Not Time to Buy Stocks

By 10.30 a.m. the market had moved down 50 points. We continue to see with the market struggles that there appears to be no strong correction, but instead a mild one.

It's not yet time to buy stocks, as we tell our www.bluechipoptions.com subscribers, although Gold and Silver hold steady. We'd like to see the Dow close about 10,260 to begin buying again, for what we think will be more upside.
By late afternoon we were down over 100 points and right again struggling at major resistance lines. We are able to buy entry to our new call at 5.50 to 6.30, and remain bullish for the short term.

We'll stay with open calls, no puts, and close our eyes a few days.

________________
Can you blame investors for being blase, with bulls barely buying, and bears barely selling?

How much economic woe is already priced into equities? This is a key question, one that we are studying at www.bluechipoptions.com

Often the market pre-prices itself in advance of an FOMC announcement, but Bernanke's "truths" last Friday make us question if "woe or fear" is already priced in, or if we must repeat recession history.

With news-bytes conjecture as to our demise is imminent.

A Market of Reversals

This is a market of reversals. When Bernanke spoke, admitted the economy sucked, and told us he would create more money to put in the system, we rushed in GREED and euphoria and moved the market up 164 points for the day. This from us, the nation now so worried about the debt we have.

The market went right to our theoretical Dow top at 10,200 and held. Our OTM call stayed steady and remains open. We continue to see a potential upside to 10,416 and will recommend a one side trade only to start the week, again to the call.
In this case we will only trade if we are not chasing the call up. Follow instructions carefully or do not trade, and if futures are extreme, take prudent risk.

Want to understand our use of the theoretical Dow?
Study:
http://www.investopedia.com/terms/t/theoreticaldowjonesindex.asp

To calculate, it's simple. Add + or - 40 points to the actual Dow closing and you'll have a close approximation or enter into your trading software.

Bulk Buying and Selling have Begun

By 2.15 p.m. we had simply repeated yesterday. It's important to know the market mood before the 3 pm clamor. We'd hit a high of 10,144 and a low of 9952, literally repeating yesterdays support and resistance lines. As I begin to write the alert today we're seeing a sudden 60 point downswing, within a minute. I've noticed 40 point jumps in just seconds, up and down, a number of times, a sign of bulk buying/selling and institutional moves, or electronic moves.

We continue to believe if there is more bottom it will not last long, and the doomsayers will be babbling as the market short term rallys, with the same 10,200 and 10,400 range resistance area stops.
By mid afternoon our 500 Call had moved only to a high of 2.50, and the 490 Put was a great play, buying under prior day at 4.60 and selling to 6.60 by late afternoon. The market is struggling to know itself, and VIX is fluctuating.

Most traders sold the put off profitably despite a trade range bound market. We'll hold the call as a hedge, keeping track of our past profits, and watch what's next in the topsy turvy world of finance.

____________________

On our homepage www.oexoptions.com we list an area of books we recommend, which you can order from Amazon right there. We believe all traders should read Dorsey's Point and Figure book at least three times, and begin charting with any of the online pnf charting services. www.stockcharts.com is excellent and even has a tutorial of point and figure.

In our password area on the website are many Floyd videos. Take the time to watch. I've got some great news-bytes of special tips, and try to explain what we do and how we trade.

We Do Not Know

What a quandary. The world is ending, or there will be an upside. That's what yesterday's trading showed, with a theoretical Dow low of 9898, a respectable "stopping point," and a afternoon resurgence to 10,114, just enough swing to keep the market struggling above 10,000, right at resistance lines.

If upside, watch 10,212 to 10,450 as tops and play the call we own accordingly.
We made money on the put yesterday, but trading was very light. While the market "bounces" like this take tight profits and exit quickly. True of both signals, and true most because our bell curve has no bias. It shifts daily from a 6 to call, 6 to put, to a zero bias. Gold, oil and equities are all showing equal averages, an unusual event.

We'd like to take tight profits, and move to another signal to the bias, but right now there is no safe bet, or even a bet that we can understand.

And the average investor is leaving equities by leaps and bounds.

______________________

Over the weekend the leader of Wikileaki Land was wanted in Sweden for "rape and molestation." Within an hour a news-byte said charges were dropped. This is what I a Roveian Technique.
Karl Rove got George elected twice on dirty tricks, and making people question facts that are true. (Obama is a Musllim, the leader of horrible Wikileaki a rapist, and THERE).....the first false fact out is always the one that gets the news hit and is what is remembered. Perhaps instead the leader of Wikileaks is someone that will later be revered and the lead person that changed journalism.

We do not know.

We do know that what he is doing is radical, and everyone will have an opinion. But this week-end was good stock market lesson-the first news-byte is what got the "hit." Someone is really worried about Wikileaks to create this subterfuge.

The World is Rotted in Fear and Hate

First, it is this division, this hatred, this confusion that is influencing our market: http://www.huffingtonpost.com/russell-simmons/the-sacred-ground-of-deep_b_691001.html

Please take the time to read this article as it shows the hatred and false facts that have created the insurgency of confusion, and made us a fully divided nation.
It is partly this mass mesmerism that took the market to new bottoms yesterday, simply because so many traders and people had taught themselves to believe what is supposed to happen.

Futures showed downturn prior to opening, so no new signal to the call was taken, but a second buy was. We see our call as a good contrarian move, as.....

We are at a turning point. The market hit a significant bottom at the theoretical Dow low of 9951 yesterday. As you study our Dow projections it's the first step down to a negative progression, but can also be a short term bottom with upside back to midlevel Dow projections at 10,400 area. This market scares everyone to trade, and people are running out, going to cash, afraid of equities.

It should make it a strong time for OEX Options, as we've seen with our profits this past month.

Thusly, the call you own may surprise everyone, and suddenly be hugely profitable, AND because the market moved back above 10,000 and held, barely.

Gold hold steady, Silver rose, and the rush to safe U.S. paper bonds, TLT, etc, rose, as yields fell.

The world is rotted in fear and hate. We are a serious turning point.

________________________

Edgar Cayce, the spiritualist, once predicted a time would come in the world (what some mistakenly think is the Apocalypse) in which so much change would come that the world would have a final decision to make:

1. Work with one another, and build harmony. Do what is right

or
2. Create a world of oligarchs and peasants, and lead us down more ultimate levels of self destruction of ourselves, and our earth.

Hmm.

Whatever you believe here, I do believe we are at one of the greatest turning points of all time. Everything seems up for stake, from what the value of currency is, to what is right and wrong, to where bi-partnership has folded to the ground and our silly Congress gives themselves more money, we let them, and no bills can pass. There is such hatred and intent to destroy, to "get back" that we see a nation paralyzed, and jobless.

And worldwide we see economic, environmental, and emotional dis-order. Communism spreading in Central and South America, Israel the warriors ready to declare nuclear war on Iran, and our taxes are going up.

We print money.

We think Obama is a Muslim. 23% of us.

Our educational levels are at all time lows.

We appear to not be a nation of power, but of confusion.

This influences the stock market as no one believes anything. We rush out of equities while others buy up what they see are undervalued equities.

It's Analagous to Becoming a Surgeon

Soooo........the market starts with flat futures so we have no idea what could happen. Then it opens and moves to theoretical Dow highs of 10,345 and lows of 10,151, all before 1 p.m.

Minor whipsaw continues to move back and forth and keep market hovering at 10,200 level for hours........all of this again pointing to a trading range,and light volume, and no further testing of lows.

The market remains at a zero count, meaning the bell curve shows no strong bias. We suggest another buying spree may be imminent, to Dow tops as we project, and leading to more downturn.

But, the market may have to hit 10,000 for this to happen.

We will stick with the call.

_______________________
Lets' repeat the key rules of the game:
*Pick an allocation you are ready to lose
*Whenever you win hide 10% or more far away
*Choose an investment % goal (% of profit)
*Have no more than two trades open at one time.
*If you cannot afford a "double buy" do not trade issues that are defined as perhaps requiring it.
*Use the Dow Projections and Pivot/support/resistance lines as a science
*View only with point and figure charts. Become adept.
*Keep a journal of your trades. Learn your emotions and above all, if not making money, or new to the service: REAL TIME PAPER TRADE 90 DAYS.

You are learning how to become a surgeon. It's not easy; it takes time and commitment.

Little Free Enterprise Left

Friday we had no new or open trades, and ended the week profitable each day we traded, typically form 22 to 50%. We've now had only one loss in the last 25 trades.

The market chartists led us again with announcements showing their opinion of the world markets, yet again based on just that day's performance, and typically disregarding opinions they may have offered two days before. This is not a criticism of fundamental chartists; instead, it is a statement that we do not believe the market is long-term chartable and we are in "new territory" with the electronic flash second trading now pervading the world. Any news bite can influence.
Our Dow Projections listed below continue from last week as we are hitting 100% on our support and resistance lines and market "stops." Friday we started from a theoretical Dow high of 10,304 to a a low of 10,107.

The area between 10,050 and 10,118 are strong support areas, where the market "decides" whether to have FEAR reign, and move back to 9800 area, or lower, and begin a "bad fall," as many predict, OR we are near a bottom that with any 100+ rise that holds could turn the market around short term to a short bull run. We think this has the highest chance of occurrence this week, perhaps even today.

The American Public is again showed as stupid and fat, as 23% believe Obama is a Muslim, and 24% believe he is not an American. The complete illogic of this shows that the Roveian propaganda is again working. We honestly believe completely false things, and cannot be made to believe the truth.

I emphasize this as sarcastically as I can, as our nation is being led not by Obama false facts (although there are plenty) but by Roveian false facts that create fear and argue for entitlement, that taxation is a Democrats issue, and support of free enterprise the Republicans. It is actually the reverse.

And, we have little free enterprise left.

No One Knows

First, the market moved perfectly for us. We saw negative futures that were obvious, the news was obvious, and we did not enter a new position to the call.

Upon market opening we saw massive drops and our Sept460 Put, bought at 3.66 average, sold to 5.20 by 3 p.m. Yet again, a profit every day this week.
Here's a letter from a subscriber that helps explain what she has been learning:

"Dear Floyd and company,
Hope you are having a good day! I don't contact you very often , but will try to do so. I have been paper trading for about a month. I have been making 1 and no more than 2 trades a week. I read your commentary every morning but only place trades that I feel comfortable with or should say am able to identify. Every trade for this past month has been conservative but profitable from 15-40% returns. I have a difficult time trading bi directionally. I get so focused on a trade that I lose sight of the bigger picture. Anyway my trading has been coming along but my lack of ability to identify and capitalize on clearly available trades has made it clear I have to take the trading a little more seriously. Just wanted to drop you a line on my progress and keep up the good work!"


And here from Floyd: the market turmoil and constant whipsaw shows a high level of FEAR, and a run from equities. And the run, all to bonds and Treasuries may soon be another bubble, while equities are undervalued (at least the top 50 that hoard cash). Amidst it we have chartists like John Murphy from stockcharts.com, a subscribed service, tell us his current thoughts, a diametric opposition to his commentary two days ago. What this says is "no one knows."

------------------------------------
-- S&P 500 STILL ON SHORT-TERM SELL SIGNAL
-- SMALL CAPS AND NASDAQ ARE LEADING MARKET LOWER
-- SO IS THE SEMICONDUCTOR INDEX
-- FALLING BOND YIELDS CONTINUE TO PULL STOCKS AND MOST COMMODITIES (EXCEPT FOR GOLD) LOWER
-- FALLING FOREIGN CURRENCIES ALSO HINT AT GLOBAL WEAKNESS

-- DEFENSIVE TREND MAY CONTINUE INTO THE AUTUMN

Bias is Very Unclear

Yesterday led to more flat lining. An easy trade was made on buying the Sept500C when it hit even near lows of 8.30 in early trading and selling to 10.25 profits by 1.30 p.m.
Again note the emphasis that we are beginning to avoid the 3p.m. crazies, as the whipsaw is often not chartable.

This leaves OEX with another profit for the week and we continue to hold our put for hedge, and with time to perhaps surprise us.

Bias is very unclear; the bell curve loses value as the highs/lows become extreme.

We'll list a call for a new trade, and we'll note: higher risk, try to day trade.

_____________

The market seriously over reacted (FEAR) to the FED's last statement and has kept us in a whirl of emotion:

http://www.huffingtonpost.com/2010/08/17/feds-move-to-buy-governme_n_685019.html

_____________

As July regional and state unemployment claims are released, and the market is an option expiry day, and a potential turning date. Ideally we will close out all open positions by end of day.

Many believe that Bernanke is doing this: Reinvesting in treasuries by paying down mortgage securities that have been paid down, which is about 20 billion a month. We are not injecting new money into the markets, but simply stalling the ebb in funds.
Floyd believes, and has written since the first Paulson/Bush fake write-down, that once we figure the true situation (Geitner did) that it could have become necessary to have a second stimulus.

This was what Obama and team first wanted to do, create an even larger stimulus, and they moved from it.
I believe that this debt is irrelevant debt that is NOT an issue, but can save an economic issue (a false bubble) that occurred world wide, led by our excesses, and that only by stimulus (without the public fear of how to pay back; I wonder why NO ONE worried about this while Bush was playing toy soldiers in Iraq?) will be stop this hemorrhaging that will continue otherwise worldwide.

For once we must take the lead, and not listen the Roveians that lead false information to us, or to the Rush Limbaughs that predict in ten years that 8/20, the fat man's birthday, will become a national holiday.

I love this guy. He's built a complete base on FEAR and mongering, and is evil, as is Glen Best, selling lies to make big money.

A Bell Curve Bias

It does not matter why, as most analysts think, but yesterday the market showed signs of recovery, and hit highs of 10,520 before hitting our resistance at 10,550, and fell back.

Those that took inventory in the Sept500Call yesterday at prices near 7.20 were able to sell to highs of 11.10 even before the 3 p.m. for a nice 55%+ return. With the count reversing the bias is now to the call. Two buys have been made on our hedge put.

Market conditions show a bell curve bias to the call, a sign of short term recovery to above current support lines. Follow futures carefully.

Read this for true sobriety:

http://www.marketwatch.com/story/reagan-insider-gop-destroyed-us-economy-2010-08-10

Read this to understand we have created a valueless currency:

http://noir.bloomberg.com/apps/news?pid=20601010&sid=aiFjnanrDWVk

Weekly jobless claims are seen dipping a bit tomorrow.
Hewlett Packard (HPQ), after their STUPID move in letting Hurd go, will release earnings. Traders with our Blue Chip Option service are actively following HPQ, Hewlett Packard, for a surprising kind of entry.
Watch HPQ

Pimco reduced its bond holdings in U.S. debt. Bill Gross, the Buffett of bonds, to 54% for 63% in its Pimco Total Return Fund
It's a statement about lowering yields, and watching U.S Treasuries against other government and corporate bonds.

Dow components have a dividend yield equal to a 10 year U.S. Treasury, with a chance of upside potential.

Gold and Silver

We experienced, at least through 12.30 p.m., what Floyd calls a WTF market. This means no one knows, no one will commit, and the market will hesitate.

Meanwhile Gold and Silver both went up. Both are on buy signals, and we wait to watch the Dow and SPX (upside would close at 1090 up) and if it will hold beyond support and resistance.
We are truly in a trading range.

Call buyers that followed "the rules" entered the Sept 500 C at 7.20 and were able to hit returns of 8.20 a contract, or $1.00 within 45 minutes.

Put buyers were also able, before 1 p.m., to make a first entry buy to the put, at well below prior day close, at 4.80.

For day traders, a profit was made on the call within hours. For longer term traders, by 1 p.m. we had first entry to both positions.

And for the rest of the day, we sat on our hands and watched the market "not decide" anything.

____________

Understanding False Emotions and Evil Thinking:

http://noir.bloomberg.com/apps/news?pid=20601087&sid=ad0fJhgSdoQg&pos=8

1. All religions should be tolerant of one another. It's the idiocy of not doing this that created this mess.
2. It's the perfect thing to do to build a mosque. It bridges gaps. If these gaps are not bridged we will have World War over God, again.

3. Christians that do not affirm this have not understood their own Bible, or have translated it to their advantage, as most faiths do.

4. Tolerance and Love fixes all. We can see what lack of tolerance and GREED accomplishes.

5. It's like we have amnesia on what has happened.

The Recovery is not as Advertised

Bernanke and Co told us this past week what we should know:

*The FEDS are likely to do something, as they may have to.
*The recovery is not as advertised. Or better put, the recovery is not what we had anticipated, blindly believing that years of excess would suddenly result in a jobs market getting better when we make nothing, and consume everything.

*Retail sales only showed growth in autos and gasoline.

*The GM profit was not noticed. FEAR showed and real positives were forgotten.

All this means is that the market was ripe for correction.

We open this week with NEW Dow Projections and again a double play, a straddle in which we hope to profit both ways, if we are careful.

And a story from new Level 3 trader JC:


"Well Floyd

In a nutshell not the best of weeks for me. To remind you here's what I did:

11th Aug - Bought 10 contracts 510 calls at $5.33.

12th Aug - Bought 20 @ $2.33 - average now down to $3.35. Placed limit order to sell at $4.10.

13th Aug. Futures neutral, no major news breaking, 9.32 to 9.35 am marginally up and trading first hour moving above the pivot. Buy 30 more call contracts at $0.822, average cost now $2.10.

Reasoning behind 3rd tranche. There seemed the possibility of a rally but if there was, perhaps unlikely it would take the call price from about $0.50 to my break even point of $3.35. I judge that there is a possibility of a move up that takes the option to $2.10. the trade was placed at about 9.45am ET.

By the time I go to bed at 1pm ET the market has moved up but seems to lack conviction, in other words I have serious doubts I will hit £2.10 and I decide not to be greedy and see if I can recover some loses and place limit orders at $1.20 & $1.50, which would have meant a loss of about 30% on my position.

I set my alarm before the close but unfortunatley to end a far from impressive week, I did not close the position.

Whilst painful to lose this much, there will be learning points, and my first is to get back to paper trading for your recommended 90 days. Any observations / advice on whether my thinking in placing these trades is off beam, please feel free.

I asked JC for permission to publish and he responded also with:

Please feel free to use whatever you wish Floyd, but there is one other point you may wish to consider.

As I am new to OEX options (less than 90 days) knowing fully the risks involved I decided to "dabble" a little and over the last three weeks (that is two weeks excluding the one just past), I have had 3 successful trades, all 1st tranche.

In view of my location in the world I will only ever be able to trade the first couple of hours or so of the US market, and therefore I suspect I may have more 1st buys than 2nd or 3rd.

What has happened this week is my one and only 2nd then 3rd tranche trade has wiped out and more the profits from the 3 successful 1st tranche trades.

In trying to analyze what I could do better, I appreciate your point about taking more notice of the news and an eye on the futures market, and if I had more experience this may have kept me out totally, so that is one learning point.

Another could well be my position sizing. I decided that I would risk a max of 10% of my pot, and my first 3 trades where about 4% each. The 4th and losing trade, after adding to it, came nearer to my 10% limit, and here I would appreciate your views on whether I should be approaching this differently?

Floyd's Response:
1. Paper trade again
2. Do NOT take third buys. The risk increases and one is showing signs of fear. Taking a larger second buy (twice that of the first) and averaging costs returns in the positive territory 73% of the time in the last 3 months. It returned even higher before this massive amount of volatility.
3. It is the sum of the parts. There will be losses. Re-examine your allocations.
4. Make sure you follow Bloomberg Online news and futures, the best site for all of this, each morning pre-market. I usually begin the evening before and study only Bloomberg.
It simplifies what I am reading to professionally presented, without political gestation, commentary.
5. Now that you still hold, continue to Monday and watch futures. Don't hold past Tuesday afternoon unless highly risk oriented.

Would You Be Willing?

The market took a day to "trigger" off Bernanke, but did just that. Bernanke said "it's not over, kids, and it might get worse" in legalese, and it took a day to hit, but this was the trigger that had the market down 230 points by 1.15 pm

For those of you that bought the put the day prior at 4.00 or less and didn't sell out, you could have sold to $10.00 by 1.17pm!! We took no new entry to the call, as futures were quite obviously down.

So far we've had three profitable trades of three this week but hold a call that may turn around with the market, or may be our first loss in several weeks. We'll hold til Friday. ____________________

Would you be willing to give up your Social Security and Medicare benefits, that you get or will be getting (assuming solvency) to lower taxes?
Would you be willing to give up our Social Security and Medicare benefits, get a full return for your investments in the funding of this (but companies would not) to cover the cost of the administration, and have no rights to any Social Security or Medicare benefits, or new programs created in the future?

Would you like to stop "public education" and make the funding and development of schools done by those attending, thusly funding their own, following defined obligations?

I would like your thoughts on these questions. I would also like to know how Rush Limbaugh would answer?

These actually are very important questions.

Moves of the Day

I like reporting to you before the 3 p.m brothel party on Wall Street begins, showing the moves of the day. The option gods were right with us, with the put we bought yesterday soaring to highs of 5.50.

All traders should have profited, and also had the opportunity to buy the call we recommended at deep discounts as the market began the whipsaw, and sell by 2.47 p.m. for great profits as the Dow came even with the day before.

10,746 -776 is a hugely strong resistance area. You'll see how the market ended, but we'll play the same game one more day, rolling both dice.

Foggy Market

Stocks tend to drift up during August, but light trading also occurs and this can magnify the impact of bad news. Because investors are now nervous about deflation/inflation, or renewed recession, worry still remains, and fear is in the background.
The market showed theoretical Dow tops of 10750 and bottoms of 10609. Entry positions were available for both trades. Silver and Gold both dropped.

The market is foggy, unclear, waiting for something.

From trader BA, who just moved to Level 3:

"Floyd,

Thank for the credit to Level 2. I did not know that Level 3 was inclusive of it. I'm enjoying your service. I've been trading Credit Spreads for 5 years and have experienced some of the pitfalls of trading them and having to end up managing them for a loss in-the-money.

So, far I've nibbled at some positions using the guidelines and I am trying not to pay attention to the profits currently, which by the way have been averaging 22% and I've closed out every trade profitably thus far, but rather give my attention to finding out if I stuck with my plan and not allowed emotions to help sway my decisions.

Again, thanks for a good teaching site and for what I've learned thus far in a very short time."

_____________________
I am at loss why we do not understand why the U.S. job market "loses steam" or that we are not stimulating employment. It is obvious, and deep in our retail economy; there are few sectors where the cost of the product is not more valuable to us than the jobs we ourselves have taken away. This is not the "bad companies" doing so, but merely capitalists trying to make money on their capital investment and seeing that the consumer was only willing to "pay less." There is only so much that can be cut in raw materials and manufacture.
Our naivety creates our obesity. "Oh, I didn't know that I had to eat 2000 calories or less, and I never thought."

Bad Payroll

Floyd, I joined Advanced Mentoring 4 months ago, paper traded for 90 days, have followed each one of your signals since then, buying only at best buy or near there, and selling to support and resistance lines, that I recalculate each day. I have been profitable an average of 28% on 26 to 27 trades. You answer my emails, and constantly help me hold my emotions when I write you. I enjoy your commentary as our provocateur, and have actually begun thinking of facts differently. I'm writing to simply thank you. My membership fees have paid back ten fold.
-William-JP, Garland, Tx

If I were to comment on JP's success from the teacher perspective, it would be: He had read all of our recommended books, and he listened to our rules,and followed them, also knowing when the "stretch from our suggestion."

http://www.oexoptions.com/AdvancedMentoring/AM.html


Friday we ended profitably to both put and call as the market gyrated right down to support lines, and burst back to resistance lines. Floyd was amused that our "learning" of bad payroll triggered the market, when all of us knew this. Yet again, it was the trigger just pointing to what happened.

Our Dow projections are slightly changed, but to remain profitable as we have with so many profitable trades we need to watch more carefully how the market breathes.

Here's what we see, using the Dow and the S&P:

1. Downside is clear if and when the S&P closed below 1086, the Nasdaq below 1850, and the Dow at 10,147

2. We see the deepest downside 10,127-10,250 unless massive world news triggers events, but even then believe the market will hold near 10,000

3. We see first tops at 10,746, and the possibility of the market summer rallying to potentially even above 11,000. If this occurs we will begin selling most we own in Blue Chip Options.

4. It is more likely for a larger correction if the market euphorially rises again to the 11,000 area.

What Have We Learned?

I have been traveling for the last three days. I wrote this commentary on Sunday 8/1 in advance of my travels, and also to help us see something. As I head home today we end a week that is best commented on by two things:
1. How have we profited from it?
2. What have we learned?

As we know, I project the Dow short term. I have no interest in long term projections, nor think the average analyst nor any chart. Too much is changing in this world, by the minute.

I do believe the market always hits overbought and oversold pockets, true support and resistance, and that by the study of a short term and long term Point and Figure chart that all the noise can be taken away and one can judge what would ordinarily do.

The true stock analyst in today's market must then study a reputable news source (such as Bloomberg) for the information of that day, and begin interpreting (both with Bloomberg and yourself) and how the daily "newsbites" will affect how close the market is to a support/resistance line, to the bullish % in the market, to the "mood of the market".

The key to trading is no longer buy and hold, and fundamentals.

I can tell in my traveling that America is in many ways spending (iPhones, iPads) and in many ways holding back (not opening restaurants, spending less discretionary income) and that many that are employed do not see recession, and cannot fathom either unemployment insurance or the cost of private insurance.

I see it daily. The employed, with health insurance, believe it is the responsibility of each person to gain health care, and that they should not be paying for what others are unable to do.

As most of you know I am not one for all the talk of the Constitution. I think it's an overrated document that we have not followed for years, and suddenly is our "Bible". So use this, or the Bible, and be citizens that recognize there are really three worlds in America:

1. The truly poor

2. The middle class poor, even though that appear rich

3. The vastly rich, the oligarchs, that good or bad attract more money always and pay less in taxes.

We have done this to ourselves.

We'd Like to Repeat

On the theoretical Dow tops of 10,742, and lows of 10,580, despite a day up until the 3 p.m. hour that seemed perfect for day traders, and hesitant on upside

Calls were tighter to play, from 2.90 to 3.70 and puts even tighter. We will keep both signals open.

___________

We'd like to repeat Monday's commentary, after another week has gone by, first for review, and then for comment:

"Stocks had their best month in a year, with the Dow posting a July gain of 692 points, or 7.1%. Encouraging earnings reports have supported the market. On Friday the blue chips overcame an early 120 point drop to finish down just 1 point. However, the FEAR began. U.S. economic growth slowed in the second quarter to a 2.4% annual rate as consumers remained frugal and a business restocking showed signs of fading.

Floyd's favorite, and his soapbox rants for years: "The recession was deeper, and the subsequent recovery slower, than the government originally estimated. Remember just a few years ago when Emperor Bush was telling us we were 'not really in a recession' and that things were brighter. Hmm, well it appears the numbers were wrong and the 1.5 last years of the Emperor's reign the GDP was actually much worse, with corrected numbers.

People forget the cause of the recession and focus on the stimulus spending that is meant to save it. For just a year, that didn't exist, I would like to implement the Republican strategy for "stop spending money". I have yet to see a Republican plan that details WHAT TO DO.

Floyd predicts another large economic stimulus required before year end.

Our masterful call that has hit profits over 21 times in a row was profitable again Friday for traders that had steel nerves and bought on the downside, waiting for the turnaround."

Comment: Even hedge funds can't trade the whipsaw and make money, and certainly individual traders cannot.
As the economy and lack of jobs worsens I suggest again that the top 50 multinational S&P500 companies are just bringing in the cash, building their coffers, and the market is now led by only newsbits and electronic trades, while the corporatization of America takes place. We falsely think that socialism is overtaking our country; instead, a reverse capitalism in which only the few have it all is at stake.

Sometimes Hold Sometimes Daytrade

The market showed theoretical Dow tops of 10,676 and bottoms of 10,560.

The upside actually held, after a nice drop in the a.m. allowing traders to gain entry to the August OEX 520 Call as low as 2.70.
Day traders sold this to 3.30 before noon.

Others will hold this position in their open signals, following prior instructions.

We continue to see a strong resiliency to the bull market, and a fair chance we'll pass the Fibonnaci lines at 10,746.
And, there's a 40% chance the reverse will take place, and we will first sell off, likely to near 10,400.

The same holds true for our new August OEX 490 Put, available below prior day close as low as 2.45.

The bulls want to continue. We're watching both Gold and Silver and listening to the talk of summer rally.

For those of you asking how we "sometimes hold, or sometimes daytrade," this depends on YOU, your option goals, and the amount of time you would spend watching charts.

Using the .60 profits available on the call in late morning trading. By itself this is very little, and often not worth the effort.

However, done numerous times a day, or a week, and in a year this how day traders make a living.

Meanwhile, we hold two open signals. Consider tight profits, or hold for the bias. The count remains with the call.

A Bull Run

The week opened to a bull run. Only traders that chased the put up got in, with lows of $12.00 and highs of 15.30 before the 3 p.m. hour.
Again because we structure our analysis first without the 3 p.m. to 4.15 p.m. "traders time" we saw Dow theoretical highs of 10,723 before 3 p.m.

The area around 10,746 is a major resistance line, where the market has stopped at almost all levels, from 8000 up to 10,000.

Many traders have written with our many recent successes sharing that they feel paralyzed by the market's whipsaw, and that any move they decide to make they then hesitate with any change in the market.

Our success with the July and August 500 Calls took place because we did the following:

1. Took calculated risk
2. Entered at calculated prices that they as the trader had defined in advance of entry; in other words, they knew how high or low they were willing to pay and to sell.
3. Ignoring the newsbites and simply following Point and Figure charts.

RIMM announces its new smartphone. A Blackpad is ready to roll soon, to try to keep up with Apple. Many companies report earnings.