100 points, and allowed our December 500 Call, already held, to hit highs of 11.80, for up to 35% returns. We are left holding our hedge December 490P, already profitable in day trading, as as our "backstop" on the inevitable consolidation that must occur in a market like this.
Call profits may also be possible, for tight gains, depending upon the whipsaw the market.
A common question asked of Floyd is "why I choose specific OTM, ATM, or ITM options" and what my reasoning is behind the choices. There is little systemology to these choices that will appeal to the logic and "method" oriented trader. Heres' how I do it:
*How close are we to expiry?
*How excited and volatile is the market?
*What is the volume and open interest on the option?
*How extended (overbought and oversold)?
*What have our most recent win ratios been? So good that it's time to move to a OTM issue because the market is no longer as easy to read?
We've had a great run this past three weeks, despite a very difficult market to read. Remember, take profits when profits are available. Don't hold all of a position for top profits, and use our %'s down to buy as indicators, NOT as exact numbers.
And a real fact: *56^% of unemployed individuals are described as “permanently separated” from their employers. In prior recessions that figure never reached higher than 45%
And some other facts:
81% of Las Vegas homes are now worth less than their mortgages.
The company "American Doll" has unveiled a new character - the homeless girl - and the doll is available this Christmas for $95.00
Reality is only as we see it. We know only what we know, and do not know what we do not know, nor know that we do not know it.
Start your week planning to "watch yourself" as you trade, so that you can learn "through you" your own behavior. There is a zen to a trading sequence in which someone must lose for
you to win, and you are pitting yourself against others in buying and selling, as in life.
1. The market has held three times now in 5 days at 10,350
2. The market hesitates and flat lines often around 10,200, with bottoms near 10,150 during the same whipsaw
3. Historically the market drops an average of 586 points from its highest high.
4. Using the whipsaw we’ve seen, and the bull resiliency, here’s how we see support and resistance lines
10,476-10,512- Highest top. 10, 550 strong area of former resistance
10,350-10,420-Likely top
10,150-Resistance
10,050-A strong “not sure area”
9764-9950-Potential support bottom
The Monday before November expiry, the Dow was down 6 of the last 9 years, and 2007 broke a 3 year bull run.
Friday, of course, on bad news, the market rose over a 100 points, and allowed our December 500 Call, already held, to hit highs of 11.80, for up to 35% returns. We are left holding our hedge December 490P, already profitable in day trading, as as our "backstop" on the inevitable consolidation that must occur in a market like this.
Call profits may also be possible, for tight gains, depending upon the whipsaw the market.
A common question asked of Floyd is "why I choose specific OTM, ATM, or ITM options" and what my reasoning is behind the choices. There is little systemology to these choices that will appeal to the logic and "method" oriented trader. Heres' how I do it:
*How close are we to expiry?
*How excited and volatile is the market?
*What is the volume and open interest on the option?
*How extended (overbought and oversold)?
*What have our most recent win ratios been? So good that it's time to move to a OTM issue because the market is no longer as easy to read?
We've had a great run this past three weeks, despite a very difficult market to read. Remember, take profits when profits are available. Don't hold all of a position for top profits, and use our %'s down to buy as indicators, NOT as exact numbers.
And a real fact: *56^% of unemployed individuals are described as “permanently separated” from their employers. In prior recessions that figure never reached higher than 45%
And some other facts:
81% of Las Vegas homes are now worth less than their mortgages.
The company "American Doll" has unveiled a new character - the homeless girl - and the doll is available this Christmas for $95.00
Reality is only as we see it. We know only what we know, and do not know what we do not know, nor know that we do not know it.
Start your week planning to "watch yourself" as you trade, so that you can learn "through you" your own behavior. There is a zen to a trading sequence in which someone must lose for
you to win, and you are pitting yourself against others in buying and selling, as in life.
Friday, November 13, 2009
All Day the Market Struggled
All day the market struggled. It opened with a run up to 10,361, and by 2.30 p.m. had already moved to 10,175. Oil led this game, as analysts began analyzing crude inventory reports, and energy stocks suffered.
We are at a turning stage in the market, and simply follow news to see how the market will do. Not the time for the investor. We saw strong downside begin in the after 3.30 p.m. hour, leading the market down over 100 points.
The key to trading is watching the nuances and when the "same thing happens over and over again." This, with an option, is called "falling in love," when you know it intimately. We are this way with the Dec 490P already, learning in nuances.
Downside we believe will be limited before the market rebounds. We'll hold with our open put, now already profitable, and end the week on another profitable and good note.
We are at a turning stage in the market, and simply follow news to see how the market will do. Not the time for the investor. We saw strong downside begin in the after 3.30 p.m. hour, leading the market down over 100 points.
The key to trading is watching the nuances and when the "same thing happens over and over again." This, with an option, is called "falling in love," when you know it intimately. We are this way with the Dec 490P already, learning in nuances.
Downside we believe will be limited before the market rebounds. We'll hold with our open put, now already profitable, and end the week on another profitable and good note.
Thursday, November 12, 2009
Sit and Watch
The bull run that skeptics hesitate with continued to market tops of 10,392 in morning trading. The market moved as lows as 10,206 in hesitancy at another market top.
Each move up that holds decreases the amount of consolidation, based on the count of the market. The bias stays clearly at near 5 to the call, and there is always an upside.
Profits are possible on both of our open signals, for fast day traders; otherwise, the market is hard to trade for index options, and actually hard to day trade in general.
An appropriate email from subscriber Dave
"Good Morning, Floyd.
Hope you are well. Been a little while since I wrote you with any questions J. I have been studying the market and alerts for months… I don’t even paper trade – I just sit and watch the market (OEX, DOW, and YM Futures) every day possible, all day when I do. I have learned a great deal by doing this and have come to understand your approach to the market much much more than I ever have before. Much appreciated are your teachings by me. Though I feel I have learned a tremendous amount, and am still learning and I have a couple questions… Stuff that is basic but that I am curious about…
As you begin to calculate up or down on the 21 day cycle… Either the 500 – 600 current market swings or 21 days, whichever comes first fulfills that particular cycle right? Then we see the 2 way trading more apparent and whipsaw as the market sorts itself out to establish the direction of the next cyclical move (whichever direction)?
Day-Trading the options that swing in ranges, to me, appears to be much more reliable than using the pivots. Just like trading channels. I’ve come to not like the pivots as far as trading them but I do see their value in establishing S/R because you can clearly see when one of them is honored vs those that are not. Just matching up the option swings with the market swings (syncing them) among other things stacks the odds in ones favor.
Anyhow, Thanks again, Floyd. All your teachings are very much appreciated."
Floyd's rule of thumb and answers: Sitting and watching the market for months is how many of my best students have gotten rich. They learn patience, and truly following the market, with fear or greed.
Right now the 21 day cycle is closer to 30 days, but each consolidation, even in stages, has averaged 586 points down. I'm actually watching this with all of you now, as it does not appear the market would consolidate deeply with the higher higher we've seen, and our Dow projections so reflect this.
There are many stocks we are recommending in our Blue Chip Options service (www.bluechipoptions.com), however, and there is more upside potentially over the next 6 weeks.
Each move up that holds decreases the amount of consolidation, based on the count of the market. The bias stays clearly at near 5 to the call, and there is always an upside.
Profits are possible on both of our open signals, for fast day traders; otherwise, the market is hard to trade for index options, and actually hard to day trade in general.
An appropriate email from subscriber Dave
"Good Morning, Floyd.
Hope you are well. Been a little while since I wrote you with any questions J. I have been studying the market and alerts for months… I don’t even paper trade – I just sit and watch the market (OEX, DOW, and YM Futures) every day possible, all day when I do. I have learned a great deal by doing this and have come to understand your approach to the market much much more than I ever have before. Much appreciated are your teachings by me. Though I feel I have learned a tremendous amount, and am still learning and I have a couple questions… Stuff that is basic but that I am curious about…
As you begin to calculate up or down on the 21 day cycle… Either the 500 – 600 current market swings or 21 days, whichever comes first fulfills that particular cycle right? Then we see the 2 way trading more apparent and whipsaw as the market sorts itself out to establish the direction of the next cyclical move (whichever direction)?
Day-Trading the options that swing in ranges, to me, appears to be much more reliable than using the pivots. Just like trading channels. I’ve come to not like the pivots as far as trading them but I do see their value in establishing S/R because you can clearly see when one of them is honored vs those that are not. Just matching up the option swings with the market swings (syncing them) among other things stacks the odds in ones favor.
Anyhow, Thanks again, Floyd. All your teachings are very much appreciated."
Floyd's rule of thumb and answers: Sitting and watching the market for months is how many of my best students have gotten rich. They learn patience, and truly following the market, with fear or greed.
Right now the 21 day cycle is closer to 30 days, but each consolidation, even in stages, has averaged 586 points down. I'm actually watching this with all of you now, as it does not appear the market would consolidate deeply with the higher higher we've seen, and our Dow projections so reflect this.
There are many stocks we are recommending in our Blue Chip Options service (www.bluechipoptions.com), however, and there is more upside potentially over the next 6 weeks.
Wednesday, November 11, 2009
Do Not Argue With the Stock Market
*Do not argue with the stock market.
*If a stock is up 20% in three weeks or less after your purchase, hold it at least 8 weeks.
*After a stock breaks out it follows Fibonnaci patterns and sells offs are likely at 38%, 50%, and 62% profits.
These are basic rules we teach at our sister service, www.bluechipoptions.com, and that are very "present" to how the market is acting.
Yesterday brought theoretical Dow highs to just over 10,300, and a bottom of 10, 187. Consolidation, when occurring, may now only whipsaw downward to 9900-9950 before a stronger bull run, as we approach the Fib top of 10,700
Do not argue with the market. Whew. 10, 700 seems so high, and yet so low, from where we were, and yet, has been a meteoric rise that has restored some wealth, and created more.
For most of the trading day yesterday we found a hard to trade market. Some traders caught entry to the Dec500 Call and made 2.00 per contract by fast trading, but most traders only were able to take entry to positions.
Our recommendations are thusly a repeat of yesterday's, as the market may continue to hold to new highs, or simply "tightly consolidate."
*If a stock is up 20% in three weeks or less after your purchase, hold it at least 8 weeks.
*After a stock breaks out it follows Fibonnaci patterns and sells offs are likely at 38%, 50%, and 62% profits.
These are basic rules we teach at our sister service, www.bluechipoptions.com, and that are very "present" to how the market is acting.
Yesterday brought theoretical Dow highs to just over 10,300, and a bottom of 10, 187. Consolidation, when occurring, may now only whipsaw downward to 9900-9950 before a stronger bull run, as we approach the Fib top of 10,700
Do not argue with the market. Whew. 10, 700 seems so high, and yet so low, from where we were, and yet, has been a meteoric rise that has restored some wealth, and created more.
For most of the trading day yesterday we found a hard to trade market. Some traders caught entry to the Dec500 Call and made 2.00 per contract by fast trading, but most traders only were able to take entry to positions.
Our recommendations are thusly a repeat of yesterday's, as the market may continue to hold to new highs, or simply "tightly consolidate."
Tuesday, November 10, 2009
100 Percent Return on Our OEBKT Call
Investors are getting carried away again. The Dow hit new highs, on a 200 plus point upswing. The reasons:
*The Dollar fell to a 15 month low after G20 meets. Gold hovers at $1,100.00.
*Increased investor certainty that we are "out of the woods" and it's time to get in the market, that there will be a global economy.
Whew. We're revising our Dow projections to show new highs that could be reached, and following historical patterns, still see an overall 586 point drop from whenever this market does top.
Read our Dow projections carefully. We are showing the ascent now necessary to the next resistance line, and make note of the 586 historical correction from any top.
Although it's hard to believe our 11/6 recommendation of the OEBKT NOV 21 2009 500.00 CALL hit highs of 10.20, for a 100% return. All it took to hold out for that kind of profit, as many traders did, was to read our re-calcualted Dow projections, sent out by Twitter, which showed a new R3 of 10,206, a great place to sell out watching the mood of the day. It's not often we can return 100% in a short time, and many of you experienced 30-60% profits, so are banging your knees, but this was a great trade. We'll likely lose on our OTM put on Wednesday stop loss, and note the 10 count to any call trade. Very overbought conditions.
Because of this we'll list two opposing signals, with special instructions.
*The Dollar fell to a 15 month low after G20 meets. Gold hovers at $1,100.00.
*Increased investor certainty that we are "out of the woods" and it's time to get in the market, that there will be a global economy.
Whew. We're revising our Dow projections to show new highs that could be reached, and following historical patterns, still see an overall 586 point drop from whenever this market does top.
Read our Dow projections carefully. We are showing the ascent now necessary to the next resistance line, and make note of the 586 historical correction from any top.
Although it's hard to believe our 11/6 recommendation of the OEBKT NOV 21 2009 500.00 CALL hit highs of 10.20, for a 100% return. All it took to hold out for that kind of profit, as many traders did, was to read our re-calcualted Dow projections, sent out by Twitter, which showed a new R3 of 10,206, a great place to sell out watching the mood of the day. It's not often we can return 100% in a short time, and many of you experienced 30-60% profits, so are banging your knees, but this was a great trade. We'll likely lose on our OTM put on Wednesday stop loss, and note the 10 count to any call trade. Very overbought conditions.
Because of this we'll list two opposing signals, with special instructions.
Monday, November 9, 2009
Friday Was Beyond Me
Note that Wednesday is Veteran's Day but that the market is open.
Friday was beyond me. Unemployment rose to over 10.2%, and Wall Street was caught selling a new kind of insurance derivative, again with no regulations. And despite this, the market held. It didn't rise, but it didn't fall, and did stay over 10,000. Many floor traders were confounded, waiting for a consolidation so clearly that the market might defy it.
We are holding to our Dow projections, noting specific support and resistance areas that have held this past week.
A bull market trend, to Dow Theory, is defined as a series of higher troughs and higher peaks. A bear market trend is defined as just the opposite, a series of lower peaks and lower troughs. In addition, a newbull market trend is said to have begun once a market makes a new higher trough followed by a higher peak, and a new bear market trend is said to begin once a market forms a new lower peak followed by a new lower trough.
It is likely to see more upside to a fast top before a choppy whipsaw downside, but the market is now clearly hesitating.
Friday was beyond me. Unemployment rose to over 10.2%, and Wall Street was caught selling a new kind of insurance derivative, again with no regulations. And despite this, the market held. It didn't rise, but it didn't fall, and did stay over 10,000. Many floor traders were confounded, waiting for a consolidation so clearly that the market might defy it.
We are holding to our Dow projections, noting specific support and resistance areas that have held this past week.
A bull market trend, to Dow Theory, is defined as a series of higher troughs and higher peaks. A bear market trend is defined as just the opposite, a series of lower peaks and lower troughs. In addition, a newbull market trend is said to have begun once a market makes a new higher trough followed by a higher peak, and a new bear market trend is said to begin once a market forms a new lower peak followed by a new lower trough.
It is likely to see more upside to a fast top before a choppy whipsaw downside, but the market is now clearly hesitating.
Friday, November 6, 2009
The Study Continues
The market showed flat futures, and varied news data prior to opening. Gold was already rising. And, from a futures of 12+ the market opened to highs of 9945.73, or almost 10,000 on the theoretical Dow.
Retail sales data was reassuring, and the market opened strongly bullish. The sadness in the country in the lack of true investigative reporting ,and the finding that over half of the derivatives being traded don't even show accurately on the exchanges, showing Wall Street still in charge. For some reason, this frightening news was not even understood, and the market just forged ahead.
We remain concerned that 10,000 will not hold and that another consolidation, led by the USD shifting, oil dropping, and made a buy to an Out of the Money Put, for a fast downside we see. The amount of massive moves in the market, up 177 points for example by 10.30 a.m. makes it difficult to trade. But to see the day hold and run up over 10,000 and hold....we'll see. More data reports out today that "excite" the market, and right now in such an emotional way it's hard to read. We seem to be repeating the same cycle, part of what some would see as a head and shoulders pattern that is ominous.
Our Dow projections are right to target, just hard to figure which way first.
More on Trader Bill's study on the count:
His premises:
How do the parts of the count stack up to correlation of movement.
I'm still trying to figure this question out.
ie. When I developed my spreadsheet, I broke down the 5 parts to the count.
Part 1 compares the current day price action
Part 2 compares the last 3 days
Part 3 the last 2 days
I recently asked our Blue Chip traders the question "why do you trade?" The answers were astounding, and showed me as person all the different reasons people are trying to make money trading options.
So, my hard question to you as a trader for a Friday is this: would you prefer smaller, steady profits, or larger pools of money invested in simple signals?
Neither answer is wrong, but your answer to this question is key.
_________________
How can we as a nation manage to take simple subjects, with simple solutions, and make them undefinable, filled with graft public or private, and inept.
Simple problems. Simple solutions.
Like, where is Osama Bin Laden. L.A.?
That is not a statement to annihilate Bin Laden, but come on, how hard is it to figure out where he is?
_________________
Trader MR gives an update on his BCO and OEX trading:
> Closed out last MKDAC today for 60% gains. I'll look to re-enter at lower price point, as MCD hit P/F resistance today.
Floyd: McDonalds has done us well, and he's right....we'll soon have a new entry on this.
>
> I made out on those GLD calls from last week. Finals positions were 80% gains.
Floyd: Gold remains a buy. CEF is an excellent long term investment, and we'll soon have new Gold calls/puts listed. There may be a correction,but Gold is headed to $2000 or more an oz.
>
> Bought AAPL dec OTM calls yesterday. Up 22% today, I'll hold for greater return.
Floyd: Smart. He's learning on his own. Apple we've played for years, and I'm soon ready to recommend a position before the January numbers come out.
>
> Now for the bad news. My index option trading has been horrendous. I can't get a good read on the market, and/or I am making bad choices. I have messed up enough OEX trades to cancel out those fantastic trades and my trading account total value is still flat lining. It's sort of comical.
>
> I feel like I am "missing something" like there is a key data point, or indicator I am not looking at. Maybe it's my mind's eye that's not focused. I think I should take a couple days to "go fishing."
Floyd: Although this is for OEX traders, it's a very honest piece of information. The indices right now (SPX, DIA and OEX) are all difficult to trade because of the amount of whipsaw in the market. When traders experience situations like this, just don't trade. This is what I call my "fishing time."
>
> I can ETF trade fairly well. My conservative portfolio (my wife's IRA account) is up 10% in 6 weeks, and its 75% cash at the moment. I may be starting to find my own style in trading. buying "longer term" or "trading the swings" seems to work for me, and I have been fairly accurate in the trades I've made.
Floyd: This is the purpose of learning to trade with me. Develop your own style, and learn what NOT to learn.
>
> The study continues...
>
>
>
> MR
Retail sales data was reassuring, and the market opened strongly bullish. The sadness in the country in the lack of true investigative reporting ,and the finding that over half of the derivatives being traded don't even show accurately on the exchanges, showing Wall Street still in charge. For some reason, this frightening news was not even understood, and the market just forged ahead.
We remain concerned that 10,000 will not hold and that another consolidation, led by the USD shifting, oil dropping, and made a buy to an Out of the Money Put, for a fast downside we see. The amount of massive moves in the market, up 177 points for example by 10.30 a.m. makes it difficult to trade. But to see the day hold and run up over 10,000 and hold....we'll see. More data reports out today that "excite" the market, and right now in such an emotional way it's hard to read. We seem to be repeating the same cycle, part of what some would see as a head and shoulders pattern that is ominous.
Our Dow projections are right to target, just hard to figure which way first.
More on Trader Bill's study on the count:
His premises:
How do the parts of the count stack up to correlation of movement.
I'm still trying to figure this question out.
ie. When I developed my spreadsheet, I broke down the 5 parts to the count.
Part 1 compares the current day price action
Part 2 compares the last 3 days
Part 3 the last 2 days
I recently asked our Blue Chip traders the question "why do you trade?" The answers were astounding, and showed me as person all the different reasons people are trying to make money trading options.
So, my hard question to you as a trader for a Friday is this: would you prefer smaller, steady profits, or larger pools of money invested in simple signals?
Neither answer is wrong, but your answer to this question is key.
_________________
How can we as a nation manage to take simple subjects, with simple solutions, and make them undefinable, filled with graft public or private, and inept.
Simple problems. Simple solutions.
Like, where is Osama Bin Laden. L.A.?
That is not a statement to annihilate Bin Laden, but come on, how hard is it to figure out where he is?
_________________
Trader MR gives an update on his BCO and OEX trading:
> Closed out last MKDAC today for 60% gains. I'll look to re-enter at lower price point, as MCD hit P/F resistance today.
Floyd: McDonalds has done us well, and he's right....we'll soon have a new entry on this.
>
> I made out on those GLD calls from last week. Finals positions were 80% gains.
Floyd: Gold remains a buy. CEF is an excellent long term investment, and we'll soon have new Gold calls/puts listed. There may be a correction,but Gold is headed to $2000 or more an oz.
>
> Bought AAPL dec OTM calls yesterday. Up 22% today, I'll hold for greater return.
Floyd: Smart. He's learning on his own. Apple we've played for years, and I'm soon ready to recommend a position before the January numbers come out.
>
> Now for the bad news. My index option trading has been horrendous. I can't get a good read on the market, and/or I am making bad choices. I have messed up enough OEX trades to cancel out those fantastic trades and my trading account total value is still flat lining. It's sort of comical.
>
> I feel like I am "missing something" like there is a key data point, or indicator I am not looking at. Maybe it's my mind's eye that's not focused. I think I should take a couple days to "go fishing."
Floyd: Although this is for OEX traders, it's a very honest piece of information. The indices right now (SPX, DIA and OEX) are all difficult to trade because of the amount of whipsaw in the market. When traders experience situations like this, just don't trade. This is what I call my "fishing time."
>
> I can ETF trade fairly well. My conservative portfolio (my wife's IRA account) is up 10% in 6 weeks, and its 75% cash at the moment. I may be starting to find my own style in trading. buying "longer term" or "trading the swings" seems to work for me, and I have been fairly accurate in the trades I've made.
Floyd: This is the purpose of learning to trade with me. Develop your own style, and learn what NOT to learn.
>
> The study continues...
>
>
>
> MR
Thursday, November 5, 2009
Lead to the Call
The market is almost stuck in a pose. A 9968 high by mid day, and lows by 3.45 that shocked the market. We were not sure of this whipsaw, thus no dual trades. We had no open signal, as with the FED announcement and the confusion to the count was not clear on bias.
Some of the work that Trader Bill is doing shows this, and when the market fluctuates as it has with these swings, is something than overbought/oversold, or just plain feverish?
November begins the Dow's "best six months" historically. We are also at a turning point in the market with all time highs having been reached in a very short time. Being prudent on upside is paramount.
So we'll help you review the thinking and facts that got us in this mess. A rock is not hard.
*10.6^% drop in the U.S. Weekday newpaper circulation, pushing us to soundbites and "blogs"
*GMAC has asked for another 2.8 to 5.6 billion
*Only 2 million people worldwide, including online and overseas subscribers exist now for the Wall Street Journal, Barrons.
*Tomorrow unemployment, non farm report, should show a drop to about 175,000. A drop below 200,000 would indicate the economic recovery is on track; others report we will come in at 9.9%.
(Floydian theory: unemployment will stay at 10% for several years in the "new America".
*One of the lead dogs of Pepsi unloaded a lot of inside shares early last week. Wonder what it means?
And a quote of great value: "A number of financial institutions are quietly becoming overcapitalized through regulatory fiat, as well as through massive earnings leverage from the yield curve, the latter of which rarely fails as a leading indicator of economic growth"-Jeffrey Bronchick, RCB Investment Strategy Letter
We'll close with a signal lead to the call, but with caution. Often after the FEDS announce, and the immediate euphoria passes, there is a reaction in the market.
Some of the work that Trader Bill is doing shows this, and when the market fluctuates as it has with these swings, is something than overbought/oversold, or just plain feverish?
November begins the Dow's "best six months" historically. We are also at a turning point in the market with all time highs having been reached in a very short time. Being prudent on upside is paramount.
So we'll help you review the thinking and facts that got us in this mess. A rock is not hard.
*10.6^% drop in the U.S. Weekday newpaper circulation, pushing us to soundbites and "blogs"
*GMAC has asked for another 2.8 to 5.6 billion
*Only 2 million people worldwide, including online and overseas subscribers exist now for the Wall Street Journal, Barrons.
*Tomorrow unemployment, non farm report, should show a drop to about 175,000. A drop below 200,000 would indicate the economic recovery is on track; others report we will come in at 9.9%.
(Floydian theory: unemployment will stay at 10% for several years in the "new America".
*One of the lead dogs of Pepsi unloaded a lot of inside shares early last week. Wonder what it means?
And a quote of great value: "A number of financial institutions are quietly becoming overcapitalized through regulatory fiat, as well as through massive earnings leverage from the yield curve, the latter of which rarely fails as a leading indicator of economic growth"-Jeffrey Bronchick, RCB Investment Strategy Letter
We'll close with a signal lead to the call, but with caution. Often after the FEDS announce, and the immediate euphoria passes, there is a reaction in the market.
Wednesday, November 4, 2009
Flat As a Pancake
Berkshire bought Burlington Northern, the USD went up, and the market was flat as a dead pancake. We hit highs of 9827 and lows of 9663. The November 450Put was available for as low as 2.45, and could have sold to 3.60. There were numerous times in the trading tight whipsaw today that day traders could have watched any put in the November chain and found tight .50 profits to be made, and movements were still over 200 points in a day, despite many tight moves.
I had a number of inquiries today about knowing when to trade the market up, when to trade at "best buy," and when to trade at prior day close. In today's market, outside of our OEX Manual, and because of the extreme market conditions we are finding a number of ways to successfully NOT be let out of the market.
1. Our standard rule is to never buy above prior day close.
2. Our secondary rule is to try to buy at discount from prior day close.
3. We follow futures and watch the mood. When the market shows upside or downside of 70 points up, it is a lagging indicator of the market opening. As one "watches futures" they find that as they "move" you can see the strength in the bias, or the lack of strength.
4. When bias is strong and one wants to trade the bias, and our recommendation, sometimes it is right to pay to market opening "the first prices available" and sell for 30 to 40% profits same day.
5. When bias is weak, or confused, as we have seen some days, it's best to just wait for the discounted and best buy price, and because the bias is less strong.
The market held much more steady today, a sign that put strength and downside may be waning, yet it also did not gain significant volume in index options. The count is now a very low bias. It is a market waiting for a strong upside move, and still not finished, or certain if a downside move should come first.
*When we trade we expect numeric precision, or system, and this can be done, but not literally. The market is a moving instrument filled with the fear and greed emotions of the trader, and will confound historical charts and facts, but never argues with supply and demand, or cause and effect.
This is what drives the market. And time. It is this simple, and no one will accept it.
Most traders want to know HOW Floyd projects the Dow and we've got a video and article on it on the website, but I will confound you most with "my view of numbers is if they read out to me, and I just know," as much as S/R on Pnf charts. I believe this comes from years of simplicity in viewing, and in my limiting of my actions. That "clean desk" video on our home page is me. I do not have much around me when I trade.
The whipsaw that we saw, and the massive sell off, after an exhaustive gap day UP, did nothing be reassure me more that the economy is rebounding, and investors are starting to slow their own frenzy.
We want this. If the market hesitates a bit, it is breathing, and we want calm.
Last Friday who could have predicted a 250 point overall decline?
Numerically, the number 0 is key, and I've suggested in our Blue Chip Option service things that I think could happen in 2010, and WHY things happened at 10,000.
The 0's concept does not work or have meaning with numbers like 9800, 7600, etc. but in the total rounds of 9000, 10,000, etc. and the reasons for 2010 showing something will be on our Blue Chip blogs this week.
Bernanke and the Fed kids, staying at high priced resorts, will likely inform us that they are holding rates steady. The focus will be on the phrase "extended period" to see if Bernanke rightly opens the door to a potential down the road rate increase.
_______________________________
And from trader MR on the question: what does trading mean to me?
What an articulate response:
Last week I promised my comments on what trading means to me. In the simplest of terms - it is continuing education, understanding myself, and a chance to regain my long term losses of 2007-2008. On the dark side, I can relate all to well with the comments from some of my fellow traders about the anger, fear, and other negative experiences that can be common side effects of the trading "lifestyle."
Recently I listened to an audio summary of the book "Sway" by Ori Brafman and Rom Brafman that highlighted a very interesting set of facts on how our brains are wired and discusses several psychological forces that derail rational thinking. It relates directly to how we understand our emotions when trading. Here is an excerpt directly from the summary, with my emphasis added throughout.
In an experiment, the NIH researchers placed participants in a specially modified MRI machine fitted with a computer monitor and a simple joystick. Lying inside the machine, the subjects played a video game reminiscent of the Atari era. At the start of each round of the game, a circle, square or triangle would appear on the screen. Each shape held a unique meaning: A circle meant that if you succeeded in completing a task — zapping a figure as it appeared on the screen — you’d earn a monetary reward. However, when subjects saw a square instead of a circle, they braced themselves for bad news. The object of the game would be the same — zap the figure — except that failing to do so would result in a monetary penalty. If the participants saw a triangle, it meant that no money was on the line; whether they hit the target or not, they would neither lose nor gain any money that round. While the participants were playing the game, they were shown a running tab of their earnings and losses. Meanwhile, the scientists monitored their brain activity and noticed that every time a circle or square appeared — that is, every time there was money to be gained or lost — a certain part of the brain lit up.This region, which remained dormant when the triangle appeared and no money was at stake, is called thenucleus accumbens. Evolutionarily speaking, the nucleus accumbens is one of the most primitive parts of the brain — one traditionally associated with our “wild side.” Scientists call this region the pleasure center because it’s associated with the high that results from drugs and gambling. At its most extreme, the pleasure center drives addiction. The MRI study surprised the researchers because it revealed that the pleasure center is also where we react to financial compensation. And the more money there is on the line, the more the pleasure center lights up. A monetary reward is — biologically speaking — like a tiny dose of a drug.
Pleasure Versus Altruism
Now compare this reaction with our neurological reaction to altruistic behavior. In 2006, after the NIH study, Duke scientists asked subjects to play a similar game, but instead of earning money for themselves, the participants were told that the better their score, the more money would be donated to charity. In the MRI images, the pleasure center remained quiet throughout the game, but a different region of the brain, the posterior superior temporal sulcus, kept lighting up — the altruism center. This is the same part of the brain responsible for social interactions — how we perceive others, how we relate and how we form bonds. Considering the two studies, scientists discovered that unlike the parts of our brain that control movement and speech, the pleasure center and the altruism center cannot both function at the same time. It’s as if we have two “engines” running in our brain that can’t operate simultaneously.We can approach a task either altruistically or from a self-interested perspective. The two different engines run on different fuels and also need different amounts of those fuels to fire up. It doesn’t take much to fuel the altruism center: All you need is the sense that you’re helping someone or making a positive impact. But the pleasure center seems to need a lot more.
(end of excerpt)
When I listened to this (and re-listened to it) a giant cartoon light bulb lit up above my head. Put this in terms of trading. When we put our money on the line strickly with the goal of making more money (I need 30% on this trade, I need to clear 10k in profit this week, this month... I need to raise 50k for my kid's college before June) it AUTOMATICALLY engages our carnal, beast like senses. It disengages our logical capabilities and leaves us shell shocked at our trading screens wondering where our money went and wondering why we did @$!% instead of the prescribed X-Y-Z.
First off - this explains for new traders why it is critical to paper trade. We see that when no money is on the line, our primitive brain is dormant and we can think logically and learn. For those of us who trade (or attempt to trade) on a regular basis I propose a paradigm shift. Rather than sitting down for the day with the goal of "daytrading for a living" or "making a set profit" we can redefine our role in a way that engages the altruistic center in our brain and shuts down the primitive side in the process. Perhaps we can define our selves as "Non-Profit OEX Liquidity Providers " who provide the service of buying options from motivated sellers and selling options to needy buyers. We enable trade. If a by-product of our effort results in profit, fantastic - that's just a function of our efforts to keep the market healthy. I think this is the science behind why Floyd teaches us to be Fruit Vendors.
When I learned of the scientific implications of the way we define our trading - I learned the REASON we feel the way we do at times (out of control, insane, frustrated, powerless to change.) More importantly I learned that we can learn to systematically disengage those negative side effects just by assigning a new paradigm to our system of trading - redefining our purpose in what we do.
Obviously there are other ways you can define your frame of reference in regards to your day-trading "mission statement" but the moral of the story is that it does not have to be about the money. In fact - it's probably more healthy if it's not.
OEX Service Provider MR
PS: Floyd made the following comment in the Oct 20th OEX daily alert and I think it stands repeating: "What we may be seeing is the re-making of the USD, and of the values we put on things." I think it will be important to bear this in mind as we trade and watch the market through Q4 2009 and Q1 2010.
I had a number of inquiries today about knowing when to trade the market up, when to trade at "best buy," and when to trade at prior day close. In today's market, outside of our OEX Manual, and because of the extreme market conditions we are finding a number of ways to successfully NOT be let out of the market.
1. Our standard rule is to never buy above prior day close.
2. Our secondary rule is to try to buy at discount from prior day close.
3. We follow futures and watch the mood. When the market shows upside or downside of 70 points up, it is a lagging indicator of the market opening. As one "watches futures" they find that as they "move" you can see the strength in the bias, or the lack of strength.
4. When bias is strong and one wants to trade the bias, and our recommendation, sometimes it is right to pay to market opening "the first prices available" and sell for 30 to 40% profits same day.
5. When bias is weak, or confused, as we have seen some days, it's best to just wait for the discounted and best buy price, and because the bias is less strong.
The market held much more steady today, a sign that put strength and downside may be waning, yet it also did not gain significant volume in index options. The count is now a very low bias. It is a market waiting for a strong upside move, and still not finished, or certain if a downside move should come first.
*When we trade we expect numeric precision, or system, and this can be done, but not literally. The market is a moving instrument filled with the fear and greed emotions of the trader, and will confound historical charts and facts, but never argues with supply and demand, or cause and effect.
This is what drives the market. And time. It is this simple, and no one will accept it.
Most traders want to know HOW Floyd projects the Dow and we've got a video and article on it on the website, but I will confound you most with "my view of numbers is if they read out to me, and I just know," as much as S/R on Pnf charts. I believe this comes from years of simplicity in viewing, and in my limiting of my actions. That "clean desk" video on our home page is me. I do not have much around me when I trade.
The whipsaw that we saw, and the massive sell off, after an exhaustive gap day UP, did nothing be reassure me more that the economy is rebounding, and investors are starting to slow their own frenzy.
We want this. If the market hesitates a bit, it is breathing, and we want calm.
Last Friday who could have predicted a 250 point overall decline?
Numerically, the number 0 is key, and I've suggested in our Blue Chip Option service things that I think could happen in 2010, and WHY things happened at 10,000.
The 0's concept does not work or have meaning with numbers like 9800, 7600, etc. but in the total rounds of 9000, 10,000, etc. and the reasons for 2010 showing something will be on our Blue Chip blogs this week.
Bernanke and the Fed kids, staying at high priced resorts, will likely inform us that they are holding rates steady. The focus will be on the phrase "extended period" to see if Bernanke rightly opens the door to a potential down the road rate increase.
_______________________________
And from trader MR on the question: what does trading mean to me?
What an articulate response:
Last week I promised my comments on what trading means to me. In the simplest of terms - it is continuing education, understanding myself, and a chance to regain my long term losses of 2007-2008. On the dark side, I can relate all to well with the comments from some of my fellow traders about the anger, fear, and other negative experiences that can be common side effects of the trading "lifestyle."
Recently I listened to an audio summary of the book "Sway" by Ori Brafman and Rom Brafman that highlighted a very interesting set of facts on how our brains are wired and discusses several psychological forces that derail rational thinking. It relates directly to how we understand our emotions when trading. Here is an excerpt directly from the summary, with my emphasis added throughout.
In an experiment, the NIH researchers placed participants in a specially modified MRI machine fitted with a computer monitor and a simple joystick. Lying inside the machine, the subjects played a video game reminiscent of the Atari era. At the start of each round of the game, a circle, square or triangle would appear on the screen. Each shape held a unique meaning: A circle meant that if you succeeded in completing a task — zapping a figure as it appeared on the screen — you’d earn a monetary reward. However, when subjects saw a square instead of a circle, they braced themselves for bad news. The object of the game would be the same — zap the figure — except that failing to do so would result in a monetary penalty. If the participants saw a triangle, it meant that no money was on the line; whether they hit the target or not, they would neither lose nor gain any money that round. While the participants were playing the game, they were shown a running tab of their earnings and losses. Meanwhile, the scientists monitored their brain activity and noticed that every time a circle or square appeared — that is, every time there was money to be gained or lost — a certain part of the brain lit up.This region, which remained dormant when the triangle appeared and no money was at stake, is called thenucleus accumbens. Evolutionarily speaking, the nucleus accumbens is one of the most primitive parts of the brain — one traditionally associated with our “wild side.” Scientists call this region the pleasure center because it’s associated with the high that results from drugs and gambling. At its most extreme, the pleasure center drives addiction. The MRI study surprised the researchers because it revealed that the pleasure center is also where we react to financial compensation. And the more money there is on the line, the more the pleasure center lights up. A monetary reward is — biologically speaking — like a tiny dose of a drug.
Pleasure Versus Altruism
Now compare this reaction with our neurological reaction to altruistic behavior. In 2006, after the NIH study, Duke scientists asked subjects to play a similar game, but instead of earning money for themselves, the participants were told that the better their score, the more money would be donated to charity. In the MRI images, the pleasure center remained quiet throughout the game, but a different region of the brain, the posterior superior temporal sulcus, kept lighting up — the altruism center. This is the same part of the brain responsible for social interactions — how we perceive others, how we relate and how we form bonds. Considering the two studies, scientists discovered that unlike the parts of our brain that control movement and speech, the pleasure center and the altruism center cannot both function at the same time. It’s as if we have two “engines” running in our brain that can’t operate simultaneously.We can approach a task either altruistically or from a self-interested perspective. The two different engines run on different fuels and also need different amounts of those fuels to fire up. It doesn’t take much to fuel the altruism center: All you need is the sense that you’re helping someone or making a positive impact. But the pleasure center seems to need a lot more.
(end of excerpt)
When I listened to this (and re-listened to it) a giant cartoon light bulb lit up above my head. Put this in terms of trading. When we put our money on the line strickly with the goal of making more money (I need 30% on this trade, I need to clear 10k in profit this week, this month... I need to raise 50k for my kid's college before June) it AUTOMATICALLY engages our carnal, beast like senses. It disengages our logical capabilities and leaves us shell shocked at our trading screens wondering where our money went and wondering why we did @$!% instead of the prescribed X-Y-Z.
First off - this explains for new traders why it is critical to paper trade. We see that when no money is on the line, our primitive brain is dormant and we can think logically and learn. For those of us who trade (or attempt to trade) on a regular basis I propose a paradigm shift. Rather than sitting down for the day with the goal of "daytrading for a living" or "making a set profit" we can redefine our role in a way that engages the altruistic center in our brain and shuts down the primitive side in the process. Perhaps we can define our selves as "Non-Profit OEX Liquidity Providers " who provide the service of buying options from motivated sellers and selling options to needy buyers. We enable trade. If a by-product of our effort results in profit, fantastic - that's just a function of our efforts to keep the market healthy. I think this is the science behind why Floyd teaches us to be Fruit Vendors.
When I learned of the scientific implications of the way we define our trading - I learned the REASON we feel the way we do at times (out of control, insane, frustrated, powerless to change.) More importantly I learned that we can learn to systematically disengage those negative side effects just by assigning a new paradigm to our system of trading - redefining our purpose in what we do.
Obviously there are other ways you can define your frame of reference in regards to your day-trading "mission statement" but the moral of the story is that it does not have to be about the money. In fact - it's probably more healthy if it's not.
OEX Service Provider MR
PS: Floyd made the following comment in the Oct 20th OEX daily alert and I think it stands repeating: "What we may be seeing is the re-making of the USD, and of the values we put on things." I think it will be important to bear this in mind as we trade and watch the market through Q4 2009 and Q1 2010.
Tuesday, November 3, 2009
Stocks Drop the OEX Makes Money ; ))
Futures were up but the market only opened 30 points up, allowing easy entry to the call, which moved to profitability by 10.30. a.m. with a 119 point run up.
Traders watching the market were able to trade fast and easily to good profits, from lows of 6.80 to 9.00 in a short hour and a half.
Then, as the market rose, traders were able to enter on the put as low as 2.25 to as high as 4.25 by 2.30 p.m.
Both signals were profitable!
*Much of learning to trade is learning who you are trading against. When you are buying, their are sellers and they are your adversary. If you were selling an OEX Option, for example, that you owned, under various conditions you could be anxious to sell, or waiting to sell at a top price. Its' the same when you are a buyer, wanting the best price, and your goal as a fruit trader is to buy right, and at the right time. That's the trick.
I make my most money trading by simply getting to know something well. Our trusty November 490 Put comes to mind that could have been traded 11 or more times profitably in a 6 day period, and was massively profitable on the big run down last week.
When I find an option that seems to "swing in a range" I begin watching it, if the Dow or the OEX is also holding to a range. I become familiar with what prices the option seems to have the most volume and sell the most at, and that do my watching on that option.
When I provoke you, it is to find things that simple, and work from this perspective.
And as an example of provoking, trader MP wrote me this past weekend. You will note MP shares his thoughts with another person also, who explains it is all "liberals" faults :)
My comments are noted, as his questions and thinking are much like many:
"Hey Floyd..
I've got several questions:
1. Seriously, how can the market drop 140pts. on Wednesday..then rise over 200pt.s on Thursday and then drop 250 pt.s Friday...What the hell is that all about? One day there is good news and the market bounces 200pts. and the next day - fear kicks into the market? What could have possible changed that dramatically? The VIX went up 6 pts. on Friday and I'm just curious as to why ALL OF A SUDDNEN there is fear in the market? Did people really believe that things were fine two days ago?
Floyd: This is simply the law of supply and demand, and cause and effect. The market had moved up dramatically, and a fall was due. The move up on Thursday was nothing more than false euphoria and an exhaustive gap up.
U.S. Stocks Drop as S&P 500 Ends Streak of Seven Monthly Gains-- Floyd: This is a silly, dramatic headline that makes one feel " the end of the world_
Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Rita Nazareth
Oct. 30 (Bloomberg) -- U.S. stocks tumbled, ending a seven- month streak of gains for the Standard & Poor’s 500 Index, as declines in consumer confidence and spending and the threat of a CIT Group Inc.bankruptcy raised concern over the durability of the economic recovery. (IS THAT REALLY THE REASON WHY WE SAW A DROP?)
Floyd: This was the "reason,", but the real reason is that the market was OVERSOLD.
“I’m well-spooked for the Halloween weekend,” said James Paulsen, who helps oversee $375 billion as chief investment strategist at Wells Capital Management in Minneapolis. “We can talk about disappointing consumer confidence data. Bank charge- offs are still happening. There’s a growing sense on the Street that there’s got to be a pullback.” SO ARE WE GETTING A PULLBACK BECAUSE THE MARKET "NEEDS" A PULLBACK OR ARE WE GETTING A PULLBACK BECAUSE THINGS REALLY AREN'T THAT GOOD...AND HAVEN''T BEEN THAT GOOD? AND WE DIDN'T THINK THIS A WEEK AGO? AT LEAST NOT GOOD ENOUGH TO WARRANT THE RUN WE HAD TO 10,000 ANYWAY CORRECT?
Floyd: This is the normal law of supply and demand and cause and effect. Nothing more
What cracks me up is how come last week...before we hit 10,000...everything was all positive - hearing about how the S&P is looking for 1200 and that the recession is over and that our economy is moving in the right direction....now Citigroup is going under...what the frig is going on and who can you trust for the proper information? Does anyone really know WHAT IS GOING ON? WHAT IS THE TRUTH?
Floyd: But if you read our alerts, not was all positive. You are fed newsbites. Citigroup is not going under. Everything was not GREAT a week ago, but things are better than a year ago.
_________________________________
I noticed that oil took a hit and your DUG calls are gaining some ground....I almost bought your .dzgkn signal for the first time the other day for 25 cents...they hit 75 cents on Friday...that would have been a nice 200% gain - instead I sat out and now I'm kicking myself...
Anyway...I'm beginning to hear more and more about the real estate plunge that we have yet to experience..what do you think about another one of those plays?
Floyd: We're doing fine on our DUG calls and will soon recommend a new position to SRS. We were too early in our inverse call on this last month.
And lastly..I often forward your political rants to my buddy Steve who is a retired marine fighter pilot, Christian, Neo-con and big time black and white guy. He is a currency trader and has yet to trade successfully over an extended period of time.He also just got out of alcohol rehab.
I was defending some of your arguments in a conversation with Steve and he had this to say about you:
Floyd may be a good trader but his underlying analysis of things is not accurate. He still refuses to acknowledge the fact that it was government meddling by the left that created the current disaster, not Bush lying. He is a statist and as such must be fought on every level. He is either a willing or innocent participant in the left's march to tyranny but it does not matter. The fact is he is an enemy of liberty.
Floyd: People like this struggle so much to believe it is "someone else's'" fault. This is a name caller, that does not know the words he uses. Statist and liberal...Limbaugh and Beck name calling, without logic. These are the people I see living in "black and white", not knowing it is grey.
My question to you is the following: How come when I read stuff like this from Steve, I see and hear how ridiculous it is...but at the same time, I'm unable to see or hear how absurd my own remarks have become. And why is it so obvious to me that a man who speaks and thinks like this will never succeed as a trader but think I can succeed when I've said and thought other things just as ridiculous?
In other words, how come it is so easy for me to see Steve's weaknesses but not mine...let alone change mine? Why so difficult?
Michael
Traders watching the market were able to trade fast and easily to good profits, from lows of 6.80 to 9.00 in a short hour and a half.
Then, as the market rose, traders were able to enter on the put as low as 2.25 to as high as 4.25 by 2.30 p.m.
Both signals were profitable!
*Much of learning to trade is learning who you are trading against. When you are buying, their are sellers and they are your adversary. If you were selling an OEX Option, for example, that you owned, under various conditions you could be anxious to sell, or waiting to sell at a top price. Its' the same when you are a buyer, wanting the best price, and your goal as a fruit trader is to buy right, and at the right time. That's the trick.
I make my most money trading by simply getting to know something well. Our trusty November 490 Put comes to mind that could have been traded 11 or more times profitably in a 6 day period, and was massively profitable on the big run down last week.
When I find an option that seems to "swing in a range" I begin watching it, if the Dow or the OEX is also holding to a range. I become familiar with what prices the option seems to have the most volume and sell the most at, and that do my watching on that option.
When I provoke you, it is to find things that simple, and work from this perspective.
And as an example of provoking, trader MP wrote me this past weekend. You will note MP shares his thoughts with another person also, who explains it is all "liberals" faults :)
My comments are noted, as his questions and thinking are much like many:
"Hey Floyd..
I've got several questions:
1. Seriously, how can the market drop 140pts. on Wednesday..then rise over 200pt.s on Thursday and then drop 250 pt.s Friday...What the hell is that all about? One day there is good news and the market bounces 200pts. and the next day - fear kicks into the market? What could have possible changed that dramatically? The VIX went up 6 pts. on Friday and I'm just curious as to why ALL OF A SUDDNEN there is fear in the market? Did people really believe that things were fine two days ago?
Floyd: This is simply the law of supply and demand, and cause and effect. The market had moved up dramatically, and a fall was due. The move up on Thursday was nothing more than false euphoria and an exhaustive gap up.
U.S. Stocks Drop as S&P 500 Ends Streak of Seven Monthly Gains-- Floyd: This is a silly, dramatic headline that makes one feel " the end of the world_
Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Rita Nazareth
Oct. 30 (Bloomberg) -- U.S. stocks tumbled, ending a seven- month streak of gains for the Standard & Poor’s 500 Index, as declines in consumer confidence and spending and the threat of a CIT Group Inc.bankruptcy raised concern over the durability of the economic recovery. (IS THAT REALLY THE REASON WHY WE SAW A DROP?)
Floyd: This was the "reason,", but the real reason is that the market was OVERSOLD.
“I’m well-spooked for the Halloween weekend,” said James Paulsen, who helps oversee $375 billion as chief investment strategist at Wells Capital Management in Minneapolis. “We can talk about disappointing consumer confidence data. Bank charge- offs are still happening. There’s a growing sense on the Street that there’s got to be a pullback.” SO ARE WE GETTING A PULLBACK BECAUSE THE MARKET "NEEDS" A PULLBACK OR ARE WE GETTING A PULLBACK BECAUSE THINGS REALLY AREN'T THAT GOOD...AND HAVEN''T BEEN THAT GOOD? AND WE DIDN'T THINK THIS A WEEK AGO? AT LEAST NOT GOOD ENOUGH TO WARRANT THE RUN WE HAD TO 10,000 ANYWAY CORRECT?
Floyd: This is the normal law of supply and demand and cause and effect. Nothing more
What cracks me up is how come last week...before we hit 10,000...everything was all positive - hearing about how the S&P is looking for 1200 and that the recession is over and that our economy is moving in the right direction....now Citigroup is going under...what the frig is going on and who can you trust for the proper information? Does anyone really know WHAT IS GOING ON? WHAT IS THE TRUTH?
Floyd: But if you read our alerts, not was all positive. You are fed newsbites. Citigroup is not going under. Everything was not GREAT a week ago, but things are better than a year ago.
_________________________________
I noticed that oil took a hit and your DUG calls are gaining some ground....I almost bought your .dzgkn signal for the first time the other day for 25 cents...they hit 75 cents on Friday...that would have been a nice 200% gain - instead I sat out and now I'm kicking myself...
Anyway...I'm beginning to hear more and more about the real estate plunge that we have yet to experience..what do you think about another one of those plays?
Floyd: We're doing fine on our DUG calls and will soon recommend a new position to SRS. We were too early in our inverse call on this last month.
And lastly..I often forward your political rants to my buddy Steve who is a retired marine fighter pilot, Christian, Neo-con and big time black and white guy. He is a currency trader and has yet to trade successfully over an extended period of time.He also just got out of alcohol rehab.
I was defending some of your arguments in a conversation with Steve and he had this to say about you:
Floyd may be a good trader but his underlying analysis of things is not accurate. He still refuses to acknowledge the fact that it was government meddling by the left that created the current disaster, not Bush lying. He is a statist and as such must be fought on every level. He is either a willing or innocent participant in the left's march to tyranny but it does not matter. The fact is he is an enemy of liberty.
Floyd: People like this struggle so much to believe it is "someone else's'" fault. This is a name caller, that does not know the words he uses. Statist and liberal...Limbaugh and Beck name calling, without logic. These are the people I see living in "black and white", not knowing it is grey.
My question to you is the following: How come when I read stuff like this from Steve, I see and hear how ridiculous it is...but at the same time, I'm unable to see or hear how absurd my own remarks have become. And why is it so obvious to me that a man who speaks and thinks like this will never succeed as a trader but think I can succeed when I've said and thought other things just as ridiculous?
In other words, how come it is so easy for me to see Steve's weaknesses but not mine...let alone change mine? Why so difficult?
Michael
Monday, November 2, 2009
The Greenback has Bottomed
The first trading day in November the Dow has been down 3 in a row after a 4 year bull run,and was down 362 points in 2007. Just think, at that time, being down 362 points was a HUGE day down.
It became the norm last year. And now, we see typical 586 point moves between a top and a bottom, often within 21 days or yet. The market has become FAST.
Now, the facts: The market dropped to 9644, just below our strong support line of 9679. Within our Dow projections, updated, you'll note our next potential bottom, and the exhaustive gap lines the market could use to "run up" again.
Stansberry and Associates wrote Friday:
"Today is a pivotal day for the market.
Stocks are either ready to break down and head toward the October lows – a break below will lead to a much more negative move over time – or the bulls will make a stand and rally into the seasonally strong period of November and December.
I favor the former scenario, but it could go either way. And it all depends on the U.S. dollar.
Stocks have been moving inverse to the U.S. dollar for the better part of two years now. Indeed, when the dollar bottomed last September, stocks began their nosedive. And the peak in the dollar in March coincided perfectly with the bottom in stocks.
The dollar broke to the upside of a bullish falling-wedge pattern on Wednesday. That event spooked the market and was largely the reason for the extended decline and temporary breakdown in the S&P 500.
The dollar was weak yesterday. It dropped back down to retest the breakout level. Not surprisingly, stocks rallied in response.
So the future of this market is entirely in the hands of the dollar. If the greenback has bottomed, stocks have peaked. If the dollar starts to fall again and make new lows, stocks will make new highs.
It's really no more complicated than that"
The dollar broke to the upside of a bullish falling-wedge pattern on Wednesday. That event spooked the market and was largely the reason for the extended decline and temporary breakdown in the S&P 500.
The dollar was weak yesterday. It dropped back down to retest the breakout level. Not surprisingly, stocks rallied in response.
So the future of this market is entirely in the hands of the dollar. If the greenback has bottomed, stocks have peaked. If the dollar starts to fall again and make new lows, stocks will make new highs.
It's really no more complicated than that"
The Great Depression and World War II created the modern world in lots of ways. They also created one of the primary lenses through which we view it. What the war brought us was a middle class, yearning more, buying on "lay away," and leading to more and more ways to communicate. And now the newsbites and Blackberry news of instant attention, or the desire to spend $100 on a dinner has become a norm.
I believe we are seeing a major shift worldwide in human sentiment, and action, and are being knifed in the corners by the many that do not want any corruption to change. Note I didn't say corruption to end, as it's been going on forever, but a way of thinking long term on "what the right thing to do is."
So, look at a large drop that was a record in 2007, and is now "a day" in 2009.
It became the norm last year. And now, we see typical 586 point moves between a top and a bottom, often within 21 days or yet. The market has become FAST.
Now, the facts: The market dropped to 9644, just below our strong support line of 9679. Within our Dow projections, updated, you'll note our next potential bottom, and the exhaustive gap lines the market could use to "run up" again.
Stansberry and Associates wrote Friday:
"Today is a pivotal day for the market.
Stocks are either ready to break down and head toward the October lows – a break below will lead to a much more negative move over time – or the bulls will make a stand and rally into the seasonally strong period of November and December.
I favor the former scenario, but it could go either way. And it all depends on the U.S. dollar.
Stocks have been moving inverse to the U.S. dollar for the better part of two years now. Indeed, when the dollar bottomed last September, stocks began their nosedive. And the peak in the dollar in March coincided perfectly with the bottom in stocks.
The dollar broke to the upside of a bullish falling-wedge pattern on Wednesday. That event spooked the market and was largely the reason for the extended decline and temporary breakdown in the S&P 500.
The dollar was weak yesterday. It dropped back down to retest the breakout level. Not surprisingly, stocks rallied in response.
So the future of this market is entirely in the hands of the dollar. If the greenback has bottomed, stocks have peaked. If the dollar starts to fall again and make new lows, stocks will make new highs.
It's really no more complicated than that"
The dollar broke to the upside of a bullish falling-wedge pattern on Wednesday. That event spooked the market and was largely the reason for the extended decline and temporary breakdown in the S&P 500.
The dollar was weak yesterday. It dropped back down to retest the breakout level. Not surprisingly, stocks rallied in response.
So the future of this market is entirely in the hands of the dollar. If the greenback has bottomed, stocks have peaked. If the dollar starts to fall again and make new lows, stocks will make new highs.
It's really no more complicated than that"
The Great Depression and World War II created the modern world in lots of ways. They also created one of the primary lenses through which we view it. What the war brought us was a middle class, yearning more, buying on "lay away," and leading to more and more ways to communicate. And now the newsbites and Blackberry news of instant attention, or the desire to spend $100 on a dinner has become a norm.
I believe we are seeing a major shift worldwide in human sentiment, and action, and are being knifed in the corners by the many that do not want any corruption to change. Note I didn't say corruption to end, as it's been going on forever, but a way of thinking long term on "what the right thing to do is."
So, look at a large drop that was a record in 2007, and is now "a day" in 2009.
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