For those trading on 10/29 note we had re-projected the Dow, and are doing so again, and gave the following instructions:
"There has been enough consolidation to justify a 586 run down, and it’s likely to see the market whipsaw to 10,150 area again, before another consolidation to 9850 to 9679 again."
We wrote the above yesterday, and saw the market hit 9964 by 1 pm. Our contrarian play on the November 500 call returned 33%-45% to traders, all able to buy just slightly above prior day close.
We read that the market would react to the downside, and we saw a market upturn of over 200 theoretical Dow points by 1.45 p.m.
The reason the market gave for this was that the U.S. economy expanded for th first time in more than a year amidst the stimulus. We are seeing, to a GDP follower, "recovery."
I gave a speech at a symposium last week to some stockbrokers in Washington DC about index option trading. I had the opportunity to meet with brokers from all over the world that "bet the market," and project and analyze.
They heard me for 30 minutes teach:
*False facts
*A rock is not hard
*Most financial statements are false
*The mood of the public is paramount to the mood of the market
The major question I had during this speech was around "how to project financials for future earnings." As you know, this is what half the talking head analysts do as they "chart" the future.
My answer was seriously listened to, and I'll repeat it:
"No company in 2009 can make long term financial business plan projections beyond one year. Too much in the world is changing. Looking at 'three year growth patterns' or what a company projects is much like fishing in a river that has poisoned and has few fish." I shut them up with their questions with this:
1. Years ago AOL owned the internet. It is now broke. Who would have seen that so many idiots could have mismanaged a business that had a 86% market share
2. Who would have guessed that Green Mountain Coffee would rise 190% while Starbucks, missing the change in the environment, dropped dramatically. Both had business plans that analysts had defined as "sound"; in fact, Green Mountain got a "watch" read from Goldman Sachs while Starbucks got a "strong buy." Interesting, the reversed happened.
The conspiracists will have a field day: was Sachs manipulating the market to short and hold calls on both instruments. You bet. And guess who won the biggest?
While in Washington I heard the babble brought on by the GOP on "Obamanation" and the false facts on "socialized medicine" or "how can we control the right of people to earn money". These were stockbrokers, of course, who benefit when United Healthcare et al rise 428% in profits in 10 years, and will not benefit when costs are controlled and contained by competition. We have no competition or free trade in ANY way in the health care industry, and those that believe that our costs will be driven up are using false facts to analyze WHAT NO ONE CAN EVEN BEGIN to conjecture about. We only know that typically when competition lowers price (aka Wal-Mart) that others are forced to find ways to be more competitive.
During the Bush reign we never saw the dead bodies coming in from Iraq. This was on purpose. It helped us hide from it.
During the Bush reign we heard about the thriving economy for years, but it thrived ONLY in the homebuilding industry, which created more than half of the jobs that gave us lowered unemployment.
Few thought out "what happens when the bubble breaks?"
I left our great capital saddened by the tears of the public caught in the newsbites that lead us to believe what is not even true, or even partway true.
I ended my speech with the kicker: "The market is up because of the stimulus, and the need for something 'good' to lead us first. And, if we do not control Wall Street again the same thing will occur, and this time it will be our fault. A President, even Bush , does not do this. Congress does. You do. You do by your thinking, your vote, and your standing up for real facts.
What person in their right mind thinks that this country could be turned around from 8 years of lies in a 10 month period? I smile at our innocence or our stupidity. I'm not sure which.
Nothing we could have done, by the way, when the bank fraud was finally 'admitted' would have been the perfect answer. We have 540 men and women (Congress) daily influenced by lobbyists, all whom represent special interests. This has been taking place since our Government was first formed, but is now in a state of pure corruption. It takes a village....you know the line. The doomsayers of 'socialism' make me smile, as Obama only represents the majority of the country, and unemployment rates are part of companies ready to return record profits (study the earnings) by simply having fewer people.
Do not for a minute think that free enterprise truly works. Wal Mart is a perfect example, having grown successfully, by filling huge buildings with goods from China, at low prices, and we buy them.
Thousands of businesses have closed because of this 'free enterprise.' It's not wrong, it's simply to show us that 'all is not as it appears.'"
________
Back to the market. Study our new Dow projections, as we have a two way possibility:
1. The market will continue another run to 10,167 before consolidating again to 9800
2. The market will slowly build to 10,256 and the last consolidation is over.
We'll give only a one way day trade today, sell before the weekend.
Saturday, October 31, 2009
Friday, October 30, 2009
Thought I Would Share
Thought I would share the following document with you as you progressed in my ongoing argument for downside. Yesterday the Dow hit a theoretical low of 9744, which exceeds our 586 point average move over a 21 day period. Sure enough, the market dropped and the November 490 Put , an "option I fell in love with" hit highs of 12.73 before the 3 p.m.. hour. Available as low as 9.50 for the day, and with many traders, we'll close out our position with this put with many traders reporting 5 to 15 actual day or two day trades on this signal over the past weeks.
I've stuck to my guns downside, as logic will always "just for a moment" prevail.
So, read this article I wrote a few days ago:
Much has been make about Dow 10,000 last week, but technicians may want to focus about 500 points higher instead. The chart below shows Volume-by-Price for the Dow Industrials. Notice that the longest bar is around 10500-11000. This represents a potential resistance zone in the coming weeks or months.
Oct. 27 (Bloomberg) -- Investors worldwide are borrowing dollars to buy assets including equities and commodities, fueling “huge” bubbles that may spark another financial crisis, said New York University professor Nouriel Roubini.
“We have the mother of all carry trades,” Roubini, who predicted the banking crisis that spurred more than $1.6 trillion of asset writedowns and credit losses at financial companies worldwide since 2007, said via satellite to a conference in Cape Town, South Africa. “Everybody’s playing the same game and this game is becoming dangerous.”
The dollar has dropped 12 percent in the past year against a basket of six major currencies as the Federal Reserve, led by Chairman Ben S. Bernanke, cut interest rates to near zero in an effort to lift the U.S. economy out of its worst recession since the 1930s. Roubini said the dollar will eventually “bottom out” as the Fed raises borrowing costs and withdraws stimulus measures including purchases of government debt. That may force investors to reverse carry trades and “rush to the exit,” he said.
“The risk is that we are planting the seeds of the next financial crisis,” said Roubini, chairman of New York-based research and advisory service Roubini Global Economics. “This asset bubble is totally inconsistent with a weaker recovery of economic and financial fundamentals.”
‘Wall of Liquidity’
The MSCI World Index of advanced-nation equities has surged 65 percent from this year’s low on March 9, while the MSCI Emerging Markets Index has jumped 96 percent. The Reuters/Jefferies CRB Index of 19 commodities has added 33 percent.
Roubini said he sees a bubble in emerging-market equities and that gains in some developing-nation currencies are becoming “excessive.” The rally in oil “is not justified by the fundamentals,” he said.
An asset “bust” may not occur for another year or two as a “wall of liquidity” pushes prices higher, Roubini said. In a carry trade, investors borrow in countries with low interest rates to invest in higher-yielding assets.
Roubini said the U.S. recession seems to be over, though the economic recovery in advanced nations will be “anemic.” He’s “more optimistic” on the outlook for emerging-nation growth.
The U.S. economy probably expanded at a 3.2 percent pace from July through September after shrinking the previous four quarters, according to the median estimate of 65 economists surveyed by Bloomberg News before the Commerce Department’s report on gross domestic product due Oct. 29.
Roubini on Stocks
The economy shrank 3.8 percent in the 12 months to June, the worst performance in seven decades.
Roubini’s July 2006 warning about the financial crisis protected investors from losses in the Standard & Poor’s 500 Index’s worst annual tumble in seven decades. The U.S. equity benchmark has surged 58 percent from a 12-year low in March even as Roubini said that month the advance was a “dead-cat bounce,” that it may “fizzle” in May and warned in July that the economy is “not out of the woods.”
___________
Here's some commentary between a subscriber and myself on my predictions about the sell off. My comments are in bold:
> Hey brother..
>
> I am amazed at how you called the downside this week.
>
> I am also kicking myself that I did not purchase the 490 put on Friday of last week for 4.50 and then again on Monday for 5.50...She was over 12.00 a few minutes ago...unbelieveable...
>
> I've got some questions for you...
>
> Since you were "certain" of downside this week and being that we were so overbought...can you share with us how you specifically traded the put signal because I know that you sometimes hold out for bottoms or tops of your DOW projections and sometimes you grab your profits and get out...
The market struggles at 000's. I bought and sold the 490 11 times in the past 5 days.
>
> I sense that this week you held out one position for large profits while you scalped other positions using another account...or maybe you purchased another strike price as well and held one longer than the other...did you do something like that?
Always the same strike
>
> Also, I noticed that when the DOW hit 9800 (magic number and good support)...the market bounced nice...giving a trader an opportunity to grab and easy .70 on the 495 call...would you or did you play something like this too?
Absolutely.
>
> I love it when you share with us how you specificaly played the market...it helps me develop strategies in the future...
>
> Anyway, nice job again on the signals this week...you were right on...
I've stuck to my guns downside, as logic will always "just for a moment" prevail.
So, read this article I wrote a few days ago:
Much has been make about Dow 10,000 last week, but technicians may want to focus about 500 points higher instead. The chart below shows Volume-by-Price for the Dow Industrials. Notice that the longest bar is around 10500-11000. This represents a potential resistance zone in the coming weeks or months.
Oct. 27 (Bloomberg) -- Investors worldwide are borrowing dollars to buy assets including equities and commodities, fueling “huge” bubbles that may spark another financial crisis, said New York University professor Nouriel Roubini.
“We have the mother of all carry trades,” Roubini, who predicted the banking crisis that spurred more than $1.6 trillion of asset writedowns and credit losses at financial companies worldwide since 2007, said via satellite to a conference in Cape Town, South Africa. “Everybody’s playing the same game and this game is becoming dangerous.”
The dollar has dropped 12 percent in the past year against a basket of six major currencies as the Federal Reserve, led by Chairman Ben S. Bernanke, cut interest rates to near zero in an effort to lift the U.S. economy out of its worst recession since the 1930s. Roubini said the dollar will eventually “bottom out” as the Fed raises borrowing costs and withdraws stimulus measures including purchases of government debt. That may force investors to reverse carry trades and “rush to the exit,” he said.
“The risk is that we are planting the seeds of the next financial crisis,” said Roubini, chairman of New York-based research and advisory service Roubini Global Economics. “This asset bubble is totally inconsistent with a weaker recovery of economic and financial fundamentals.”
‘Wall of Liquidity’
The MSCI World Index of advanced-nation equities has surged 65 percent from this year’s low on March 9, while the MSCI Emerging Markets Index has jumped 96 percent. The Reuters/Jefferies CRB Index of 19 commodities has added 33 percent.
Roubini said he sees a bubble in emerging-market equities and that gains in some developing-nation currencies are becoming “excessive.” The rally in oil “is not justified by the fundamentals,” he said.
An asset “bust” may not occur for another year or two as a “wall of liquidity” pushes prices higher, Roubini said. In a carry trade, investors borrow in countries with low interest rates to invest in higher-yielding assets.
Roubini said the U.S. recession seems to be over, though the economic recovery in advanced nations will be “anemic.” He’s “more optimistic” on the outlook for emerging-nation growth.
The U.S. economy probably expanded at a 3.2 percent pace from July through September after shrinking the previous four quarters, according to the median estimate of 65 economists surveyed by Bloomberg News before the Commerce Department’s report on gross domestic product due Oct. 29.
Roubini on Stocks
The economy shrank 3.8 percent in the 12 months to June, the worst performance in seven decades.
Roubini’s July 2006 warning about the financial crisis protected investors from losses in the Standard & Poor’s 500 Index’s worst annual tumble in seven decades. The U.S. equity benchmark has surged 58 percent from a 12-year low in March even as Roubini said that month the advance was a “dead-cat bounce,” that it may “fizzle” in May and warned in July that the economy is “not out of the woods.”
___________
Here's some commentary between a subscriber and myself on my predictions about the sell off. My comments are in bold:
> Hey brother..
>
> I am amazed at how you called the downside this week.
>
> I am also kicking myself that I did not purchase the 490 put on Friday of last week for 4.50 and then again on Monday for 5.50...She was over 12.00 a few minutes ago...unbelieveable...
>
> I've got some questions for you...
>
> Since you were "certain" of downside this week and being that we were so overbought...can you share with us how you specifically traded the put signal because I know that you sometimes hold out for bottoms or tops of your DOW projections and sometimes you grab your profits and get out...
The market struggles at 000's. I bought and sold the 490 11 times in the past 5 days.
>
> I sense that this week you held out one position for large profits while you scalped other positions using another account...or maybe you purchased another strike price as well and held one longer than the other...did you do something like that?
Always the same strike
>
> Also, I noticed that when the DOW hit 9800 (magic number and good support)...the market bounced nice...giving a trader an opportunity to grab and easy .70 on the 495 call...would you or did you play something like this too?
Absolutely.
>
> I love it when you share with us how you specificaly played the market...it helps me develop strategies in the future...
>
> Anyway, nice job again on the signals this week...you were right on...
Wednesday, October 28, 2009
Fruit Vendor Trading
We saw hesitancy. The theoretical Dow hit 9987, not crossing 10,000, while dropping to 9798. New buys were possible on our open November 490P, it hit highs of 10.30 for those already holding, and was available as low as 8.20 for a first buy.
Anything could now move the market, but oil earnings come out this week for the giants, and they will be bleak. We'll hold only a position to the put for the time being.
Many of our new traders read our OEX Manual, and study our Support/Resistance lines and write me often about "following the exact rules." I do not believe that anything in the world is absolute, that a rock is not hard (we only know what we know) and that even a trading system cannot be "absolute," but must have flexibility and intuition built in. The market breathes, and itself only follows rules "to a point."
What certain "types of personalities" do is key. At Level 3 and Advanced Mentoring we offer a Myers Brigg psychological test that I score, and it helps identify "traits" in your personality that you can watch for.
For some obvious examples:
*An "introverted" "engineer" "type" will want absolutes, and black and white.
*An "extroverted and "emotional" "type" will thrive more on risk, often too much risk, and break rules
*The "type of person" that "knows" what "should be" will have difficulty "fighting with themselves" over what is, not what should be.
*The personality type that "suffers" will potentially subconsciously sabotage their own successes, based on their own self fulfilling prophecy that they have "bad luck".
*Those types that "name" things (Obama is a socialist), or "freedom is being taken away" will struggle with false facts, the leading cause of failure in trading.
Many "believe" what they read or more sadly "listen to" on radio and TV and without any investigation or analysis of what the "definition" is will struggle with "black and white."
Smart traders know that a "rock is not hard," and know that facts are often not facts, but "half done" pieces of information.
As you trade, it is key you question facts, not get caught in "defining" what is occurring (as we as a public never have ALL the facts), and have a basic question about EVERYTHING.
For example, when town hall meetings became "screaming fits" was this the American people speaking out, or was it American people being misled with false information, thusly resulting in more bi-partisanship?
Did this truly represent the country, or did it disrupt our country?
How did this affect the stock market? (Suggestion: something must get better, and the market leads the economy, so we will buy stocks and not be "left out.")
Trader MR wrote me last weekend to share his successes in "fruit vendor trading" on the OEX:
>> I found some excellent material on the human mind that were infinitely enlightening when compared to the trading experience. I'll be summarizing sometime this week as a follow up to the "what trading means to me" (WTMTM)commentary.
>>
>> My laptop contracted a virus last week; I've been less prolific in my communication, and this doesn't count as my "official" WTMTM reply email :)
>>
>> A general comment though, it was a great week to trade wasn't it? 5/5 on OEX trades all returning 10% per trade. My trading portfolio is up about 4% in a week when the DOW was flat to declining, still holding an open GLD call (that I opened on my own advice).
>>
>> I started to actually follow the rules this month - with the exception of the first trade of October. I am 11/15 for the month and I saw that when I actually follow the rules: trade at S/R, make 2nd buys wisely, don't overbuy and break the rules due to fear of losing a large % of the portfolio --- it all works together.
>>
>> I am looking forward to sharing the data I found. I believe it can be truly helpful in daily trading.
>>
>> Fruit Vendor MR
Anything could now move the market, but oil earnings come out this week for the giants, and they will be bleak. We'll hold only a position to the put for the time being.
Many of our new traders read our OEX Manual, and study our Support/Resistance lines and write me often about "following the exact rules." I do not believe that anything in the world is absolute, that a rock is not hard (we only know what we know) and that even a trading system cannot be "absolute," but must have flexibility and intuition built in. The market breathes, and itself only follows rules "to a point."
What certain "types of personalities" do is key. At Level 3 and Advanced Mentoring we offer a Myers Brigg psychological test that I score, and it helps identify "traits" in your personality that you can watch for.
For some obvious examples:
*An "introverted" "engineer" "type" will want absolutes, and black and white.
*An "extroverted and "emotional" "type" will thrive more on risk, often too much risk, and break rules
*The "type of person" that "knows" what "should be" will have difficulty "fighting with themselves" over what is, not what should be.
*The personality type that "suffers" will potentially subconsciously sabotage their own successes, based on their own self fulfilling prophecy that they have "bad luck".
*Those types that "name" things (Obama is a socialist), or "freedom is being taken away" will struggle with false facts, the leading cause of failure in trading.
Many "believe" what they read or more sadly "listen to" on radio and TV and without any investigation or analysis of what the "definition" is will struggle with "black and white."
Smart traders know that a "rock is not hard," and know that facts are often not facts, but "half done" pieces of information.
As you trade, it is key you question facts, not get caught in "defining" what is occurring (as we as a public never have ALL the facts), and have a basic question about EVERYTHING.
For example, when town hall meetings became "screaming fits" was this the American people speaking out, or was it American people being misled with false information, thusly resulting in more bi-partisanship?
Did this truly represent the country, or did it disrupt our country?
How did this affect the stock market? (Suggestion: something must get better, and the market leads the economy, so we will buy stocks and not be "left out.")
Trader MR wrote me last weekend to share his successes in "fruit vendor trading" on the OEX:
>> I found some excellent material on the human mind that were infinitely enlightening when compared to the trading experience. I'll be summarizing sometime this week as a follow up to the "what trading means to me" (WTMTM)commentary.
>>
>> My laptop contracted a virus last week; I've been less prolific in my communication, and this doesn't count as my "official" WTMTM reply email :)
>>
>> A general comment though, it was a great week to trade wasn't it? 5/5 on OEX trades all returning 10% per trade. My trading portfolio is up about 4% in a week when the DOW was flat to declining, still holding an open GLD call (that I opened on my own advice).
>>
>> I started to actually follow the rules this month - with the exception of the first trade of October. I am 11/15 for the month and I saw that when I actually follow the rules: trade at S/R, make 2nd buys wisely, don't overbuy and break the rules due to fear of losing a large % of the portfolio --- it all works together.
>>
>> I am looking forward to sharing the data I found. I believe it can be truly helpful in daily trading.
>>
>> Fruit Vendor MR
Tuesday, October 27, 2009
It Will Be Interesting
Of course, the market opened with an exhaustive gap up to 10,100 theoretical Dow by 10 a.m., and then began hesitating. This was the perfect day for trading,as we saw light futures, no bias, and traders were able to buy the Nov 490P at best buy of 5.20, to highs of 10.00 by early afternoon. This was an easy trade. At the same time, traders had no time to enter on the call, as it rose in a fast gap up, and held.
Yesterday was the perfect OEX profit, with every rule intact! Returns of 40% plus were easy.
It might be harder today. There are struggles at 9800, but the market wants to go much lower. Earnings should look good for many reporting, and housing starts may appear falsely "up."
It will be interesting to see if the consolidation will hold.
Many market makers believe the market is now not only oversold, but overpriced, and that equities will suffer, despite what have been good earnings so far. Part of this is that Wall Street and companies set easy earning expectations because of the financial debacle, but earning analysts are now "pricing performance, not just cutbacks" into their future earnings projections.
The bottom line: this will make it harder for companies living on their growth by "restructuring" to sustain that growth, and that earnings expectations will be much higher.
Long term trader Bill D is actively studying and analyzing with us, and I have been attaching many of his charts recently. Here's how this Advanced Mentoring student is thinking and working:
"This all started because I wanted to keep track of the count from day to day on a number of strikes. Your bell curve analysis is based on the $2-3 option. Well since that changes from day to day and you need data from 3 days prior I figured I'd keep it in a spreadsheet and update daily. Takes all of 3 minutes I think. I use "Thinkorswim" nice platform.
Well just for shiggles I decided to throw it on a chart to see what it looked like. Followed it a couple days and decided to share.
My first thought is, the 475 put stuck out like a sore thumb the day before the big afternoon selloff. Could this be a leading indicator by identifying a strike that is becoming active?
Why/how does your count system work, because of demand. Logic will show, well the math will show that based on the bell curve count parameters demand "should" create an increase in price and the count method should indentify the most demand for an issue because it happens over a number of days. The proprietary systems identify most actives on a daily basis. I think the count system takes that a step further by using the 3 previous days close its not a one and done thing it is a potential trend.
By tracking all strikes on both sides the $2 option is always on the chart.
So first off, we can identify a specific strike in a string that is increasing in daily closing price.
Next is the bias. The day after option expiration both chains were flat although the calls were running on the 6 line and the puts were running on the 3 line, which indicated to me that there wasn't a clear bias either way but something might be up. It also might have been because of option expiration. Don't know that one yet.
The next two days were where the movement was and when the 475 Put started to show its bias and a possible change in the short term trend. The markets ended down for the week and the put string was running a higher count than the call string.
The one thing I've noticed when copying the data is the put prices are usually more uniform than the call prices.
I think it is just another way to identify the most active issue in the string. The caveot is the bias. We'll see how this works, need more time."
Yesterday was the perfect OEX profit, with every rule intact! Returns of 40% plus were easy.
It might be harder today. There are struggles at 9800, but the market wants to go much lower. Earnings should look good for many reporting, and housing starts may appear falsely "up."
It will be interesting to see if the consolidation will hold.
Many market makers believe the market is now not only oversold, but overpriced, and that equities will suffer, despite what have been good earnings so far. Part of this is that Wall Street and companies set easy earning expectations because of the financial debacle, but earning analysts are now "pricing performance, not just cutbacks" into their future earnings projections.
The bottom line: this will make it harder for companies living on their growth by "restructuring" to sustain that growth, and that earnings expectations will be much higher.
Long term trader Bill D is actively studying and analyzing with us, and I have been attaching many of his charts recently. Here's how this Advanced Mentoring student is thinking and working:
"This all started because I wanted to keep track of the count from day to day on a number of strikes. Your bell curve analysis is based on the $2-3 option. Well since that changes from day to day and you need data from 3 days prior I figured I'd keep it in a spreadsheet and update daily. Takes all of 3 minutes I think. I use "Thinkorswim" nice platform.
Well just for shiggles I decided to throw it on a chart to see what it looked like. Followed it a couple days and decided to share.
My first thought is, the 475 put stuck out like a sore thumb the day before the big afternoon selloff. Could this be a leading indicator by identifying a strike that is becoming active?
Why/how does your count system work, because of demand. Logic will show, well the math will show that based on the bell curve count parameters demand "should" create an increase in price and the count method should indentify the most demand for an issue because it happens over a number of days. The proprietary systems identify most actives on a daily basis. I think the count system takes that a step further by using the 3 previous days close its not a one and done thing it is a potential trend.
By tracking all strikes on both sides the $2 option is always on the chart.
So first off, we can identify a specific strike in a string that is increasing in daily closing price.
Next is the bias. The day after option expiration both chains were flat although the calls were running on the 6 line and the puts were running on the 3 line, which indicated to me that there wasn't a clear bias either way but something might be up. It also might have been because of option expiration. Don't know that one yet.
The next two days were where the movement was and when the 475 Put started to show its bias and a possible change in the short term trend. The markets ended down for the week and the put string was running a higher count than the call string.
The one thing I've noticed when copying the data is the put prices are usually more uniform than the call prices.
I think it is just another way to identify the most active issue in the string. The caveot is the bias. We'll see how this works, need more time."
Monday, October 26, 2009
Purveyors of Hate
It's almost fun. We saw Friday again run to a 10,140 high, and a 9892 low, in the same whipsaw pattern we've seen for days, with the exception that the market CLOSED more dramatically down.
Our OTM 520 day trade call was profitable only to .40 per contract, yet traders on the November 490P were able to buy as low as 4.60 and sell to highs of 7.80. Numerous traders wrote us notes on what Friday was, but I'll give you the funniest to start your week:
Sometimes when I am stupid I make the most! I smelled the downside, and put a pre-order on the put in at 4.80. I had to leave for a few hours, and then my car broke down,but I had learned from Floyd to "never leave without a sell order in" so I (thinking I would be back in a couple hours) put a sell in at 7.60. I had planned to return to do a second larger buy, and had bought 15 contracts for my opening. So I returned home after the car disaster to see my order filled at 7.60. The math is incredible. I made $4500.00! I had been profitable on all calls this past week, being smart, and had a week with total profits of over 8200.00. WOW! MDL, New Orleans
Here's how I see the market:
1. We need a healthy consolidation to allow more upturn. Each upturn we have without effective consolidation (and there have been TOO many) is not a bull market, but a euphoric market, and historically always leads to larger falls.
2. Over 106 banks have closed. This is serious stuff.
3. Wall Street was FIRST bailed out by President Bush, and as the magnitude of the fraud became clear, then bailed out by Obama. The Bush/Paulson 585 billion was a game to pay off the boys that helped them. It slowed the crisis, but the next bail out was to save our nation from financial ruin. Sadly, no regulations have been put in (Congress leads this) and we're seeing new Wall Street games that the GOP boys claim is socialistic to "stop the earnings."
Sorry, but with earnings to Wall Street slime now exceeding prior massive earnings, we are in process of allowing greed to take over our nation, while we "fret" that Obama does not understand the high unemployment issue.
Sigh.
4. With healthy consolidation I believe the market will rebound again, and that 10,700 is a Fibonnacci retracement from our deepest bottom earlier this year, and MAY be a stopping point. In other words, with retracements so far following Fibbonanci to the T, we may have euphorically led ourselves to a top that could easily disintegrate, and lead to a deeper downturn. Much will depend upon whether the HATE in the nation can be calmed, as we have built a fervor over "obamanation", bullshit on socialism, etc., and of course, led to even more bi-partisanship in the country.
5. Glenn Beck and Rush the idiot lead much of the nation. This will influence group intelligence. Pay attention to their rants, as some actually believe this stuff. Sorry, conservatives, but these men are not conservatives, but purveyors of hate.
Our OTM 520 day trade call was profitable only to .40 per contract, yet traders on the November 490P were able to buy as low as 4.60 and sell to highs of 7.80. Numerous traders wrote us notes on what Friday was, but I'll give you the funniest to start your week:
Sometimes when I am stupid I make the most! I smelled the downside, and put a pre-order on the put in at 4.80. I had to leave for a few hours, and then my car broke down,but I had learned from Floyd to "never leave without a sell order in" so I (thinking I would be back in a couple hours) put a sell in at 7.60. I had planned to return to do a second larger buy, and had bought 15 contracts for my opening. So I returned home after the car disaster to see my order filled at 7.60. The math is incredible. I made $4500.00! I had been profitable on all calls this past week, being smart, and had a week with total profits of over 8200.00. WOW! MDL, New Orleans
Here's how I see the market:
1. We need a healthy consolidation to allow more upturn. Each upturn we have without effective consolidation (and there have been TOO many) is not a bull market, but a euphoric market, and historically always leads to larger falls.
2. Over 106 banks have closed. This is serious stuff.
3. Wall Street was FIRST bailed out by President Bush, and as the magnitude of the fraud became clear, then bailed out by Obama. The Bush/Paulson 585 billion was a game to pay off the boys that helped them. It slowed the crisis, but the next bail out was to save our nation from financial ruin. Sadly, no regulations have been put in (Congress leads this) and we're seeing new Wall Street games that the GOP boys claim is socialistic to "stop the earnings."
Sorry, but with earnings to Wall Street slime now exceeding prior massive earnings, we are in process of allowing greed to take over our nation, while we "fret" that Obama does not understand the high unemployment issue.
Sigh.
4. With healthy consolidation I believe the market will rebound again, and that 10,700 is a Fibonnacci retracement from our deepest bottom earlier this year, and MAY be a stopping point. In other words, with retracements so far following Fibbonanci to the T, we may have euphorically led ourselves to a top that could easily disintegrate, and lead to a deeper downturn. Much will depend upon whether the HATE in the nation can be calmed, as we have built a fervor over "obamanation", bullshit on socialism, etc., and of course, led to even more bi-partisanship in the country.
5. Glenn Beck and Rush the idiot lead much of the nation. This will influence group intelligence. Pay attention to their rants, as some actually believe this stuff. Sorry, conservatives, but these men are not conservatives, but purveyors of hate.
Friday, October 23, 2009
We Lived Big
More on "what I get from trading":
1. Floyd:
> Before I get into "what I get out of trading" I need to provide you with the background of "why" I trade. I started my career on Wall Street 25 years ago. During that time I held various positions within an investment banking environment while obtaining a masters degree and law degree at night. When I completed my law degree, I had the opportunity to work in an emerging field know as Swaps. While derivatives such options had been around for a long time, Swaps were just becoming a "commoditized" product. Despite my vast knowledge of derivatives, I remained a "buy and hold" mutual fund investor, content to take the easy "random walk down Wall Street." However, life was progressing nicely and I was doing well professionally and financially.
> Then from out of nowhere my life began to quickly unravel. Shortly after my smart and beautiful daughter started high school her behavior, personality, and appearance made a disturbing change. Her mood and appearance became suddenly dark and withdrawn. Athletics fell by the wayside. Self confidence plummeted. She became withdrawn and prone to violent outbursts that injured herself and others and caused damage to home. Our life was on the edge every day and it was clear that our daughter was tormented in some way that even had professional therapists baffled. After two years of turmoil my wife and I were resigned to institutionalizing my daughter.
> Then we found a boarding school in Maine called the Hyde School. It is not a typical high school because if focuses on character, integrity,courage, leadership and concern for others. The motto of the school is "Every individual is gifted with a unique potential" and each student is challenged in many ways to discover their own unique potential. Parents are challenged in the same way as their children to discover their own unique potential through the school's parent education program. Critical self evaluation and reflection are key components of Hyde's program, but most important are the selfless staff and teachers at Hyde. They are truly dedicated to helping each child and their parents find their unique place in world.
> To make a long story short, the Hyde School has turned my entire family's life around. After three years at Hyde my daughter has re-emerged as the smart, caring and beautiful girl that I remember and always hoped she would be. She is in the process of applying to college as a special education major, hoping to make a difference in the lives of autistic and downs syndrome children.
> And I am trading. After the meltdown last September I saw my retirement savings reduced by 50%. With many years of experience in financial markets and derivatives it was time to take matters into my own hands. I liquidated all of my mutual fund investments and started trading. Awkwardly and without much of a plan at first; but then refining, studying and having the humility to look for and ask for help. That is how I found you and OEX options Floyd, and I am truly grateful for your teachings. However, it was Hyde that gave me the courage to trust in myself, my talents and my potential to take the first steps. I am still learning and I still make mistakes. I try to reflect and lean by those mistakes. Overall, however, I am profitable. When I trade I set a certain portion of my profits aside for the Hyde school. I want to be able to help the Hyde school reach the families and children who are desperate to turn their lives around, just as Hyde has helped me and my family. So my trading is in part a recognition of my unique potential and in part a tribute to getting my daughter back.
> Thank you for asking this question. It helps to remind me why I am trading when fear and greed muddy the waters.
2.. I trade to learn to control my emotions. It is a game of zen, where I beat the bid/ ask by manipulating the other people buying and selling. I do nothing but this, and feel relaxed when I am trading, like a great big poker game.
GER
3. And from trader Johnny, who we tributed:
I got home from the hospital yesterday and my surgery has been rescheduled for this coming Monday provided the infections have been eliminated.
The tribute to our friendship brought me to tears, and I would like to call you whenever it is a good time for you.
I hope Jenn is finding that inner strength to help her move through the emotions that have been stirred in her heart and mind as a result of the breakup between her and her boyfriend. I'm confident that with your loving guidance she will find that foundation of true inner knowing that this is a test for her, and that she can and will overcome the emotional upheaval and be a stronger individual afterwards.
Thank you for being my friend!
Johnny
______________________________
The market yesterday went from a low of 9874 theoretical Dow to a high of 10,145. Read our Dow projections carefully. Call traders bought the Oct 520Call as low, easily, as 2.25 and sold to highs of 3.60 by simply following resistance and support lines. We were profitable on calls again today.
We also believe the market is now "nuts" and reaction could follow.
__________________________________________
It is a sad fact that the outpouring of government money has not staunched the job hemorrhaging or loosened credit to the struggling small business owner or shut off the surge in foreclosures.
The outpouring of FED dollars is what I was most afraid of, that it was not enough. I know most of the nation is now fearful of deficit, and the money being spent. I find it surprising that the deficit created by Emperor Bush is never mentioned, still part of our deficit now,as we continue failing in our overseas Iraqi effort.
We have been forced to the worst reality of our lives. We lived big, got big, and now expect not to pay for it. Or, sillier yet, we believe the "private sector" and capitalism left alone will right the system.
I refer you to Goldman Sachs record profits as the answer. What private sector? I know the small businesses that are the mainstay of America and they are NOT doing well. Credit is tightened, business is down , and they do not have jobs to give.
Last week consulting I bankrupted a firm, and a new firm bought the employees. I led this. I hired jobs, and lowered salaries of staff by 23% average for their taking a new job, and ALL 7 employees offered the jobs took them.
I lowered wages because of the low margins of the business (competitive market created by FEAR) and the inability for the new business to establish a large enough credit line, despite 38 years in business.
We blame the government for the situation, yet in actuality, it is the businesses finding they can pay less, they can use people more, and they can "make do."
1. Floyd:
> Before I get into "what I get out of trading" I need to provide you with the background of "why" I trade. I started my career on Wall Street 25 years ago. During that time I held various positions within an investment banking environment while obtaining a masters degree and law degree at night. When I completed my law degree, I had the opportunity to work in an emerging field know as Swaps. While derivatives such options had been around for a long time, Swaps were just becoming a "commoditized" product. Despite my vast knowledge of derivatives, I remained a "buy and hold" mutual fund investor, content to take the easy "random walk down Wall Street." However, life was progressing nicely and I was doing well professionally and financially.
> Then from out of nowhere my life began to quickly unravel. Shortly after my smart and beautiful daughter started high school her behavior, personality, and appearance made a disturbing change. Her mood and appearance became suddenly dark and withdrawn. Athletics fell by the wayside. Self confidence plummeted. She became withdrawn and prone to violent outbursts that injured herself and others and caused damage to home. Our life was on the edge every day and it was clear that our daughter was tormented in some way that even had professional therapists baffled. After two years of turmoil my wife and I were resigned to institutionalizing my daughter.
> Then we found a boarding school in Maine called the Hyde School. It is not a typical high school because if focuses on character, integrity,courage, leadership and concern for others. The motto of the school is "Every individual is gifted with a unique potential" and each student is challenged in many ways to discover their own unique potential. Parents are challenged in the same way as their children to discover their own unique potential through the school's parent education program. Critical self evaluation and reflection are key components of Hyde's program, but most important are the selfless staff and teachers at Hyde. They are truly dedicated to helping each child and their parents find their unique place in world.
> To make a long story short, the Hyde School has turned my entire family's life around. After three years at Hyde my daughter has re-emerged as the smart, caring and beautiful girl that I remember and always hoped she would be. She is in the process of applying to college as a special education major, hoping to make a difference in the lives of autistic and downs syndrome children.
> And I am trading. After the meltdown last September I saw my retirement savings reduced by 50%. With many years of experience in financial markets and derivatives it was time to take matters into my own hands. I liquidated all of my mutual fund investments and started trading. Awkwardly and without much of a plan at first; but then refining, studying and having the humility to look for and ask for help. That is how I found you and OEX options Floyd, and I am truly grateful for your teachings. However, it was Hyde that gave me the courage to trust in myself, my talents and my potential to take the first steps. I am still learning and I still make mistakes. I try to reflect and lean by those mistakes. Overall, however, I am profitable. When I trade I set a certain portion of my profits aside for the Hyde school. I want to be able to help the Hyde school reach the families and children who are desperate to turn their lives around, just as Hyde has helped me and my family. So my trading is in part a recognition of my unique potential and in part a tribute to getting my daughter back.
> Thank you for asking this question. It helps to remind me why I am trading when fear and greed muddy the waters.
2.. I trade to learn to control my emotions. It is a game of zen, where I beat the bid/ ask by manipulating the other people buying and selling. I do nothing but this, and feel relaxed when I am trading, like a great big poker game.
GER
3. And from trader Johnny, who we tributed:
I got home from the hospital yesterday and my surgery has been rescheduled for this coming Monday provided the infections have been eliminated.
The tribute to our friendship brought me to tears, and I would like to call you whenever it is a good time for you.
I hope Jenn is finding that inner strength to help her move through the emotions that have been stirred in her heart and mind as a result of the breakup between her and her boyfriend. I'm confident that with your loving guidance she will find that foundation of true inner knowing that this is a test for her, and that she can and will overcome the emotional upheaval and be a stronger individual afterwards.
Thank you for being my friend!
Johnny
______________________________
The market yesterday went from a low of 9874 theoretical Dow to a high of 10,145. Read our Dow projections carefully. Call traders bought the Oct 520Call as low, easily, as 2.25 and sold to highs of 3.60 by simply following resistance and support lines. We were profitable on calls again today.
We also believe the market is now "nuts" and reaction could follow.
__________________________________________
It is a sad fact that the outpouring of government money has not staunched the job hemorrhaging or loosened credit to the struggling small business owner or shut off the surge in foreclosures.
The outpouring of FED dollars is what I was most afraid of, that it was not enough. I know most of the nation is now fearful of deficit, and the money being spent. I find it surprising that the deficit created by Emperor Bush is never mentioned, still part of our deficit now,as we continue failing in our overseas Iraqi effort.
We have been forced to the worst reality of our lives. We lived big, got big, and now expect not to pay for it. Or, sillier yet, we believe the "private sector" and capitalism left alone will right the system.
I refer you to Goldman Sachs record profits as the answer. What private sector? I know the small businesses that are the mainstay of America and they are NOT doing well. Credit is tightened, business is down , and they do not have jobs to give.
Last week consulting I bankrupted a firm, and a new firm bought the employees. I led this. I hired jobs, and lowered salaries of staff by 23% average for their taking a new job, and ALL 7 employees offered the jobs took them.
I lowered wages because of the low margins of the business (competitive market created by FEAR) and the inability for the new business to establish a large enough credit line, despite 38 years in business.
We blame the government for the situation, yet in actuality, it is the businesses finding they can pay less, they can use people more, and they can "make do."
Thursday, October 22, 2009
What Do You Get Out Of Trading?
Some answers to my homework question:
1. What do you get out of trading?
first, thanks for asking this question...once you put things on paper you can't hide from them anymore...while it is embarrassing, i have to admit, i truly believed there was a "Holy Grail" trading system that would solve all my "problems". so much so that i have spent a small fortune and almost two decades looking for the "perfect" system that would satisfy my desire for success (at an endeavor that very few individuals have true success at) and overpower an obvious strong fear of failure...so what do i get out of trading?...a long and currently positive self-assessment and re-evaluation of my entire thought process, belief systems and limiting behaviors. my only wish (regret?) is the length of time and the "tuition" associated with the countless newsletters, seminars, home study courses (audio tapes, vhs tapes, cd's dvd's, webinars, etc.), software programs, data services, computers, brokers, personal conversations with several traders who wrote books, funny looks and head shaking from my wife, etc. has led me to finally realize that no amount of money can buy an "outside solution" to overcome an "inside problem"...my account balance truly does reflect my success at releasing these inner limiting programs...why did it take so long and cost so much in terms of time, money and frustration?...pick your saying..."when the student is ready, the teacher will appear"..."a problem can't be solved with the same thinking that created it"...or my current favorite..."Duh"
jmp
2. Great question Floyd...
My initial response to the question "What do I get out of trading?" was FRUSTRATED...ANGRY...IRRITABLE...GREEDY....FEARFUL....ARROGANT......PRIDEFUL.......SELFISH... DISTRACTED.....AND SHAME.
I become frustrated with myself for not taking profits when I should. I then allow the frustration to turn into self-hatred (anger). this perpetuates a constant state of irritability that lingers within my demeanor (it's really shame - the feeling that I'm bad or worthless because I continue to lose and not make money). I'm irritated that "I've done it again" and I'm irritated that I feel unable to make a change.
As I wallow in this state of mind, I then become greedy and try to win my money back. This causes me to break my rules, over-leverage and usually win because I'm fearful of taking another loss (in other words, I grab profits quickly). It is during this time that I THINK that I've kept the greed at bay (because I leave money on the table and take profits), the reality is that I'm lying to myself because I over-leveraged big time and got lucky that the trade went in my direction. The fact that I've now won perpetuates more self-deception because I think that I've now "got it" or "turned the corner" and are finally on the right track.
This causes me to become arrogant, place riskier trades where I eventually refuse to take stop losses (pride) because I KNOW THAT I'M RIGHT....or because I MUST be right or because I cannot afford to take a loss of this magnitude.
Of course, I eventually lose my entire investment, if not my entire account. This causes me to become totally self-absorbed and distracted as I throw myself a pity party, trying to figure out what happened, study more technical analysis gurus on the internet, read as many forecast predictions from as analysts and stare at the charts for hours to see how I can improve.
During all of this, because I hate myself, I'm acting like a freakin' jerk towards my wife and kids and I'm neglecting my responsibilities.
That is what trading has done for me so far.
When I tell people all of this, they always respond in the same manner, "It is obvious that trading is not for you. Why don't you just stop doing it?"
I don't know if it is pride or my competitive spirit but I feel as though if I walked away now, then I would be a quitter and that the market would have gotten the best of me. Also, if I quit now, it's as if I'm surrendering to my character defects of pride, arrogance, fear, greed, lack of self-control, shame etc...
I know that in order for me to make money in the markets, I MUST be a master of my own emotions and exercise self-discipline; character traits that all people should strive for. Unfortunately, I've been unable to do that since I began trading 20 months ago.
So on the positive side, what trading has done for me is brought about a greater self-awareness of who I truly am. I was blind to many of these character defects before I began to trade. And I determined to have them removed from my life and make money while doing it.
I just HOPE that starts today.
Let me ask you this Floyd. After you lost the last dollar of your 250K, did you KNOW that things were going to be different before you placed your next trade or did you HOPE that things were going to be different? In other words, there had to be a period of time after your 250K loss and before your 80% success rate where you reflected on your life and career as a trader. What transpired during that time, how much time elapsed between those two periods and what did you feel like during that transition?
I appreciate your time as you analyze my response to your homework assignment.
Take care.
Michael
3. Floyd, I really enjoy studying the market. Admittedly, with family, job/travel commitments, etc I cannot devote as much time to it as I would like, but I really enjoy it. Someday, I hope to make a living from these efforts, but it seems very nebulous at times. I hope to get there, sooner rather than later.
I also like to study complex options trading. I think money can be made if one is careful to understand the risks in any given position. The trick is in understanding adjustments, how they work, when to put on, etc.
It is my hope and expectation that this double-barreled approach will bear fruit one day. Since I have not really made profits with the OEX options approach, it does make it harder to visualize how things would be. But I have to believe that I can do it.
I got laid off 18 months ago. I got another job within three months. I was lucky. I do not want to rely on anyone else for my living. That goal and my pursuit of this goal is something else that I get out of trading.
Jon
4. Four years ago I got fired from a 200k a year job. I had worked for the company 15 years. They fired me on age. Prior to that I worked for a company for 20 years, my pension is bankrupted and they also let me go in a "cost cutting." Both times I was innocent and a good employee. My answer was to FUCK American corporations. I invested 30k in courses on trading, wasted all my money, and then found you. I trade full time for a living now, about 20 hours a week, and bring in about 220 k gross, after commission, or the past three years. I trade because I hate American corporations, and I find your teaching for extraordinary, but uniquely "right on target". To me , trading is my job.
BOB
_________________________
Many believe it's time to raise federal interest rates, and I see the issue. I see no need for short term rates to remain near zero as the economy clearly shows signs of improvement. Gold, oil and other commodities are skyrocketing (I think Gold will hit $2000 an oz, and advise Blue Chip Option subscribers (www.bluechipoptions.com) , the dollar is falling, and interest rates are near zero.)
My Floydian thoughts are simple. Raise the rates to 2% which are still very low, and send a signal to the world markets that the U.S. is serious about helping its falling USD, and stabilize concerns the world has.
With the country saving more, finally, we also need to encourage it. Right now we punish prudent cash investors and reward the more speculative investor, not a fair balance.
So Main Street still suffers, savers have little to gain, and Wall Street is having one of its best years ever. This says three things:
1. The Bush 585 billion bailout by Paulson paid off bank executives and calmed the storm for a few weeks.
2. The Obama infusion stimulated car sales, got the banks out of part of their derivative hell, and sadly without regulation yet in place (Congress) has allowed Wall Street to start the game all over again. It's half paid off.
Meanwhile the nation debates healthcare, armed with all false propaganda and facts, and never figures out that the insurance companies, RNC renegades, and pharmaceutical companies are not our friends, but our business and life enemies in many ways.
Face real facts, not false ones.
____________
The market repeated itself, with highs of 10,159 and lows of 9904. This allowed new put buyers excellent entry on the resistance lines, and profits for new trades to over $2.00 per contract. The 520 Call was also available for tight .5 profits, showing again a top and OTM options hesitant to move.
We'll be using the same signals around this whipsaw.
1. What do you get out of trading?
first, thanks for asking this question...once you put things on paper you can't hide from them anymore...while it is embarrassing, i have to admit, i truly believed there was a "Holy Grail" trading system that would solve all my "problems". so much so that i have spent a small fortune and almost two decades looking for the "perfect" system that would satisfy my desire for success (at an endeavor that very few individuals have true success at) and overpower an obvious strong fear of failure...so what do i get out of trading?...a long and currently positive self-assessment and re-evaluation of my entire thought process, belief systems and limiting behaviors. my only wish (regret?) is the length of time and the "tuition" associated with the countless newsletters, seminars, home study courses (audio tapes, vhs tapes, cd's dvd's, webinars, etc.), software programs, data services, computers, brokers, personal conversations with several traders who wrote books, funny looks and head shaking from my wife, etc. has led me to finally realize that no amount of money can buy an "outside solution" to overcome an "inside problem"...my account balance truly does reflect my success at releasing these inner limiting programs...why did it take so long and cost so much in terms of time, money and frustration?...pick your saying..."when the student is ready, the teacher will appear"..."a problem can't be solved with the same thinking that created it"...or my current favorite..."Duh"
jmp
2. Great question Floyd...
My initial response to the question "What do I get out of trading?" was FRUSTRATED...ANGRY...IRRITABLE...GREEDY....FEARFUL....ARROGANT......PRIDEFUL.......SELFISH... DISTRACTED.....AND SHAME.
I become frustrated with myself for not taking profits when I should. I then allow the frustration to turn into self-hatred (anger). this perpetuates a constant state of irritability that lingers within my demeanor (it's really shame - the feeling that I'm bad or worthless because I continue to lose and not make money). I'm irritated that "I've done it again" and I'm irritated that I feel unable to make a change.
As I wallow in this state of mind, I then become greedy and try to win my money back. This causes me to break my rules, over-leverage and usually win because I'm fearful of taking another loss (in other words, I grab profits quickly). It is during this time that I THINK that I've kept the greed at bay (because I leave money on the table and take profits), the reality is that I'm lying to myself because I over-leveraged big time and got lucky that the trade went in my direction. The fact that I've now won perpetuates more self-deception because I think that I've now "got it" or "turned the corner" and are finally on the right track.
This causes me to become arrogant, place riskier trades where I eventually refuse to take stop losses (pride) because I KNOW THAT I'M RIGHT....or because I MUST be right or because I cannot afford to take a loss of this magnitude.
Of course, I eventually lose my entire investment, if not my entire account. This causes me to become totally self-absorbed and distracted as I throw myself a pity party, trying to figure out what happened, study more technical analysis gurus on the internet, read as many forecast predictions from as analysts and stare at the charts for hours to see how I can improve.
During all of this, because I hate myself, I'm acting like a freakin' jerk towards my wife and kids and I'm neglecting my responsibilities.
That is what trading has done for me so far.
When I tell people all of this, they always respond in the same manner, "It is obvious that trading is not for you. Why don't you just stop doing it?"
I don't know if it is pride or my competitive spirit but I feel as though if I walked away now, then I would be a quitter and that the market would have gotten the best of me. Also, if I quit now, it's as if I'm surrendering to my character defects of pride, arrogance, fear, greed, lack of self-control, shame etc...
I know that in order for me to make money in the markets, I MUST be a master of my own emotions and exercise self-discipline; character traits that all people should strive for. Unfortunately, I've been unable to do that since I began trading 20 months ago.
So on the positive side, what trading has done for me is brought about a greater self-awareness of who I truly am. I was blind to many of these character defects before I began to trade. And I determined to have them removed from my life and make money while doing it.
I just HOPE that starts today.
Let me ask you this Floyd. After you lost the last dollar of your 250K, did you KNOW that things were going to be different before you placed your next trade or did you HOPE that things were going to be different? In other words, there had to be a period of time after your 250K loss and before your 80% success rate where you reflected on your life and career as a trader. What transpired during that time, how much time elapsed between those two periods and what did you feel like during that transition?
I appreciate your time as you analyze my response to your homework assignment.
Take care.
Michael
3. Floyd, I really enjoy studying the market. Admittedly, with family, job/travel commitments, etc I cannot devote as much time to it as I would like, but I really enjoy it. Someday, I hope to make a living from these efforts, but it seems very nebulous at times. I hope to get there, sooner rather than later.
I also like to study complex options trading. I think money can be made if one is careful to understand the risks in any given position. The trick is in understanding adjustments, how they work, when to put on, etc.
It is my hope and expectation that this double-barreled approach will bear fruit one day. Since I have not really made profits with the OEX options approach, it does make it harder to visualize how things would be. But I have to believe that I can do it.
I got laid off 18 months ago. I got another job within three months. I was lucky. I do not want to rely on anyone else for my living. That goal and my pursuit of this goal is something else that I get out of trading.
Jon
4. Four years ago I got fired from a 200k a year job. I had worked for the company 15 years. They fired me on age. Prior to that I worked for a company for 20 years, my pension is bankrupted and they also let me go in a "cost cutting." Both times I was innocent and a good employee. My answer was to FUCK American corporations. I invested 30k in courses on trading, wasted all my money, and then found you. I trade full time for a living now, about 20 hours a week, and bring in about 220 k gross, after commission, or the past three years. I trade because I hate American corporations, and I find your teaching for extraordinary, but uniquely "right on target". To me , trading is my job.
BOB
_________________________
Many believe it's time to raise federal interest rates, and I see the issue. I see no need for short term rates to remain near zero as the economy clearly shows signs of improvement. Gold, oil and other commodities are skyrocketing (I think Gold will hit $2000 an oz, and advise Blue Chip Option subscribers (www.bluechipoptions.com) , the dollar is falling, and interest rates are near zero.)
My Floydian thoughts are simple. Raise the rates to 2% which are still very low, and send a signal to the world markets that the U.S. is serious about helping its falling USD, and stabilize concerns the world has.
With the country saving more, finally, we also need to encourage it. Right now we punish prudent cash investors and reward the more speculative investor, not a fair balance.
So Main Street still suffers, savers have little to gain, and Wall Street is having one of its best years ever. This says three things:
1. The Bush 585 billion bailout by Paulson paid off bank executives and calmed the storm for a few weeks.
2. The Obama infusion stimulated car sales, got the banks out of part of their derivative hell, and sadly without regulation yet in place (Congress) has allowed Wall Street to start the game all over again. It's half paid off.
Meanwhile the nation debates healthcare, armed with all false propaganda and facts, and never figures out that the insurance companies, RNC renegades, and pharmaceutical companies are not our friends, but our business and life enemies in many ways.
Face real facts, not false ones.
____________
The market repeated itself, with highs of 10,159 and lows of 9904. This allowed new put buyers excellent entry on the resistance lines, and profits for new trades to over $2.00 per contract. The 520 Call was also available for tight .5 profits, showing again a top and OTM options hesitant to move.
We'll be using the same signals around this whipsaw.
Wednesday, October 21, 2009
Traders Profit Both Ways
The market moved from a high on the theoretical Dow of 10,138, and a run down to 9953. The bull/bear struggle continues. Trader MR wrote, of many trading yesterday, and summarized a perfect day trading slight moves:
> Profited both ways today.
>
> I bought the recommended put at 6.30 and a bigger buy at 5.80 yesterday - sold at 6.30 today via limit order. I don't like to be in the market for longer than a day or two under current conditions.
>
> I daytraded the call - buying at 3.90 and selling at 4.30 for a quick 10% in about 30 minutes.
>
> I bought a few Nov 103 calls on GLD early in the day, which are down for now - but I believe they'll be back. They have good volume and lots of open interest.
>
> On position sizing. I realized today that I need to keep my profit goals in perspective. If I trade in a manner that increases my active trading portfolio by 1% a week then that's a 50% return over a one year time period. I've already hit the 1.5 % mark for this week, so I could realistically sit out and wait for a few days for the "perfect" opportunity to place the next trade - for example, hitting DOW support at an S2 or S3 pivot point."
This is how to trade this market. Until bias clearly establishes, until upside continues, we are in a new "range" to hit new highs.
Today we'd like to lead with a recommendation we've been giving to our Blue Chip Option Subscribers first:
For traders wanting to invest in cash oriented positions we recommend a Gold hedge of 5 to 15% of a portfolio.
However, we have been recommending to Blue Chip traders that TIPS (U.S. Treasury Inflation Bonds ETF) are an excellent buy right now, we think yields will rise, and that TIPS are a safe investment against inflation that may hit us.
For traders in money markets moving some CASH to TIPS has good long term safety and potential.
_____________
Today I would like to ask a personal question. I want to understand you, and want to help you understand who you are within your emotions affects and effects your trading. So my question is:
What do you get out of trading?
Send your thoughts, your answers and I'll share some thinking with you. Consider this your homework assignment.
> Profited both ways today.
>
> I bought the recommended put at 6.30 and a bigger buy at 5.80 yesterday - sold at 6.30 today via limit order. I don't like to be in the market for longer than a day or two under current conditions.
>
> I daytraded the call - buying at 3.90 and selling at 4.30 for a quick 10% in about 30 minutes.
>
> I bought a few Nov 103 calls on GLD early in the day, which are down for now - but I believe they'll be back. They have good volume and lots of open interest.
>
> On position sizing. I realized today that I need to keep my profit goals in perspective. If I trade in a manner that increases my active trading portfolio by 1% a week then that's a 50% return over a one year time period. I've already hit the 1.5 % mark for this week, so I could realistically sit out and wait for a few days for the "perfect" opportunity to place the next trade - for example, hitting DOW support at an S2 or S3 pivot point."
This is how to trade this market. Until bias clearly establishes, until upside continues, we are in a new "range" to hit new highs.
Today we'd like to lead with a recommendation we've been giving to our Blue Chip Option Subscribers first:
For traders wanting to invest in cash oriented positions we recommend a Gold hedge of 5 to 15% of a portfolio.
However, we have been recommending to Blue Chip traders that TIPS (U.S. Treasury Inflation Bonds ETF) are an excellent buy right now, we think yields will rise, and that TIPS are a safe investment against inflation that may hit us.
For traders in money markets moving some CASH to TIPS has good long term safety and potential.
_____________
Today I would like to ask a personal question. I want to understand you, and want to help you understand who you are within your emotions affects and effects your trading. So my question is:
What do you get out of trading?
Send your thoughts, your answers and I'll share some thinking with you. Consider this your homework assignment.
Tuesday, October 20, 2009
A Few Theories on the Economy
And the market continues its bullish rise, hitting theoretical Dow tops of 10,158. There is strong chartist argument now about whether the Dow will approach 10,700 before correcting, and then the bubble bursting again.
And just as strong an argument that we've more than reached market tops, and will correct to the 9679 area. Call traders were again day trade profitable with easy buys on the OEBKD November 21 2009 520.00 CALL, which was available 3.70 buy to 4.80 sell, right within the tight ranges we recommended on calls. We'll recommend the same trade again today, holding a hedge put. Begin watching if the call or put begin to waver back and forth in slight price ranges, which could afford slight day trade moves of .50 to .75 per contract. This is "learning to fall in love" with an option.
However, that's if the market holds. No one knows. Earnings look good for many companies, and there is a positive resiliency to the market.
Let's talk this week about a few theories of the economy, or better yet, clarification of false facts:
* The Dollar is Collapsing.
It's surely not healthy, is in a downtrend, but the ICE U.S. Dollar Index is about the same as it was a year ago.
* Institutional traders have not yet fully entered the market, and it will raise our outlook higher.
The average U.S. equity fund is right now about 5% higher than the S&P 500. Fund managers are playing stocks on the uprise well.
*10,000 is too far a jump and too high, too fast
This is true in many ways ,but part of a normal retracement from bottoms. For reasons we'll debate forever, it's happening very fast.
*Many compare what is happening now to what happened in 1974-1975, which would imply a very stiff correction shortly, followed by new highs.
This is very true. And very possible. The ONE variable left out of the economic turnaround in real estate, which is a lie.
*Real Estate sales are improving.
Commercial real estate is a bubble waiting to collapse. Residential real estate 2 of 3 homes sold are in foreclosure, or short sales. A bit of optimism on "facts here"
_______________
The Dow has criss-crossed 10,000 no fewer than 25 times before, sometimes amidst bubbles, and sometimes like last Friday where it closed at 9996, up 1.3% for the day. We talk about this two days later, as the 10,000 area, and how long and if the market holds at this "magic 0000's" threshold.
What we may be seeing is the re-making of the USD, and of the values we put on things. People say they cannot afford even state or county taxes, point rightly to the constant fraud, but drive on roads with unsafe bridges, and fly in vastly overpopulated air traffic highways, on what appear outdated planes. We may see a re-shaping of priorities, and we may see as unemployment remains high (some think just under 10% is the NEW standard) that our entire spending priorities will shift, putting the country more in turmoil.
And just as strong an argument that we've more than reached market tops, and will correct to the 9679 area. Call traders were again day trade profitable with easy buys on the OEBKD November 21 2009 520.00 CALL, which was available 3.70 buy to 4.80 sell, right within the tight ranges we recommended on calls. We'll recommend the same trade again today, holding a hedge put. Begin watching if the call or put begin to waver back and forth in slight price ranges, which could afford slight day trade moves of .50 to .75 per contract. This is "learning to fall in love" with an option.
However, that's if the market holds. No one knows. Earnings look good for many companies, and there is a positive resiliency to the market.
Let's talk this week about a few theories of the economy, or better yet, clarification of false facts:
* The Dollar is Collapsing.
It's surely not healthy, is in a downtrend, but the ICE U.S. Dollar Index is about the same as it was a year ago.
* Institutional traders have not yet fully entered the market, and it will raise our outlook higher.
The average U.S. equity fund is right now about 5% higher than the S&P 500. Fund managers are playing stocks on the uprise well.
*10,000 is too far a jump and too high, too fast
This is true in many ways ,but part of a normal retracement from bottoms. For reasons we'll debate forever, it's happening very fast.
*Many compare what is happening now to what happened in 1974-1975, which would imply a very stiff correction shortly, followed by new highs.
This is very true. And very possible. The ONE variable left out of the economic turnaround in real estate, which is a lie.
*Real Estate sales are improving.
Commercial real estate is a bubble waiting to collapse. Residential real estate 2 of 3 homes sold are in foreclosure, or short sales. A bit of optimism on "facts here"
_______________
The Dow has criss-crossed 10,000 no fewer than 25 times before, sometimes amidst bubbles, and sometimes like last Friday where it closed at 9996, up 1.3% for the day. We talk about this two days later, as the 10,000 area, and how long and if the market holds at this "magic 0000's" threshold.
What we may be seeing is the re-making of the USD, and of the values we put on things. People say they cannot afford even state or county taxes, point rightly to the constant fraud, but drive on roads with unsafe bridges, and fly in vastly overpopulated air traffic highways, on what appear outdated planes. We may see a re-shaping of priorities, and we may see as unemployment remains high (some think just under 10% is the NEW standard) that our entire spending priorities will shift, putting the country more in turmoil.
Monday, October 19, 2009
A Market Quite Unsure
Friday we saw a market quite unsure if it would hold above 10,000. We saw a market that hit a theoretical Dow top of 10,100, a resistance area, and a low of 9899. The count holds at 3 to the put, not quite a bias that defines "ready to trade," yet the market did not do well holding above 10,000 after one day.
After hitting stop loss on our put last Friday, fortunately on a dip that lowered our losses, and for some broke them even, I'm hesitant to recommend a put on a low count, and will provide dual signals based on signals.
We believe the market is at a top and will bottom test likely at 9550 to 9720.
After hitting stop loss on our put last Friday, fortunately on a dip that lowered our losses, and for some broke them even, I'm hesitant to recommend a put on a low count, and will provide dual signals based on signals.
We believe the market is at a top and will bottom test likely at 9550 to 9720.
Friday, October 16, 2009
Let's See Which Reality Sets In
My commentary, you may have noted, has been more muted the last few days, as the market struggled to hit 10,000. While 73% of companies reporting last quarter had good earnings, most are generating profits by slashing costs and workers, an approach that has unemployment near 10%, at 1983 levels. I worry that a lot of these profits are not because these firms are expanding revenues but because they're controlling cost by laying off workers.
In other words, as the market surges these companies are not acting as if we're going to have a recovery, but remain in defense mode. It is our fault that there are not new jobs, not Obama's, although infrastructure rebuidling as stimulus creates huge jobs and may be supportive.
Anyway, I guess I have been the quiet skeptic, quite surprised to see the rebound show such resilience, but frightened silly at the profits Goldman Sachs is going to make, and that the top traded stock for profits for the past six months was AIG, a phantom company.
A bit of me is more than saddened by the devisive nature of a few that can affect a majority. We are so easily led.
Okay, to the market. Hesitation all day but by mid afternoon all call traders had profited. Here's a great email from a new trader from France, nicknamed "Yellowman", :
Ok, I bought the call today at 9,50 ... and had my sell order at R1 (10071) ... I did a recalculation of the subset R/S and I had a new R1 of 10042... with the dow trading at 10033 (near the new R1) so I sold it at 11,00... I hope that was ok to do?
That's superb profit and what a trader should look for.
Although the market showed no strength it allowed call buyers easy entry and good fast day trade profits, which leaves us with our hedge put, which we'll stop loss today. With the market falling at 3.30 we saw even more of the nervousness of this market yesterday and do not want to hold positions over the weekend. No new trades.
Let's see "which reality sets in."
In other words, as the market surges these companies are not acting as if we're going to have a recovery, but remain in defense mode. It is our fault that there are not new jobs, not Obama's, although infrastructure rebuidling as stimulus creates huge jobs and may be supportive.
Anyway, I guess I have been the quiet skeptic, quite surprised to see the rebound show such resilience, but frightened silly at the profits Goldman Sachs is going to make, and that the top traded stock for profits for the past six months was AIG, a phantom company.
A bit of me is more than saddened by the devisive nature of a few that can affect a majority. We are so easily led.
Okay, to the market. Hesitation all day but by mid afternoon all call traders had profited. Here's a great email from a new trader from France, nicknamed "Yellowman", :
Ok, I bought the call today at 9,50 ... and had my sell order at R1 (10071) ... I did a recalculation of the subset R/S and I had a new R1 of 10042... with the dow trading at 10033 (near the new R1) so I sold it at 11,00... I hope that was ok to do?
That's superb profit and what a trader should look for.
Although the market showed no strength it allowed call buyers easy entry and good fast day trade profits, which leaves us with our hedge put, which we'll stop loss today. With the market falling at 3.30 we saw even more of the nervousness of this market yesterday and do not want to hold positions over the weekend. No new trades.
Let's see "which reality sets in."
Thursday, October 15, 2009
A Strong Bullish Statement
Option expiry day the Dow has been down 3 straight years. Yesterday we saw new highs, with the market topping 10,000 several times.
All call traders were profitable and day trades also possible repeatedly on slight fluctuations. Our hedge put loses value,and we'll hold only through Friday, as the follow through is key to what happened to the market yesterday.
Our call was up 106^% from opening by 3 p.m. and it took most of the market day to show the struggle as the market could not reach and hold 9999.99, the revised r1.
What's next. Well, make note that option expiry is historically down, and make note that it was a struggle to 10,000. We'll follow the follow through, and issue new Dow projections.
Gold and Oil continued to rise. Watch the USD and its value climb, all interrelated to why the market is being so euphoric, and all backwards.
Many ask me if I am a "silent bear." Not at all, just a skeptical man that questions it all.
The market did hold above 10,000, a strong bullish statement if there is one.
Study your Pnf Dow and OEX charts to new periods, such as annual, or monthly, to gain perspective compared to weekly views.
All call traders were profitable and day trades also possible repeatedly on slight fluctuations. Our hedge put loses value,and we'll hold only through Friday, as the follow through is key to what happened to the market yesterday.
Our call was up 106^% from opening by 3 p.m. and it took most of the market day to show the struggle as the market could not reach and hold 9999.99, the revised r1.
What's next. Well, make note that option expiry is historically down, and make note that it was a struggle to 10,000. We'll follow the follow through, and issue new Dow projections.
Gold and Oil continued to rise. Watch the USD and its value climb, all interrelated to why the market is being so euphoric, and all backwards.
Many ask me if I am a "silent bear." Not at all, just a skeptical man that questions it all.
The market did hold above 10,000, a strong bullish statement if there is one.
Study your Pnf Dow and OEX charts to new periods, such as annual, or monthly, to gain perspective compared to weekly views.
Wednesday, October 14, 2009
Truly Remarkable Times
By noon the market hit 9895 on the actual Dow. Now add 40 points to average to the theoretical Dow, and we saw a top at 9935, so far.
I recalculated at about 10.30 a.m., not enough to twitter, at 50 points, but noticed the new pivot was 9850. Hmm, isn't this a number we've seen many times in recent days, as a strong resistance line.
Moves like we saw in trading until 2.30 p.m. were a large yawn, with what seemed a "draw" on what the market would do.
__________________________
What a mess. WE are now completely forgetting the trillion plus deficit built on the useless Iraq War, can't figure out how to close Gitmo, argue over what is really right in wrong in "war", all while:
MULLAH OMAR HAS STAGED 'ONE OF THE MOST REMARKABLE MILITARY COMEBACKS IN MODERN HISTORY'
We must remember Obama inherits double jeopardy, and that what was Al Queda is now a giant organization of hate. Obama's worldwide speeches and Nobel Peace Prize, no matter what one may think of the man or he as a President, bring us back a credibility with the world that Bush had lost us.
Truly remarkable times when we consider the statistics of what happened to us, and just how close we came to financial meltdown.
In 2009 about 40% of individual income taxes will go toward debt interest payments.
In 2009 insurance companies, whom we all trust, told Congress that the health bill would RAISE insurance costs.
It is putting all of these pieces of information together with "smarts" that distinguishes our ability to understand what is trying to be done, and the real reasons for why people hesitate to change.
It's up to you to find out how much money Goldman Sachs will make this year. If you can discover this you'll have part of the answer.
I recalculated at about 10.30 a.m., not enough to twitter, at 50 points, but noticed the new pivot was 9850. Hmm, isn't this a number we've seen many times in recent days, as a strong resistance line.
Moves like we saw in trading until 2.30 p.m. were a large yawn, with what seemed a "draw" on what the market would do.
__________________________
What a mess. WE are now completely forgetting the trillion plus deficit built on the useless Iraq War, can't figure out how to close Gitmo, argue over what is really right in wrong in "war", all while:
MULLAH OMAR HAS STAGED 'ONE OF THE MOST REMARKABLE MILITARY COMEBACKS IN MODERN HISTORY'
We must remember Obama inherits double jeopardy, and that what was Al Queda is now a giant organization of hate. Obama's worldwide speeches and Nobel Peace Prize, no matter what one may think of the man or he as a President, bring us back a credibility with the world that Bush had lost us.
Truly remarkable times when we consider the statistics of what happened to us, and just how close we came to financial meltdown.
In 2009 about 40% of individual income taxes will go toward debt interest payments.
In 2009 insurance companies, whom we all trust, told Congress that the health bill would RAISE insurance costs.
It is putting all of these pieces of information together with "smarts" that distinguishes our ability to understand what is trying to be done, and the real reasons for why people hesitate to change.
It's up to you to find out how much money Goldman Sachs will make this year. If you can discover this you'll have part of the answer.
Tuesday, October 13, 2009
Declare a Fishing Day
The market moved right to 9972 on the theoretical Dow while the market gapped up in the a.m. There may be some slight movement above 10,000, but we believe the volume and intensity of euphoria is waning. OEBKT NOV 21 2009 500.00 CALL bought at 9.60 last week hit highs of 11.60 for a nice 2.00 per contract profit on the upside run.
The USD rose dramatically, yet Gold held. Oil rose. All of these are contradictory market statements, and show again why the count is muted, and confused.
One of my rules of thumb:
* When trading well, trade larger. When not trading well, stop trading. These are very simple rules I use. Another is that if I have been doing extraordinarily well, and have been trading larger, I often declare a "fishing day," that you'll see in the alerts, and I stay offline, away from the news, the market, and from any input as I am beginning to feel "over my threshold." "Over the threshold" means to me that I am over my level of handling stress (a human created emotion) and that I should "stop."
The USD rose dramatically, yet Gold held. Oil rose. All of these are contradictory market statements, and show again why the count is muted, and confused.
One of my rules of thumb:
* When trading well, trade larger. When not trading well, stop trading. These are very simple rules I use. Another is that if I have been doing extraordinarily well, and have been trading larger, I often declare a "fishing day," that you'll see in the alerts, and I stay offline, away from the news, the market, and from any input as I am beginning to feel "over my threshold." "Over the threshold" means to me that I am over my level of handling stress (a human created emotion) and that I should "stop."
Monday, October 12, 2009
October is...
October is the best month historically for the Dow, and the S&P, since 1998. The Monday before option expiry the Dow has been up 23 of the last 28 years.
The market hit theoretical highs of 9905. To get a theoretical, or exponential Dow high, simply ADD 40 points, or SUBTRACT 40 points from the actual high and low of the day.
We list our Dow projections using theoretical Dow, and our moving average analysis is always exponential. We have also recently adjusted our ATR readings to 5 to 7 days, lowering them because of market volatility.
Lastly, with the market flat lining, and then whipsaw, on this almost inverted struggle to 10,000 we've begun manually doing our "count," which is a bell curve analysis of the overbought/oversold conditions.
For example, today the count is 4 to the call. This shows:
1. There is room to the upside, and the market does not show oversold. This contradicts, however, the bullish % on the Dow or OEX, and helps us recognize that the "count" is extremely affected right now by the uncertainty in the market.
2. The count itself is becoming skewed by the constant whipsaw
The bottom line: There is a strong possibility of a move to the market tops near 10,000. Holding over 10,000 seems unlikely. There is just as strong a possibility, from the struggle we've seen near the high 9800's, that the market is topping.
Gold is at all time highs, and holding. So far.
President Obama won the Nobel Peace Prize for our country, and we are suddenly a "world nation" again yet the vast right wing finds reasons this is shameful, and unfair, with no thoughts of what this honor does for our country.
And the best goes on.
The market hit theoretical highs of 9905. To get a theoretical, or exponential Dow high, simply ADD 40 points, or SUBTRACT 40 points from the actual high and low of the day.
We list our Dow projections using theoretical Dow, and our moving average analysis is always exponential. We have also recently adjusted our ATR readings to 5 to 7 days, lowering them because of market volatility.
Lastly, with the market flat lining, and then whipsaw, on this almost inverted struggle to 10,000 we've begun manually doing our "count," which is a bell curve analysis of the overbought/oversold conditions.
For example, today the count is 4 to the call. This shows:
1. There is room to the upside, and the market does not show oversold. This contradicts, however, the bullish % on the Dow or OEX, and helps us recognize that the "count" is extremely affected right now by the uncertainty in the market.
2. The count itself is becoming skewed by the constant whipsaw
The bottom line: There is a strong possibility of a move to the market tops near 10,000. Holding over 10,000 seems unlikely. There is just as strong a possibility, from the struggle we've seen near the high 9800's, that the market is topping.
Gold is at all time highs, and holding. So far.
President Obama won the Nobel Peace Prize for our country, and we are suddenly a "world nation" again yet the vast right wing finds reasons this is shameful, and unfair, with no thoughts of what this honor does for our country.
And the best goes on.
Friday, October 9, 2009
A Dead Man's Flip of the Coin
Typically the Monday before option expiry Friday the Dow has been up 23 of the last 28 years, with 2007 the first loss in 7 years.
And with the exhaustive gaps we saw yesterday, with highs to 9876 by mid morning, we provided a recalculation of the support and resistance and pivot lines. Subscriber Jurgen, new to our service, wrote yesterday after reviewing the manual and videos, and "confused" on how we are to use support and resistance.
Let's use yesterday as an example:
1. When we re-calculated the pivot point was 9775.73. After the initial run up, which went to R1 on the morning calculation, the market moved back to this re-calculated pivot and did little.
The key here is the market must remain below or above the pivot to show a clear bias.
2. By noon the market had hit the re-calculated R1, which was 9823.40. If a trader was holding calls they had bought this would be a key time to consider, if profitable, selling them, as the next step in s2 and the market often hesitates. Many of the rules on S/R are written right below in our daily alert.
3. S1 yesterday did not hold. Day traders may have bought a put at that time, as they saw the hesitancy, and waited to sell if the market moved to the pivot, or down to s1. Sure enough, this occurred, the market dropped right to the re-calculated s1 at 9745.71, and puts could have been profitable for day traders.
A common rule we often teach for regular trading is: "Buy at s2, sell at r2, and buy at r2, sell at s2." This rule is for the longer range trader, and note that recent massive moves in the market of over 100 points often in an hour make this type of trading tougher.
There are NO hard and fast rules on how to use S/R, and this is the hardest thing we teach. Support simply means that this is an area the market has hesitated before, as does resistance. When the market hesitates it is a "trigger" to the floor traders, and we see action of either "shift of bias" or stronger upside or downside when we hit core support and resistance lines.
Here's an example of where we used support/resistance and our Dow projections for maximum profits. This was our new signal for yesterday:
OEBKT NOV 21 2009 500.00 CALL
"Follow futures, and if futures are UP 50 points buy this at 'market' and sell to 9876."
Futures were up, and traders bought at opening and were able to sell for over a 1.00 per contract profits within hours. This is also a position that can now be "held," as you'll see in our instructions below.
The value of support and resistance is that we know certain things occur then normally, and can often take advantage of buys and sells where we know the market might "hesitate."
Study our videos on support and resistance, and use them as "fluid" tools. Re-calculate, or watch for our Twitter, if the market really moves, as you can begin to see many patterns emerge.
It is a dead man's flip of the coin if the market will hit 9950 to 10,000. The bulls are surely trying, and resistance seems strong. There is good news, but really, enough good news?
We feel that is part of how Wall Street is thinking, and where the hesitancy is. If we hedge, somewhere we will lose. We'll hold with the call for a new trade and list a put for risk traders that want to hold for next week.
And with the exhaustive gaps we saw yesterday, with highs to 9876 by mid morning, we provided a recalculation of the support and resistance and pivot lines. Subscriber Jurgen, new to our service, wrote yesterday after reviewing the manual and videos, and "confused" on how we are to use support and resistance.
Let's use yesterday as an example:
1. When we re-calculated the pivot point was 9775.73. After the initial run up, which went to R1 on the morning calculation, the market moved back to this re-calculated pivot and did little.
The key here is the market must remain below or above the pivot to show a clear bias.
2. By noon the market had hit the re-calculated R1, which was 9823.40. If a trader was holding calls they had bought this would be a key time to consider, if profitable, selling them, as the next step in s2 and the market often hesitates. Many of the rules on S/R are written right below in our daily alert.
3. S1 yesterday did not hold. Day traders may have bought a put at that time, as they saw the hesitancy, and waited to sell if the market moved to the pivot, or down to s1. Sure enough, this occurred, the market dropped right to the re-calculated s1 at 9745.71, and puts could have been profitable for day traders.
A common rule we often teach for regular trading is: "Buy at s2, sell at r2, and buy at r2, sell at s2." This rule is for the longer range trader, and note that recent massive moves in the market of over 100 points often in an hour make this type of trading tougher.
There are NO hard and fast rules on how to use S/R, and this is the hardest thing we teach. Support simply means that this is an area the market has hesitated before, as does resistance. When the market hesitates it is a "trigger" to the floor traders, and we see action of either "shift of bias" or stronger upside or downside when we hit core support and resistance lines.
Here's an example of where we used support/resistance and our Dow projections for maximum profits. This was our new signal for yesterday:
OEBKT NOV 21 2009 500.00 CALL
"Follow futures, and if futures are UP 50 points buy this at 'market' and sell to 9876."
Futures were up, and traders bought at opening and were able to sell for over a 1.00 per contract profits within hours. This is also a position that can now be "held," as you'll see in our instructions below.
The value of support and resistance is that we know certain things occur then normally, and can often take advantage of buys and sells where we know the market might "hesitate."
Study our videos on support and resistance, and use them as "fluid" tools. Re-calculate, or watch for our Twitter, if the market really moves, as you can begin to see many patterns emerge.
It is a dead man's flip of the coin if the market will hit 9950 to 10,000. The bulls are surely trying, and resistance seems strong. There is good news, but really, enough good news?
We feel that is part of how Wall Street is thinking, and where the hesitancy is. If we hedge, somewhere we will lose. We'll hold with the call for a new trade and list a put for risk traders that want to hold for next week.
Big Talkers
The market flat lined just enough to bore everyone, up until 3 p.m. 9780 as a high, and 9635 as a low, but options trading tightly.
In periods day traders were able to eke out tight profits, or break even. We continue to hold puts.
The market will clearly either break resistance lines shortly and hit 9950, or break down again. We are in a waiting game.
____________________________________________________
I especially love the "big talkers": Texas GOP Lawmakers Who Voted Against Recovery Act Now Beg For Stimulus Funds
And I'm proud to be an American, that has allowed our own dollar to have little value: http://www.breitbart.com/article.php?id=CNG.e272eaa74dccc30f21c6ff7638b0f37b.461&show_article=1
It is important to note that Gold is 1042.00 while the USD falls. While world currency is seriously being discussed.
Often smart negotiators do not win, but look to ways in which the compromise benefits them.
In periods day traders were able to eke out tight profits, or break even. We continue to hold puts.
The market will clearly either break resistance lines shortly and hit 9950, or break down again. We are in a waiting game.
____________________________________________________
I especially love the "big talkers": Texas GOP Lawmakers Who Voted Against Recovery Act Now Beg For Stimulus Funds
And I'm proud to be an American, that has allowed our own dollar to have little value: http://www.breitbart.com/article.php?id=CNG.e272eaa74dccc30f21c6ff7638b0f37b.461&show_article=1
It is important to note that Gold is 1042.00 while the USD falls. While world currency is seriously being discussed.
Often smart negotiators do not win, but look to ways in which the compromise benefits them.
Wednesday, October 7, 2009
World Currency Discussed
The USD fell, and a world currency was discussed, and the stock market went up. This is an important statement.
What a profitable day again yesterday! Traders took entry to our higher risk OEBKD call and locked in .80 profits, on same day trades, with minimal risk. We stop lossed our puts. The market is so irrational that we saw 9814 highs to 9561 lows in a single day, and came very close again to the market tops that stopped upside last time.
We hesitate, as always, as we see market tops. Note in our Dow projections that Roubini's concern on "too fast a run up", and Floyd's ongoing concern that consolidations do not last long enough to lock profits and keep a healthy market; we're now listing in our Dow projections market tops we might reach before the same free fall to 9376, or below.
Stocks and commodities rose yesterday, get this, as Australia raised interest rates. This is "evidence" to their economists that the recession is slowing, and recovery is beginning.
Just a few short years ago when Emperor Bush was commanding I remember arguments about "not having even entered a recession." To Floydian thinking, we've been through TWO recessions, the first around Bush, then streamlined to goosefat as the market moved up around Wall Street, only to come crashing down.
Bloomberg has sued the U.S to identify companies that received loans from the central bank, and by now you've all read the Gov't is accused of not telling us how bad it really was when the SECOND stimulus of 700+ billion came in the early Obama weeks. Please don't forget the 585 billion that Paulson, Cheney and boys rammed through Congress, "the end of the world" last Sept and October.
Obama is now struggling with an unemployment rate at 10%, and smart economists believe this unemployment rate will stay this high, through company leanings and less business, unless a THIRD stimulus (still called the "second" stimulus) is introduced to the American people within 6 months.
My favorite is the new bank game called “re-emic”, which stands for “reseecuritization of real estate mortgages conduits." Floyd Translation: The banks have taken more toxic assets they have in real estate and repackaged them to get a higher “security rating.” Sigh. Jim Rogers, famed trader, sees “inflation as already worse than the government is seeing it and hyperinflation occurring over the next few years."
We suggest market tops will lead to another potential overall 586 point overall drop to the market, before returning to upside. Yet again we believe consolidations too short, and upside quite euphoric.
What a profitable day again yesterday! Traders took entry to our higher risk OEBKD call and locked in .80 profits, on same day trades, with minimal risk. We stop lossed our puts. The market is so irrational that we saw 9814 highs to 9561 lows in a single day, and came very close again to the market tops that stopped upside last time.
We hesitate, as always, as we see market tops. Note in our Dow projections that Roubini's concern on "too fast a run up", and Floyd's ongoing concern that consolidations do not last long enough to lock profits and keep a healthy market; we're now listing in our Dow projections market tops we might reach before the same free fall to 9376, or below.
Stocks and commodities rose yesterday, get this, as Australia raised interest rates. This is "evidence" to their economists that the recession is slowing, and recovery is beginning.
Just a few short years ago when Emperor Bush was commanding I remember arguments about "not having even entered a recession." To Floydian thinking, we've been through TWO recessions, the first around Bush, then streamlined to goosefat as the market moved up around Wall Street, only to come crashing down.
Bloomberg has sued the U.S to identify companies that received loans from the central bank, and by now you've all read the Gov't is accused of not telling us how bad it really was when the SECOND stimulus of 700+ billion came in the early Obama weeks. Please don't forget the 585 billion that Paulson, Cheney and boys rammed through Congress, "the end of the world" last Sept and October.
Obama is now struggling with an unemployment rate at 10%, and smart economists believe this unemployment rate will stay this high, through company leanings and less business, unless a THIRD stimulus (still called the "second" stimulus) is introduced to the American people within 6 months.
My favorite is the new bank game called “re-emic”, which stands for “reseecuritization of real estate mortgages conduits." Floyd Translation: The banks have taken more toxic assets they have in real estate and repackaged them to get a higher “security rating.” Sigh. Jim Rogers, famed trader, sees “inflation as already worse than the government is seeing it and hyperinflation occurring over the next few years."
We suggest market tops will lead to another potential overall 586 point overall drop to the market, before returning to upside. Yet again we believe consolidations too short, and upside quite euphoric.
Tuesday, October 6, 2009
Happy Days Are Here Again
Happy Days are here again.
-OXBJN OEX.X OCT 2009 470.0000 CALL we bought at 12.78 last week, and sold to highs of 16.20 by 3 p.m. on Monday, for a great start to the week.
We had issued new Dow projections showing a 9679 resistance, and twittered out new Dow calculations at 11 a.m. that showed R2 at 9619, and r3 and 9649. Astute traders saw our new calculations, and the upsurge, and most held right to our high market sell at r2.
A comment from a subscriber: Wow these ITM calls really move in price. I bought 4 contracts last week as close to 9376 as I could get for 11.50. Sold today - limit order while I was in a meeting for 16.00. I am still sitting on some losing OTM calls. They only moved a few cents today while the ITM calls moved a couple dollars. I think I saw a lesson in this one. I am assuming we went with the ITM call for the price movement since we were at a turn around point in the market. I see how we can profit on the movement without waiting for bias to increase prices on the OTM issues. Is that a fair observation?" Floydian comment: ITM works very well in tight ranges, ATM at other times, and OTM can be hugely lucrative for less risk at certain times. This was one of those times for an ITM call!
However, everything is NOT good, and the market upsurge may have been an exhaustive gap up, with a potential downside to surprise us all. There's enough talk about it, and there should be:
First, some information:
1. Treasury Yields Drop to Lowest Since May as Recovery Falters
http://www.bloomberg.com/apps/news?pid=email_en&sid=abdGwSy.WPGI
2.This was in Bloomberg on Sunday, showing the "hope of investors":
http://www.marketwatch.com/story/us-stocks-await-the-earnings-cavalry-2009-10-03
3. This may soon become Floyd's favorite quote of misinformation:
· “The DIF (Deposit Insurance Fund) balance going negative doesn’t mean we’ve run out of money”, said FDIC Chairman Sheila Barr told reporters last week. Of course, one might wonder why this would be said when the FDIC is asking the FED to fund it, and that the protection of our bank deposits now may require this. Think long term. The failure of banks began many years ago; we are now just paying for our own GREED and lack of oversight.
4. · Historically MACD gives strong buy signals at this time of year, and many option and stock services use this as a “buy signal”. My comment on MACD, which I do watch at this time of year, is that there appears to suddenly be a loss of momentum. Follow this on daily and weekly charts to see the differance, and remember it means different things to us as short-term traders vs. those that are watching MACD also for buy signals. We only track MACD, and use PnF charts for all of our final decisions.
_____________
Next, I will cry for and with you:
This is so sad. My favorite journalist, Matt Taibbi, writes another scathing article for Rolling Stone Magazine, the third to gain world wide attention as he exposes the Wall Street that collapsed.
Wall Street's Naked Swindle
A scheme to sell fake stocks helped kill Bear Sterns and Lehman Brothers — exposing the counterfeit nature of our entire economy. By Matt Taibbi
Find this article today on the web. Taibbi correctly exposes how the game has been played, and sadly shows us how there are so many regulating bodies that none have been organized to solve the situation.
I find Taibbi a frightening journalist. His facts have been checked, he gains much national TV interview exposure, but continues to work for Rolling Stone Magazine vs. a top news organization, because he will "not be muzzled".
Here he is on YouTube: http://www.youtube.com/watch?v=OqZUbe9KIMs
It leaves me naked, with no weapons, and an army advancing. I'm disgusted, discouraged, saddened for society, and angry.
5. Roubini Says Stocks Have Risen ‘Too Much, Too Soon, Too Fast’
Oct. 4 (Bloomberg) -- New York University Professor Nouriel Roubini, who accurately predicted the financial crisis, said stock and commodity markets may drop in coming months as the gradual pace of the economic recovery disappoints investors.
“Markets have gone up too much, too soon, too fast,” Roubini said in an interview in Istanbul yesterday. “I see the risk of a correction, especially when the markets now realize that the recovery is not rapid and V-shaped, but more like U- shaped. That might be in the fourth quarter or the first quarter of next year.”
Stocks have surged around the world in the past six months as evidence mounts that the economy is emerging from its deepest recession since the 1930s. The Standard & Poor’s 500 Index has soared 51 percent from a 12-year low in March while Europe’s Dow Jones Stoxx 600 is up 48 percent. The euphoria contrasts with the cautious tone of Group of Seven policy makers, who said after their meeting in Istanbul yesterday that prospects for growth “remain fragile.”
“The real economy is barely recovering while markets are going this way,” Roubini said. If growth doesn’t rebound rapidly, “eventually markets are going to flatten out and correct to valuations that are justified. I see a growing gap between what markets are doing and the weaker real economic activities.”
‘Anemic’ Recovery
The International Monetary Fund predicts the global economy will expand 3.1 percent in 2010, led by growth in Asia, after a 1.1 percent contraction this year. That is still “anemic” and “very weak,” Roubini said.
U.S. stocks fell last week after manufacturing expanded less than anticipated and unemployment climbed to a 26-year high, fueling concern the economy is rebounding more slowly than forecast.
Gains in the S&P 500 have pushed valuations in the index to more than 19 times reported operating profits from the past year, data compiled by Bloomberg show. That’s near the most expensive level since 2004.
The performance of the U.S. economy is probably more sluggish than reflected in stock markets, risking a correction in equities, Nobel Prize-winning economist Michael Spence said last month. U.S. stock-market investors have “over processed” the stabilization of growth in the world’s largest economy, Spence said.
Creating Bubbles
The global equity rally has added about $20.1 trillion to the value of stocks worldwide since this year’s low on March 9. Governments have poured about $2 trillion of stimulus into the global economy while central banks have cut interest rates to close to zero in efforts to revive growth.
“In the short run we need monetary and fiscal stimulus to avoid another tipping point and to avoid deflation, but now this easy money has already started to create asset bubbles in equities, commodities, credit and emerging markets,” Roubini said. “For the sake of achieving growth stability again and avoiding deflation, we may be planting the seeds of the next cycle of financial instability.”
-OXBJN OEX.X OCT 2009 470.0000 CALL we bought at 12.78 last week, and sold to highs of 16.20 by 3 p.m. on Monday, for a great start to the week.
We had issued new Dow projections showing a 9679 resistance, and twittered out new Dow calculations at 11 a.m. that showed R2 at 9619, and r3 and 9649. Astute traders saw our new calculations, and the upsurge, and most held right to our high market sell at r2.
A comment from a subscriber: Wow these ITM calls really move in price. I bought 4 contracts last week as close to 9376 as I could get for 11.50. Sold today - limit order while I was in a meeting for 16.00. I am still sitting on some losing OTM calls. They only moved a few cents today while the ITM calls moved a couple dollars. I think I saw a lesson in this one. I am assuming we went with the ITM call for the price movement since we were at a turn around point in the market. I see how we can profit on the movement without waiting for bias to increase prices on the OTM issues. Is that a fair observation?" Floydian comment: ITM works very well in tight ranges, ATM at other times, and OTM can be hugely lucrative for less risk at certain times. This was one of those times for an ITM call!
However, everything is NOT good, and the market upsurge may have been an exhaustive gap up, with a potential downside to surprise us all. There's enough talk about it, and there should be:
First, some information:
1. Treasury Yields Drop to Lowest Since May as Recovery Falters
http://www.bloomberg.com/apps/news?pid=email_en&sid=abdGwSy.WPGI
2.This was in Bloomberg on Sunday, showing the "hope of investors":
http://www.marketwatch.com/story/us-stocks-await-the-earnings-cavalry-2009-10-03
3. This may soon become Floyd's favorite quote of misinformation:
· “The DIF (Deposit Insurance Fund) balance going negative doesn’t mean we’ve run out of money”, said FDIC Chairman Sheila Barr told reporters last week. Of course, one might wonder why this would be said when the FDIC is asking the FED to fund it, and that the protection of our bank deposits now may require this. Think long term. The failure of banks began many years ago; we are now just paying for our own GREED and lack of oversight.
4. · Historically MACD gives strong buy signals at this time of year, and many option and stock services use this as a “buy signal”. My comment on MACD, which I do watch at this time of year, is that there appears to suddenly be a loss of momentum. Follow this on daily and weekly charts to see the differance, and remember it means different things to us as short-term traders vs. those that are watching MACD also for buy signals. We only track MACD, and use PnF charts for all of our final decisions.
_____________
Next, I will cry for and with you:
This is so sad. My favorite journalist, Matt Taibbi, writes another scathing article for Rolling Stone Magazine, the third to gain world wide attention as he exposes the Wall Street that collapsed.
Wall Street's Naked Swindle
A scheme to sell fake stocks helped kill Bear Sterns and Lehman Brothers — exposing the counterfeit nature of our entire economy. By Matt Taibbi
Find this article today on the web. Taibbi correctly exposes how the game has been played, and sadly shows us how there are so many regulating bodies that none have been organized to solve the situation.
I find Taibbi a frightening journalist. His facts have been checked, he gains much national TV interview exposure, but continues to work for Rolling Stone Magazine vs. a top news organization, because he will "not be muzzled".
Here he is on YouTube: http://www.youtube.com/watch?v=OqZUbe9KIMs
It leaves me naked, with no weapons, and an army advancing. I'm disgusted, discouraged, saddened for society, and angry.
5. Roubini Says Stocks Have Risen ‘Too Much, Too Soon, Too Fast’
Oct. 4 (Bloomberg) -- New York University Professor Nouriel Roubini, who accurately predicted the financial crisis, said stock and commodity markets may drop in coming months as the gradual pace of the economic recovery disappoints investors.
“Markets have gone up too much, too soon, too fast,” Roubini said in an interview in Istanbul yesterday. “I see the risk of a correction, especially when the markets now realize that the recovery is not rapid and V-shaped, but more like U- shaped. That might be in the fourth quarter or the first quarter of next year.”
Stocks have surged around the world in the past six months as evidence mounts that the economy is emerging from its deepest recession since the 1930s. The Standard & Poor’s 500 Index has soared 51 percent from a 12-year low in March while Europe’s Dow Jones Stoxx 600 is up 48 percent. The euphoria contrasts with the cautious tone of Group of Seven policy makers, who said after their meeting in Istanbul yesterday that prospects for growth “remain fragile.”
“The real economy is barely recovering while markets are going this way,” Roubini said. If growth doesn’t rebound rapidly, “eventually markets are going to flatten out and correct to valuations that are justified. I see a growing gap between what markets are doing and the weaker real economic activities.”
‘Anemic’ Recovery
The International Monetary Fund predicts the global economy will expand 3.1 percent in 2010, led by growth in Asia, after a 1.1 percent contraction this year. That is still “anemic” and “very weak,” Roubini said.
U.S. stocks fell last week after manufacturing expanded less than anticipated and unemployment climbed to a 26-year high, fueling concern the economy is rebounding more slowly than forecast.
Gains in the S&P 500 have pushed valuations in the index to more than 19 times reported operating profits from the past year, data compiled by Bloomberg show. That’s near the most expensive level since 2004.
The performance of the U.S. economy is probably more sluggish than reflected in stock markets, risking a correction in equities, Nobel Prize-winning economist Michael Spence said last month. U.S. stock-market investors have “over processed” the stabilization of growth in the world’s largest economy, Spence said.
Creating Bubbles
The global equity rally has added about $20.1 trillion to the value of stocks worldwide since this year’s low on March 9. Governments have poured about $2 trillion of stimulus into the global economy while central banks have cut interest rates to close to zero in efforts to revive growth.
“In the short run we need monetary and fiscal stimulus to avoid another tipping point and to avoid deflation, but now this easy money has already started to create asset bubbles in equities, commodities, credit and emerging markets,” Roubini said. “For the sake of achieving growth stability again and avoiding deflation, we may be planting the seeds of the next cycle of financial instability.”
Monday, October 5, 2009
We Could Debate This Forever
Those that follow MACD buy signals should begin watching. Historically divergences occur this time of year and some stocks are a buy for the next historically strong 6 months of the market.
However, we'll be discussing this week what October could bring, either a run up to 10,700, or a run down to under 9000. That much is at stake.
Friday unemployment went from 9.7 to 9.8% and the investing public used this, and the ISM report, to continue sell off. The market moves Friday hit highs of 9565 and lows of 9390. Note 9376 in the past was a strong support and resistance line, and the strength of the turnaround from the morning bottom Friday has some chartists believing that this bottom will hold.
Of course, we could debate this forever.
However, we'll be discussing this week what October could bring, either a run up to 10,700, or a run down to under 9000. That much is at stake.
Friday unemployment went from 9.7 to 9.8% and the investing public used this, and the ISM report, to continue sell off. The market moves Friday hit highs of 9565 and lows of 9390. Note 9376 in the past was a strong support and resistance line, and the strength of the turnaround from the morning bottom Friday has some chartists believing that this bottom will hold.
Of course, we could debate this forever.
Friday, October 2, 2009
I Was Nervous
I was nervous the night before last. I had watched the market moves all day made money, and I simply was unsure if yesterday would try a second bottom test. Hence, we had no open put signal and missed a good profit.
An intraday alert went out at the 9550 crossing yesterday for an ITM call, with a high risk attached, as the market could still go to our 9376 bottom.
We're not convinced yet that October will be filled with surprises. What had appeared 10,700 on a bull run early year end run up to the Fibonnacci retracement could actually be charted. I could prove it to myself.
At the same time, I've not "understood" the run up, and felt nervous our euphoria would lead to a bubble burst.
I'm still studying key dates, and economic indicators and am not ready to project beyond our current Dow projections. Read them carefully. They may now actually reverse in an uptrend with a shorter top.
And to get smart:
Volcker: Obama's Reforms Maintain 'Too Big To Fail'
URL: http://www.rollingstone.com/politics/story/30219673/the_lie_machine
And, from the boy that started it all, read with a cavalier attitude as Bubbles Greenspan, who helped create this mess, now speaks:
Greenspan Says U.S. Will Need to Tighten Credit, Raise Taxes
Oct. 1 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the U.S. will have to both tighten credit and raise taxes as the economy pulls out of the worst recession since the 1930s.
“The presumption that we’re going to be able to resolve this without significant increases in taxes is unrealistic,” Greenspan, 83, said in an interview with Bloomberg Television yesterday.
The budget deficit this year is forecast to widen to $1.6 trillion, boosted in part by President Barack Obama’s $787 billion stimulus package. Between 2010 and 2019, deficits will total $7.1 trillion, according to the Congressional Budget Office.
Greenspan also said the Fed will have to withdraw money from the financial system to avoid inflation. The central bank has doubled its balance sheet over the last year to $2.2 billion as it battled the recession that began in December 2007.
The economy will grow at a 3 percent to 4 percent annual pace in the next six months before slowing in 2010, Greenspan predicted. Growth will be aided by a surge in the stock market and inventory restocking by companies. Share prices are likely to “flatten out, even though earnings are doing very well.”
The Standard & Poor’s 500 Index has jumped 56 percent from its low for the year on March 9, an ascent that’s had a “very positive” impact on the economy, Greenspan added. The index fell 0.3 percent yesterday to 1,057.08.
Job Cuts
The world’s largest economy shrank at a 0.7 percent annual rate from April through June, the best performance in more than a year. An unexpected decline in a gauge of business activity released yesterday, along with a private report showing employers cut more jobs than forecast, indicate a recovery may be slow to take hold.
Greenspan, who was appointed Fed chairman in 1987 by President Ronald Reagan and served until January 2006, praised the steps has taken by his successor, Ben S. Bernanke, to help pull the economy out of recession.
“The Fed has done a splendid job,” he said.
Still, the size of the Fed’s balance sheet is “not sustainable” and will eventually have to be reduced to “something just north of $1 trillion,” he said.
“My concern is that legislation or other actions on the part of Congress may prevent” the Fed from withdrawing the stimulus, Greenspan said. “Unless we sterilize or unwind the big monetary base we’ve built up, two, three years out inflation really begins to take hold.”
Representative Ron Paul of Texas, a Republican, is leading an effort in Congress to repeal the central bank’s immunity to audits of monetary policy.
Consumption Tax
Greenspan said that the odds are growing that the U.S. will have to enact some form of consumption tax to help reduce the federal budget deficit.
Obama has pledged to bring down the deficit without raising taxes on middle-income Americans. The CBO estimates that this year’s budget shortfall will equal 11.2 percent of the economy, the most since World War II.
Greenspan said he is “quite impressed” by Obama and called him “a very intelligent man.”
“But I don’t think he is sufficiently in control of a very serious budget problem,” the former Fed chief said.
Greenspan said that an overhaul of financial regulations is needed. Treasury Secretary Timothy Geithner has proposed the most sweeping changes to the rules governing Wall Street in seven decades, including giving the Fed authority to monitor risk across the financial system while stripping it of its consumer-protection role.
‘Broke Down’
“It’s very obvious that a lot of things which were in place in the regulatory area in the markets failed,” Greenspan said. “It broke down and it’s got to be fixed.”
Bernanke has opposed ceding the central bank’s power to regulate the safety of financial products to a new agency. Greenspan, for his part, called such power “peripheral” to the Fed’s main role.
He also cautioned against responding to the financial crisis with excessive regulation. While agreeing that the government should have a say on executive compensation in the institutions that are receiving government aid, Greenspan voiced wariness about extending that control to other banks.
“You have to be careful here because this should be a relationship between shareholders, directors and executives,” he said.
And for more fun:
http://www.wsj.com/article/SB125434960666354035.html?mod=WSJ_hpp_sections_markets
An intraday alert went out at the 9550 crossing yesterday for an ITM call, with a high risk attached, as the market could still go to our 9376 bottom.
We're not convinced yet that October will be filled with surprises. What had appeared 10,700 on a bull run early year end run up to the Fibonnacci retracement could actually be charted. I could prove it to myself.
At the same time, I've not "understood" the run up, and felt nervous our euphoria would lead to a bubble burst.
I'm still studying key dates, and economic indicators and am not ready to project beyond our current Dow projections. Read them carefully. They may now actually reverse in an uptrend with a shorter top.
And to get smart:
Volcker: Obama's Reforms Maintain 'Too Big To Fail'
URL: http://www.rollingstone.com/politics/story/30219673/the_lie_machine
And, from the boy that started it all, read with a cavalier attitude as Bubbles Greenspan, who helped create this mess, now speaks:
Greenspan Says U.S. Will Need to Tighten Credit, Raise Taxes
Oct. 1 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the U.S. will have to both tighten credit and raise taxes as the economy pulls out of the worst recession since the 1930s.
“The presumption that we’re going to be able to resolve this without significant increases in taxes is unrealistic,” Greenspan, 83, said in an interview with Bloomberg Television yesterday.
The budget deficit this year is forecast to widen to $1.6 trillion, boosted in part by President Barack Obama’s $787 billion stimulus package. Between 2010 and 2019, deficits will total $7.1 trillion, according to the Congressional Budget Office.
Greenspan also said the Fed will have to withdraw money from the financial system to avoid inflation. The central bank has doubled its balance sheet over the last year to $2.2 billion as it battled the recession that began in December 2007.
The economy will grow at a 3 percent to 4 percent annual pace in the next six months before slowing in 2010, Greenspan predicted. Growth will be aided by a surge in the stock market and inventory restocking by companies. Share prices are likely to “flatten out, even though earnings are doing very well.”
The Standard & Poor’s 500 Index has jumped 56 percent from its low for the year on March 9, an ascent that’s had a “very positive” impact on the economy, Greenspan added. The index fell 0.3 percent yesterday to 1,057.08.
Job Cuts
The world’s largest economy shrank at a 0.7 percent annual rate from April through June, the best performance in more than a year. An unexpected decline in a gauge of business activity released yesterday, along with a private report showing employers cut more jobs than forecast, indicate a recovery may be slow to take hold.
Greenspan, who was appointed Fed chairman in 1987 by President Ronald Reagan and served until January 2006, praised the steps has taken by his successor, Ben S. Bernanke, to help pull the economy out of recession.
“The Fed has done a splendid job,” he said.
Still, the size of the Fed’s balance sheet is “not sustainable” and will eventually have to be reduced to “something just north of $1 trillion,” he said.
“My concern is that legislation or other actions on the part of Congress may prevent” the Fed from withdrawing the stimulus, Greenspan said. “Unless we sterilize or unwind the big monetary base we’ve built up, two, three years out inflation really begins to take hold.”
Representative Ron Paul of Texas, a Republican, is leading an effort in Congress to repeal the central bank’s immunity to audits of monetary policy.
Consumption Tax
Greenspan said that the odds are growing that the U.S. will have to enact some form of consumption tax to help reduce the federal budget deficit.
Obama has pledged to bring down the deficit without raising taxes on middle-income Americans. The CBO estimates that this year’s budget shortfall will equal 11.2 percent of the economy, the most since World War II.
Greenspan said he is “quite impressed” by Obama and called him “a very intelligent man.”
“But I don’t think he is sufficiently in control of a very serious budget problem,” the former Fed chief said.
Greenspan said that an overhaul of financial regulations is needed. Treasury Secretary Timothy Geithner has proposed the most sweeping changes to the rules governing Wall Street in seven decades, including giving the Fed authority to monitor risk across the financial system while stripping it of its consumer-protection role.
‘Broke Down’
“It’s very obvious that a lot of things which were in place in the regulatory area in the markets failed,” Greenspan said. “It broke down and it’s got to be fixed.”
Bernanke has opposed ceding the central bank’s power to regulate the safety of financial products to a new agency. Greenspan, for his part, called such power “peripheral” to the Fed’s main role.
He also cautioned against responding to the financial crisis with excessive regulation. While agreeing that the government should have a say on executive compensation in the institutions that are receiving government aid, Greenspan voiced wariness about extending that control to other banks.
“You have to be careful here because this should be a relationship between shareholders, directors and executives,” he said.
And for more fun:
http://www.wsj.com/article/SB125434960666354035.html?mod=WSJ_hpp_sections_markets
Thursday, October 1, 2009
Now, Let Me Yell At You - It Will Not Just "Come to You"
At the opening the market dropped to 9558, right at our first theoretical Dow low, and all puts could have been sold profitably, to up to 40% depending upon issue and time of buy.
Call buyers were also rewarded on the Oct500C buying on the downturn, and selling to .60 profits within an hour. The position was later available for tight day trades as the market hesitated.
This is a good example for traders of always having a sell order in. We went right to our 9550 downturn at opening, and all puts and calls hit their profits. By 3 p.m., the two way trades we emphasized had shifted focus again, and the market began moving down. Astute traders had bought the puts again on the upturn, and sold again on the downturn after 3 p.m.
Today I'll share an example of how I personally trade, as last Thursday and Friday were excellent examples of how one could "day trade" regular stock options that one owns, and index options.
If you'll remember Friday we moved from a 9776 theoretical Dow top to a 9600 low. First, I sold an open put I had from Thursday, that I had already sold 2/3 of profitably, selling the final 1/3 of my ITM issue at 30% profits.
As the market hit bottoms and I sold this issue I bought the October 500 Call at 3.00 and sold later in the day for 3.90. So ...I had two profitable trades and was out of the indices for the week, which was my goal.
At www.bluechipoptions.com we also own a stock option on McDonalds. This was a signal given months ago, MCDAK McDonalds January 2010 55.00 call. Traders have made two buys on this call, and currently own it at 3.10 average price. This is a long term call LEAP option that we've been holding. However, I saw the issue drop dramatically at opening the day prior and hit lows of 2.70. So, in a separate trade from my current holding I bought 20 MCDAK at 2.70 last Thursday. Sure enough, the market rebounded Friday and I was able to sell my 20 MCDAK at 3.60, pocketing $1800.00 in a day trade on an issue I own.
I was trading all day Friday, and this was key, as I day traded because of the volatility of the market. However, for those of you saying "but I could not be online," I'll share that I did ALL of this trading sitting by the pool on an iPhone, checking periodically.
The important point is not "that I won," and I am giving you a testimonial. The importance is that I was "on a run" and I played all I could. Near the end of the day I had "the itch" to buy a put for Monday's opening, and even though it became our signal for Monday morning, I did not let myself buy the issue as the close of the market day, because I was trying to control my "greed." I could sense it building, so I simply stopped myself.
Now, let me yell at you. Many of our traders make a living off OEXOptions.com, many are stockbrokers and professionals, and as many are individual investors, with people from all over the world. In fact, over 28% of our client base subscribers from India. Over 15% from Australia.
My point is: GET to work. Many of you do not utilize our manual, or the many videos on the website. I can tell by the stats on our work and website, and I'm constantly surprised by how few of our paying subscribers really utilize the videos on our websites, or study our calculation worksheets, or even write me. It's part of my thinking that I've been outlining "we are fucked," and is said to all of us. If you intend to do well trading options, become an expert.
Study. Journal. Read the manual. Watch the videos. ASK ME QUESTIONS!
There is an old rule of 80/20. Be in the 20. Work to learn to trade. It will not just "come to you."
Call buyers were also rewarded on the Oct500C buying on the downturn, and selling to .60 profits within an hour. The position was later available for tight day trades as the market hesitated.
This is a good example for traders of always having a sell order in. We went right to our 9550 downturn at opening, and all puts and calls hit their profits. By 3 p.m., the two way trades we emphasized had shifted focus again, and the market began moving down. Astute traders had bought the puts again on the upturn, and sold again on the downturn after 3 p.m.
Today I'll share an example of how I personally trade, as last Thursday and Friday were excellent examples of how one could "day trade" regular stock options that one owns, and index options.
If you'll remember Friday we moved from a 9776 theoretical Dow top to a 9600 low. First, I sold an open put I had from Thursday, that I had already sold 2/3 of profitably, selling the final 1/3 of my ITM issue at 30% profits.
As the market hit bottoms and I sold this issue I bought the October 500 Call at 3.00 and sold later in the day for 3.90. So ...I had two profitable trades and was out of the indices for the week, which was my goal.
At www.bluechipoptions.com we also own a stock option on McDonalds. This was a signal given months ago, MCDAK McDonalds January 2010 55.00 call. Traders have made two buys on this call, and currently own it at 3.10 average price. This is a long term call LEAP option that we've been holding. However, I saw the issue drop dramatically at opening the day prior and hit lows of 2.70. So, in a separate trade from my current holding I bought 20 MCDAK at 2.70 last Thursday. Sure enough, the market rebounded Friday and I was able to sell my 20 MCDAK at 3.60, pocketing $1800.00 in a day trade on an issue I own.
I was trading all day Friday, and this was key, as I day traded because of the volatility of the market. However, for those of you saying "but I could not be online," I'll share that I did ALL of this trading sitting by the pool on an iPhone, checking periodically.
The important point is not "that I won," and I am giving you a testimonial. The importance is that I was "on a run" and I played all I could. Near the end of the day I had "the itch" to buy a put for Monday's opening, and even though it became our signal for Monday morning, I did not let myself buy the issue as the close of the market day, because I was trying to control my "greed." I could sense it building, so I simply stopped myself.
Now, let me yell at you. Many of our traders make a living off OEXOptions.com, many are stockbrokers and professionals, and as many are individual investors, with people from all over the world. In fact, over 28% of our client base subscribers from India. Over 15% from Australia.
My point is: GET to work. Many of you do not utilize our manual, or the many videos on the website. I can tell by the stats on our work and website, and I'm constantly surprised by how few of our paying subscribers really utilize the videos on our websites, or study our calculation worksheets, or even write me. It's part of my thinking that I've been outlining "we are fucked," and is said to all of us. If you intend to do well trading options, become an expert.
Study. Journal. Read the manual. Watch the videos. ASK ME QUESTIONS!
There is an old rule of 80/20. Be in the 20. Work to learn to trade. It will not just "come to you."
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