The Facts

As futures were just wiggling along early this morning Bloomberg hit with this news:

U.S. Index Futures Drop, Stocks Erase Gains on Apple Outlook, China Rates
and chartists later in the day shared with us:

-- BOUNCE IN OVERSOLD DOLLAR CAUSES PROFIT-TAKING IN STOCKS AND COMMODITIES
-- GOLD TUMBLES
-- STOCKS APPEAR DUE FOR SOME PROFIT-TAKING BUT REMAIN IN AN UPTREND


and

A testimonial befitting of yesterday's actions:


Hello there.

It's me..."Christian" _______. Just over a year ago, I subscribed to your free trial offer. I want to thank you for that. I also made some comments that you ultimately posted on your blog, I believe.

Just to jog your memory, this was around June of 2009. You know---trading requires a certain mindset. Agreed? that's not a startling statement. And I gotta tell ya---the tuition is quite high on Wall Street.

Boy...have I paid to learn how to play. And I fear that I still have to learn some more, and, of course, learning is gonna cost some money. When I came on board with your firm albeit on a trial basis, I funded my account with $8.5K---not a lot of money by any stretch. but get this. I started on a Monday, June 8th. By that Friday my account was up to $14, 600! Not bad? By early the following week...I gave it all back and then some. I closed out the account minus $5k of my initial principle. In summary, I know I can do this. I just have to resist from trying to create a trade where there is none to be had, and I also have to keep from over trading. In short, I need to work on my discipline. what I find is that I'll tune into CNBC to check out how Europe closed their session in order to have sense of the climate for what's to come.
Of course, if it's a Monday and any political stuff happened over the weekend that might adversely impact the market, I'll be on the lookout for this. And let's not forget the economic calendar that we need to watch. But where I tend to get into trouble is when I make a trade and in less than 15 minutes or so...I'm plus $800 or more, and I end up feeling like...phew! that was easy. And then I want to go back in to trade some more. And some times I win but most times I lose. And I suppose...this is one of my problems(?) I know that I'm good at picking (or sensing) which way the market is going. Often times the signs pretty clear. So, I jump in and make a quick hit. but there I go again...trying to scalp the market from home. I don't think is quite as easy as if one were in the pit? The dynamics of electronic trading, particularly the delay factor is of consequence. I love the OEX---it's all I've ever traded. And I'm determined to come up, on average, as winner. This next go around (which will be soon), I will enter the market with a sharper eye toward avoiding my previous mistakes as well as refraining from over-trading or attempting to create a trade where there is none to be had---perhaps you've been guilty of this in your earlier years of trading the OEX? I'm not sure if I'll be able to participate in the year end rally (if there is one) or if I'll have to wait until next year and catch the market when it decides to regroup and move forward again. And praise whatever higher power that we're not stricken with some horrific terrorist act that will send the market into a tailspin. And, of course, I'm not sure how long the veil of "economic indiscretions(s) can continue to hide the fact that this country is in deep pooh-pooh before clarity on the situation is prevalent across America---and BAM! It will hit the fan! Talk about a market dive---plunge of whatever you wanna call. I remember that I bought a book titled "Dow 40,000." Wow! That's a lot of change. But how about "Dow 3,500!" OUCH! Either way...there will be a lot of $ to be made if you know how to Trade. Nice talking to ya. Be in touch soon."

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The FACTS: The market sold off and hit theoretical lows of 10,870 area, leading right to the Fibonacci re-tracement that market always moves to. This is a healthy sell off if it holds on decline and if profit taking was just in order, and the fundamentals return. I mean, Apple did utterly FANTASTIC in earnings, yet that they did not do "good" enough was a trigger.

Puts we bought Monday were hugely profitable, buying the November 510 Put as low as 4.50, and selling to 6.90 by 3.30 p.m. 50% plus returns in a day no one can beat, and we also took a nice first buy to the call, which we'll hold, be ready to second buy and simply watch the market today. Puts may have some more downside, the market itself may, but we'll hold with our Tuesday profits and our open signal.

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As most of our traders have grasped I will be branded a liberal. Thank you. And I believe the best writing coming out in America these days, the best true and fear journalism, comes from The Atlantic, Harpers, and surprisingly, Rolling Stone.
Rolling Stone has Mat Taibbi, the best journalist of this century as a free lancer, and Tim Dickinson, who can close the loopholes on facts. As the GOP spends millions to regain power (with which we have no idea what they would do except stop the tax cuts for the rich, and end that damn start at healthcare), Dickinson takes the time to clearly identify what has been done, what was happening as Obama came into power, and how in the end he may be judged.

This view into politics is a direct view into the stock market and into real reporting, agree or disagree. Liberal vs. conservative is immaterial as both are just "names," often just used for "calling" or for "degrading a point of view" to "upgrade your point of view"

Please read this if you read any one article I pull off blogs and websites:


http://www.rollingstone.com/politics/news/17390/220013

Question Information Pushed from ANY Source, ask WHY

Market movements by 2 p.m.: Theoretical Dow Low: 11,016 High: 11,171

All of this lack of real movement before the 3 pm. hour. A market stuck between support and resistance lines.
Calls were not available for purchase because the market held up, but first buys were possible to the November OEX Put.

We show an upside count to 4, with a waning strength, but strong resiliency.

If Gold and Silver falter we see only short term corrections around the USD.
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For years at OEX I often posted testimonials by traders, on great successes or failures, and their thoughts. Many of these are on our website, and I've slowed down the chest pounding recently simply because we all know how we are performing. Friday I received a great testimonial from an executive with a major insurance company in New York, legal counsel to the firm itself, that so well put what his concerns were, and what he had accomplished, that I thought I would share:

> Floyd:
> First let me thank you for your tremendous service. I have been a level 3 subscriber for just over a year and I feel that I have made some very substantial progress in my "trading education." Your philosophy of teaching "how to trade", rather than simply providing advice on "what to buy and sell" has motivated me to work to master this skill. Over the past year I have read the books you recommend on P&F Charting and the Wyckoff Method, as well as additional readings on Technical Analysis. I researched many on-line brokers and moved my accounts to Think or Swim because of their charting capabilities, especially the support / resistance and Fibonacci overlays. I understand the concepts of how the market breathes and falling in love with an option. I can see it happen as I watch the market daily. The Think or Swim support and resistance overlays are terrific, and I should know exactly when to get in and out of a trade. However, for all of the great technology and personal progress I have made in educating myself, I am having difficulty "pulling the trigger" on a trade. I am in constant fear that when I enter the trade that the market will whipsaw in the opposite direction, even though I know that the market moves in phases. When I do enter a trade I will change my sell order and normally jump out way too early when I see the market start to pull back. I am very "stuck" at this point and could use some guidance.
> I was hoping that you would be kind enough to review my attached Myers Briggs Test and perhaps help me shed some light on my personality characteristics and how they effect my trading.

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This is a fascinating article that may change your view on the values and methods of some good businesses:

http://www.businessweek.com/magazine/content/10_42/b4199062749187_page_3.htm

We felt that when Bernanke spoke last Friday, which all were ready for and priced into the market, that we heard "self congratulation, part apologia, heavy on the obvious and not especially revelatory".

What we at OEX believe about mid term elections, and the future of the stock market (now half the volume of three years ago) is that the devaluation of currency, the creation of massive debt to overcome massive debt (Keynesian in nature if allowed to play out), will play small parts, while the "advertisers" that have so falsified will lead us down the same path of family values and JOBS, the least important part of an economic recovery at this stage.

Jobs are critical, but control of the crisis and regulation so that it does occur again, are key. Remember, many remember the "magnificent years of Reagan" but take no note of the massive debt left behind for the next President. In this case, Reagan had the press and the media.
Here we have the reverse, in which the press and media have been overcome by the GOP rich to make sure the important stuff to them does not change.

Question why the information is coming, always, from any source.

Puts and Calls

Puts and calls could have moved Friday for us if the trader was willing to sit around all day and watch the market repeat the same 100 point up and down, still ending above 11,000.

We move to November issues and list both put and call with specific instructions. The market bias is bullish, with an expectation (out of FEAR) of downside.

With both signals, follow futures carefully and only trade if you have buy and sell signals in at all times. Expect larger second buys. Any news byte could affect the market.

Pure Hesitancy

Slimey Goldman Sachs won with a a 38% and our Blue Chip Options call on this stock has advanced dramatically already.
http://noir.bloomberg.com/apps/news?pid=20601010&sid=af_s05VsXeTU

The market continued a classic flat lining, pure hesitancy on upside or downside, and waiting for a "news byte" to bite on, and trigger a movement.

We've been extremely accurate in our Dow Projections this week.

We sense the possibility of a downside raises each day, but the market fights with resiliency.

Yesterday's call recommendation was profitable several times, from $1.00 to $2.50 per contract, and we remain with it as an open signal, suggesting a top is soon coming.
Today we list our first put, but again with caution.
We see any decline as short lived, even if "deep."

The market through 2 p.m. yesterday, before the electronic funds enter, had fluctuated from theoretical Dow highs of 10,998 and lows of 10,052. The hesitancy around 11,000 were fodder for massive electronic trades, while we calmly sat and made a bit of money on the call.

Bought right, we might be able to do so several times with the put. Note we are buying a November put, under the right conditions, while still holding an October call. Read our buy and sell instructions carefully.

Above all, question all facts. In the market, in life, and especially in the games that Karl Rove and group are playing; they are world changing, and not good. Things are not as easy as "lower taxes and stop spending." Custer was actually a coward.

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In our Advanced Mentoring service we work with traders most about three things:

1. Self defeating behavior (the conscious fighting the subconscious)

2. Subconscious self sabotage

3. Buying and selling in a frenzy, and not remembering even what and why you did what you did.

There are reasons we all act in these ways, and much of this is exposed when trading options, as you are acting as
a fruit vendor (See Movie and Article on website). Many of us have trouble seeing inside ourselves.

Businesses are Unwilling to Borrow

The theoretical Dow hit highs of 11,195 and lows of 10,982. We were never able to get the Nov signal and are taking it off our buy list. Nothing stops this bull run and we see topping soon and to take more prudence

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Stocks Gain on China Reserves, U.S. Earnings; Bonds, Yen Drop

Oct. 13 (Bloomberg) -- Stocks rose, sending the benchmark global index to a six-month high, as China announced record currency reserves, the Federal Reserve signaled it will protect the recovery and Intel Corp. forecast higher sales. A gauge of commodities reached a two-year high, as the yen and bonds fell.

The MSCI World Index gained 1.3 percent at 11 a.m. in New York, its highest level since April 27. The Standard & Poor’s 500 Index added 0.8 percent. The Reuters/Jefferies CRB Index of commodities added 0.9 percent and reached its highest level since October 2008. The yen weakened against all but one of 16 of its most-traded counterparts. The yield on the German 10-year bund climbed four basis points, while the U.S. Treasury yield rose three basis points.

China’s foreign-exchange reserves increased by a record to $2.65 trillion at the end of September while a 25 percent jump in exports lifted its trade surplus to $16.9 billion, reinforcing optimism the country will continue to lead the global recovery. The Fed said in minutes published yesterday it was prepared to ease monetary policy “before long.” Intel’s sales forecast topped analysts’ estimates.

“The market’s got a lot of tailwinds operating right now,” said John Kattar, chief investment officer at Eastern Investment Advisors in Boston, which manages $1.6 billion. “Earnings should be good, and that should be a catalyst for the market, and everyone’s looking ahead to” bond purchases by the Federal Reserve to spur growth. “All risk assets have responded dramatically just to expectations.”

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Relative to Gold the past 10 years have actually shown a steady and steep drop in equity prices.

Earnings look as if they will be strong, overall, yet nearly all market gains in recent years have occurred outside of earnings season.

Businesses are unwilling to borrow not because money is not available. That's a GOP lie. They are unwilling to borrow because they fear more changes in Washington.

Bullish Short Term

Everybody's waiting. We hit theoretical Dow lows of 10,873 in morning trading and highs of only 11, 066 by 3.15 p.m.
Gold slightly consolidated but held. A close below 1300 would move us bearish on gold short term. Silver held stead.
All the major soft commodities (corn, potash, wheat, and all agricultural products and services) took off, on global needs and a new
safe commodity.

The market is at a turning point. We will continue only trade one signal and only buy it at the right price. I know it's not exciting to not win every day as we did for 6 weeks, but this is too tight a market.

We are bullish for the short term. Any correction deeper than 250 points would raise our eyebrows, and any one below that is merely healthy consolidation.

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These slime should know. They created much of the first recession:

http://noir.bloomberg.com/apps/news?pid=20601087&sid=aJi7lXBGSi3U&pos=6

More facts:
*In 2008 the largest # of shares traded on the big board was 11.1 billion; this year we are averaging only 4.9 billion shares.

*Chinese credit card balances have risen by 17.1% in 2009. Sarcastic spectators such as Floyd, noting the number of McDonalds and KFC's opening in China, predict the average weight of Chinese will increase by 30% within two years.

*On Friday Big Benny speaks at a conference on monetary policy in a low-inflation environment, perhaps shedding more light on the central bank's intention.

*GE reports results tomorrow before the market opens and may affect futures.

Very Scary Stuff

Floyd grew bored with the market by 2.11 p.m, during which time the market had only moved 40 points in the day.

No entry was made to our new recommendation to the call, but we remain open to purchase this signal. Same rules, different day.


Remember, a key rule of Floydian trading,and of life,is to question authority:

http://abcnews.go.com/Technology/fbi-backdoor-access-mail-texts/story?id=11825039

We believe this is NEWS, not Christine, not Sarah,and not whether Obama is a Muslim.

Very scary stuff.


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FED minutes will likely (duh) express continued concern about the economy and will include more policy option discussions. This could create volatility in the market.

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We will spend a few moments this week with REAL facts, none that you are hearing being paid for, or news-byted:
*The USD has hit fresh lows against several currencies
*Apple is making a version of its iphone for use by Verizon. It may well take the stock above $300.00. Our Blue Chip Option service reports on new positions in Apple this week
*Not only did the Dow top 11,000 last Friday, but Global stock markets also rallied.
*The Treasury may have to take unprecedented steps to prevent U.S. workers from seeing big tax increases in the new year, as congressional delays hold back the setting of withholding tables.
Smart traders already distrust this, knowing it is the "holding of a vote" to make things look worse.
*Intel reports earnings today, as do many other tech companies, again noting that volatility may increase.