If you would like to understand the thinking behind the sell off yesterday, it's simple. Euphoria led off, and people woke up.
http://www.bloomberg.com/apps/news?pid=20601087&sid=abjAdI_e_aoo&refer=home
Traders that took inventory to the put thought I was nuts, but made some real money...with buys as low as 3.10 and sells to as high as 11.20. Calls, as expected, were available only for tight profits.
We do NOT recommend opening the market today with a buy. The volatility is too extreme. Take prudent risk.
The above URL link gives you Bloomberg's interpretation of the market yesterday.
Here's mine:
Wrestler "Hulk Hogan" is worth 32 million dollars. This proves that America be be sold on anything and that anyone can get rich in the U.S.A.
Three months ago I predicted: "Fannie and Freddie, through false financials, will fall, and the same administration that allowed the oversights to occur, will bail them out for 250 billion or more, and America will not understand the real repercussions".
Four months ago: "The USD will rise, and America will think we did it. What will do it is the Euro falling from its false highs, and the dollar benefiting. Yet again we will not understand what we have truly done to the USD in the last 8 years:
How am I doing so far?
Do NOT be misled by Hulk Hogan. Our economy is dependent upon our ability to understand the world economy.
"Bomb, bomb, bomb Iran" and far right Christian views (Sarah the hockey mom) ARE NOT Global thinking, but instead, more of the "I am right, therefore others must follow my way" world.
McCain is NOT a maverick or a change agent. He voted 90% with Bushy. Want more of the same?
There is a clear reason our economy is in a shatters. Oil, the USD, and mortgages. It will get worse. If we elect stupidly, it will get far worse. People are responsible for the debts this country has created, and 250 billion in the Freddie/Fannie bail out is enough to wear one out. As if we have this money.
In Broward County Florida (Miami/Ft Lauderdale) there were 761 foreclosures in 2006; there have been 6401 foreclosures in the first nine months of this year. This is a 741% increase; couple this with Fannie and Freddie NOT being managed, and now a 250 billion bailout, and the costs in Iraq....this is why our USD is in trouble, and our economy in shatters.
Who else is responsible?
Consider Floydian Therapy®: http://www.oexoptions.com/pages/FloydianTherapy.html
Wednesday, September 10, 2008
Tuesday, September 9, 2008
I am Amazed at our Own Stupidity
Do not be fooled by false promises. Our economy depends upon it:
1."McCain has vowed to wipe out earmarks, which are targeted funding for specific projects that lawmakers put into spending bills. As governor, Palin originally supported earmarks for a controversial $398 million Alaska project dubbed the "bridge to nowhere." But she dropped her support after the state's likely share of the cost rose. She hung onto $27 million to build the approach road to the bridge.
Under Palin's leadership, Alaska this year asked for almost $300 per person in requests for pet projects from one of McCain's top adversaries: indicted Sen. Ted Stevens. That's more than any other state received, per person, from Congress for the current budget year. Other states got just $34 worth of local projects per person this year, on average, according to Citizens Against Government Waste, a Washington-based watchdog group. The state government's earmark requests to Congress in her first year in office exceeded $550 million, more than $800 per resident. Palin actually reduced the state government's requests for special projects this year in the wake of President Bush's demand for a cutback in earmarks.
Alaska also has become so accustomed to largess flowing from Congress through Stevens that most of Palin's earmark requests this year - such as studies of Alaskan fisheries, grants to combat drug trafficking, and rural airport upgrades - simply keep ongoing programs going. Among her requests was $150,000 to pay the travel bills of state and fisheries industry representatives on the boards that implement North Pacific fisheries agreements"
All is not as it appears. McCain and Palin say they are change agents, but there is no HISTORY of their EVER wanting any changes to how things run.
2. If you are not worried about the bail out of Freddie and Fannie you should be. The cost will be over 200 billion, and this is done after NO financial reviews have been in place for the past 8 years, and the Govt itself led the subslime lending.
For the many Republicans that believe Obama will raise taxes, get smart. Your taxes were just raised, as there is NO money to fund this, and it will occur with whatever new administration we have, and more deficit. There are many ways taxes are raised.
Of course, the market took this with real euphoria, and hit Dow tops at 11,610. Sometimes I am amazed at our own stupidity.
It is NOT good news, and there is NO funding to pay for it.
However, for the many traders that held call inventory, the day was sweet:
Like I said on Friday, "something is building on a come back". I said that because I was trying to feel the breath of the market. I don't know if I got it but none of the tools told me that. I got saved on the 610 call. Just sold 40 contracts for over 8k at $2.1 a contract. My average cost was 1.55 so when I saw the bid at 2.00 I jumped in and made 20% on my investment. I don't care about anything except what I felt on Friday and had peace until I saw the futures on Sunday. Its some kind of higher intelligence. That world is becoming more familiar on every correct and incorrect interpretation. WOW, Thank you Floyd. Please be well. :) Got to use the tools first then go fly the jet, and don't crash flyboy. TP
"Nice trade, Floyd. I held both the calls and profited in the end 24%. You were just a few days early. As you teach, it is amazing to see what triggers the market at times. Imagine a bail out as being good! " JAE
1."McCain has vowed to wipe out earmarks, which are targeted funding for specific projects that lawmakers put into spending bills. As governor, Palin originally supported earmarks for a controversial $398 million Alaska project dubbed the "bridge to nowhere." But she dropped her support after the state's likely share of the cost rose. She hung onto $27 million to build the approach road to the bridge.
Under Palin's leadership, Alaska this year asked for almost $300 per person in requests for pet projects from one of McCain's top adversaries: indicted Sen. Ted Stevens. That's more than any other state received, per person, from Congress for the current budget year. Other states got just $34 worth of local projects per person this year, on average, according to Citizens Against Government Waste, a Washington-based watchdog group. The state government's earmark requests to Congress in her first year in office exceeded $550 million, more than $800 per resident. Palin actually reduced the state government's requests for special projects this year in the wake of President Bush's demand for a cutback in earmarks.
Alaska also has become so accustomed to largess flowing from Congress through Stevens that most of Palin's earmark requests this year - such as studies of Alaskan fisheries, grants to combat drug trafficking, and rural airport upgrades - simply keep ongoing programs going. Among her requests was $150,000 to pay the travel bills of state and fisheries industry representatives on the boards that implement North Pacific fisheries agreements"
All is not as it appears. McCain and Palin say they are change agents, but there is no HISTORY of their EVER wanting any changes to how things run.
2. If you are not worried about the bail out of Freddie and Fannie you should be. The cost will be over 200 billion, and this is done after NO financial reviews have been in place for the past 8 years, and the Govt itself led the subslime lending.
For the many Republicans that believe Obama will raise taxes, get smart. Your taxes were just raised, as there is NO money to fund this, and it will occur with whatever new administration we have, and more deficit. There are many ways taxes are raised.
Of course, the market took this with real euphoria, and hit Dow tops at 11,610. Sometimes I am amazed at our own stupidity.
It is NOT good news, and there is NO funding to pay for it.
However, for the many traders that held call inventory, the day was sweet:
Like I said on Friday, "something is building on a come back". I said that because I was trying to feel the breath of the market. I don't know if I got it but none of the tools told me that. I got saved on the 610 call. Just sold 40 contracts for over 8k at $2.1 a contract. My average cost was 1.55 so when I saw the bid at 2.00 I jumped in and made 20% on my investment. I don't care about anything except what I felt on Friday and had peace until I saw the futures on Sunday. Its some kind of higher intelligence. That world is becoming more familiar on every correct and incorrect interpretation. WOW, Thank you Floyd. Please be well. :) Got to use the tools first then go fly the jet, and don't crash flyboy. TP
"Nice trade, Floyd. I held both the calls and profited in the end 24%. You were just a few days early. As you teach, it is amazing to see what triggers the market at times. Imagine a bail out as being good! " JAE
Monday, September 8, 2008
False Facts Have Led Our Country For Many Years
Market conditions last Friday left us with a 5 count to the put, meaning a market that still has the potential of downside, or a test to the 11, 050 again, unless something with the market creates FEAR that takes a normal, but surprise correction, to 10,800.
When our Dow projections, which are based on historical patterns, are broken (2 of 10 times this year, on average) the market has "reacted" once to almost bear conditions, and whipsawed back.
It is the breaking of the pattern that should be noted, however, as our work is based on number counting, in effect, and patterns that are broken MAY result in a shifting of emotion in the market.
False facts have led our country for many years, and the price is being paid. Unemployment came in at 6.1% Friday, settling the market at just above 11,050. The real fact, if you take out how unemployment statistics have been manipulated by our Govt, is that the unemployment in the country is now 15.1%. Whether these are people that "want to work" or "can" work is irrelevant; they do not work, and are thusly unemployed.
It is a fact, for example, that McCain voted Bushian ways 90% of the time. This is used now by Obama as "do you want more of the same?", and it's accurate. McCain supported the Republican and Bushian doctrine that we now have the results of. 42% of Americans right appear to believe McCain will lead well, and thusly that he will either change his ways to improve, or that what has occurred is okay.
It is difficult to even argue this kind of thinking. This is an example, in stock trading, of "misinformation" creating fact.
A false fact would be McCain's "Obama will raise taxes to the American people". This is true, but it would not affect the lower or middle class Americans, only taking away many of the tax breaks that have taken the labor out of our country, and gained wealth on tax breaks. Warren Buffet, the world's richest man, voting for Obama, states it well: "I should pay more taxes than someone earning 80K a year, and proportionately I do not. Something is inherently wrong". It is the disparity that should be eliminated. Some should not have more advantage than others. This is basic sandbox thinking.
Sarah Palin may be sweet, and "Mrs. Smith goes to Washington". Should she be President Palin, if McCain dies, and go to Russia? Sorry, the lack of the education and the formality of global thinking cannot be done well by a woman (or man) that has never traveled overseas extensively. The world is no longer the U.S., and perhaps we are not even the superpower we were, or soon will not be.
I wonder at times if Americans should not be allowed to vote until they can understand that the world does exist outside of our world? And that not all people have the same beliefs, nor should they.
The FEDS will spend 25 billion today to bail out Fannie and Freddie.
This is a TAX INCREASE. Do not be tricked. Someone will pay for this, and it cannot be the govt that approved it, as they have no money.
How the market takes this will be of interest. It's frighteningly bad news, and what I predicted a few weeks ago.
No one in our country in a government position appears to have any accountability, or even act as good analysts for why this occurred.
Vote smartly.
When our Dow projections, which are based on historical patterns, are broken (2 of 10 times this year, on average) the market has "reacted" once to almost bear conditions, and whipsawed back.
It is the breaking of the pattern that should be noted, however, as our work is based on number counting, in effect, and patterns that are broken MAY result in a shifting of emotion in the market.
False facts have led our country for many years, and the price is being paid. Unemployment came in at 6.1% Friday, settling the market at just above 11,050. The real fact, if you take out how unemployment statistics have been manipulated by our Govt, is that the unemployment in the country is now 15.1%. Whether these are people that "want to work" or "can" work is irrelevant; they do not work, and are thusly unemployed.
It is a fact, for example, that McCain voted Bushian ways 90% of the time. This is used now by Obama as "do you want more of the same?", and it's accurate. McCain supported the Republican and Bushian doctrine that we now have the results of. 42% of Americans right appear to believe McCain will lead well, and thusly that he will either change his ways to improve, or that what has occurred is okay.
It is difficult to even argue this kind of thinking. This is an example, in stock trading, of "misinformation" creating fact.
A false fact would be McCain's "Obama will raise taxes to the American people". This is true, but it would not affect the lower or middle class Americans, only taking away many of the tax breaks that have taken the labor out of our country, and gained wealth on tax breaks. Warren Buffet, the world's richest man, voting for Obama, states it well: "I should pay more taxes than someone earning 80K a year, and proportionately I do not. Something is inherently wrong". It is the disparity that should be eliminated. Some should not have more advantage than others. This is basic sandbox thinking.
Sarah Palin may be sweet, and "Mrs. Smith goes to Washington". Should she be President Palin, if McCain dies, and go to Russia? Sorry, the lack of the education and the formality of global thinking cannot be done well by a woman (or man) that has never traveled overseas extensively. The world is no longer the U.S., and perhaps we are not even the superpower we were, or soon will not be.
I wonder at times if Americans should not be allowed to vote until they can understand that the world does exist outside of our world? And that not all people have the same beliefs, nor should they.
The FEDS will spend 25 billion today to bail out Fannie and Freddie.
This is a TAX INCREASE. Do not be tricked. Someone will pay for this, and it cannot be the govt that approved it, as they have no money.
How the market takes this will be of interest. It's frighteningly bad news, and what I predicted a few weeks ago.
No one in our country in a government position appears to have any accountability, or even act as good analysts for why this occurred.
Vote smartly.
Friday, September 5, 2008
Fish Tank Psychology
"If you show an American an image of a fish tank, the American will usually describe the biggest fish in the tank, and what it is doing. If you ask a Chinese person to describe a fish tank, the Chinese will usually describe the context in which the fish swim. Americans usually see individuals; Chinese and other Americans see contexts. What happens if collectivist societies, especially those in Asia, rise economically and come to rival the West? A new sort of global "conversation" will develop. The opening ceremony in Beijing was a statement in that conversation. The most striking features were the images of thousands of Chinese moving as one-drumming as one, dancing as one, sprinting on precise formations without ever stumbling or colliding. It was a high tech vision of a harmonious society, performed in the context of China's miraculous group."
What we know is NOT all that is, and NOT all that may be.
____
I have been dead wrong on the market this week. After Tuesday's run up to celebrate "no hurricane" each downturn has been sharper and on higher volume that my projections. Of interest, our projections were strikingly accurate until this last turn, and it is the stronger turns that last that I have missed in January, June and now. These are not chartable downturns, but have typically gone to support lines.
6 times historically, once the market hits a 100 point upside, we have seen 586 point average agains, and I had seen a gain off the most recent bottoms. We do not know when the blood letting will stop.
In Washington, they are arguing whether we have inflation or not.
We will stop loss the Sept610Call today (we suggest stop loss for all traders) our loser of the week. A first buy should have been made for any new traders to the Oct585C.
Puts may have more downturn, and we've listed new Dow projections. Hurricane Ike is not a reason to hold puts or calls over the weekend in new trades. We would prefer to watch the reaction to McCain's babbles last night (Sara the soccer Mom for President), and to see where the market trends before any recommendation.
What we know is NOT all that is, and NOT all that may be.
____
I have been dead wrong on the market this week. After Tuesday's run up to celebrate "no hurricane" each downturn has been sharper and on higher volume that my projections. Of interest, our projections were strikingly accurate until this last turn, and it is the stronger turns that last that I have missed in January, June and now. These are not chartable downturns, but have typically gone to support lines.
6 times historically, once the market hits a 100 point upside, we have seen 586 point average agains, and I had seen a gain off the most recent bottoms. We do not know when the blood letting will stop.
In Washington, they are arguing whether we have inflation or not.
We will stop loss the Sept610Call today (we suggest stop loss for all traders) our loser of the week. A first buy should have been made for any new traders to the Oct585C.
Puts may have more downturn, and we've listed new Dow projections. Hurricane Ike is not a reason to hold puts or calls over the weekend in new trades. We would prefer to watch the reaction to McCain's babbles last night (Sara the soccer Mom for President), and to see where the market trends before any recommendation.
Thursday, September 4, 2008
Hurricanes and Fear of Oil
We believe the market will now go up. Read our Dow projections very carefully today as we have hit each step of our last 7 day projections, and an upside would now typically occur, first up 300 points, then again another 200 points plus.
We won't know we have any upside bull move, however, until the market can close up 100 plus points in a day.
Hurricanes and fear of oil can dampen any play, but the high volume Tuesday showed a market that many believe was manipulated by traders to sell off oil puts and calls, and yesterday's struggle may have finished the downside.
At least, if history will repeat again, it has.
Calls were profitable yesterday for new traders that bought our OTM issue and played it tight. Otherwise, I've missed the downward move this week, and was early to the call. The market will potentially still surprise us.
___________
A recent Gallup poll showed that 42% of Americans would allow Sara Palin to be our President if McCain, aged 72, were to die.
Mrs. Palin has NEVER been in any part of Europe, China, Russia, South America. She may have been on a Caribbean cruise boat, but sorry, even considering that this lady could represent us to the world, and that votes have not dropped off, astounds old Floyd.
We won't know we have any upside bull move, however, until the market can close up 100 plus points in a day.
Hurricanes and fear of oil can dampen any play, but the high volume Tuesday showed a market that many believe was manipulated by traders to sell off oil puts and calls, and yesterday's struggle may have finished the downside.
At least, if history will repeat again, it has.
Calls were profitable yesterday for new traders that bought our OTM issue and played it tight. Otherwise, I've missed the downward move this week, and was early to the call. The market will potentially still surprise us.
___________
A recent Gallup poll showed that 42% of Americans would allow Sara Palin to be our President if McCain, aged 72, were to die.
Mrs. Palin has NEVER been in any part of Europe, China, Russia, South America. She may have been on a Caribbean cruise boat, but sorry, even considering that this lady could represent us to the world, and that votes have not dropped off, astounds old Floyd.
Wednesday, September 3, 2008
Tuesday Was Interesting...
Tuesday was very interesting. Many traders bet on a hurricane, and the put losses were astronomic on the first day back to the market, and floor trader pros were surely in evidence, jumping the market up 200 plus points in early trading, causing massive put losses as traders covered, and promptly bringing the market right back down to the 590 moving average.
We took first entry to the Sept610C at OEX 595, and many traders took two entries as the market plunged.
Chartwise we had seen a downturn FIRST to the 11,400 area, before a jump to near 12,000. The "lack of hurricane" and lower oil prices were the trigger and catalyst for the type of upsurge this morning that is impossible to catch.
Most important, the trader must recognize that conditions are truly erratic. We had a 200 point decline in Friday, and 200 point run up on Tuesday, and 230 point drop again Tuesday. The Bell Curve analysis of "6 to a put" or "7 to a call" appears to have no historical perspective in massive runs like this. Some traders use VIX as an additional "pressure tool", and others are trade range playing on support lines, but profits will be harder in a market that has no bearing.
Not everyone can learn to trade successfully. I am asked this question all of the time, and always answer honestly. In Advanced Mentoring I use Floydian therapy :) to help the client understand often why they choose to trade to fail.
Working strategies can be taught, but a great deal cannot be. Some of what cannot be taught, but must be self learned, is to ignore market interpretations, and opinions. Far too often new traders interpret sentiment and believe "what should be", and take astronomical losses holding too long, or buying big after winning large a few times, or both.
We took first entry to the Sept610C at OEX 595, and many traders took two entries as the market plunged.
Chartwise we had seen a downturn FIRST to the 11,400 area, before a jump to near 12,000. The "lack of hurricane" and lower oil prices were the trigger and catalyst for the type of upsurge this morning that is impossible to catch.
Most important, the trader must recognize that conditions are truly erratic. We had a 200 point decline in Friday, and 200 point run up on Tuesday, and 230 point drop again Tuesday. The Bell Curve analysis of "6 to a put" or "7 to a call" appears to have no historical perspective in massive runs like this. Some traders use VIX as an additional "pressure tool", and others are trade range playing on support lines, but profits will be harder in a market that has no bearing.
Not everyone can learn to trade successfully. I am asked this question all of the time, and always answer honestly. In Advanced Mentoring I use Floydian therapy :) to help the client understand often why they choose to trade to fail.
Working strategies can be taught, but a great deal cannot be. Some of what cannot be taught, but must be self learned, is to ignore market interpretations, and opinions. Far too often new traders interpret sentiment and believe "what should be", and take astronomical losses holding too long, or buying big after winning large a few times, or both.
Tuesday, September 2, 2008
Inflation is NOT at Bay
Good commentary from Mike Gibbons:
"Stocks fell on Friday giving back Thursday's gains and closing the week with only the Russell 2000 showing a modest gain. Volumes were low throughout the week as this was the last week of the summer before the Labor Day weekend. The markets received a fillip on Thursday with the release of surprisingly strong GDP numbers but reality returned on Friday with the Commerce Department reporting core inflation had risen to 2.4% and a fall in consumer spending in real terms. With consumers accounting for 70% of the economy and consumption now falling after the stimulus checks were spent , the economy faces difficult times and the markets too.
The NASDAQ could not sustain a rise above the 200 day moving average level a week ago and another attempt to vault that level failed this week. In contrast, the Russell 2000 tested support at the 200 dma level and bounced back. As we have been reporting for several weeks now, the small caps are providing the best breakouts and the best returns.
"A practical example in a fictitious country.
In 2007, Islandia produced 500 coconuts, which residents sold to themselves for $1 each, and imported 1 barrel of oil, which cost $100... Nominal GDP in Islandia for 2007 was $500. If you wanted to describe that in real terms, you'd call it 500 coconuts. You don't count the oil in either nominal or real GDP because Islandia didn't produce any oil...
Here are the numbers for 2008. We grew 510 coconuts, sold them for $1.01 each, and still imported 1 barrel of oil, paying $125 for it. So nominal GDP was $515.10 (a 3% increase) and real GDP was 510 coconuts (a 2% increase). The change in the implicit GDP deflator would be the change in the ratio of nominal GDP to real GDP, namely, +1%...
But wait a minute, Islandia's pundits decry. How can your crummy accounting claim that inflation was only 1%? Last year we bought 500 coconuts and 1 barrel of oil for $600, but this year if we tried to buy the same thing it would cost us $630. The inflation rate, they tell you, is obviously 5%, not 1%."
And, from Floyd:
1. Inflation is NOT at bay.
2. The government facts we are getting do not clearly identify real inflation rates, or unemployment claims. We are deceiving ourselves when we believe this.
3. Gold and Silver (GLD, SLV, and SSRI) remain strong longer term core investments we recommend to all subscribers. Conservative subscribers should hold up to 15% of their total investments in core metals, as we have devalued our own dollar beyond recognition, and if McCain is elected, he'll continue the Bush tradition of supply side economics, in which the fewer get rich, and the many get poorer, and the country loses superpower status. If McCain dies and the Alaska soccer mom becomes President, a person that has travelled only out of the country ONCE (to Kuwait last year) we will have successfully destroyed much of our potential. The answer is not drilling in Alaska, sigh, but finding alternatives that do not create a supply and demand crisis.
And, a journal from an Advanced Mentoring client:
Hey Floyd...
I just wanted to journal a bit and share my thoughts with you pertaining to today.
My day began in a rush....I was running late for an appointment ...and feeling guilty because people were waiting on me. I also did not want to go where I was going this morning and that was causing me to be angry...I would have preferred to stay home on the computer and watch the market because I had a feeling that today was going to be a good trading day....an opportunity to "earn money" from the market.
I had my Blackberry with me and my location was not providing me with the best of service (more frustration and anger). When I left the house in the morning...the futures were down about 15pts....not much at all. I had no communication with the outside world for the next 90 minutes and when the market opened up...My Blackberry was working and I noticed that the DOW was at -60pts. Here I am trying to meet with contractors regarding house renovations and I cannot stay focused b/c all I am "worried" about is trying to read the tape. From what I gather...during the first 5-10 minutes of the opening...the DOW moved from -60pts. to -20pts....Now I knew the signal for the day was a little more upside...maybe a move to 11,850...look for some quick profits and then get ready for some downside.
During this short move up (-60pts.to -20pts.)...I grew more and more frustrated because I felt as though this was the perfect opportunity to purchase a call (below prior day close) and get ready for a quick profit. BUT...my Blackberry was not working well and the skeptic kept telling me that an opening of 60pts. to the downside was not to be taken lightly...that maybe I should wait this out a bit. Meanwhile...I'm trying to have a conversation with builders and contractors regarding ceiling joists and bathroom fixtures. At one point I was able to read some headlines from Bloomberg stating:" US stocks retreat on income, spending data, and poor Dell earnings....hurricane Gustav on the horizon"...With all of this going on I was obviously in no position to trade...so what do I do?
My Blackberry connects to my broker and I buy (2) CALLS for 4.30...and about 1/2 hour later...I'm selling them for 3.80...LIVID at myself for being so stupid!!
First of all...Why did I feel that I "had to" trade this morning?" Why couldn't I be at peace with taking the day off?
Secondly, why couldn't I recognize the brief pullback this morning from the initial drop instead of only seeing upside? Was it because my mind was fixated on what was "supposed to happen?" All I kept saying to myself was "the market is supposed to move to the upside about 100pts...buys some calls and look for some quick profits and then get ready to buy some puts..."
It was like all I could "see" was upside movement...considering downside was not even an option in my mind when in reality...all the signals were pointing in to the downside.
Anyway...my one saving grace was that I was able to see a play that went bad and I was at least able to get our with only a $100 loss. I went back to my meeting and errands...occasionally checking the market from my mobile device and radio.
I had to do some traveling later on in the day and I was able to get better service from my Blackberry. I noticed that we hit a low in the later morning of about 11,540..one of our key support areas. At about 1:30pm...I noticed that the DOW moved back to about 11,600 and was hanging around there for a while (another key support/resistance line...magic number zero's ).
In my mind I was picturing a chart and I said to myself..."I betcha that this is just a brief mid-day pullback before some more downside again...this would be a good time to scalp some puts."
I bought (5) puts for 8.80...about 75 minutes later...I sold them for 9.80...made a nice $500 from my truck...erased my $100 loss earlier and gave myself a $400 profit for the day. Can you believe it? About 6 months ago I had no idea what an option contract even was...but because of your teaching....I was able to shake off a stupid mental mistake that I made in the morning..come back with confidence and poise...visualize what the market was doing (OEX...50% FIBO retracement) ...and use a hand held mobile device to make $400 from my truck while I'm running errands for the family...are you kidding me? Only in America are we blessed with this kind of opportunity.
But here is the best part...as the market was dropping...I needed to decide when to take a profit...and I thought of you...I said to myself..."though the market dropped to 11,540 earlier and will probably retest this low late this afternoon....and though this option hit a high of 10.20 already...you may want to consider placing a sell order in at 9.80 just to be safe...be prepared to leave some money on the table "just in case" she does not go all the way to test the low...you don't need to try to squeeze every last dime out of this trade...a 1.00 profit is a great way to end the day." So that is what I did...I put in a sell order for 9.80 and was thrilled that my position was filled. Who cares that the option made it to 10.80? So what I could have made another dollar profit? The victory of the day was the mental comeback...the ability to "see" what was going on and the courage to take a shot.
I just finished my first two weeks of live trading...after following your recommendation of 90 days of "paper trading" and study...I am happy to say that I am up $2000...and I know much more about myself and the market.
Thanks Floyd...I could not have done it without you...Have a great Labor day weekend.
I'll be catching up on my Advanced Mentoring assignments.
"Stocks fell on Friday giving back Thursday's gains and closing the week with only the Russell 2000 showing a modest gain. Volumes were low throughout the week as this was the last week of the summer before the Labor Day weekend. The markets received a fillip on Thursday with the release of surprisingly strong GDP numbers but reality returned on Friday with the Commerce Department reporting core inflation had risen to 2.4% and a fall in consumer spending in real terms. With consumers accounting for 70% of the economy and consumption now falling after the stimulus checks were spent , the economy faces difficult times and the markets too.
The NASDAQ could not sustain a rise above the 200 day moving average level a week ago and another attempt to vault that level failed this week. In contrast, the Russell 2000 tested support at the 200 dma level and bounced back. As we have been reporting for several weeks now, the small caps are providing the best breakouts and the best returns.
"A practical example in a fictitious country.
In 2007, Islandia produced 500 coconuts, which residents sold to themselves for $1 each, and imported 1 barrel of oil, which cost $100... Nominal GDP in Islandia for 2007 was $500. If you wanted to describe that in real terms, you'd call it 500 coconuts. You don't count the oil in either nominal or real GDP because Islandia didn't produce any oil...
Here are the numbers for 2008. We grew 510 coconuts, sold them for $1.01 each, and still imported 1 barrel of oil, paying $125 for it. So nominal GDP was $515.10 (a 3% increase) and real GDP was 510 coconuts (a 2% increase). The change in the implicit GDP deflator would be the change in the ratio of nominal GDP to real GDP, namely, +1%...
But wait a minute, Islandia's pundits decry. How can your crummy accounting claim that inflation was only 1%? Last year we bought 500 coconuts and 1 barrel of oil for $600, but this year if we tried to buy the same thing it would cost us $630. The inflation rate, they tell you, is obviously 5%, not 1%."
And, from Floyd:
1. Inflation is NOT at bay.
2. The government facts we are getting do not clearly identify real inflation rates, or unemployment claims. We are deceiving ourselves when we believe this.
3. Gold and Silver (GLD, SLV, and SSRI) remain strong longer term core investments we recommend to all subscribers. Conservative subscribers should hold up to 15% of their total investments in core metals, as we have devalued our own dollar beyond recognition, and if McCain is elected, he'll continue the Bush tradition of supply side economics, in which the fewer get rich, and the many get poorer, and the country loses superpower status. If McCain dies and the Alaska soccer mom becomes President, a person that has travelled only out of the country ONCE (to Kuwait last year) we will have successfully destroyed much of our potential. The answer is not drilling in Alaska, sigh, but finding alternatives that do not create a supply and demand crisis.
And, a journal from an Advanced Mentoring client:
Hey Floyd...
I just wanted to journal a bit and share my thoughts with you pertaining to today.
My day began in a rush....I was running late for an appointment ...and feeling guilty because people were waiting on me. I also did not want to go where I was going this morning and that was causing me to be angry...I would have preferred to stay home on the computer and watch the market because I had a feeling that today was going to be a good trading day....an opportunity to "earn money" from the market.
I had my Blackberry with me and my location was not providing me with the best of service (more frustration and anger). When I left the house in the morning...the futures were down about 15pts....not much at all. I had no communication with the outside world for the next 90 minutes and when the market opened up...My Blackberry was working and I noticed that the DOW was at -60pts. Here I am trying to meet with contractors regarding house renovations and I cannot stay focused b/c all I am "worried" about is trying to read the tape. From what I gather...during the first 5-10 minutes of the opening...the DOW moved from -60pts. to -20pts....Now I knew the signal for the day was a little more upside...maybe a move to 11,850...look for some quick profits and then get ready for some downside.
During this short move up (-60pts.to -20pts.)...I grew more and more frustrated because I felt as though this was the perfect opportunity to purchase a call (below prior day close) and get ready for a quick profit. BUT...my Blackberry was not working well and the skeptic kept telling me that an opening of 60pts. to the downside was not to be taken lightly...that maybe I should wait this out a bit. Meanwhile...I'm trying to have a conversation with builders and contractors regarding ceiling joists and bathroom fixtures. At one point I was able to read some headlines from Bloomberg stating:" US stocks retreat on income, spending data, and poor Dell earnings....hurricane Gustav on the horizon"...With all of this going on I was obviously in no position to trade...so what do I do?
My Blackberry connects to my broker and I buy (2) CALLS for 4.30...and about 1/2 hour later...I'm selling them for 3.80...LIVID at myself for being so stupid!!
First of all...Why did I feel that I "had to" trade this morning?" Why couldn't I be at peace with taking the day off?
Secondly, why couldn't I recognize the brief pullback this morning from the initial drop instead of only seeing upside? Was it because my mind was fixated on what was "supposed to happen?" All I kept saying to myself was "the market is supposed to move to the upside about 100pts...buys some calls and look for some quick profits and then get ready to buy some puts..."
It was like all I could "see" was upside movement...considering downside was not even an option in my mind when in reality...all the signals were pointing in to the downside.
Anyway...my one saving grace was that I was able to see a play that went bad and I was at least able to get our with only a $100 loss. I went back to my meeting and errands...occasionally checking the market from my mobile device and radio.
I had to do some traveling later on in the day and I was able to get better service from my Blackberry. I noticed that we hit a low in the later morning of about 11,540..one of our key support areas. At about 1:30pm...I noticed that the DOW moved back to about 11,600 and was hanging around there for a while (another key support/resistance line...magic number zero's ).
In my mind I was picturing a chart and I said to myself..."I betcha that this is just a brief mid-day pullback before some more downside again...this would be a good time to scalp some puts."
I bought (5) puts for 8.80...about 75 minutes later...I sold them for 9.80...made a nice $500 from my truck...erased my $100 loss earlier and gave myself a $400 profit for the day. Can you believe it? About 6 months ago I had no idea what an option contract even was...but because of your teaching....I was able to shake off a stupid mental mistake that I made in the morning..come back with confidence and poise...visualize what the market was doing (OEX...50% FIBO retracement) ...and use a hand held mobile device to make $400 from my truck while I'm running errands for the family...are you kidding me? Only in America are we blessed with this kind of opportunity.
But here is the best part...as the market was dropping...I needed to decide when to take a profit...and I thought of you...I said to myself..."though the market dropped to 11,540 earlier and will probably retest this low late this afternoon....and though this option hit a high of 10.20 already...you may want to consider placing a sell order in at 9.80 just to be safe...be prepared to leave some money on the table "just in case" she does not go all the way to test the low...you don't need to try to squeeze every last dime out of this trade...a 1.00 profit is a great way to end the day." So that is what I did...I put in a sell order for 9.80 and was thrilled that my position was filled. Who cares that the option made it to 10.80? So what I could have made another dollar profit? The victory of the day was the mental comeback...the ability to "see" what was going on and the courage to take a shot.
I just finished my first two weeks of live trading...after following your recommendation of 90 days of "paper trading" and study...I am happy to say that I am up $2000...and I know much more about myself and the market.
Thanks Floyd...I could not have done it without you...Have a great Labor day weekend.
I'll be catching up on my Advanced Mentoring assignments.
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