Subscriber quote detail in the commentary has become quite interactive over this past 7 market days, and feedback has helped a number of traders.
From an Advanced Mentoring and Level 3 subscriber in California, MF:
"Hi Floyd,
For the record, I never doubted you. You're a great man, not because signal 28(or whatever) in row made money, but because you're a great teacher which teaches how to trade not buy an option.
Like life, successful trading is a journey. I hope most of your scared subscribers learned that, and now make the changes to thrive during the journey.
Thanks,
Mike "
From AWE/Chicago:
"14.50 to 15.70 in 75 minutes. Scalped it again for 1.00 later. Right to 12,760 again, Floyd, and up 8k for the day. No emotions. Knew the risk to the trade"
Yesterday's moves helped us see the strength of uptrend, and longer term bias. Midday we issued an alert for May655P at 12.70 or less, promptly available to buy, and sold for up to 15.70, right near our 15.90 top, within two hours, and available for day trading scalping several times after that, all around the struggle at 645 and 647.
Today is historically stronger, the Dow up 8 of the last 12 years. Floyd sees a 52% chance of more downside, however, and today could show whipsaw, and a plunge. Who knows?
It's now a struggle beginning at a trading range, and oil will lead the "event" that will be construed to trigger movement...read that carefully, because the cause and effect are already in place around supply and demand; it will be an "event" (earnings, oil, fraud probe that will provide the trigger to what is already going to happen.
We'll hold and recommend the same put today, a high risk trade, focusing on one more downward plunge, before a renewed 350 point potential upside. Bias is being established.
OPEC tells us that $200.00 oil could truly be on the horizon, and we hear from economists we'll soon hit 4.00 to 5.00 gallon, to other economists telling us that oil has peaked, and gas prices could tumble.
We believe oil is priced entirely by commodity traders entirely at this time, and the value of supply/demand, or what can be refined (all the gobblygook we read each day) has little to do with the price of crude. We believe crude oil is priced by floor traders, leading the market with their manipulation.
In actuality the European Central bank may actually become our American ally, and our undoing. What's happening is that the Euro is becoming hugely expensive compared to our USD.
Europe is having trouble exporting because of the value of their own "dollar". We could soon see, thusly, the Euro devalue,and conversely the USD rally. What will happen is not so obvious to the American public, but oil is priced worldwide in U.S. Dollars. If there were a 10% rise in the dollar, for example, oil could fall by $1.00 a gallon.
This will, of course, move our silly little minds right back to the SUVS, and to massive consumption, as "all is better", and "it is easy again", and we will lose sight of the real picture, yet again letting the horse out of the barn and locking the door. The USD is at a 12 year low against the Japanese yen and the Euro has almost doubled against the USD since 2002.
We are now creating a foreign currency bubble, and all bubbles burst.
Remember that what the majority expect is seldom right. Recession could actually begin to slow (Floyd predicts the end by October 2008, while the economists still debate whether we are in one) because the USD strengthens, NOT from our wise movements or $160 billion stimulus package (yet most will think this is why we improve, again falsely). If recession slows it will do so because the USD gains false value BECAUSE the foreign currency bubble bursts.
We're watching. It may soon be time to short oil, and to move out of some commodities, as the USD may gain because of others stupidity, and nothing that we do to truly improve the value of our paper currency.
DJX or SPX Option traders: Puts profitable again yesterday. New Trade: DJX May ATM Put for 20% profits. Sell by day end. High risk trade.
"The federal government is sending each and everyone of us at least a $600 rebate. If we spend that money at Wal-Mart, the money will go to China. If we spend it on gasoline it will go to the Arabs. If we purchase a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala. If we purchase a good car it will go to Japan. If we purchase useless crap it will go to Taiwan ... and none of it will help the American economy. The only way to keep that money here at home is to buy prostitutes, weed, beer, cigarettes, whiskey, and tattoos, since these are the only products still produced in the USA. Thank you for your help & please support the U.S."
Friday, May 9, 2008
Thursday, May 8, 2008
Trust the Facts, Not the False Facts
FLOYD is NOT ONLINE at all today. FISHING. I will lead with this, before I tell you all: I TOLD YOU SO! There! It felt so good to see us in the know watch the May655P move to highs of 16.90, allowing profits to all traders that held it out, and trusted in the FACTS, not the false facts.
The Dow moved to a low of 12,759 on the theoretical Dow. Not sure if I could have been more close in my top level projection. And it's not to brag, but to PROVE to you that the financial babble of the "bulls have taken over" macroeconomic gobblegook that so influenced you all for days. Here's a few comments:
1. “Floyd, That was the single hardest thing I have ever done with regards to investing – keeping to the 4 day rule of stop loss. It was unbelievable how challenging it was. The key element however that you have introduced us to a time tested successful model. I would have NEVER thought to hold that option through the lows. I can’t say the emotion was completely out of it (yet) but I can say I am thrilled I followed your advice/model!!!” - Gratefully, RC
2. “ Sorry about the nervousness. I just lost a lot over the last few days, over $6,ooo after yesterdays reversal. I have 10 puts at a 13.65 average cost so I’m still $4775 out. I wasn’t home yesterday do to work and got burned when the market reversed before it reached my sell order. I would like to stay with it, but I’m concerned it will do like it did yesterday again. I know I over extended on the buy by my own stupidity, but I would appreciate any help you can give me on bailing myself out of this.
Floyd, thank you I bow to your wisdom. sorry I was such a pest. I turned a $6000 loss into a $2000 profit with your advice. I just became a member today and can’t wait to learn more. thanks again.” – D
3. “Floyd, you amaze me. I fought to listen to you, and just realized I wrote you over 15 times on "how wrong you were" and "what I had read", but I kept the faith. I just made 42% and total profits of $31,000 on the one trade. I've never seen the psychology of the trade so perfectly analyzed as your many reader comments. I'll tell them all: subscribe to Advanced Mentoring. Listen and read to you. You can trade full time within a year. And, I agree with your rants...I’ve begun to see what I did not understand. "NC, Asheville
4. “Hi. just wondering why over the last two days, the price has ended up at the opposite level the "first 30-60 minutes of trading" rule of the price in relation to the pivot point said it would. I'm probably just misunderstanding something.
Floyd: Indicators are just indicators.
Also, yesterday, I seem to remember the bias being to the put and yet the day ended up significantly positive. Was this bias fulfilled in the morning? Because that was a short-lived dip in price followed by a much longer-lived rise. Is the bias intended to predict to entire trading day?
Floyd: The bias lasts sometimes 30 minutes:) Puts were profitable yesterday.
This morning's signal was to buy OEYQK again. I already had a contract I bought at 8:40 or so (Which today filled out to sell giving me a 36% return) a little while ago. So this new signal for the day was to add to my position?
Floyd: Can we see from this email that the subscriber still has to learn? It was a new signal. No need to add, if we already owned the signal.
If so, I'm assuming I was supposed to follow the buying rule of waiting until it drops 30% of the price I paid for the original contract. That's how I filled out my pre-market buy orders. They obviously didn't get filled, but I'm just wondering if when you give us a new signal for a position we already have, if you still expect us to wait for it to drop the 33% of our first buy, or if you think its ok to buy at up to 20% of the previous day close?
Floyd: This subscriber needs to read our manual and study.
I made a mistake last week. I had only 10,000 in my paper trading account and bought into OEYQK at a little over $16.00 . My first mistake was to pay more than 10% of my account into that trade. MY second mistake was not buying at 33% discount when the price fell. There I couldn't have held two contracts at a lower averaged cost and profit off of yesterday's early morning drop in the oex. So I took a loss. THANK GOD IM PAPER TRADING!! I'm also glad I had a chance to lose fake money right off the bat. I've learned so freakin much over the last week and a half since I subscribed to you service. I will NEVER make those mistakes again. I might even paper trade longer than 4 months. And just to let you know, I've been considering subscribing to you service for almost a year and have been sourcing you out to see if you're a scam. (20-40 percent returns daily sounds like a scam). But honestly, all I found was positive feedback. I'm deadly serious about trading for a living. I'm only 24, but I'm very committed and serious about it. I'm really glad there’s a mentoring service out there where I can get one on one help. Once I start making real money, I'll also subscribe to bluechipoptions.com and bump up my oexoptions.com level to level 3. "
Floyd: This would be the time this subscriber should subscribe to Level 3, not after making money:)
5. “Man did those guys eat there words today that wrote the emails. Nice call. I still have much to learn though. I was getting restless and sold out just above S1 level and missed out on 125 points of downside. I got back to break even on old 655 trade and then sold the more in the money option I bought yesterday for a decent profit. I just should have had patients, guess it just a learning process. I can not beat myself up for making less profit than I could have. Just learn my emotions.”
With this all said, it's time to move on. The Friday before Mother's Day the Dow has been up 8 of the last 12 years. Be prepared. I suspect we could have a bit more downside today, and will keep the same Dow projection potential bottoms for the short term, and NOT issue a new signal for market opening.
As noted above I plan to "fish" a few hours. For those of you that are new to my style, FISHING means I will not watch the market, will do NOTHING, and will let the dust settle a bit. As I see futures, and appropriate bias clarification, I'll watch for entry to the call. Read our Dow projections carefully.
Lastly, one subscriber wrote yesterday with the question "Is George Soros right?". Soros is a billionaire investor that I believe as astute as Buffett, and like Buffett, he believes that the "worse may be over" and the "recession controlled". Meanwhile, back at the political ranch, the economists and children of government still argue when the recession has begun, or if we are in one. Just as most do not understand that the price of oil has NOTHING to do with supply or demand, or the oil companies, but with oil traders and how they've bet futures, and with how Bush took it from $32.00 a barrel to $120.00 a barrel in his eight years of idiocy, by how he bet our lives on "democracy in the Middle East", and the control of Iraqi oil.
As I teach: ALL is not as it appears.
And one last trader who made my day – “Hey Floyd, My kids are vying for my attention right now so I don't have much time. There is so much I'd like to write to you about.
At this point, all I can say is that I think you are a freakin' genius. Utterly amazing. I cannot believe how someone can predict the market with this kind of accuracy. I realize that you cannot be correct 100% of the time...but I'm telling you right now - I will NEVER doubt you again.
I am studying your manual, watching your videos, and reading your articles. I am only 34 and I know you are older than me. I will have a membership for as long as you are offering your services. However, I want to make sure that on the day you retire, I'm not left with my thumb up my rear not having a clue as to what to do. I am so glad that I signed up for Level 3.
I can't wait to hear what you have to say next. One happy camper!” – MP
Floyd: Thanks MP
The Dow moved to a low of 12,759 on the theoretical Dow. Not sure if I could have been more close in my top level projection. And it's not to brag, but to PROVE to you that the financial babble of the "bulls have taken over" macroeconomic gobblegook that so influenced you all for days. Here's a few comments:
1. “Floyd, That was the single hardest thing I have ever done with regards to investing – keeping to the 4 day rule of stop loss. It was unbelievable how challenging it was. The key element however that you have introduced us to a time tested successful model. I would have NEVER thought to hold that option through the lows. I can’t say the emotion was completely out of it (yet) but I can say I am thrilled I followed your advice/model!!!” - Gratefully, RC
2. “ Sorry about the nervousness. I just lost a lot over the last few days, over $6,ooo after yesterdays reversal. I have 10 puts at a 13.65 average cost so I’m still $4775 out. I wasn’t home yesterday do to work and got burned when the market reversed before it reached my sell order. I would like to stay with it, but I’m concerned it will do like it did yesterday again. I know I over extended on the buy by my own stupidity, but I would appreciate any help you can give me on bailing myself out of this.
Floyd, thank you I bow to your wisdom. sorry I was such a pest. I turned a $6000 loss into a $2000 profit with your advice. I just became a member today and can’t wait to learn more. thanks again.” – D
3. “Floyd, you amaze me. I fought to listen to you, and just realized I wrote you over 15 times on "how wrong you were" and "what I had read", but I kept the faith. I just made 42% and total profits of $31,000 on the one trade. I've never seen the psychology of the trade so perfectly analyzed as your many reader comments. I'll tell them all: subscribe to Advanced Mentoring. Listen and read to you. You can trade full time within a year. And, I agree with your rants...I’ve begun to see what I did not understand. "NC, Asheville
4. “Hi. just wondering why over the last two days, the price has ended up at the opposite level the "first 30-60 minutes of trading" rule of the price in relation to the pivot point said it would. I'm probably just misunderstanding something.
Floyd: Indicators are just indicators.
Also, yesterday, I seem to remember the bias being to the put and yet the day ended up significantly positive. Was this bias fulfilled in the morning? Because that was a short-lived dip in price followed by a much longer-lived rise. Is the bias intended to predict to entire trading day?
Floyd: The bias lasts sometimes 30 minutes:) Puts were profitable yesterday.
This morning's signal was to buy OEYQK again. I already had a contract I bought at 8:40 or so (Which today filled out to sell giving me a 36% return) a little while ago. So this new signal for the day was to add to my position?
Floyd: Can we see from this email that the subscriber still has to learn? It was a new signal. No need to add, if we already owned the signal.
If so, I'm assuming I was supposed to follow the buying rule of waiting until it drops 30% of the price I paid for the original contract. That's how I filled out my pre-market buy orders. They obviously didn't get filled, but I'm just wondering if when you give us a new signal for a position we already have, if you still expect us to wait for it to drop the 33% of our first buy, or if you think its ok to buy at up to 20% of the previous day close?
Floyd: This subscriber needs to read our manual and study.
I made a mistake last week. I had only 10,000 in my paper trading account and bought into OEYQK at a little over $16.00 . My first mistake was to pay more than 10% of my account into that trade. MY second mistake was not buying at 33% discount when the price fell. There I couldn't have held two contracts at a lower averaged cost and profit off of yesterday's early morning drop in the oex. So I took a loss. THANK GOD IM PAPER TRADING!! I'm also glad I had a chance to lose fake money right off the bat. I've learned so freakin much over the last week and a half since I subscribed to you service. I will NEVER make those mistakes again. I might even paper trade longer than 4 months. And just to let you know, I've been considering subscribing to you service for almost a year and have been sourcing you out to see if you're a scam. (20-40 percent returns daily sounds like a scam). But honestly, all I found was positive feedback. I'm deadly serious about trading for a living. I'm only 24, but I'm very committed and serious about it. I'm really glad there’s a mentoring service out there where I can get one on one help. Once I start making real money, I'll also subscribe to bluechipoptions.com and bump up my oexoptions.com level to level 3. "
Floyd: This would be the time this subscriber should subscribe to Level 3, not after making money:)
5. “Man did those guys eat there words today that wrote the emails. Nice call. I still have much to learn though. I was getting restless and sold out just above S1 level and missed out on 125 points of downside. I got back to break even on old 655 trade and then sold the more in the money option I bought yesterday for a decent profit. I just should have had patients, guess it just a learning process. I can not beat myself up for making less profit than I could have. Just learn my emotions.”
With this all said, it's time to move on. The Friday before Mother's Day the Dow has been up 8 of the last 12 years. Be prepared. I suspect we could have a bit more downside today, and will keep the same Dow projection potential bottoms for the short term, and NOT issue a new signal for market opening.
As noted above I plan to "fish" a few hours. For those of you that are new to my style, FISHING means I will not watch the market, will do NOTHING, and will let the dust settle a bit. As I see futures, and appropriate bias clarification, I'll watch for entry to the call. Read our Dow projections carefully.
Lastly, one subscriber wrote yesterday with the question "Is George Soros right?". Soros is a billionaire investor that I believe as astute as Buffett, and like Buffett, he believes that the "worse may be over" and the "recession controlled". Meanwhile, back at the political ranch, the economists and children of government still argue when the recession has begun, or if we are in one. Just as most do not understand that the price of oil has NOTHING to do with supply or demand, or the oil companies, but with oil traders and how they've bet futures, and with how Bush took it from $32.00 a barrel to $120.00 a barrel in his eight years of idiocy, by how he bet our lives on "democracy in the Middle East", and the control of Iraqi oil.
As I teach: ALL is not as it appears.
And one last trader who made my day – “Hey Floyd, My kids are vying for my attention right now so I don't have much time. There is so much I'd like to write to you about.
At this point, all I can say is that I think you are a freakin' genius. Utterly amazing. I cannot believe how someone can predict the market with this kind of accuracy. I realize that you cannot be correct 100% of the time...but I'm telling you right now - I will NEVER doubt you again.
I am studying your manual, watching your videos, and reading your articles. I am only 34 and I know you are older than me. I will have a membership for as long as you are offering your services. However, I want to make sure that on the day you retire, I'm not left with my thumb up my rear not having a clue as to what to do. I am so glad that I signed up for Level 3.
I can't wait to hear what you have to say next. One happy camper!” – MP
Floyd: Thanks MP
Wednesday, May 7, 2008
May655P Hit Profits
The Dow moved to a high, again, of 13,050, and a low of 12,820 yesterday. The May655P hit profits at 14.20. Many emails, from many subscribers, should help us all:
1. I'd love to hear your comments with regards to the following statements made today in the news :
"Stocks reversed early losses to trade modestly higher Tuesday, as investors monitored the movements of record-high oil prices but still laid bets that the economy and companies are in recovery mode."
Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, said it is a good sign that stock traders started buying back in again when the Standard & Poor's briefly dipped below the technically significant 1,400 mark.
"We had some negative news this morning, and we've shaken it off. It's encouraging," Detrick said.
"I think overall, the strength in stocks right now is on fairly firm footing," said JPMorgan equities analyst Thomas J. Lee...."The credit markets keep showing increased appetite for risk".... "In some ways, first-quarter earnings are yesterday's news," Lee said.
Huge quarterly losses from three major players in the financial and homebuilding industries initially sparked some stock selling Tuesday, but those dips were soon met by bargain-hunters, who are betting that those sectors are a good buy right now given their low prices.
3PM - THE BULLS ARE OUT!..."All ten of the economic sectors are in positive territory for the first time this session."
Are you still sticking with the following predictions? And is this supposed to happen by the time we exercise out stop loss?
Floyd - “12,660 first strong bottom, leading to a potential bottom of 12,540
There is also a distinct possibility of a softer bottom at 12,760."
2. “Nice move this morning and yesterday. I would have never been able to have the faith and discipline I did to hold out in this put before. It took a long road to get to this point in my trading career. I just made back all my loss on XAU and then some. I figure it would take me a month of so of small gains to get back to break even. It is almost like we have some unfair knowledge that Jim Cramer does not and all the other "professionals" on CNBC don't have.
I did modify the trade a little, let me know if it was flawed. My 2nd buy at the top around 13100 I bought a more in the money option the 665 put as opposed to the 655 puts I was holding inventory on. I made up ground very quick and closed out this morning at a 50% profit, 1 of my 655 contracts sold at $14 and am my last 2 for $14. Buying the higher option was a wise move this time, but want to make sure it is something you see as being ok to do. I only did it because it appeared we were at an extreme level and wanted to take advantage of the downside once it started. Anyway, thanks for the guidance.”
3. “Floyd, I am just a novice at trading so I am trying to get my arms around what the market did today. Did we have the complete reversal because the Federal Govt reduced the restrictions on Fannie and Freddie enabling them to potentially make more bad loans and lose MORE money? And that was
considered good news?
I am going to have to stop loss till the 9th. My "you know what" is puckering just a bit now : )
I guess if I wanted security I would be in T-bills. Kind Regards, RC"
4. “Yeah, I got overconfident as I made $18k in just one trade on Wednesday, but I didn't sell it the 640put cos I thought it was gonna go lower !!! So no profit =(. Thanks very much for your help Floyd, I know I put myself in this mess, but now I need to get out. Thanks Floyd, your prediction that it will go down is true =).
“I really need your advice and help today. Can you please from your vast experience suggest a price for me to sell today my following puts:
1. 640 May Put(bought @$7.00), bought last Wednesday
2. 650 May Put(bought @15.60), bought last Thursday
The longer I hold it, is it the longer the options decrease in value ? As last time I could sell them for around $8.00 of DOW of 12,850. I see in the ThinkOrSwim platform that this price has reduced now. Why is that ? Now if I want to get $7.00 the DOW has to drop to like 12,750. Hope to hear back from you soon before market opens thanks very much Floyd. Regards,
D”
5. “Hey Floyd, Got in May655p @ $11.50 on Thur sold this morning @ $14.00. Got in again in the last half hour @ $7.30 and sold @ $7.90.
Thanks again, D”
The answers are simple:
1. There is little good news, but the bulls are trying to hold the market up. The risk increases by the day, and the market count bias is now 0. This means neither put or call show strength, despite what talking heads say, despite what a chartist will interpret. No trades will show strength until a true move takes place that "identifies" strength.
2. The talking heads are just that. Remember, these are the same boys that bankrupted Bear Stearns.
3. Some of our traders above obviously don't yet understand even the basics of trading options. Are you one of them? Looking for a signal without knowledge of how to trade?
Last week the FEDS gave us the 7th rate cut in as many months, and the easy money policies continued. This time Bernanke clarified, "this might be the end", and it's important to watch this.
The Central bank is hopefully now more concerned about inflation. Concerns over our housing downturn and credit disaster has taken priority to the FEDS, and the incessant babbles about "in recession". In the 1970's Jimmy Carter was labeled the "worst President" only because he had inherited the easy money and weak dollar policies of prior administrations. As always, the American people stupidly believed Carter was the culprit, when in actuality it was the easy money of the past that created the situation that he and the Reserve Chairman Burns had to deal with.
Former President Clinton led during a stock market bubble, and wisely used the capital to pay down the prior administrations (Bush Idiot #1) excessive spending; however, Clinton did little to control the interest rate games, and allowed the great American hero, Bubbles Greenspan, to push for creative financing, and even condone "unique methods to sponsor American home ownership".
Along came Bushy idiot #2, who had never run a business successfully, and was determined to avenge his Father's Middle East fate, we used a terror attack without any logic begin to "build democracy" in a region at war for years. When this occurred, the free money began, and we printed dollars. Remember, Communist China and other foreign countries buy over 51% of our Treasury bills. The "oil strategy" failed (get Iraq pipeline), but the lobbyist efforts by the oil companies, Halliburton, et al brought wealth to many. Exactly what was planned.
Halliburton, who was never bid out on any contracts, now has their core corporate offices in Dubai. Have we said enough?
How are we doing in Afghanistan, where the terror began. Opium sales have doubled, the Taliban are back, and anyone remember Osama Bin Laden?
The rants above lead to what now must occur: The FEDS will have to stop the interest rate games IN CASE we will truly need to lower rates again.
The tax rebates are out. The economy will now burst to the upside, say the stupid, and even have pointed out that the recent runs above 13,100 were led by the tax rebates.
1. I'd love to hear your comments with regards to the following statements made today in the news :
"Stocks reversed early losses to trade modestly higher Tuesday, as investors monitored the movements of record-high oil prices but still laid bets that the economy and companies are in recovery mode."
Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, said it is a good sign that stock traders started buying back in again when the Standard & Poor's briefly dipped below the technically significant 1,400 mark.
"We had some negative news this morning, and we've shaken it off. It's encouraging," Detrick said.
"I think overall, the strength in stocks right now is on fairly firm footing," said JPMorgan equities analyst Thomas J. Lee...."The credit markets keep showing increased appetite for risk".... "In some ways, first-quarter earnings are yesterday's news," Lee said.
Huge quarterly losses from three major players in the financial and homebuilding industries initially sparked some stock selling Tuesday, but those dips were soon met by bargain-hunters, who are betting that those sectors are a good buy right now given their low prices.
3PM - THE BULLS ARE OUT!..."All ten of the economic sectors are in positive territory for the first time this session."
Are you still sticking with the following predictions? And is this supposed to happen by the time we exercise out stop loss?
Floyd - “12,660 first strong bottom, leading to a potential bottom of 12,540
There is also a distinct possibility of a softer bottom at 12,760."
2. “Nice move this morning and yesterday. I would have never been able to have the faith and discipline I did to hold out in this put before. It took a long road to get to this point in my trading career. I just made back all my loss on XAU and then some. I figure it would take me a month of so of small gains to get back to break even. It is almost like we have some unfair knowledge that Jim Cramer does not and all the other "professionals" on CNBC don't have.
I did modify the trade a little, let me know if it was flawed. My 2nd buy at the top around 13100 I bought a more in the money option the 665 put as opposed to the 655 puts I was holding inventory on. I made up ground very quick and closed out this morning at a 50% profit, 1 of my 655 contracts sold at $14 and am my last 2 for $14. Buying the higher option was a wise move this time, but want to make sure it is something you see as being ok to do. I only did it because it appeared we were at an extreme level and wanted to take advantage of the downside once it started. Anyway, thanks for the guidance.”
3. “Floyd, I am just a novice at trading so I am trying to get my arms around what the market did today. Did we have the complete reversal because the Federal Govt reduced the restrictions on Fannie and Freddie enabling them to potentially make more bad loans and lose MORE money? And that was
considered good news?
I am going to have to stop loss till the 9th. My "you know what" is puckering just a bit now : )
I guess if I wanted security I would be in T-bills. Kind Regards, RC"
4. “Yeah, I got overconfident as I made $18k in just one trade on Wednesday, but I didn't sell it the 640put cos I thought it was gonna go lower !!! So no profit =(. Thanks very much for your help Floyd, I know I put myself in this mess, but now I need to get out. Thanks Floyd, your prediction that it will go down is true =).
“I really need your advice and help today. Can you please from your vast experience suggest a price for me to sell today my following puts:
1. 640 May Put(bought @$7.00), bought last Wednesday
2. 650 May Put(bought @15.60), bought last Thursday
The longer I hold it, is it the longer the options decrease in value ? As last time I could sell them for around $8.00 of DOW of 12,850. I see in the ThinkOrSwim platform that this price has reduced now. Why is that ? Now if I want to get $7.00 the DOW has to drop to like 12,750. Hope to hear back from you soon before market opens thanks very much Floyd. Regards,
D”
5. “Hey Floyd, Got in May655p @ $11.50 on Thur sold this morning @ $14.00. Got in again in the last half hour @ $7.30 and sold @ $7.90.
Thanks again, D”
The answers are simple:
1. There is little good news, but the bulls are trying to hold the market up. The risk increases by the day, and the market count bias is now 0. This means neither put or call show strength, despite what talking heads say, despite what a chartist will interpret. No trades will show strength until a true move takes place that "identifies" strength.
2. The talking heads are just that. Remember, these are the same boys that bankrupted Bear Stearns.
3. Some of our traders above obviously don't yet understand even the basics of trading options. Are you one of them? Looking for a signal without knowledge of how to trade?
Last week the FEDS gave us the 7th rate cut in as many months, and the easy money policies continued. This time Bernanke clarified, "this might be the end", and it's important to watch this.
The Central bank is hopefully now more concerned about inflation. Concerns over our housing downturn and credit disaster has taken priority to the FEDS, and the incessant babbles about "in recession". In the 1970's Jimmy Carter was labeled the "worst President" only because he had inherited the easy money and weak dollar policies of prior administrations. As always, the American people stupidly believed Carter was the culprit, when in actuality it was the easy money of the past that created the situation that he and the Reserve Chairman Burns had to deal with.
Former President Clinton led during a stock market bubble, and wisely used the capital to pay down the prior administrations (Bush Idiot #1) excessive spending; however, Clinton did little to control the interest rate games, and allowed the great American hero, Bubbles Greenspan, to push for creative financing, and even condone "unique methods to sponsor American home ownership".
Along came Bushy idiot #2, who had never run a business successfully, and was determined to avenge his Father's Middle East fate, we used a terror attack without any logic begin to "build democracy" in a region at war for years. When this occurred, the free money began, and we printed dollars. Remember, Communist China and other foreign countries buy over 51% of our Treasury bills. The "oil strategy" failed (get Iraq pipeline), but the lobbyist efforts by the oil companies, Halliburton, et al brought wealth to many. Exactly what was planned.
Halliburton, who was never bid out on any contracts, now has their core corporate offices in Dubai. Have we said enough?
How are we doing in Afghanistan, where the terror began. Opium sales have doubled, the Taliban are back, and anyone remember Osama Bin Laden?
The rants above lead to what now must occur: The FEDS will have to stop the interest rate games IN CASE we will truly need to lower rates again.
The tax rebates are out. The economy will now burst to the upside, say the stupid, and even have pointed out that the recent runs above 13,100 were led by the tax rebates.
Tuesday, May 6, 2008
Pure Panic!
On Friday the number of emails in pure panic mode were exceptional. My favorite was this:
"Floyd, it's clear that the market is now in full break out. I read this on CNN Money and don't understand why you think the market might even go down. All the charts tell me this, and I've talked to several bankers who assure me that the market is headed higher"
And my next favorite:
"Hi Floyd,
I've got a good story for you here.
On Tuesday or Wednesday of last week, I placed my first order from one of your alerts. I don't remember the PUT that you recommended (you'd think I'd have it written down in my journal but I don't - another mistake) but I accidentally placed an order for 7 contracts (I wanted 1 contract). I was so nervous that I did not know how to cancel the order before it filled and needless to say, I had about $7500 on the line (my account is $30,000. Fortunately for me, your alert was correct and I made a quick $1600. I couldn't believe how accurate your predictions were throughout the entire day. Needless to say, I was fired up and ready for the next trade. What a rush!
The next day, you sent out another alert for the 655 PUT (I believe you said to get in under 17.10. I wanted to get in so bad that I bought a contract for 16.50. The price quickly dropped and I bought another at 16.10. As we all know, the price continued to drop and the faster it dropped, the quicker my anger and frustration began to rise. I figured that if I kept buying puts at a lower price, my overall cost would decrease and when the OEX reverses (which of course it will b/c FLOYD said so - I couldn't imagine you being wrong) I will make a great profit. So I bought another contract at 14.50, and another at 14.30 and TWO more at 12.90, one more and 12.80 and finally one last contract at 10.80. All in all, I bought 8 contracts for an average price of 13.85 ($11,080 - without commissions). Remember, my entire portfolio is only $30,000. This is my 2nd week of trading!!
What a perfect of example of how emotion and greed can ruin a trader real fast!!
So you can now imagine why I NEED this puppy to drop a lot and drop fast because I cannot stomach watching 1/3 of my portfolio get pissed down the toilet due to my stupidity.
As I type this, I am ONLY losing $2700 and I am seriously thinking about taking a loss on the entire thing. I can stomach a $2700 loss. I can't imagine a 7 or 8 or 9, 10, ELEVEN THOUSAND DOLLAR LOSS!! NO WAY! Not this early in my trading career. That is 1/3 of my portfolio.
I promise you one thing Floyd - I have learned my lesson about over leveraging, greed and anger. NEVER AGAIN!!
At this point, I'm just trying to minimize my losses. Any recommendations? I should would appreciate any help.
Feel free to use me as an example of what not to do!!
Hope to hear from you soon,
M"
And, in my ongoing email "teaching" as "trial subscribers try us", an email from a gent canceling his service. This one I'll teach from, and I wish this gentleman the best:
"always a pleasure to listen to your analysis. I'm interested in live alert. Your email is excellent- it teaches us how you look to OEX but it did not help us to make $$
It will be excellent subscription if you said clearly we are buying 655 call for $9.50
we are selling 655 call for 10.80 or we are holding overnight and we looking for $13.90 and our stop $4.50.
we are buying put 650 for $11.70 target $14.90 stop loss 3 day or $5.50
thanks for your time and effort. appreciate all your help"
1. He's tried us before. This is called a "churner". They spend much of their time trying a variety of services.
2. Making money is hard. No service is the holy grail. I have clandestinely subscribed to so many services that "offer signals" and never yet have I found one in which you can truly ever "buy at 10.80, sell at 13.90"....or where the service tells you EXACTLY what to do. Think it out: if every subscriber did this the market would flood with the same orders, if the service is of any size.
This in the industry is called "the signal game"....these services make their livings churning through many subscribers that pay to join and have a few successes, but many failures.
If you are the type of subscriber that wants this, please save your money. You will lose it. No service can help you "buy/sell". You must learn HOW to buy sell.
Yesterday the market was first led downward, so the talking heads tell us, because the idiots at Microsoft didn't buy the idiots that ruined Yahoo. This is NOT the reason the market fell. This was the EVENT that triggered the first sell off in the market, that we projected earlier last week, and that has a 55% chance of continuing in downturn. Yesterday the market moved to a theoretical Dow low of 12,900. More downside could occur.
Buffett, the legendary investor, recently advised that he believes the financial meltdown that could occur has lessened in risk. He also advised that stock market gains will NOT be large over the next year, and that smart investors must "think small".
This is one more reason to play index options. Astute investors can gain 10 to 30% on intelligent index investing daily, hourly and weekly, and at the same time invest in solid moves, such as through our stock/option Floyd investing at www.bluechipoptions.com
Do NOT expect high gains. You won't get them. We have done a great job in destroying our own economy and have a long way to rebuild. Remember this as you consider your Presidential candidate.
"Floyd, it's clear that the market is now in full break out. I read this on CNN Money and don't understand why you think the market might even go down. All the charts tell me this, and I've talked to several bankers who assure me that the market is headed higher"
And my next favorite:
"Hi Floyd,
I've got a good story for you here.
On Tuesday or Wednesday of last week, I placed my first order from one of your alerts. I don't remember the PUT that you recommended (you'd think I'd have it written down in my journal but I don't - another mistake) but I accidentally placed an order for 7 contracts (I wanted 1 contract). I was so nervous that I did not know how to cancel the order before it filled and needless to say, I had about $7500 on the line (my account is $30,000. Fortunately for me, your alert was correct and I made a quick $1600. I couldn't believe how accurate your predictions were throughout the entire day. Needless to say, I was fired up and ready for the next trade. What a rush!
The next day, you sent out another alert for the 655 PUT (I believe you said to get in under 17.10. I wanted to get in so bad that I bought a contract for 16.50. The price quickly dropped and I bought another at 16.10. As we all know, the price continued to drop and the faster it dropped, the quicker my anger and frustration began to rise. I figured that if I kept buying puts at a lower price, my overall cost would decrease and when the OEX reverses (which of course it will b/c FLOYD said so - I couldn't imagine you being wrong) I will make a great profit. So I bought another contract at 14.50, and another at 14.30 and TWO more at 12.90, one more and 12.80 and finally one last contract at 10.80. All in all, I bought 8 contracts for an average price of 13.85 ($11,080 - without commissions). Remember, my entire portfolio is only $30,000. This is my 2nd week of trading!!
What a perfect of example of how emotion and greed can ruin a trader real fast!!
So you can now imagine why I NEED this puppy to drop a lot and drop fast because I cannot stomach watching 1/3 of my portfolio get pissed down the toilet due to my stupidity.
As I type this, I am ONLY losing $2700 and I am seriously thinking about taking a loss on the entire thing. I can stomach a $2700 loss. I can't imagine a 7 or 8 or 9, 10, ELEVEN THOUSAND DOLLAR LOSS!! NO WAY! Not this early in my trading career. That is 1/3 of my portfolio.
I promise you one thing Floyd - I have learned my lesson about over leveraging, greed and anger. NEVER AGAIN!!
At this point, I'm just trying to minimize my losses. Any recommendations? I should would appreciate any help.
Feel free to use me as an example of what not to do!!
Hope to hear from you soon,
M"
And, in my ongoing email "teaching" as "trial subscribers try us", an email from a gent canceling his service. This one I'll teach from, and I wish this gentleman the best:
"always a pleasure to listen to your analysis. I'm interested in live alert. Your email is excellent- it teaches us how you look to OEX but it did not help us to make $$
It will be excellent subscription if you said clearly we are buying 655 call for $9.50
we are selling 655 call for 10.80 or we are holding overnight and we looking for $13.90 and our stop $4.50.
we are buying put 650 for $11.70 target $14.90 stop loss 3 day or $5.50
thanks for your time and effort. appreciate all your help"
1. He's tried us before. This is called a "churner". They spend much of their time trying a variety of services.
2. Making money is hard. No service is the holy grail. I have clandestinely subscribed to so many services that "offer signals" and never yet have I found one in which you can truly ever "buy at 10.80, sell at 13.90"....or where the service tells you EXACTLY what to do. Think it out: if every subscriber did this the market would flood with the same orders, if the service is of any size.
This in the industry is called "the signal game"....these services make their livings churning through many subscribers that pay to join and have a few successes, but many failures.
If you are the type of subscriber that wants this, please save your money. You will lose it. No service can help you "buy/sell". You must learn HOW to buy sell.
Yesterday the market was first led downward, so the talking heads tell us, because the idiots at Microsoft didn't buy the idiots that ruined Yahoo. This is NOT the reason the market fell. This was the EVENT that triggered the first sell off in the market, that we projected earlier last week, and that has a 55% chance of continuing in downturn. Yesterday the market moved to a theoretical Dow low of 12,900. More downside could occur.
Buffett, the legendary investor, recently advised that he believes the financial meltdown that could occur has lessened in risk. He also advised that stock market gains will NOT be large over the next year, and that smart investors must "think small".
This is one more reason to play index options. Astute investors can gain 10 to 30% on intelligent index investing daily, hourly and weekly, and at the same time invest in solid moves, such as through our stock/option Floyd investing at www.bluechipoptions.com
Do NOT expect high gains. You won't get them. We have done a great job in destroying our own economy and have a long way to rebuild. Remember this as you consider your Presidential candidate.
Monday, May 5, 2008
All is Not as it Appears
May 665 calls bought at opening on Friday hit fast profit goals of 20% up on Friday. Meanwhile our buys on the May655P remain at loss, and we continue to hold for our 4 day stop loss. No matter what occurs in the next few days, it's time again for Floyd's key lesson of stock trading:
All is NOT as it appears. Only when you truly know this key rule, and can focus away from the talking heads, from the news articles, and from the TV, can you begin to truly understand how the market breathes.
"Floyd, regardless of whether you profit for us on this put, as a long term subscriber I smile when I read the "urgent" messages from your subscribers on Friday...I remember these days well, where I over invested in a trade, and did not manage my risk. Only when I began truly studying your work, and following the rules, did I begin to truly make money. in 2007 I earned 176,000 trading OEX options. In 2006 I lose 27,000. The only difference: I studied, and took the emotions out of the trade."-BCE, Ontario
The amount of FEAR I saw with our traders Friday, and why I simply "closed up shop", indicates the amount of irrational euphoria in the market. As the talking heads said:
"The worst seems behind us, and the market is now fully in a break out mode". (We have not even begun to reach a break out mode, yet).
I could see it in the emails.....28 of 29 of the last trades we've recommended have been profitable, a record for Floyd and OEX, and discussion points I've provided over the past week, that I'm fearful of being right so often that traders would begin to believe this is "easy". I provided a bit of evidence in our second alert Friday, showing that many traders couldn't believe they might lose money, and "what do I do"....a few more comments from subscribers Friday:
"I am sure you are getting bombarded with questions so I am going to be keep mine simple:
"Since the market moved bullish a little more than I anticipated, should I be thinking about selling a higher strike put to maybe offset the puts that I currently own (8 puts at 13.85).
I am trying to think of ways to hedge myself and prevent taking a big loss.
Any thoughts?"
Floyd- Follow the rules. Take two buys, hold for the # of days stop loss, and wait it out.
"Thank you for your excellent market/trader perspective. I especially appreciate your "rantings" and recent dialog.
I am in on the May655p @ $11.50. This is my first buy. For future reference, do you think I should have bought a second buy at around $7.60 today?
Also, since the market stayed "afloat" does it give you more or less reason to look for a large move down, I think I am asking about difference between accumulation and distribution...but I am not sure...Could you elaborate?
Have a peaceful weekend!"
Thank you, D
Floyd - The market accumulates during upside, and distributes during real correction. Friday we saw a run up to 13,150 area, but an immediate correction, and a "hold" just above 13,000. Nothing has yet shown us that we have a strong upside, only that is May, institutional traders are accumulating, and that a false unemployment report (5% is crap...it's closer to 12%) provided a bit of false optimism.
"Thanks for the information on the Harpers magazine article, about how the Government has manipulated the economic numbers for their own benefit. Truly scary...
I was at the bank yesterday and the manager was ranting to the customers in line...."Gas is so expensive...we need to drill more holes in Alaska". I thought to myself....No you need to sell your SUV.
also....
Earlier I was talking with my friend's daughter who is attending a 4 year university in Southern California. Apparently her Economics teacher is telling her class that "We're not in a recession".
Later I thought to myself...man people are stupid. No wonder as a nation we're in so much trouble. I didn't always think this way, in fact I probably would have thought the same, before you started teaching me.
Thank you for your rants and teaching. My families life will be better because of it.” - M
From Mike Gibbons:
"Both the NASDAQ Composite and S&P 500 broke out from their double-bottom bases this week and simultaneously broke the medium term downward trend line. Both indexes gained for the third week in succession and have gained in four out of the last six weeks. The NASDAQ is approaching its 200 day moving average,
Why are the markets rising while the economic fundamentals continue to deteriorate and will the trend continue?
Firstly, we think the economic fundamentals are deteriorating despite the loss of fewer jobs than expected and the supposed fall in unemployment. The Fed's statement on Tuesday confirmed that further weakening can be expected and their move on Friday to increase the Term Auction Facility funds by 50% and relax standards for the Term Securities Lending Facility (TSLF) to include AAA/Aaa-rated asset-backed securities shows they expect the liquidity situation to get worse before it gets better. We have long held that the Administration and Fed would do everything in their power to support the markets this year and Bernanke seems to have found the silver bullet with the combination of interest rate and discount window rate cuts together with the TAF and TSLF loans. Loans under these facilities mounted to $413 billion by April 30 and will clearly go higher. Acknowledged writedowns on mortgage losses amount to at most $250 billion so there is a comfortable surplus of capital that can be put to work. It was intended that these loans be used to relieve the credit crunch but there is little evidence that is happening (in fact it seems to be getting worse so it's reasonable to assume that this excess is being invested in the equity markets rather than to expand credit. If this reasoning is correct, then we can expect markets to move higher until the perceived risk of lending money is lower than the perceived risk of equity investments."
From veteran trader, Bill, who did NOT panic on upturn Friday, some good lessons in Point and Figure, with Floyd comments returned to him in bold.
We educate the trader.
"A couple questions, looking at the info on the OEX, the weekly distribution indicates overbought by 45% and the midrange of 623.65 and the 50 dma is 623.90.
This is correct. Good work.
Same goes with the DJIA, overbought by 48%, midrange of 12462.
Yes, this would be the deepest bottom.
Is this a level that the index is likely to trade back too?
Yes, the OEX tracks the Dow perfectly.
I understand the overbought/oversold concept and as the level moves up the curve the potential for reversal is greater, my question is, what level of overbought/oversold are indicators of a potential reversal?
This is where I use the "count" method. When the moves get to 8 in my bell curve work, the market is showing signs.
Also looks like the indexes are very extended from the bullish support line another indicator of a potential reversal?
Yes
The fact that the X and O ranges are getting tigher an indication of anything?
Yes, we are approaching "trade range" where something could happen again. Note the market is trying to establish new upside above 13,100, so far has not held.
BTW, I enjoy your political and economic commentary.
Thanks.
As far as the 655 put trade is going, I have made multiple buys and sells already. On thursday, as I indicated earlier, I purchased at market tops 13,050. I did not buy at best buy, but @ 11.20 had partial sells at different levels had my @ 12 sell order filled. Option backed up, I bought again and made another sell of partials. My net position right now is 100 @ $9.889. I've already booked $5,300 in profits on the trade. The 640 Put trade earlier in the week netted $11,600.
Proof of how to trade:)
Plan the trade and trade the plan......
This is the key!
All is NOT as it appears. Only when you truly know this key rule, and can focus away from the talking heads, from the news articles, and from the TV, can you begin to truly understand how the market breathes.
"Floyd, regardless of whether you profit for us on this put, as a long term subscriber I smile when I read the "urgent" messages from your subscribers on Friday...I remember these days well, where I over invested in a trade, and did not manage my risk. Only when I began truly studying your work, and following the rules, did I begin to truly make money. in 2007 I earned 176,000 trading OEX options. In 2006 I lose 27,000. The only difference: I studied, and took the emotions out of the trade."-BCE, Ontario
The amount of FEAR I saw with our traders Friday, and why I simply "closed up shop", indicates the amount of irrational euphoria in the market. As the talking heads said:
"The worst seems behind us, and the market is now fully in a break out mode". (We have not even begun to reach a break out mode, yet).
I could see it in the emails.....28 of 29 of the last trades we've recommended have been profitable, a record for Floyd and OEX, and discussion points I've provided over the past week, that I'm fearful of being right so often that traders would begin to believe this is "easy". I provided a bit of evidence in our second alert Friday, showing that many traders couldn't believe they might lose money, and "what do I do"....a few more comments from subscribers Friday:
"I am sure you are getting bombarded with questions so I am going to be keep mine simple:
"Since the market moved bullish a little more than I anticipated, should I be thinking about selling a higher strike put to maybe offset the puts that I currently own (8 puts at 13.85).
I am trying to think of ways to hedge myself and prevent taking a big loss.
Any thoughts?"
Floyd- Follow the rules. Take two buys, hold for the # of days stop loss, and wait it out.
"Thank you for your excellent market/trader perspective. I especially appreciate your "rantings" and recent dialog.
I am in on the May655p @ $11.50. This is my first buy. For future reference, do you think I should have bought a second buy at around $7.60 today?
Also, since the market stayed "afloat" does it give you more or less reason to look for a large move down, I think I am asking about difference between accumulation and distribution...but I am not sure...Could you elaborate?
Have a peaceful weekend!"
Thank you, D
Floyd - The market accumulates during upside, and distributes during real correction. Friday we saw a run up to 13,150 area, but an immediate correction, and a "hold" just above 13,000. Nothing has yet shown us that we have a strong upside, only that is May, institutional traders are accumulating, and that a false unemployment report (5% is crap...it's closer to 12%) provided a bit of false optimism.
"Thanks for the information on the Harpers magazine article, about how the Government has manipulated the economic numbers for their own benefit. Truly scary...
I was at the bank yesterday and the manager was ranting to the customers in line...."Gas is so expensive...we need to drill more holes in Alaska". I thought to myself....No you need to sell your SUV.
also....
Earlier I was talking with my friend's daughter who is attending a 4 year university in Southern California. Apparently her Economics teacher is telling her class that "We're not in a recession".
Later I thought to myself...man people are stupid. No wonder as a nation we're in so much trouble. I didn't always think this way, in fact I probably would have thought the same, before you started teaching me.
Thank you for your rants and teaching. My families life will be better because of it.” - M
From Mike Gibbons:
"Both the NASDAQ Composite and S&P 500 broke out from their double-bottom bases this week and simultaneously broke the medium term downward trend line. Both indexes gained for the third week in succession and have gained in four out of the last six weeks. The NASDAQ is approaching its 200 day moving average,
Why are the markets rising while the economic fundamentals continue to deteriorate and will the trend continue?
Firstly, we think the economic fundamentals are deteriorating despite the loss of fewer jobs than expected and the supposed fall in unemployment. The Fed's statement on Tuesday confirmed that further weakening can be expected and their move on Friday to increase the Term Auction Facility funds by 50% and relax standards for the Term Securities Lending Facility (TSLF) to include AAA/Aaa-rated asset-backed securities shows they expect the liquidity situation to get worse before it gets better. We have long held that the Administration and Fed would do everything in their power to support the markets this year and Bernanke seems to have found the silver bullet with the combination of interest rate and discount window rate cuts together with the TAF and TSLF loans. Loans under these facilities mounted to $413 billion by April 30 and will clearly go higher. Acknowledged writedowns on mortgage losses amount to at most $250 billion so there is a comfortable surplus of capital that can be put to work. It was intended that these loans be used to relieve the credit crunch but there is little evidence that is happening (in fact it seems to be getting worse so it's reasonable to assume that this excess is being invested in the equity markets rather than to expand credit. If this reasoning is correct, then we can expect markets to move higher until the perceived risk of lending money is lower than the perceived risk of equity investments."
From veteran trader, Bill, who did NOT panic on upturn Friday, some good lessons in Point and Figure, with Floyd comments returned to him in bold.
We educate the trader.
"A couple questions, looking at the info on the OEX, the weekly distribution indicates overbought by 45% and the midrange of 623.65 and the 50 dma is 623.90.
This is correct. Good work.
Same goes with the DJIA, overbought by 48%, midrange of 12462.
Yes, this would be the deepest bottom.
Is this a level that the index is likely to trade back too?
Yes, the OEX tracks the Dow perfectly.
I understand the overbought/oversold concept and as the level moves up the curve the potential for reversal is greater, my question is, what level of overbought/oversold are indicators of a potential reversal?
This is where I use the "count" method. When the moves get to 8 in my bell curve work, the market is showing signs.
Also looks like the indexes are very extended from the bullish support line another indicator of a potential reversal?
Yes
The fact that the X and O ranges are getting tigher an indication of anything?
Yes, we are approaching "trade range" where something could happen again. Note the market is trying to establish new upside above 13,100, so far has not held.
BTW, I enjoy your political and economic commentary.
Thanks.
As far as the 655 put trade is going, I have made multiple buys and sells already. On thursday, as I indicated earlier, I purchased at market tops 13,050. I did not buy at best buy, but @ 11.20 had partial sells at different levels had my @ 12 sell order filled. Option backed up, I bought again and made another sell of partials. My net position right now is 100 @ $9.889. I've already booked $5,300 in profits on the trade. The 640 Put trade earlier in the week netted $11,600.
Proof of how to trade:)
Plan the trade and trade the plan......
This is the key!
Friday, May 2, 2008
Market Gyrations and the Great Depression
Recent market gyrations of 300 point moves up or down within a few days has not happened since the Great Depression. Remember this as you trade.
When the market begins to gyrate upwards on good news on, as an example, GOOGLE earnings (4/17/2008) and buyers begin to move the Dow to near 13,000 euphoria begins to build. For OEX option traders this is a great time, if disciplined in their studies, as WHAT the market does is irrelevant to index option trading. Unlike stock investments we are watching a short period, typically no longer than 21 market days, and recently, as quick in movement for 600 point moves in the market of 7 days.
Yesterdays' moves allowed us a two buy entry to the May655P.
We shared the fears of subscribers intraday after our alert, yet again trying to point out that this is option trading, thusly highly volatile, and is always high risk. When I do as well as I've done in my picks, note that I will fail us sometimes....it's part of the game. And...I don't think yet that it will happen on this trade.
April 23rd, 1999 was the first month ever to gain 1000 Dow points. Just think about this as you consider the massive moves that have been occurring in the market over the past 6 months. What has changed, and how can you take advantage of it?
Now, to teach again...it's best to share some afternoon dialogue we had with traders, which sum up well how I saw the market yesterday.
1. “Your email outlining the concerns of some of your subscribers is somewhat refreshing. I remember those days. Greed going to slaughter a lot of these guys who think you do nothing but win. Some of these guys you quoted in the alert are making bucketloads of money. I was telling Dave last night that, if these people choose not to follow the rules with exactness, the market is going to hand them their rear end on a platter. Although I think we are solid on the current trade, it is just a matter of time before some of these guys learn what I learned months ago - MANAGE YOUR RISK. No fear, no greed, just manage your risk!!!”-Advanced Mentoring Client, SK, Arizona
2. From Advanced Mentoring Client PC from Germany:
“Hi Floyd, Thanks for this. I had promised myself I would never send you a "what do I do now in panic" mail. I'm helped in this attitude by knowing that you will be cooly placing your 2nd buys, so OK. My whole approach is not just to do what you do but understand why you think what you think. I hope I always ask you to teach me what you think not what to do? If I can think like you I will have no option but to do what you do.
Floyd - understood and I will try to think and help here.
I have spent a lot of time over the last month working at pivots and improving timing and finished the day yesterday in far better condition and with confidence. I hope all your subscribers recognize that you could never teach it, it can only be learnt and all you can do there is give pointers and say "stay with it". Bang away at something long enough and it has to give. So, it is coming for me. I only ended up working one side of the straddle yesterday, it was an interesting exercise in emotion and attitude as it was the put side I worked yesterday. I did profit on the call the day before. I came through in the end yesterday and I could still see pivots at work. If they were at work today they quickly crumbled.
Floyd - We were caught up today in a semi conductor and tech rally, and institutional buyers taking new inventory. This type of play often happens around the FOMC
With paper loss approx half all April's gains after 2nd buy today, as I write, I will keep my head cool from your lead. Your penultimate sentence above is quite acceptable in principle but the possibility of loss on this trade is only brought about by the market continuing to rise rather than fall over the next 4 days, right?
Floyd - Right, and I think it unlikely. A shift downward has a 65% potential in my mind, before a stronger upside return.
This leads to some questions.
I haven't been able to see what kept the house market afloat for about the last 4 years of it but it kept creeping up those 4 years and, it seems in economics there is no gradual this or that, greed and fear have no grades? Reading all the bank woes during the end of 2007 beginning 2008 one could be forgiven for believing the only thing that's keeping the wall street suicides below the 1929 level is that there are less gas ovens around these days for people to get their heads in - what is pushing the market up now??!! Just opinion? Scraping down interest rates will only affect what comes after the decimal point.
Floyd - Euphoria. The market moves today will slow, as they did yesterday and moved back to the 50 day moving average, and institutional trades entering the fold. Semiconductors rallied, techs rallied, and the market took off.
Why the crash down late yesterday, then the push up today without the crash? Do you think anything to do with manipulation?
Reading about Wyckoff I wondered if the pretty much flat line from Monday to early yesterday (now also looking back to the first 8 days of April) were large operators accumulating? They used the interest rate micro-change yesterday (trojan horse) to place sell orders at stepped up prices and the market leapt. I could follow that line of thinking until the Dow dropped 200 points in 2 and a half hours on the same day. With the same leap up today, appearing even stronger than yesterday, apparently based on an oil company saying it had done less well than they thought but still good, I lost the thread. I would be with Wyckoff all the way on manipulation I'm just weak on the mechanics of it and am dying to improve on this one!!
Floyd - This is exactly right. Couple in the FOMC and what is bad news to the average bear, that they will now control interest rate drops, and the first moves down. Typically around the FOMC we see "exhaustive gaps" that are two way.
So, the 500 point drop is still on the cards djya reckon? Hold steady with the Put?
Floyd - Yes.
Is it the manipulation campaign "phenomenon" which would bring that about?
Floyd - Yes.
Did you ever have the opportunity of meeting Richard Wyckoff?
Regards – PC – Germany
No, my Dad was his sole licensee back in the 1920's and worked with him for many years. I only know what I know from my Dad's training, and courses that he taught.
When the market begins to gyrate upwards on good news on, as an example, GOOGLE earnings (4/17/2008) and buyers begin to move the Dow to near 13,000 euphoria begins to build. For OEX option traders this is a great time, if disciplined in their studies, as WHAT the market does is irrelevant to index option trading. Unlike stock investments we are watching a short period, typically no longer than 21 market days, and recently, as quick in movement for 600 point moves in the market of 7 days.
Yesterdays' moves allowed us a two buy entry to the May655P.
We shared the fears of subscribers intraday after our alert, yet again trying to point out that this is option trading, thusly highly volatile, and is always high risk. When I do as well as I've done in my picks, note that I will fail us sometimes....it's part of the game. And...I don't think yet that it will happen on this trade.
April 23rd, 1999 was the first month ever to gain 1000 Dow points. Just think about this as you consider the massive moves that have been occurring in the market over the past 6 months. What has changed, and how can you take advantage of it?
Now, to teach again...it's best to share some afternoon dialogue we had with traders, which sum up well how I saw the market yesterday.
1. “Your email outlining the concerns of some of your subscribers is somewhat refreshing. I remember those days. Greed going to slaughter a lot of these guys who think you do nothing but win. Some of these guys you quoted in the alert are making bucketloads of money. I was telling Dave last night that, if these people choose not to follow the rules with exactness, the market is going to hand them their rear end on a platter. Although I think we are solid on the current trade, it is just a matter of time before some of these guys learn what I learned months ago - MANAGE YOUR RISK. No fear, no greed, just manage your risk!!!”-Advanced Mentoring Client, SK, Arizona
2. From Advanced Mentoring Client PC from Germany:
“Hi Floyd, Thanks for this. I had promised myself I would never send you a "what do I do now in panic" mail. I'm helped in this attitude by knowing that you will be cooly placing your 2nd buys, so OK. My whole approach is not just to do what you do but understand why you think what you think. I hope I always ask you to teach me what you think not what to do? If I can think like you I will have no option but to do what you do.
Floyd - understood and I will try to think and help here.
I have spent a lot of time over the last month working at pivots and improving timing and finished the day yesterday in far better condition and with confidence. I hope all your subscribers recognize that you could never teach it, it can only be learnt and all you can do there is give pointers and say "stay with it". Bang away at something long enough and it has to give. So, it is coming for me. I only ended up working one side of the straddle yesterday, it was an interesting exercise in emotion and attitude as it was the put side I worked yesterday. I did profit on the call the day before. I came through in the end yesterday and I could still see pivots at work. If they were at work today they quickly crumbled.
Floyd - We were caught up today in a semi conductor and tech rally, and institutional buyers taking new inventory. This type of play often happens around the FOMC
With paper loss approx half all April's gains after 2nd buy today, as I write, I will keep my head cool from your lead. Your penultimate sentence above is quite acceptable in principle but the possibility of loss on this trade is only brought about by the market continuing to rise rather than fall over the next 4 days, right?
Floyd - Right, and I think it unlikely. A shift downward has a 65% potential in my mind, before a stronger upside return.
This leads to some questions.
I haven't been able to see what kept the house market afloat for about the last 4 years of it but it kept creeping up those 4 years and, it seems in economics there is no gradual this or that, greed and fear have no grades? Reading all the bank woes during the end of 2007 beginning 2008 one could be forgiven for believing the only thing that's keeping the wall street suicides below the 1929 level is that there are less gas ovens around these days for people to get their heads in - what is pushing the market up now??!! Just opinion? Scraping down interest rates will only affect what comes after the decimal point.
Floyd - Euphoria. The market moves today will slow, as they did yesterday and moved back to the 50 day moving average, and institutional trades entering the fold. Semiconductors rallied, techs rallied, and the market took off.
Why the crash down late yesterday, then the push up today without the crash? Do you think anything to do with manipulation?
Reading about Wyckoff I wondered if the pretty much flat line from Monday to early yesterday (now also looking back to the first 8 days of April) were large operators accumulating? They used the interest rate micro-change yesterday (trojan horse) to place sell orders at stepped up prices and the market leapt. I could follow that line of thinking until the Dow dropped 200 points in 2 and a half hours on the same day. With the same leap up today, appearing even stronger than yesterday, apparently based on an oil company saying it had done less well than they thought but still good, I lost the thread. I would be with Wyckoff all the way on manipulation I'm just weak on the mechanics of it and am dying to improve on this one!!
Floyd - This is exactly right. Couple in the FOMC and what is bad news to the average bear, that they will now control interest rate drops, and the first moves down. Typically around the FOMC we see "exhaustive gaps" that are two way.
So, the 500 point drop is still on the cards djya reckon? Hold steady with the Put?
Floyd - Yes.
Is it the manipulation campaign "phenomenon" which would bring that about?
Floyd - Yes.
Did you ever have the opportunity of meeting Richard Wyckoff?
Regards – PC – Germany
No, my Dad was his sole licensee back in the 1920's and worked with him for many years. I only know what I know from my Dad's training, and courses that he taught.
Thursday, May 1, 2008
All Calls and Puts Were Profitable
The FEDS babbled, and we won!
All calls and puts were profitable, and we begin the day with no inventory. The market moved to highs of 13,050 before falling to lows of 12,769, right at our top resistance and first support lines.
"For the first time, I absolutely followed your instructions (90% of the way) on the May 630 calls. Bought at very close to best buy price (2x) and held to 23. It was so tough to hang on through the uncertainty of the day. I used the R3 number as my top and got out at really great profits. After 6 weeks of doing this, I can finally say I stayed the course and realized the profits I had been missing- time and time again by not following the subsets and sell prices. Granted, my trades had been profitable, but not like this.
Buying a signal service would not compare to this!! I did have to work for the trade, however I knew how and when. Thanks for your instruction"-R
And from another trader who writes:
"Floyd, two way trades again, profits of 25% both directions. Your Dow projections are like a science. I've learned to not listen to any talking heads, not read any bull___in the Wall Street Journal, and to trust almost no fact. I'm up 86k for the year. Thanks” -J L.
And another successful trader – RC writes:
“Sold all of my May 650 puts – no inventory
Bought @ $10.00
Sold @ $15.80
$29,000 profit
I will go fishing now and wait your instructions for tomorrow to make another $29,000
THANK YOU!”
In 2007 alone, American assets of 400 billion were sold to foreign buyers.
To date the Federal Reserve has invested over 400 billion in saving Bear Stearns and the New York banks.
It’s relatively obvious that the “paper” in the market (bonds, debt obligations, appraised valueless of assets) are quite suspect, and our Federal government is considering “controls” in place. Say this twice…the FEDS will put controls in, and try not to smileJ
We borrow 2 billion a day from Europe, Asia, and the Persian Gulf to continue the democracy build in Iraq.
Although “I’m always right” Bush is a large part of this mess, we can’t blame this on just the Republicans. The former Clinton “blow job” regime had a bubbled stock market that led to great excess, but they at least did not spend the money, and did balance the budget.
Credit cards will be next. Visa, MasterCard, Discover and all the credit card games are also filled with false financials, as the assumption of bad debt is another false paper game that will be exposed, as debt happy consumers will soon be unable to pay.
As gas approaches $4.00 a gallon, it’s relatively obvious that it is oil traders leading the game, not supply and demand, and with the Iraq bet for “free oil” (part of the Bush game) an utter disaster, and new cars still coming out that get 16 miles to a gallon, and selling….it’s clear this will yet again be a country that lets the horse out of the barn, and then closes the door. We never stop.
7 in 10 of cancer deaths in China are pollution related.
The current annual deficit of the International Monetary Fund is 140 billion. 8 of 10 U.S. voting citizens do not know what the International Monetary Fund is.
Lastly, another subscriber cancellation prompts more commentary. Trader “S”, who quit a few days ago, may decide to come back to us. All of your comments opened his eyes a bit.
But, trader “D” just quit, and in our inquiry why, his response was:
“A few weeks ago I emailed you with three questions. You did not answer any of them but you did rebuke me for not papertrading more. I was disappointed.
Your incessant political ranting is not instructive. A macroeconomic analysis might be more helpful. The current reduction in market volatility will make it more difficult to trade options. I have learned most of what I was looking for when I subscribed. Thank you.”
And here's my response:
1. I apologized if my answers were incomplete. (If I am ever unclear, please always write me again)
2. I am proud to nag everyone to paper trade at least 90 days. It's plain stupid to not do this. Tough.
3. I will ramble on politically. I wish I had done this years ago when Bushy was making us safe in Iraq, and first cutting taxes. 8 years later we're a complete mess politically, economically, and seem ready to elect the same type of idiots again. It's time to argue, and it does affect our economic longevity. Our debt is sad. We must begin to elect like stock traders, recognizing "false facts".
4. "Macroeconomics" is defined as: "The field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy wide phenomena such as changes in unemployment, national income, rate of growth, GDP, inflation and price levels. Macroeconomics is focused on the movement and trends in the economy as a whole, while in microeconomics the focus is placed on factors that affect the decisions made by firms and individuals. The factors that are studied by macro and micro will often influence each other, such as the current level of unemployment in the economy as a whole will affect the supply of workers which an oil company can hire from, for example."
a. Unemployment facts are falsified by the Government.
b. GDP facts are bull crap.
c. Six idiot economists in a room can't agree on whether we are in a recession. Bush knows we're not.
d. The entire study of a long term trend is like smoking dope in the White House. No long term trends can be identified at all in option trading, nor would we want them to.
5. Funny that this subscriber thinks we have a reduction in volatility. He's plain nuts. It's been the best and most volatile index option trading I've seen in 6 years.
This is a subscriber I could not help. He believes too much in what he reads, and doesn't agree on what really does influence the market.
All calls and puts were profitable, and we begin the day with no inventory. The market moved to highs of 13,050 before falling to lows of 12,769, right at our top resistance and first support lines.
"For the first time, I absolutely followed your instructions (90% of the way) on the May 630 calls. Bought at very close to best buy price (2x) and held to 23. It was so tough to hang on through the uncertainty of the day. I used the R3 number as my top and got out at really great profits. After 6 weeks of doing this, I can finally say I stayed the course and realized the profits I had been missing- time and time again by not following the subsets and sell prices. Granted, my trades had been profitable, but not like this.
Buying a signal service would not compare to this!! I did have to work for the trade, however I knew how and when. Thanks for your instruction"-R
And from another trader who writes:
"Floyd, two way trades again, profits of 25% both directions. Your Dow projections are like a science. I've learned to not listen to any talking heads, not read any bull___in the Wall Street Journal, and to trust almost no fact. I'm up 86k for the year. Thanks” -J L.
And another successful trader – RC writes:
“Sold all of my May 650 puts – no inventory
Bought @ $10.00
Sold @ $15.80
$29,000 profit
I will go fishing now and wait your instructions for tomorrow to make another $29,000
THANK YOU!”
In 2007 alone, American assets of 400 billion were sold to foreign buyers.
To date the Federal Reserve has invested over 400 billion in saving Bear Stearns and the New York banks.
It’s relatively obvious that the “paper” in the market (bonds, debt obligations, appraised valueless of assets) are quite suspect, and our Federal government is considering “controls” in place. Say this twice…the FEDS will put controls in, and try not to smileJ
We borrow 2 billion a day from Europe, Asia, and the Persian Gulf to continue the democracy build in Iraq.
Although “I’m always right” Bush is a large part of this mess, we can’t blame this on just the Republicans. The former Clinton “blow job” regime had a bubbled stock market that led to great excess, but they at least did not spend the money, and did balance the budget.
Credit cards will be next. Visa, MasterCard, Discover and all the credit card games are also filled with false financials, as the assumption of bad debt is another false paper game that will be exposed, as debt happy consumers will soon be unable to pay.
As gas approaches $4.00 a gallon, it’s relatively obvious that it is oil traders leading the game, not supply and demand, and with the Iraq bet for “free oil” (part of the Bush game) an utter disaster, and new cars still coming out that get 16 miles to a gallon, and selling….it’s clear this will yet again be a country that lets the horse out of the barn, and then closes the door. We never stop.
7 in 10 of cancer deaths in China are pollution related.
The current annual deficit of the International Monetary Fund is 140 billion. 8 of 10 U.S. voting citizens do not know what the International Monetary Fund is.
Lastly, another subscriber cancellation prompts more commentary. Trader “S”, who quit a few days ago, may decide to come back to us. All of your comments opened his eyes a bit.
But, trader “D” just quit, and in our inquiry why, his response was:
“A few weeks ago I emailed you with three questions. You did not answer any of them but you did rebuke me for not papertrading more. I was disappointed.
Your incessant political ranting is not instructive. A macroeconomic analysis might be more helpful. The current reduction in market volatility will make it more difficult to trade options. I have learned most of what I was looking for when I subscribed. Thank you.”
And here's my response:
1. I apologized if my answers were incomplete. (If I am ever unclear, please always write me again)
2. I am proud to nag everyone to paper trade at least 90 days. It's plain stupid to not do this. Tough.
3. I will ramble on politically. I wish I had done this years ago when Bushy was making us safe in Iraq, and first cutting taxes. 8 years later we're a complete mess politically, economically, and seem ready to elect the same type of idiots again. It's time to argue, and it does affect our economic longevity. Our debt is sad. We must begin to elect like stock traders, recognizing "false facts".
4. "Macroeconomics" is defined as: "The field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy wide phenomena such as changes in unemployment, national income, rate of growth, GDP, inflation and price levels. Macroeconomics is focused on the movement and trends in the economy as a whole, while in microeconomics the focus is placed on factors that affect the decisions made by firms and individuals. The factors that are studied by macro and micro will often influence each other, such as the current level of unemployment in the economy as a whole will affect the supply of workers which an oil company can hire from, for example."
a. Unemployment facts are falsified by the Government.
b. GDP facts are bull crap.
c. Six idiot economists in a room can't agree on whether we are in a recession. Bush knows we're not.
d. The entire study of a long term trend is like smoking dope in the White House. No long term trends can be identified at all in option trading, nor would we want them to.
5. Funny that this subscriber thinks we have a reduction in volatility. He's plain nuts. It's been the best and most volatile index option trading I've seen in 6 years.
This is a subscriber I could not help. He believes too much in what he reads, and doesn't agree on what really does influence the market.
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