We will lead Monday’s commentary and alert with a summary of our NEW Dow projections.
1. The market has held three times now in 5 days at 10,350
2. The market hesitates and flat lines often around 10,200, with bottoms near 10,150 during the same whipsaw
3. Historically the market drops an average of 586 points from its highest high.
4. Using the whipsaw we’ve seen, and the bull resiliency, here’s how we see support and resistance lines
10,476-10,512- Highest top. 10, 550 strong area of former resistance
10,350-10,420-Likely top
10,150-Resistance
10,050-A strong “not sure area”
9764-9950-Potential support bottom
The Monday before November expiry, the Dow was down 6 of the last 9 years, and 2007 broke a 3 year bull run.
Friday, of course, on bad news, the market rose over a 100 points, and allowed our December 500 Call, already held, to hit highs of 11.80, for up to 35% returns. We are left holding our hedge December 490P, already profitable in day trading, as as our "backstop" on the inevitable consolidation that must occur in a market like this.
Call profits may also be possible, for tight gains, depending upon the whipsaw the market.
A common question asked of Floyd is "why I choose specific OTM, ATM, or ITM options" and what my reasoning is behind the choices. There is little systemology to these choices that will appeal to the logic and "method" oriented trader. Heres' how I do it:
*How close are we to expiry?
*How excited and volatile is the market?
*What is the volume and open interest on the option?
*How extended (overbought and oversold)?
*What have our most recent win ratios been? So good that it's time to move to a OTM issue because the market is no longer as easy to read?
We've had a great run this past three weeks, despite a very difficult market to read. Remember, take profits when profits are available. Don't hold all of a position for top profits, and use our %'s down to buy as indicators, NOT as exact numbers.
And a real fact: *56^% of unemployed individuals are described as “permanently separated” from their employers. In prior recessions that figure never reached higher than 45%
And some other facts:
81% of Las Vegas homes are now worth less than their mortgages.
The company "American Doll" has unveiled a new character - the homeless girl - and the doll is available this Christmas for $95.00
Reality is only as we see it. We know only what we know, and do not know what we do not know, nor know that we do not know it.
Start your week planning to "watch yourself" as you trade, so that you can learn "through you" your own behavior. There is a zen to a trading sequence in which someone must lose for
you to win, and you are pitting yourself against others in buying and selling, as in life.
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