Every sign is bullish. The 50 day moving average crossed the 200 day moving average, and the ominous head and shoulder pattern that we saw as the downside risk has been passed.
Caterpillar earnings took it up, and Apple could belatedly.
We've revised our Dow projections, with a lesser downside because of this momentum, but remain bearish on the market without a consolidation. Yet again, the rise has been too euphoric, and without reason.
We took stop loss on our August 370P, but regained some of the profits with up to $1.00 a contract profits on our OTM Call.
With all these facts.....head and shoulders, 50 and 200 day moving average, I remain suspicious because again the euphoric "little reason" rise. If we can have effective consolidation, to allow traders to profit, the market can be healthier.
And the conspiracist in me just knows Goldman Sachs has been building the market long, and now has puts on the S&P 500 after they and the plunge protection team have done their job.
Follow futures carefully. Two way trades and good profits may be available.
Many new subscribers on trial have asked if it is necessary to be online all day to trade with us. I use an Iphone32G and trade 1/3 of the time from the phone. Blackberry's work well.
One must at least "watch" the Dow and "read the market" during the trading day, even if using "limit orders," which can successfully work well, but we highly recommend not considering option trading if one can't have some access during the trading day, even if limited to two or three times.
Wednesday, July 22, 2009
Tuesday, July 21, 2009
You Can't Make This Stuff Up
In 1998 the week after July expiry the down fell 4.3%, a large amount for that time period, and hit 4.2% off in this week in 2007. Last week the first wave of quarterly corporate earnings reports arrived stronger than expected, and investors were further soothed on the economic crisis and the Dow gained 7.3% alone last week, it's biggest since March. It should be noted that even lackluster earnings were "ignored" and that only 11% of major companies have reported so far. But, 71% of those quarterly reports that have been issued have beaten analysts expectations.
This is conflicting news. Unemployment is rising. Savings is going up. People are spending less. Yet again we've seen a market take meteoric rises, and typically slow consolidations, and "events" seem to trigger whipsaw.
This is why we have been saying the higher the market had gone last week, and now, the deeper the potential decline. If the market can absorb good gains in a more normal fashion, see quarterly's that are not so stellar, or begin to wonder "why all is so good when it is not" then consolidation can be healthy.
For example, GE's profits fell 49% as the recession took its toll on its industrial businesses and its struggling finance unit. Citi and Bank of America had second quarter profits on hefty one time gains, and it's Floyd's bet that we will soon mounting credit card losses from banks, despite the rape of America with rising fees to return them to profitability, with our money.
You really can't make this stuff up. And the market gains on rising hope. CIT, as the example, in is process of obtaining debt refinancing from its bondholders, and this triggered the early morning rise. Imagine, a bank close to bankruptcy buys some "time", and it's good news :)
And from our Floydian Blog at www.bluechipoptions.com:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aHcr2O3tkOCo
1. The obvious will show that "things are improving.".
2. The market may take this as "the real estate market is gaining ground."
Oops. One in every two homes being sold in the U.S. is sold out of foreclosure.
Skews those "happy facts" a bit, doesn't it.
The Floydian Lesson: Read information, but do not believe interpretation.
In fact, within the euphoria, answer:
1. Record Foreclosures
2. Record Chapter 11 Filings
3. Record Unemployment - not that BS the Gubermit puts out.
4. Record expanse of the money Supply
5. Record Price declines in Housing
6. Record Insider Selling
7. Record low volumes in NYSE trading for Retail - not Black Box Goldman
8. Record Secondary Equity Offerings
9. Record FED and Gubermit false dating of statistics.
You really can't make this stuff up :)
_____________
So, with all this: the S &P 500 hit new highs, and the market hit theoretical Dow tops of 8895, at our top, and lows of 8705. We project below Dow moves possible to just under 9000, but see the market at overbought tops.
Our recommendation for the OXBHM August 465C is an excellent example. It opened at 2.800, moved down to the prior day close at 2.40, and moved up only .60 to highs of 3.00. This is classic sign that an OTM call was not rising in value because the market acted overbought.
We'll list the signal today as "open" for any last minute profits. We are a market led by euphoria. Let's keep taking the profits!
This is conflicting news. Unemployment is rising. Savings is going up. People are spending less. Yet again we've seen a market take meteoric rises, and typically slow consolidations, and "events" seem to trigger whipsaw.
This is why we have been saying the higher the market had gone last week, and now, the deeper the potential decline. If the market can absorb good gains in a more normal fashion, see quarterly's that are not so stellar, or begin to wonder "why all is so good when it is not" then consolidation can be healthy.
For example, GE's profits fell 49% as the recession took its toll on its industrial businesses and its struggling finance unit. Citi and Bank of America had second quarter profits on hefty one time gains, and it's Floyd's bet that we will soon mounting credit card losses from banks, despite the rape of America with rising fees to return them to profitability, with our money.
You really can't make this stuff up. And the market gains on rising hope. CIT, as the example, in is process of obtaining debt refinancing from its bondholders, and this triggered the early morning rise. Imagine, a bank close to bankruptcy buys some "time", and it's good news :)
And from our Floydian Blog at www.bluechipoptions.com:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aHcr2O3tkOCo
1. The obvious will show that "things are improving.".
2. The market may take this as "the real estate market is gaining ground."
Oops. One in every two homes being sold in the U.S. is sold out of foreclosure.
Skews those "happy facts" a bit, doesn't it.
The Floydian Lesson: Read information, but do not believe interpretation.
In fact, within the euphoria, answer:
1. Record Foreclosures
2. Record Chapter 11 Filings
3. Record Unemployment - not that BS the Gubermit puts out.
4. Record expanse of the money Supply
5. Record Price declines in Housing
6. Record Insider Selling
7. Record low volumes in NYSE trading for Retail - not Black Box Goldman
8. Record Secondary Equity Offerings
9. Record FED and Gubermit false dating of statistics.
You really can't make this stuff up :)
_____________
So, with all this: the S &P 500 hit new highs, and the market hit theoretical Dow tops of 8895, at our top, and lows of 8705. We project below Dow moves possible to just under 9000, but see the market at overbought tops.
Our recommendation for the OXBHM August 465C is an excellent example. It opened at 2.800, moved down to the prior day close at 2.40, and moved up only .60 to highs of 3.00. This is classic sign that an OTM call was not rising in value because the market acted overbought.
We'll list the signal today as "open" for any last minute profits. We are a market led by euphoria. Let's keep taking the profits!
Friday, July 17, 2009
Retirement Accounts
For an serious read on objectivism, the philosophy of Ayn Rand, and how it has led our government for years: http://www.nytimes.com/2007/09/15/business/15atlas.html?pagewanted=1&_r=2&th&emc=th
And, as we watch performance in our retirement accounts, 70% of funds under-perform their benchmark every year. It's sad. On average, an actively managed fund returns 2% less (after fees) than the index it's measured against. A $100,000 portfolio that compounds 10% per year will grow to $1.7 million in 30 years. The fund with a 2% drag? Just $1 million. That's a $700,000 difference.
The gig is too obvious. The guys that manage the fund get 1 to 2% of your investment every year, no matter how they perform. More important, mutual fund regulations meant to protect investors actually make matters worse. For example, some rules mandate diversification. So instead of owning his 10 favorite stocks, a mutual fund manager may be forced to own more than 100 stocks... and dilute returns in the process.
Rules can also force managers to sell winning stocks prematurely, as their increased presence in the portfolio violates the diversification mandate. Also, size rules prohibit large-cap mutual funds from owning mid- or small-cap stocks, even if it's the best thing to do at the time.
For starters, the compensation structure is flawed. Mutual fund managers get a slice of your investment (typically 1%-2%) every year, no matter how they perform. Because they're paid based on total assets under management, not performance, managers shift focus from returns to fundraising.
Other rules prevent funds from buying companies in the midst of corporate restructuring or those temporarily losing money... or owning a stock that trades too few shares a day... or shorting stocks.
So, then we watch Wall Street, which devastated the world economy, and a few of the slime (like Goldman Sachs) are raking in 900k a year for each employee, and BlackRock has 42 million in billings already in being in charge of figuring out part of the derivative mess.
We're soon introducing another website, www.bluechipoptions.com that helps trade in more market volatility, as there is truly money to be made in the market today.
Just look at our call successes last week. We made serious money.
And, it's harder to understand the volatility. I consider VIX a statistical indicator now, and nothing more. Too many anomalies. While the DJIA,S&P, and NASDAQ each surged about 3% or more, triggered by euphoria, the ViX moved up from 25.02 to 25.89. This wasn't supposed to happen, it's the opposite, so it was a rarity in the fear gauge. Jason Goepert said that, "this was the only time in history that both the Vix and S&P500 rose more than 2.5% on the same."
In the other two instances, the markets declined soon thereafter.
What i see in this ViX anomaly is a unique combination of optimism (not greed) and fear, battling it out.
This shows Friday well. A market that hit highs of 8794 on the theoretical Dow twice, but hovered for the day in the 8600-8700 resistance area. Calls were available and tightly profitable. Puts were also available, and we now have open signals.
Study our Dow projections. We update through the week, and should be used in conjunction with the Dow or OEX projections you take throughout the day.
Last week we made crazy money. Let's start with prudent risk on our open trades.
Do NOT trust false facts, or be led by optimism or pessimism, but realism, with a sense of "what the ___?"
And, as we watch performance in our retirement accounts, 70% of funds under-perform their benchmark every year. It's sad. On average, an actively managed fund returns 2% less (after fees) than the index it's measured against. A $100,000 portfolio that compounds 10% per year will grow to $1.7 million in 30 years. The fund with a 2% drag? Just $1 million. That's a $700,000 difference.
The gig is too obvious. The guys that manage the fund get 1 to 2% of your investment every year, no matter how they perform. More important, mutual fund regulations meant to protect investors actually make matters worse. For example, some rules mandate diversification. So instead of owning his 10 favorite stocks, a mutual fund manager may be forced to own more than 100 stocks... and dilute returns in the process.
Rules can also force managers to sell winning stocks prematurely, as their increased presence in the portfolio violates the diversification mandate. Also, size rules prohibit large-cap mutual funds from owning mid- or small-cap stocks, even if it's the best thing to do at the time.
For starters, the compensation structure is flawed. Mutual fund managers get a slice of your investment (typically 1%-2%) every year, no matter how they perform. Because they're paid based on total assets under management, not performance, managers shift focus from returns to fundraising.
Other rules prevent funds from buying companies in the midst of corporate restructuring or those temporarily losing money... or owning a stock that trades too few shares a day... or shorting stocks.
So, then we watch Wall Street, which devastated the world economy, and a few of the slime (like Goldman Sachs) are raking in 900k a year for each employee, and BlackRock has 42 million in billings already in being in charge of figuring out part of the derivative mess.
We're soon introducing another website, www.bluechipoptions.com that helps trade in more market volatility, as there is truly money to be made in the market today.
Just look at our call successes last week. We made serious money.
And, it's harder to understand the volatility. I consider VIX a statistical indicator now, and nothing more. Too many anomalies. While the DJIA,S&P, and NASDAQ each surged about 3% or more, triggered by euphoria, the ViX moved up from 25.02 to 25.89. This wasn't supposed to happen, it's the opposite, so it was a rarity in the fear gauge. Jason Goepert said that, "this was the only time in history that both the Vix and S&P500 rose more than 2.5% on the same."
In the other two instances, the markets declined soon thereafter.
What i see in this ViX anomaly is a unique combination of optimism (not greed) and fear, battling it out.
This shows Friday well. A market that hit highs of 8794 on the theoretical Dow twice, but hovered for the day in the 8600-8700 resistance area. Calls were available and tightly profitable. Puts were also available, and we now have open signals.
Study our Dow projections. We update through the week, and should be used in conjunction with the Dow or OEX projections you take throughout the day.
Last week we made crazy money. Let's start with prudent risk on our open trades.
Do NOT trust false facts, or be led by optimism or pessimism, but realism, with a sense of "what the ___?"
It's Basic Math
On July expiry the Dow has been down 6 of the last 8 years, and off 4.6% alone in 2002. We will add to this that our bell curve count has approached 10 for two days, clear signs of a massively overbought market. So, the market will go up again, perhaps, for no good reason.
By noon the market had moved to our recalculated r1 and s1 three times. Classic flat lining. By 2.30 p.m. calls were profitable. Remember,we do not often trade at what we think are market tops, but some traders were risk oriented enough to buy in at 2.90 to 3.00 on the August 460 Call, and sell to 3.67 And by 3.30 the market had topped at 8747.
Fed minutes showed officials are preparing for an unusual recovery in which the economy improves, but unemployment worsens.
U.S. consumer prices jumped last month, led by energy and autos, thought compared annually they fell by the fastest rate since 1950.
In a euphoria driven market we continue to see the summation indexes operating off sell signals, slow stastics shows overbought, and chartists that believe in the head and shoulders pattern are watching now to see if a rally can be created, or if the pattern is being violated. This may lessen the downside, and we're revising our Dow projections.
Yet again, although profitable to the call another day this week, we remain both suspicious and surprised. We make massive moves down, up, and never really make headway. Stock traders are not making money "guessing" this, only option traders that are playing the overbought and oversold conditions.
For traders learning our moves with 3X bear and bull funds, that we'll be discussing more, a good comment from a subscriber:
"I've been reading about BGZ and double and triple leveraged ETF's...some of it is quite confusing BUT I did find this blog that spoke in "layman's terms" and I understand the severity of the risk...
Below is a quick excerpt that makes sense to me...
As posted on my blog July 11, 2009, after reading a lot of blog posts and comments, tweets on twitter, Facebook comments, and emails, I decided it was time to figure out if there was any real decay behind the leveraged ETFs, both long and short. I wanted to revisit this issue of the double and triple leveraged ETFs, and why investors should stay away from them, and to clear up some confusion. With the popularity of ETFs came these funds which use 200% and 300% leverage. Yes in any steady trend they can grow like weeds, but in a correction they will give back much of their gains. This is simple, and basic math.
First of all, these are extremely risky, and investors shouldn't hold on to any leveraged ETF(s) for the "long run", they are almost sure to lose money. These instruments are ideal for traders not investors!
Second of all, let's identify what a leveraged ETF does. A double leveraged ETF uses 200% (triple uses 300%) leverage to capture a specific basket, sector, or index move. Let's take the very popular SDS, which is a 2X inverse tracking the S&P 500; for every 1% move up in the S&P 500 index, SDS will move down by 2%, and for every 1% move down in the index, SDS will move up by 2%. Similarly is the SSO, which is the 2X tracking the S&P 500; for every 1% move up in the S&P 500 index, SSO will move up by 2%, and for every 1% move down in the index, SSO will move down by 2%.
If you're the person who says "It's a great way to hedge my portfolio, so what's the problem with them?", then clear all your other thoughts and read this post carefully - it may save you some money.
It's basic math that so many people overlook! Let's use the benchmark S&P 500 index for an example. Let's say we start off on the S&P 500 at 1000 and a double and triple leveraged ETF both at $100 per. If the benchmark index moves down 10% in 1 week to 900, and assuming both ETFs track perfectly it would put the double leveraged ETF at $80 per share, and the triple leveraged ETF at $70 per share.
Here is where some investors don't use those basic math skills they learned so many years ago, and assume that when the S&P gets back to 1000, the leveraged ETF will trade at the identical value as before, when the S&P was at 1000... THIS IS FALSE!
Basic math tells us this is impossible. In order for the benchmark to get back to 1000 it will need to go up by 11.11% which will correlate to a 22.22% and 33.33% move in the double and triple ETFs respectively.
As we can see, in order to get the double leveraged ETF back to 100 from 80, the benchmark will need to increase by 12.5% correlating to a 25% increase in the double ETF. The triple leveraged ETF will need an even greater move to get back to 100. In order for the triple ETF to get back to 100 from 70, the benchmark will need to increase by 14.283% correlating to a 42.85% increase in the triple ETF."
We have now had 5 profitable call trades in a row, and hold one of two hedge put positions.
And a note from subscriber JK:
> "Floyd,
> An interesting letter in the Australian Shooter Magazine this week, which quoted: "If you consider that there has been an average of 160,000 troops in the Iraq theater of operations during the past 22 months, and a total of 2112 deaths, that gives a firearm death rate of 60 per 100,000 soldiers."
>
> The firearm death rate in Washington , DC is 80.6 per 100,000 for the same period. That means you are about 25 per cent more likely to be shot and killed in the US capital, which has some of the strictest gun control laws in the US, than you are in Iraq.
>
> Conclusion: The US should pull out of Washington.
>
> Just a thought...
>
> Johnny
By noon the market had moved to our recalculated r1 and s1 three times. Classic flat lining. By 2.30 p.m. calls were profitable. Remember,we do not often trade at what we think are market tops, but some traders were risk oriented enough to buy in at 2.90 to 3.00 on the August 460 Call, and sell to 3.67 And by 3.30 the market had topped at 8747.
Fed minutes showed officials are preparing for an unusual recovery in which the economy improves, but unemployment worsens.
U.S. consumer prices jumped last month, led by energy and autos, thought compared annually they fell by the fastest rate since 1950.
In a euphoria driven market we continue to see the summation indexes operating off sell signals, slow stastics shows overbought, and chartists that believe in the head and shoulders pattern are watching now to see if a rally can be created, or if the pattern is being violated. This may lessen the downside, and we're revising our Dow projections.
Yet again, although profitable to the call another day this week, we remain both suspicious and surprised. We make massive moves down, up, and never really make headway. Stock traders are not making money "guessing" this, only option traders that are playing the overbought and oversold conditions.
For traders learning our moves with 3X bear and bull funds, that we'll be discussing more, a good comment from a subscriber:
"I've been reading about BGZ and double and triple leveraged ETF's...some of it is quite confusing BUT I did find this blog that spoke in "layman's terms" and I understand the severity of the risk...
Below is a quick excerpt that makes sense to me...
As posted on my blog July 11, 2009, after reading a lot of blog posts and comments, tweets on twitter, Facebook comments, and emails, I decided it was time to figure out if there was any real decay behind the leveraged ETFs, both long and short. I wanted to revisit this issue of the double and triple leveraged ETFs, and why investors should stay away from them, and to clear up some confusion. With the popularity of ETFs came these funds which use 200% and 300% leverage. Yes in any steady trend they can grow like weeds, but in a correction they will give back much of their gains. This is simple, and basic math.
First of all, these are extremely risky, and investors shouldn't hold on to any leveraged ETF(s) for the "long run", they are almost sure to lose money. These instruments are ideal for traders not investors!
Second of all, let's identify what a leveraged ETF does. A double leveraged ETF uses 200% (triple uses 300%) leverage to capture a specific basket, sector, or index move. Let's take the very popular SDS, which is a 2X inverse tracking the S&P 500; for every 1% move up in the S&P 500 index, SDS will move down by 2%, and for every 1% move down in the index, SDS will move up by 2%. Similarly is the SSO, which is the 2X tracking the S&P 500; for every 1% move up in the S&P 500 index, SSO will move up by 2%, and for every 1% move down in the index, SSO will move down by 2%.
If you're the person who says "It's a great way to hedge my portfolio, so what's the problem with them?", then clear all your other thoughts and read this post carefully - it may save you some money.
It's basic math that so many people overlook! Let's use the benchmark S&P 500 index for an example. Let's say we start off on the S&P 500 at 1000 and a double and triple leveraged ETF both at $100 per. If the benchmark index moves down 10% in 1 week to 900, and assuming both ETFs track perfectly it would put the double leveraged ETF at $80 per share, and the triple leveraged ETF at $70 per share.
Here is where some investors don't use those basic math skills they learned so many years ago, and assume that when the S&P gets back to 1000, the leveraged ETF will trade at the identical value as before, when the S&P was at 1000... THIS IS FALSE!
Basic math tells us this is impossible. In order for the benchmark to get back to 1000 it will need to go up by 11.11% which will correlate to a 22.22% and 33.33% move in the double and triple ETFs respectively.
As we can see, in order to get the double leveraged ETF back to 100 from 80, the benchmark will need to increase by 12.5% correlating to a 25% increase in the double ETF. The triple leveraged ETF will need an even greater move to get back to 100. In order for the triple ETF to get back to 100 from 70, the benchmark will need to increase by 14.283% correlating to a 42.85% increase in the triple ETF."
We have now had 5 profitable call trades in a row, and hold one of two hedge put positions.
And a note from subscriber JK:
> "Floyd,
> An interesting letter in the Australian Shooter Magazine this week, which quoted: "If you consider that there has been an average of 160,000 troops in the Iraq theater of operations during the past 22 months, and a total of 2112 deaths, that gives a firearm death rate of 60 per 100,000 soldiers."
>
> The firearm death rate in Washington , DC is 80.6 per 100,000 for the same period. That means you are about 25 per cent more likely to be shot and killed in the US capital, which has some of the strictest gun control laws in the US, than you are in Iraq.
>
> Conclusion: The US should pull out of Washington.
>
> Just a thought...
>
> Johnny
Thursday, July 16, 2009
Nothing Was New
"A strong up day can cause a low to come early and a high to come late; a strong down day can cause a high to come early and a low to come late."
Wow, did we make some money! We had all bought OXBHI OEX.X AUG 2009 445.0000 CALL for costs of 3.37 up. This position was sold to highs of of 8.50, and most selling in the 7.50 to 7.80 range for a 100% return.
All it took, traders, was following our alert. Watching futures, seeing that they were up, checking Bloomberg (all the URLS we give you) and seeing good news, and being ready. By recalculating the Dow during the day the trader was able to see a new R 1 and R2 and sell accordingly.
We have numerous "thanks" from subscribers today that study our work, and have learned our system, and we've had 4 profitable call trades this week.
We own a hedge position in either an OTM put that we'll hold, or a new issue recommendation to an inverse ETF called BGZ that is a 3X bear fund, and when traded as an option (traded as a call) can be hugely profitable.
By 4 p.m. the market had climbed over 256 points. We had recalculated Dow projections mid day and saw the new R2 at 8616, and climbing. Everyone knows that nothing was new yesterday, and that "events" triggered euphoria, and a massive run up right to the top of our Dow projections. I see a classic head and shoulders pattern, and a market set up for a fall, because yet again, it rose without reason, but only emotion. We have hit all of our Dow projections. The reversal to the projections will now take place, where the former support becomes resistance.
Wow, did we make some money! We had all bought OXBHI OEX.X AUG 2009 445.0000 CALL for costs of 3.37 up. This position was sold to highs of of 8.50, and most selling in the 7.50 to 7.80 range for a 100% return.
All it took, traders, was following our alert. Watching futures, seeing that they were up, checking Bloomberg (all the URLS we give you) and seeing good news, and being ready. By recalculating the Dow during the day the trader was able to see a new R 1 and R2 and sell accordingly.
We have numerous "thanks" from subscribers today that study our work, and have learned our system, and we've had 4 profitable call trades this week.
We own a hedge position in either an OTM put that we'll hold, or a new issue recommendation to an inverse ETF called BGZ that is a 3X bear fund, and when traded as an option (traded as a call) can be hugely profitable.
By 4 p.m. the market had climbed over 256 points. We had recalculated Dow projections mid day and saw the new R2 at 8616, and climbing. Everyone knows that nothing was new yesterday, and that "events" triggered euphoria, and a massive run up right to the top of our Dow projections. I see a classic head and shoulders pattern, and a market set up for a fall, because yet again, it rose without reason, but only emotion. We have hit all of our Dow projections. The reversal to the projections will now take place, where the former support becomes resistance.
Wednesday, July 15, 2009
An Upside Run
After three successful call trades in a day we made the moves to enter the market at the strong resistance line 8376 area that held the market yesterday, and then sat back on our hands.
Slimey Goldman Sachs made record profits. Oil begin to rise, even while gas demand lowers. Retail sales reports, always misleading and silly, point to the "recession may be easing."
U.S Treasuries dropped. And by 3 p.m. just read the market moves, to the theoretical Dow: Highs of 8401, fleeting, and lows of 8245, also fleeting, and then a day of minor moves around the zero point on the Dow, showing no real bias.
OXBHI August 445 Call was bought as low as 3.37, and barely moved all day. This was true with our put position also, all up until the 3 p.m. hour when a bit of action took place.
I'll make this simple: The market is at a crossroads. Upside is absolutely going to occur, and to our market tops, but we think or "wish" to occur in a bit of slow moving periods, where silly euphoria does not reign. Hitting a resistance line in a market waiting for second quarter results, and living in the "news of Sarah, Michael, and by the way, a declining economy" has the market in hesitancy.
We are hedging with dual trades, and don't know even which way we are hedging. Watch carefully, as another downside run on reality could take place, or an upside run to "there must be a way to make money."
The market is "flat lining." This always means something "big" will happen, just a matter of when. :)
Slimey Goldman Sachs made record profits. Oil begin to rise, even while gas demand lowers. Retail sales reports, always misleading and silly, point to the "recession may be easing."
U.S Treasuries dropped. And by 3 p.m. just read the market moves, to the theoretical Dow: Highs of 8401, fleeting, and lows of 8245, also fleeting, and then a day of minor moves around the zero point on the Dow, showing no real bias.
OXBHI August 445 Call was bought as low as 3.37, and barely moved all day. This was true with our put position also, all up until the 3 p.m. hour when a bit of action took place.
I'll make this simple: The market is at a crossroads. Upside is absolutely going to occur, and to our market tops, but we think or "wish" to occur in a bit of slow moving periods, where silly euphoria does not reign. Hitting a resistance line in a market waiting for second quarter results, and living in the "news of Sarah, Michael, and by the way, a declining economy" has the market in hesitancy.
We are hedging with dual trades, and don't know even which way we are hedging. Watch carefully, as another downside run on reality could take place, or an upside run to "there must be a way to make money."
The market is "flat lining." This always means something "big" will happen, just a matter of when. :)
Tuesday, July 14, 2009
The Market Listened
The market listened to Floyd. It hit it's bottom and for no good reason :) began the climb up. All calls we held were profitable. THREE for THREE in one day! Here's some examples:
1, -OXBHD OEX.X AUG 2009 420.0000 CALL was bought as low as 9.60, and on average at 10.80, last week and hit highs of 14.10
2. -OXBHT OEX.X AUG 2009 400.0000 CALL was bought at 22.50, and sold to highs of 27.00
3. -OXBHI OEX.X AUG 2009 445.0000 CALL was our recommendation today, under $2.00, and traders only got in at 2.13 or better, selling to highs of 3.62 by midday.
We consider all three of these trades profitable. What a great start to the week.
And by 3.45 p.m. the profits had increased even more, when the Dow hit 8365 right at our 8376 top that is strong resistance.
Many new trial subscribers we know struggle to under our daily alert. Letters today from subscribers might help us understand. I've included comments from seasoned Level 2 and Level 3 traders, and new subscribers:
-"Floyd, I recalculated the Dow three times and held out the August 400 call for max profits. I saw the count, and watched futures, and knew what was on the economic agenda.
I even knew to watch the market at 11.30 a.m. and 1.30 p.m. around economic calendars, and I had set buys and sells. For your information, I've made $41,000 trading OEX options in the past three month and I would recommend your Level 3 service to anyone. I paper traded three months, and studied the manual. I wanted to be the perfect student. You're an incredible trader, Floyd, and you've taught me a lot." JW, Kansas City
Floyd, nice play on he Aug420call, in at 10.80, out at 13.10, and did a good 20% on the 400 Call. Right to your Dow projections, brother. I've also been day trading for .50 increments all of last Thursday and Friday.
-JWK, South Bend, Indiana
And some questions from subscribers:
I’m a trial member and I had a quick question: Can I day trade these option contracts... for example purchase 1 contract in the morning and sell that same contract in the afternoon? or does one have to allow the option price to settle for one day to realize the gain in price"
-Floyd- Yes, this is what day trading is. You can sell in minutes. The SEC mandates that traders that show consistent trades to the same options may be considered pattern day traders (we are) and will require a $25,000 balance in your trading account
From Trader MP, NJ: Good afternoon my friend...
Sold my calls at the 8250 area...R2 from the alert...looks like I may have jumped the gun with selling...but what can you do...gotta take the profits when I can correct?
When you write: At 8376 to 8400 is a strong resistance, and we'll watch volatility, earnings, and volume for what could be a reversal to 8050 area,
What exactly are you looking for before issuing puts? How much volume is HIGH and what number is LOW? What numbers do you look for? Do you ever watch $TICK? I read somewhere that $TICK is a good indicator for volume...And what about the VIX? What number indicates FEAR?
Floyd: Three things: 1. The mood of that day. If euphoria ran, or it was a hesitant rise. I watch only the Dow and the OEX, and the options I am trading.
Floyd: I posted a great article on trading the Tick and on Vix at www.bluechiptoptions.com
Lots of new blogs at
http://bluechipoptions.blogspot.com/
"The Monday before July expiry the Dow has been up five years in a row."
How important or significant are stats like this? I guess today makes it six years in a row huh?
Floyd: I use historical data often and find that the "psychology" fascinating. When I list this kind of thing, pay attention.
We are seeing a great deal of "carve outs" at larger companies, as they "divest"non core assets. These are big words. What it means is: "they are getting rid of the shit they should not have bought to begin with," and the financials may look better short term, but they are "cash flowing" out. When carve outs occur the market is affected, in both fear and greed, and as they slow it will affect the market.
Part of why so many economists and talking heads think the third quarter will breakout stocks again is because "carve outs" will be large in this quarter. Examples are Bristol Myers, in recent months, when it spun off Mead Johnson Nutrition. Mead had a nice 35% gain on its' IPO during the carve out, Bristol gained, and in the long run both could lose. The bad news for stocks is that markets often fall after carve outs, also known as false financial games to make slowing production look good.
Be watchful. A good market will move slowly and steadily up, on increasing volume. We are a market barely above last October's lows, after yet again a bubble rise. And Goldman Sachs has record profits.
And Sarah Palin is writing a book, and may be losing her hair from the stress.
Enjoy the show.
1, -OXBHD OEX.X AUG 2009 420.0000 CALL was bought as low as 9.60, and on average at 10.80, last week and hit highs of 14.10
2. -OXBHT OEX.X AUG 2009 400.0000 CALL was bought at 22.50, and sold to highs of 27.00
3. -OXBHI OEX.X AUG 2009 445.0000 CALL was our recommendation today, under $2.00, and traders only got in at 2.13 or better, selling to highs of 3.62 by midday.
We consider all three of these trades profitable. What a great start to the week.
And by 3.45 p.m. the profits had increased even more, when the Dow hit 8365 right at our 8376 top that is strong resistance.
Many new trial subscribers we know struggle to under our daily alert. Letters today from subscribers might help us understand. I've included comments from seasoned Level 2 and Level 3 traders, and new subscribers:
-"Floyd, I recalculated the Dow three times and held out the August 400 call for max profits. I saw the count, and watched futures, and knew what was on the economic agenda.
I even knew to watch the market at 11.30 a.m. and 1.30 p.m. around economic calendars, and I had set buys and sells. For your information, I've made $41,000 trading OEX options in the past three month and I would recommend your Level 3 service to anyone. I paper traded three months, and studied the manual. I wanted to be the perfect student. You're an incredible trader, Floyd, and you've taught me a lot." JW, Kansas City
Floyd, nice play on he Aug420call, in at 10.80, out at 13.10, and did a good 20% on the 400 Call. Right to your Dow projections, brother. I've also been day trading for .50 increments all of last Thursday and Friday.
-JWK, South Bend, Indiana
And some questions from subscribers:
I’m a trial member and I had a quick question: Can I day trade these option contracts... for example purchase 1 contract in the morning and sell that same contract in the afternoon? or does one have to allow the option price to settle for one day to realize the gain in price"
-Floyd- Yes, this is what day trading is. You can sell in minutes. The SEC mandates that traders that show consistent trades to the same options may be considered pattern day traders (we are) and will require a $25,000 balance in your trading account
From Trader MP, NJ: Good afternoon my friend...
Sold my calls at the 8250 area...R2 from the alert...looks like I may have jumped the gun with selling...but what can you do...gotta take the profits when I can correct?
When you write: At 8376 to 8400 is a strong resistance, and we'll watch volatility, earnings, and volume for what could be a reversal to 8050 area,
What exactly are you looking for before issuing puts? How much volume is HIGH and what number is LOW? What numbers do you look for? Do you ever watch $TICK? I read somewhere that $TICK is a good indicator for volume...And what about the VIX? What number indicates FEAR?
Floyd: Three things: 1. The mood of that day. If euphoria ran, or it was a hesitant rise. I watch only the Dow and the OEX, and the options I am trading.
Floyd: I posted a great article on trading the Tick and on Vix at www.bluechiptoptions.com
Lots of new blogs at
http://bluechipoptions.blogspot.com/
"The Monday before July expiry the Dow has been up five years in a row."
How important or significant are stats like this? I guess today makes it six years in a row huh?
Floyd: I use historical data often and find that the "psychology" fascinating. When I list this kind of thing, pay attention.
We are seeing a great deal of "carve outs" at larger companies, as they "divest"non core assets. These are big words. What it means is: "they are getting rid of the shit they should not have bought to begin with," and the financials may look better short term, but they are "cash flowing" out. When carve outs occur the market is affected, in both fear and greed, and as they slow it will affect the market.
Part of why so many economists and talking heads think the third quarter will breakout stocks again is because "carve outs" will be large in this quarter. Examples are Bristol Myers, in recent months, when it spun off Mead Johnson Nutrition. Mead had a nice 35% gain on its' IPO during the carve out, Bristol gained, and in the long run both could lose. The bad news for stocks is that markets often fall after carve outs, also known as false financial games to make slowing production look good.
Be watchful. A good market will move slowly and steadily up, on increasing volume. We are a market barely above last October's lows, after yet again a bubble rise. And Goldman Sachs has record profits.
And Sarah Palin is writing a book, and may be losing her hair from the stress.
Enjoy the show.
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