A General Rule

Everyone was excited yesterday as the elections to "change the world" were taking place. I'm saddened by it all, and how stupid many politicians must think we are, or how stupid we may be.

The market sharply moved up 86 points at opening, with a solid showing of futures in advance. The market again through mid morning showed trade range tendency, as the world waits for the election "answers" and what Bernanke does with the USD this week.
Calls that were bought yesterday near the market close were available for quick tight profits in morning trading.

A general rule often asked of me:
"When you say buy below prior day close, and you give a %, should we hold exactly to that %?"
The answer, as evidenced yesterday, is "sometimes." Every buy and sell price we give are in "general ranges" and set up for you to make judgment. As an example, the market finally moved below prior day close yesterday near the end of the day, and we did want entry to the call, so we adjusted our buy price UP to still buy below prior day close. This is also true with our "sell range."

Sell NEAR the prices we guide to, or take tighter profits-these are standards you define based on your own risk orientation and goals. This allowed us a sale from a buy at 13.40 to $15.00 the next day, and many will still hold on the call, again all before 2 p.m.

The stagnation or flat lining we are seeing is making it much more difficult to trade, as the moves are light, fast, and obviously "waiting" for election news, and then news of the USD.

We will keep both signals open, and take a larger second buy to the call if necessary. We believe there may be slight downside, and would only be concerned if we passed 11,030 and closed below that; otherwise, we see whipsaw and a "relief" turn to upside that it's all "decided and fixed."

______________________
In our Blue Chip Option portfolio (www.bluechipoptions.com) our average return rate on options recommended this year, inclusive of wins, losses and commissions is 46.1%

_____________________

By the end of last week the stock market had hit a six month high of a return of 31.49%^. Cynics wonder just how much this is like prior run ups where we rush to the top, again, only to fall back to support lines again. If the corrections that take place are not lower lows in the market they are merely a healthy correction. It's when the lows come in below prior support line lows that market makers and stock traders should be taking notice.