It's almost fun. We saw Friday again run to a 10,140 high, and a 9892 low, in the same whipsaw pattern we've seen for days, with the exception that the market CLOSED more dramatically down.
Our OTM 520 day trade call was profitable only to .40 per contract, yet traders on the November 490P were able to buy as low as 4.60 and sell to highs of 7.80. Numerous traders wrote us notes on what Friday was, but I'll give you the funniest to start your week:
Sometimes when I am stupid I make the most! I smelled the downside, and put a pre-order on the put in at 4.80. I had to leave for a few hours, and then my car broke down,but I had learned from Floyd to "never leave without a sell order in" so I (thinking I would be back in a couple hours) put a sell in at 7.60. I had planned to return to do a second larger buy, and had bought 15 contracts for my opening. So I returned home after the car disaster to see my order filled at 7.60. The math is incredible. I made $4500.00! I had been profitable on all calls this past week, being smart, and had a week with total profits of over 8200.00. WOW! MDL, New Orleans
Here's how I see the market:
1. We need a healthy consolidation to allow more upturn. Each upturn we have without effective consolidation (and there have been TOO many) is not a bull market, but a euphoric market, and historically always leads to larger falls.
2. Over 106 banks have closed. This is serious stuff.
3. Wall Street was FIRST bailed out by President Bush, and as the magnitude of the fraud became clear, then bailed out by Obama. The Bush/Paulson 585 billion was a game to pay off the boys that helped them. It slowed the crisis, but the next bail out was to save our nation from financial ruin. Sadly, no regulations have been put in (Congress leads this) and we're seeing new Wall Street games that the GOP boys claim is socialistic to "stop the earnings."
Sorry, but with earnings to Wall Street slime now exceeding prior massive earnings, we are in process of allowing greed to take over our nation, while we "fret" that Obama does not understand the high unemployment issue.
Sigh.
4. With healthy consolidation I believe the market will rebound again, and that 10,700 is a Fibonnacci retracement from our deepest bottom earlier this year, and MAY be a stopping point. In other words, with retracements so far following Fibbonanci to the T, we may have euphorically led ourselves to a top that could easily disintegrate, and lead to a deeper downturn. Much will depend upon whether the HATE in the nation can be calmed, as we have built a fervor over "obamanation", bullshit on socialism, etc., and of course, led to even more bi-partisanship in the country.
5. Glenn Beck and Rush the idiot lead much of the nation. This will influence group intelligence. Pay attention to their rants, as some actually believe this stuff. Sorry, conservatives, but these men are not conservatives, but purveyors of hate.
Monday, October 26, 2009
Friday, October 23, 2009
We Lived Big
More on "what I get from trading":
1. Floyd:
> Before I get into "what I get out of trading" I need to provide you with the background of "why" I trade. I started my career on Wall Street 25 years ago. During that time I held various positions within an investment banking environment while obtaining a masters degree and law degree at night. When I completed my law degree, I had the opportunity to work in an emerging field know as Swaps. While derivatives such options had been around for a long time, Swaps were just becoming a "commoditized" product. Despite my vast knowledge of derivatives, I remained a "buy and hold" mutual fund investor, content to take the easy "random walk down Wall Street." However, life was progressing nicely and I was doing well professionally and financially.
> Then from out of nowhere my life began to quickly unravel. Shortly after my smart and beautiful daughter started high school her behavior, personality, and appearance made a disturbing change. Her mood and appearance became suddenly dark and withdrawn. Athletics fell by the wayside. Self confidence plummeted. She became withdrawn and prone to violent outbursts that injured herself and others and caused damage to home. Our life was on the edge every day and it was clear that our daughter was tormented in some way that even had professional therapists baffled. After two years of turmoil my wife and I were resigned to institutionalizing my daughter.
> Then we found a boarding school in Maine called the Hyde School. It is not a typical high school because if focuses on character, integrity,courage, leadership and concern for others. The motto of the school is "Every individual is gifted with a unique potential" and each student is challenged in many ways to discover their own unique potential. Parents are challenged in the same way as their children to discover their own unique potential through the school's parent education program. Critical self evaluation and reflection are key components of Hyde's program, but most important are the selfless staff and teachers at Hyde. They are truly dedicated to helping each child and their parents find their unique place in world.
> To make a long story short, the Hyde School has turned my entire family's life around. After three years at Hyde my daughter has re-emerged as the smart, caring and beautiful girl that I remember and always hoped she would be. She is in the process of applying to college as a special education major, hoping to make a difference in the lives of autistic and downs syndrome children.
> And I am trading. After the meltdown last September I saw my retirement savings reduced by 50%. With many years of experience in financial markets and derivatives it was time to take matters into my own hands. I liquidated all of my mutual fund investments and started trading. Awkwardly and without much of a plan at first; but then refining, studying and having the humility to look for and ask for help. That is how I found you and OEX options Floyd, and I am truly grateful for your teachings. However, it was Hyde that gave me the courage to trust in myself, my talents and my potential to take the first steps. I am still learning and I still make mistakes. I try to reflect and lean by those mistakes. Overall, however, I am profitable. When I trade I set a certain portion of my profits aside for the Hyde school. I want to be able to help the Hyde school reach the families and children who are desperate to turn their lives around, just as Hyde has helped me and my family. So my trading is in part a recognition of my unique potential and in part a tribute to getting my daughter back.
> Thank you for asking this question. It helps to remind me why I am trading when fear and greed muddy the waters.
2.. I trade to learn to control my emotions. It is a game of zen, where I beat the bid/ ask by manipulating the other people buying and selling. I do nothing but this, and feel relaxed when I am trading, like a great big poker game.
GER
3. And from trader Johnny, who we tributed:
I got home from the hospital yesterday and my surgery has been rescheduled for this coming Monday provided the infections have been eliminated.
The tribute to our friendship brought me to tears, and I would like to call you whenever it is a good time for you.
I hope Jenn is finding that inner strength to help her move through the emotions that have been stirred in her heart and mind as a result of the breakup between her and her boyfriend. I'm confident that with your loving guidance she will find that foundation of true inner knowing that this is a test for her, and that she can and will overcome the emotional upheaval and be a stronger individual afterwards.
Thank you for being my friend!
Johnny
______________________________
The market yesterday went from a low of 9874 theoretical Dow to a high of 10,145. Read our Dow projections carefully. Call traders bought the Oct 520Call as low, easily, as 2.25 and sold to highs of 3.60 by simply following resistance and support lines. We were profitable on calls again today.
We also believe the market is now "nuts" and reaction could follow.
__________________________________________
It is a sad fact that the outpouring of government money has not staunched the job hemorrhaging or loosened credit to the struggling small business owner or shut off the surge in foreclosures.
The outpouring of FED dollars is what I was most afraid of, that it was not enough. I know most of the nation is now fearful of deficit, and the money being spent. I find it surprising that the deficit created by Emperor Bush is never mentioned, still part of our deficit now,as we continue failing in our overseas Iraqi effort.
We have been forced to the worst reality of our lives. We lived big, got big, and now expect not to pay for it. Or, sillier yet, we believe the "private sector" and capitalism left alone will right the system.
I refer you to Goldman Sachs record profits as the answer. What private sector? I know the small businesses that are the mainstay of America and they are NOT doing well. Credit is tightened, business is down , and they do not have jobs to give.
Last week consulting I bankrupted a firm, and a new firm bought the employees. I led this. I hired jobs, and lowered salaries of staff by 23% average for their taking a new job, and ALL 7 employees offered the jobs took them.
I lowered wages because of the low margins of the business (competitive market created by FEAR) and the inability for the new business to establish a large enough credit line, despite 38 years in business.
We blame the government for the situation, yet in actuality, it is the businesses finding they can pay less, they can use people more, and they can "make do."
1. Floyd:
> Before I get into "what I get out of trading" I need to provide you with the background of "why" I trade. I started my career on Wall Street 25 years ago. During that time I held various positions within an investment banking environment while obtaining a masters degree and law degree at night. When I completed my law degree, I had the opportunity to work in an emerging field know as Swaps. While derivatives such options had been around for a long time, Swaps were just becoming a "commoditized" product. Despite my vast knowledge of derivatives, I remained a "buy and hold" mutual fund investor, content to take the easy "random walk down Wall Street." However, life was progressing nicely and I was doing well professionally and financially.
> Then from out of nowhere my life began to quickly unravel. Shortly after my smart and beautiful daughter started high school her behavior, personality, and appearance made a disturbing change. Her mood and appearance became suddenly dark and withdrawn. Athletics fell by the wayside. Self confidence plummeted. She became withdrawn and prone to violent outbursts that injured herself and others and caused damage to home. Our life was on the edge every day and it was clear that our daughter was tormented in some way that even had professional therapists baffled. After two years of turmoil my wife and I were resigned to institutionalizing my daughter.
> Then we found a boarding school in Maine called the Hyde School. It is not a typical high school because if focuses on character, integrity,courage, leadership and concern for others. The motto of the school is "Every individual is gifted with a unique potential" and each student is challenged in many ways to discover their own unique potential. Parents are challenged in the same way as their children to discover their own unique potential through the school's parent education program. Critical self evaluation and reflection are key components of Hyde's program, but most important are the selfless staff and teachers at Hyde. They are truly dedicated to helping each child and their parents find their unique place in world.
> To make a long story short, the Hyde School has turned my entire family's life around. After three years at Hyde my daughter has re-emerged as the smart, caring and beautiful girl that I remember and always hoped she would be. She is in the process of applying to college as a special education major, hoping to make a difference in the lives of autistic and downs syndrome children.
> And I am trading. After the meltdown last September I saw my retirement savings reduced by 50%. With many years of experience in financial markets and derivatives it was time to take matters into my own hands. I liquidated all of my mutual fund investments and started trading. Awkwardly and without much of a plan at first; but then refining, studying and having the humility to look for and ask for help. That is how I found you and OEX options Floyd, and I am truly grateful for your teachings. However, it was Hyde that gave me the courage to trust in myself, my talents and my potential to take the first steps. I am still learning and I still make mistakes. I try to reflect and lean by those mistakes. Overall, however, I am profitable. When I trade I set a certain portion of my profits aside for the Hyde school. I want to be able to help the Hyde school reach the families and children who are desperate to turn their lives around, just as Hyde has helped me and my family. So my trading is in part a recognition of my unique potential and in part a tribute to getting my daughter back.
> Thank you for asking this question. It helps to remind me why I am trading when fear and greed muddy the waters.
2.. I trade to learn to control my emotions. It is a game of zen, where I beat the bid/ ask by manipulating the other people buying and selling. I do nothing but this, and feel relaxed when I am trading, like a great big poker game.
GER
3. And from trader Johnny, who we tributed:
I got home from the hospital yesterday and my surgery has been rescheduled for this coming Monday provided the infections have been eliminated.
The tribute to our friendship brought me to tears, and I would like to call you whenever it is a good time for you.
I hope Jenn is finding that inner strength to help her move through the emotions that have been stirred in her heart and mind as a result of the breakup between her and her boyfriend. I'm confident that with your loving guidance she will find that foundation of true inner knowing that this is a test for her, and that she can and will overcome the emotional upheaval and be a stronger individual afterwards.
Thank you for being my friend!
Johnny
______________________________
The market yesterday went from a low of 9874 theoretical Dow to a high of 10,145. Read our Dow projections carefully. Call traders bought the Oct 520Call as low, easily, as 2.25 and sold to highs of 3.60 by simply following resistance and support lines. We were profitable on calls again today.
We also believe the market is now "nuts" and reaction could follow.
__________________________________________
It is a sad fact that the outpouring of government money has not staunched the job hemorrhaging or loosened credit to the struggling small business owner or shut off the surge in foreclosures.
The outpouring of FED dollars is what I was most afraid of, that it was not enough. I know most of the nation is now fearful of deficit, and the money being spent. I find it surprising that the deficit created by Emperor Bush is never mentioned, still part of our deficit now,as we continue failing in our overseas Iraqi effort.
We have been forced to the worst reality of our lives. We lived big, got big, and now expect not to pay for it. Or, sillier yet, we believe the "private sector" and capitalism left alone will right the system.
I refer you to Goldman Sachs record profits as the answer. What private sector? I know the small businesses that are the mainstay of America and they are NOT doing well. Credit is tightened, business is down , and they do not have jobs to give.
Last week consulting I bankrupted a firm, and a new firm bought the employees. I led this. I hired jobs, and lowered salaries of staff by 23% average for their taking a new job, and ALL 7 employees offered the jobs took them.
I lowered wages because of the low margins of the business (competitive market created by FEAR) and the inability for the new business to establish a large enough credit line, despite 38 years in business.
We blame the government for the situation, yet in actuality, it is the businesses finding they can pay less, they can use people more, and they can "make do."
Thursday, October 22, 2009
What Do You Get Out Of Trading?
Some answers to my homework question:
1. What do you get out of trading?
first, thanks for asking this question...once you put things on paper you can't hide from them anymore...while it is embarrassing, i have to admit, i truly believed there was a "Holy Grail" trading system that would solve all my "problems". so much so that i have spent a small fortune and almost two decades looking for the "perfect" system that would satisfy my desire for success (at an endeavor that very few individuals have true success at) and overpower an obvious strong fear of failure...so what do i get out of trading?...a long and currently positive self-assessment and re-evaluation of my entire thought process, belief systems and limiting behaviors. my only wish (regret?) is the length of time and the "tuition" associated with the countless newsletters, seminars, home study courses (audio tapes, vhs tapes, cd's dvd's, webinars, etc.), software programs, data services, computers, brokers, personal conversations with several traders who wrote books, funny looks and head shaking from my wife, etc. has led me to finally realize that no amount of money can buy an "outside solution" to overcome an "inside problem"...my account balance truly does reflect my success at releasing these inner limiting programs...why did it take so long and cost so much in terms of time, money and frustration?...pick your saying..."when the student is ready, the teacher will appear"..."a problem can't be solved with the same thinking that created it"...or my current favorite..."Duh"
jmp
2. Great question Floyd...
My initial response to the question "What do I get out of trading?" was FRUSTRATED...ANGRY...IRRITABLE...GREEDY....FEARFUL....ARROGANT......PRIDEFUL.......SELFISH... DISTRACTED.....AND SHAME.
I become frustrated with myself for not taking profits when I should. I then allow the frustration to turn into self-hatred (anger). this perpetuates a constant state of irritability that lingers within my demeanor (it's really shame - the feeling that I'm bad or worthless because I continue to lose and not make money). I'm irritated that "I've done it again" and I'm irritated that I feel unable to make a change.
As I wallow in this state of mind, I then become greedy and try to win my money back. This causes me to break my rules, over-leverage and usually win because I'm fearful of taking another loss (in other words, I grab profits quickly). It is during this time that I THINK that I've kept the greed at bay (because I leave money on the table and take profits), the reality is that I'm lying to myself because I over-leveraged big time and got lucky that the trade went in my direction. The fact that I've now won perpetuates more self-deception because I think that I've now "got it" or "turned the corner" and are finally on the right track.
This causes me to become arrogant, place riskier trades where I eventually refuse to take stop losses (pride) because I KNOW THAT I'M RIGHT....or because I MUST be right or because I cannot afford to take a loss of this magnitude.
Of course, I eventually lose my entire investment, if not my entire account. This causes me to become totally self-absorbed and distracted as I throw myself a pity party, trying to figure out what happened, study more technical analysis gurus on the internet, read as many forecast predictions from as analysts and stare at the charts for hours to see how I can improve.
During all of this, because I hate myself, I'm acting like a freakin' jerk towards my wife and kids and I'm neglecting my responsibilities.
That is what trading has done for me so far.
When I tell people all of this, they always respond in the same manner, "It is obvious that trading is not for you. Why don't you just stop doing it?"
I don't know if it is pride or my competitive spirit but I feel as though if I walked away now, then I would be a quitter and that the market would have gotten the best of me. Also, if I quit now, it's as if I'm surrendering to my character defects of pride, arrogance, fear, greed, lack of self-control, shame etc...
I know that in order for me to make money in the markets, I MUST be a master of my own emotions and exercise self-discipline; character traits that all people should strive for. Unfortunately, I've been unable to do that since I began trading 20 months ago.
So on the positive side, what trading has done for me is brought about a greater self-awareness of who I truly am. I was blind to many of these character defects before I began to trade. And I determined to have them removed from my life and make money while doing it.
I just HOPE that starts today.
Let me ask you this Floyd. After you lost the last dollar of your 250K, did you KNOW that things were going to be different before you placed your next trade or did you HOPE that things were going to be different? In other words, there had to be a period of time after your 250K loss and before your 80% success rate where you reflected on your life and career as a trader. What transpired during that time, how much time elapsed between those two periods and what did you feel like during that transition?
I appreciate your time as you analyze my response to your homework assignment.
Take care.
Michael
3. Floyd, I really enjoy studying the market. Admittedly, with family, job/travel commitments, etc I cannot devote as much time to it as I would like, but I really enjoy it. Someday, I hope to make a living from these efforts, but it seems very nebulous at times. I hope to get there, sooner rather than later.
I also like to study complex options trading. I think money can be made if one is careful to understand the risks in any given position. The trick is in understanding adjustments, how they work, when to put on, etc.
It is my hope and expectation that this double-barreled approach will bear fruit one day. Since I have not really made profits with the OEX options approach, it does make it harder to visualize how things would be. But I have to believe that I can do it.
I got laid off 18 months ago. I got another job within three months. I was lucky. I do not want to rely on anyone else for my living. That goal and my pursuit of this goal is something else that I get out of trading.
Jon
4. Four years ago I got fired from a 200k a year job. I had worked for the company 15 years. They fired me on age. Prior to that I worked for a company for 20 years, my pension is bankrupted and they also let me go in a "cost cutting." Both times I was innocent and a good employee. My answer was to FUCK American corporations. I invested 30k in courses on trading, wasted all my money, and then found you. I trade full time for a living now, about 20 hours a week, and bring in about 220 k gross, after commission, or the past three years. I trade because I hate American corporations, and I find your teaching for extraordinary, but uniquely "right on target". To me , trading is my job.
BOB
_________________________
Many believe it's time to raise federal interest rates, and I see the issue. I see no need for short term rates to remain near zero as the economy clearly shows signs of improvement. Gold, oil and other commodities are skyrocketing (I think Gold will hit $2000 an oz, and advise Blue Chip Option subscribers (www.bluechipoptions.com) , the dollar is falling, and interest rates are near zero.)
My Floydian thoughts are simple. Raise the rates to 2% which are still very low, and send a signal to the world markets that the U.S. is serious about helping its falling USD, and stabilize concerns the world has.
With the country saving more, finally, we also need to encourage it. Right now we punish prudent cash investors and reward the more speculative investor, not a fair balance.
So Main Street still suffers, savers have little to gain, and Wall Street is having one of its best years ever. This says three things:
1. The Bush 585 billion bailout by Paulson paid off bank executives and calmed the storm for a few weeks.
2. The Obama infusion stimulated car sales, got the banks out of part of their derivative hell, and sadly without regulation yet in place (Congress) has allowed Wall Street to start the game all over again. It's half paid off.
Meanwhile the nation debates healthcare, armed with all false propaganda and facts, and never figures out that the insurance companies, RNC renegades, and pharmaceutical companies are not our friends, but our business and life enemies in many ways.
Face real facts, not false ones.
____________
The market repeated itself, with highs of 10,159 and lows of 9904. This allowed new put buyers excellent entry on the resistance lines, and profits for new trades to over $2.00 per contract. The 520 Call was also available for tight .5 profits, showing again a top and OTM options hesitant to move.
We'll be using the same signals around this whipsaw.
1. What do you get out of trading?
first, thanks for asking this question...once you put things on paper you can't hide from them anymore...while it is embarrassing, i have to admit, i truly believed there was a "Holy Grail" trading system that would solve all my "problems". so much so that i have spent a small fortune and almost two decades looking for the "perfect" system that would satisfy my desire for success (at an endeavor that very few individuals have true success at) and overpower an obvious strong fear of failure...so what do i get out of trading?...a long and currently positive self-assessment and re-evaluation of my entire thought process, belief systems and limiting behaviors. my only wish (regret?) is the length of time and the "tuition" associated with the countless newsletters, seminars, home study courses (audio tapes, vhs tapes, cd's dvd's, webinars, etc.), software programs, data services, computers, brokers, personal conversations with several traders who wrote books, funny looks and head shaking from my wife, etc. has led me to finally realize that no amount of money can buy an "outside solution" to overcome an "inside problem"...my account balance truly does reflect my success at releasing these inner limiting programs...why did it take so long and cost so much in terms of time, money and frustration?...pick your saying..."when the student is ready, the teacher will appear"..."a problem can't be solved with the same thinking that created it"...or my current favorite..."Duh"
jmp
2. Great question Floyd...
My initial response to the question "What do I get out of trading?" was FRUSTRATED...ANGRY...IRRITABLE...GREEDY....FEARFUL....ARROGANT......PRIDEFUL.......SELFISH... DISTRACTED.....AND SHAME.
I become frustrated with myself for not taking profits when I should. I then allow the frustration to turn into self-hatred (anger). this perpetuates a constant state of irritability that lingers within my demeanor (it's really shame - the feeling that I'm bad or worthless because I continue to lose and not make money). I'm irritated that "I've done it again" and I'm irritated that I feel unable to make a change.
As I wallow in this state of mind, I then become greedy and try to win my money back. This causes me to break my rules, over-leverage and usually win because I'm fearful of taking another loss (in other words, I grab profits quickly). It is during this time that I THINK that I've kept the greed at bay (because I leave money on the table and take profits), the reality is that I'm lying to myself because I over-leveraged big time and got lucky that the trade went in my direction. The fact that I've now won perpetuates more self-deception because I think that I've now "got it" or "turned the corner" and are finally on the right track.
This causes me to become arrogant, place riskier trades where I eventually refuse to take stop losses (pride) because I KNOW THAT I'M RIGHT....or because I MUST be right or because I cannot afford to take a loss of this magnitude.
Of course, I eventually lose my entire investment, if not my entire account. This causes me to become totally self-absorbed and distracted as I throw myself a pity party, trying to figure out what happened, study more technical analysis gurus on the internet, read as many forecast predictions from as analysts and stare at the charts for hours to see how I can improve.
During all of this, because I hate myself, I'm acting like a freakin' jerk towards my wife and kids and I'm neglecting my responsibilities.
That is what trading has done for me so far.
When I tell people all of this, they always respond in the same manner, "It is obvious that trading is not for you. Why don't you just stop doing it?"
I don't know if it is pride or my competitive spirit but I feel as though if I walked away now, then I would be a quitter and that the market would have gotten the best of me. Also, if I quit now, it's as if I'm surrendering to my character defects of pride, arrogance, fear, greed, lack of self-control, shame etc...
I know that in order for me to make money in the markets, I MUST be a master of my own emotions and exercise self-discipline; character traits that all people should strive for. Unfortunately, I've been unable to do that since I began trading 20 months ago.
So on the positive side, what trading has done for me is brought about a greater self-awareness of who I truly am. I was blind to many of these character defects before I began to trade. And I determined to have them removed from my life and make money while doing it.
I just HOPE that starts today.
Let me ask you this Floyd. After you lost the last dollar of your 250K, did you KNOW that things were going to be different before you placed your next trade or did you HOPE that things were going to be different? In other words, there had to be a period of time after your 250K loss and before your 80% success rate where you reflected on your life and career as a trader. What transpired during that time, how much time elapsed between those two periods and what did you feel like during that transition?
I appreciate your time as you analyze my response to your homework assignment.
Take care.
Michael
3. Floyd, I really enjoy studying the market. Admittedly, with family, job/travel commitments, etc I cannot devote as much time to it as I would like, but I really enjoy it. Someday, I hope to make a living from these efforts, but it seems very nebulous at times. I hope to get there, sooner rather than later.
I also like to study complex options trading. I think money can be made if one is careful to understand the risks in any given position. The trick is in understanding adjustments, how they work, when to put on, etc.
It is my hope and expectation that this double-barreled approach will bear fruit one day. Since I have not really made profits with the OEX options approach, it does make it harder to visualize how things would be. But I have to believe that I can do it.
I got laid off 18 months ago. I got another job within three months. I was lucky. I do not want to rely on anyone else for my living. That goal and my pursuit of this goal is something else that I get out of trading.
Jon
4. Four years ago I got fired from a 200k a year job. I had worked for the company 15 years. They fired me on age. Prior to that I worked for a company for 20 years, my pension is bankrupted and they also let me go in a "cost cutting." Both times I was innocent and a good employee. My answer was to FUCK American corporations. I invested 30k in courses on trading, wasted all my money, and then found you. I trade full time for a living now, about 20 hours a week, and bring in about 220 k gross, after commission, or the past three years. I trade because I hate American corporations, and I find your teaching for extraordinary, but uniquely "right on target". To me , trading is my job.
BOB
_________________________
Many believe it's time to raise federal interest rates, and I see the issue. I see no need for short term rates to remain near zero as the economy clearly shows signs of improvement. Gold, oil and other commodities are skyrocketing (I think Gold will hit $2000 an oz, and advise Blue Chip Option subscribers (www.bluechipoptions.com) , the dollar is falling, and interest rates are near zero.)
My Floydian thoughts are simple. Raise the rates to 2% which are still very low, and send a signal to the world markets that the U.S. is serious about helping its falling USD, and stabilize concerns the world has.
With the country saving more, finally, we also need to encourage it. Right now we punish prudent cash investors and reward the more speculative investor, not a fair balance.
So Main Street still suffers, savers have little to gain, and Wall Street is having one of its best years ever. This says three things:
1. The Bush 585 billion bailout by Paulson paid off bank executives and calmed the storm for a few weeks.
2. The Obama infusion stimulated car sales, got the banks out of part of their derivative hell, and sadly without regulation yet in place (Congress) has allowed Wall Street to start the game all over again. It's half paid off.
Meanwhile the nation debates healthcare, armed with all false propaganda and facts, and never figures out that the insurance companies, RNC renegades, and pharmaceutical companies are not our friends, but our business and life enemies in many ways.
Face real facts, not false ones.
____________
The market repeated itself, with highs of 10,159 and lows of 9904. This allowed new put buyers excellent entry on the resistance lines, and profits for new trades to over $2.00 per contract. The 520 Call was also available for tight .5 profits, showing again a top and OTM options hesitant to move.
We'll be using the same signals around this whipsaw.
Wednesday, October 21, 2009
Traders Profit Both Ways
The market moved from a high on the theoretical Dow of 10,138, and a run down to 9953. The bull/bear struggle continues. Trader MR wrote, of many trading yesterday, and summarized a perfect day trading slight moves:
> Profited both ways today.
>
> I bought the recommended put at 6.30 and a bigger buy at 5.80 yesterday - sold at 6.30 today via limit order. I don't like to be in the market for longer than a day or two under current conditions.
>
> I daytraded the call - buying at 3.90 and selling at 4.30 for a quick 10% in about 30 minutes.
>
> I bought a few Nov 103 calls on GLD early in the day, which are down for now - but I believe they'll be back. They have good volume and lots of open interest.
>
> On position sizing. I realized today that I need to keep my profit goals in perspective. If I trade in a manner that increases my active trading portfolio by 1% a week then that's a 50% return over a one year time period. I've already hit the 1.5 % mark for this week, so I could realistically sit out and wait for a few days for the "perfect" opportunity to place the next trade - for example, hitting DOW support at an S2 or S3 pivot point."
This is how to trade this market. Until bias clearly establishes, until upside continues, we are in a new "range" to hit new highs.
Today we'd like to lead with a recommendation we've been giving to our Blue Chip Option Subscribers first:
For traders wanting to invest in cash oriented positions we recommend a Gold hedge of 5 to 15% of a portfolio.
However, we have been recommending to Blue Chip traders that TIPS (U.S. Treasury Inflation Bonds ETF) are an excellent buy right now, we think yields will rise, and that TIPS are a safe investment against inflation that may hit us.
For traders in money markets moving some CASH to TIPS has good long term safety and potential.
_____________
Today I would like to ask a personal question. I want to understand you, and want to help you understand who you are within your emotions affects and effects your trading. So my question is:
What do you get out of trading?
Send your thoughts, your answers and I'll share some thinking with you. Consider this your homework assignment.
> Profited both ways today.
>
> I bought the recommended put at 6.30 and a bigger buy at 5.80 yesterday - sold at 6.30 today via limit order. I don't like to be in the market for longer than a day or two under current conditions.
>
> I daytraded the call - buying at 3.90 and selling at 4.30 for a quick 10% in about 30 minutes.
>
> I bought a few Nov 103 calls on GLD early in the day, which are down for now - but I believe they'll be back. They have good volume and lots of open interest.
>
> On position sizing. I realized today that I need to keep my profit goals in perspective. If I trade in a manner that increases my active trading portfolio by 1% a week then that's a 50% return over a one year time period. I've already hit the 1.5 % mark for this week, so I could realistically sit out and wait for a few days for the "perfect" opportunity to place the next trade - for example, hitting DOW support at an S2 or S3 pivot point."
This is how to trade this market. Until bias clearly establishes, until upside continues, we are in a new "range" to hit new highs.
Today we'd like to lead with a recommendation we've been giving to our Blue Chip Option Subscribers first:
For traders wanting to invest in cash oriented positions we recommend a Gold hedge of 5 to 15% of a portfolio.
However, we have been recommending to Blue Chip traders that TIPS (U.S. Treasury Inflation Bonds ETF) are an excellent buy right now, we think yields will rise, and that TIPS are a safe investment against inflation that may hit us.
For traders in money markets moving some CASH to TIPS has good long term safety and potential.
_____________
Today I would like to ask a personal question. I want to understand you, and want to help you understand who you are within your emotions affects and effects your trading. So my question is:
What do you get out of trading?
Send your thoughts, your answers and I'll share some thinking with you. Consider this your homework assignment.
Tuesday, October 20, 2009
A Few Theories on the Economy
And the market continues its bullish rise, hitting theoretical Dow tops of 10,158. There is strong chartist argument now about whether the Dow will approach 10,700 before correcting, and then the bubble bursting again.
And just as strong an argument that we've more than reached market tops, and will correct to the 9679 area. Call traders were again day trade profitable with easy buys on the OEBKD November 21 2009 520.00 CALL, which was available 3.70 buy to 4.80 sell, right within the tight ranges we recommended on calls. We'll recommend the same trade again today, holding a hedge put. Begin watching if the call or put begin to waver back and forth in slight price ranges, which could afford slight day trade moves of .50 to .75 per contract. This is "learning to fall in love" with an option.
However, that's if the market holds. No one knows. Earnings look good for many companies, and there is a positive resiliency to the market.
Let's talk this week about a few theories of the economy, or better yet, clarification of false facts:
* The Dollar is Collapsing.
It's surely not healthy, is in a downtrend, but the ICE U.S. Dollar Index is about the same as it was a year ago.
* Institutional traders have not yet fully entered the market, and it will raise our outlook higher.
The average U.S. equity fund is right now about 5% higher than the S&P 500. Fund managers are playing stocks on the uprise well.
*10,000 is too far a jump and too high, too fast
This is true in many ways ,but part of a normal retracement from bottoms. For reasons we'll debate forever, it's happening very fast.
*Many compare what is happening now to what happened in 1974-1975, which would imply a very stiff correction shortly, followed by new highs.
This is very true. And very possible. The ONE variable left out of the economic turnaround in real estate, which is a lie.
*Real Estate sales are improving.
Commercial real estate is a bubble waiting to collapse. Residential real estate 2 of 3 homes sold are in foreclosure, or short sales. A bit of optimism on "facts here"
_______________
The Dow has criss-crossed 10,000 no fewer than 25 times before, sometimes amidst bubbles, and sometimes like last Friday where it closed at 9996, up 1.3% for the day. We talk about this two days later, as the 10,000 area, and how long and if the market holds at this "magic 0000's" threshold.
What we may be seeing is the re-making of the USD, and of the values we put on things. People say they cannot afford even state or county taxes, point rightly to the constant fraud, but drive on roads with unsafe bridges, and fly in vastly overpopulated air traffic highways, on what appear outdated planes. We may see a re-shaping of priorities, and we may see as unemployment remains high (some think just under 10% is the NEW standard) that our entire spending priorities will shift, putting the country more in turmoil.
And just as strong an argument that we've more than reached market tops, and will correct to the 9679 area. Call traders were again day trade profitable with easy buys on the OEBKD November 21 2009 520.00 CALL, which was available 3.70 buy to 4.80 sell, right within the tight ranges we recommended on calls. We'll recommend the same trade again today, holding a hedge put. Begin watching if the call or put begin to waver back and forth in slight price ranges, which could afford slight day trade moves of .50 to .75 per contract. This is "learning to fall in love" with an option.
However, that's if the market holds. No one knows. Earnings look good for many companies, and there is a positive resiliency to the market.
Let's talk this week about a few theories of the economy, or better yet, clarification of false facts:
* The Dollar is Collapsing.
It's surely not healthy, is in a downtrend, but the ICE U.S. Dollar Index is about the same as it was a year ago.
* Institutional traders have not yet fully entered the market, and it will raise our outlook higher.
The average U.S. equity fund is right now about 5% higher than the S&P 500. Fund managers are playing stocks on the uprise well.
*10,000 is too far a jump and too high, too fast
This is true in many ways ,but part of a normal retracement from bottoms. For reasons we'll debate forever, it's happening very fast.
*Many compare what is happening now to what happened in 1974-1975, which would imply a very stiff correction shortly, followed by new highs.
This is very true. And very possible. The ONE variable left out of the economic turnaround in real estate, which is a lie.
*Real Estate sales are improving.
Commercial real estate is a bubble waiting to collapse. Residential real estate 2 of 3 homes sold are in foreclosure, or short sales. A bit of optimism on "facts here"
_______________
The Dow has criss-crossed 10,000 no fewer than 25 times before, sometimes amidst bubbles, and sometimes like last Friday where it closed at 9996, up 1.3% for the day. We talk about this two days later, as the 10,000 area, and how long and if the market holds at this "magic 0000's" threshold.
What we may be seeing is the re-making of the USD, and of the values we put on things. People say they cannot afford even state or county taxes, point rightly to the constant fraud, but drive on roads with unsafe bridges, and fly in vastly overpopulated air traffic highways, on what appear outdated planes. We may see a re-shaping of priorities, and we may see as unemployment remains high (some think just under 10% is the NEW standard) that our entire spending priorities will shift, putting the country more in turmoil.
Monday, October 19, 2009
A Market Quite Unsure
Friday we saw a market quite unsure if it would hold above 10,000. We saw a market that hit a theoretical Dow top of 10,100, a resistance area, and a low of 9899. The count holds at 3 to the put, not quite a bias that defines "ready to trade," yet the market did not do well holding above 10,000 after one day.
After hitting stop loss on our put last Friday, fortunately on a dip that lowered our losses, and for some broke them even, I'm hesitant to recommend a put on a low count, and will provide dual signals based on signals.
We believe the market is at a top and will bottom test likely at 9550 to 9720.
After hitting stop loss on our put last Friday, fortunately on a dip that lowered our losses, and for some broke them even, I'm hesitant to recommend a put on a low count, and will provide dual signals based on signals.
We believe the market is at a top and will bottom test likely at 9550 to 9720.
Friday, October 16, 2009
Let's See Which Reality Sets In
My commentary, you may have noted, has been more muted the last few days, as the market struggled to hit 10,000. While 73% of companies reporting last quarter had good earnings, most are generating profits by slashing costs and workers, an approach that has unemployment near 10%, at 1983 levels. I worry that a lot of these profits are not because these firms are expanding revenues but because they're controlling cost by laying off workers.
In other words, as the market surges these companies are not acting as if we're going to have a recovery, but remain in defense mode. It is our fault that there are not new jobs, not Obama's, although infrastructure rebuidling as stimulus creates huge jobs and may be supportive.
Anyway, I guess I have been the quiet skeptic, quite surprised to see the rebound show such resilience, but frightened silly at the profits Goldman Sachs is going to make, and that the top traded stock for profits for the past six months was AIG, a phantom company.
A bit of me is more than saddened by the devisive nature of a few that can affect a majority. We are so easily led.
Okay, to the market. Hesitation all day but by mid afternoon all call traders had profited. Here's a great email from a new trader from France, nicknamed "Yellowman", :
Ok, I bought the call today at 9,50 ... and had my sell order at R1 (10071) ... I did a recalculation of the subset R/S and I had a new R1 of 10042... with the dow trading at 10033 (near the new R1) so I sold it at 11,00... I hope that was ok to do?
That's superb profit and what a trader should look for.
Although the market showed no strength it allowed call buyers easy entry and good fast day trade profits, which leaves us with our hedge put, which we'll stop loss today. With the market falling at 3.30 we saw even more of the nervousness of this market yesterday and do not want to hold positions over the weekend. No new trades.
Let's see "which reality sets in."
In other words, as the market surges these companies are not acting as if we're going to have a recovery, but remain in defense mode. It is our fault that there are not new jobs, not Obama's, although infrastructure rebuidling as stimulus creates huge jobs and may be supportive.
Anyway, I guess I have been the quiet skeptic, quite surprised to see the rebound show such resilience, but frightened silly at the profits Goldman Sachs is going to make, and that the top traded stock for profits for the past six months was AIG, a phantom company.
A bit of me is more than saddened by the devisive nature of a few that can affect a majority. We are so easily led.
Okay, to the market. Hesitation all day but by mid afternoon all call traders had profited. Here's a great email from a new trader from France, nicknamed "Yellowman", :
Ok, I bought the call today at 9,50 ... and had my sell order at R1 (10071) ... I did a recalculation of the subset R/S and I had a new R1 of 10042... with the dow trading at 10033 (near the new R1) so I sold it at 11,00... I hope that was ok to do?
That's superb profit and what a trader should look for.
Although the market showed no strength it allowed call buyers easy entry and good fast day trade profits, which leaves us with our hedge put, which we'll stop loss today. With the market falling at 3.30 we saw even more of the nervousness of this market yesterday and do not want to hold positions over the weekend. No new trades.
Let's see "which reality sets in."
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