A Myriad of Complexity

The market again suffered a complete free-fall, moving the theoretical Dow lows of 9814, just near the Fibonnaci retracement we have used time and time again.
As this bottomed, and after obvious futures news in advance of down movements worldwide, we just sat back. We weren't in on the put, and many traders took second entry to the OEX July 500 C, averaging cost.

And several Advanced Mentoring students who were "dual trading reported" 86% returns on OEX JUL 17 2010 490.00 PUT in yesterday's trading.
__________

June consumer confidence is reported today. The World Gold Investment Congress takes place in London. Tomorrow, the SEC (Berrnie's buddies) will vote on a rule that will prohibit "pay to play practices."

And the second quarter ends. Today Obama meets with Saudi Arabia's King Abdullah.

Someone might want to investigate how much investment Aramaco (Saudi's oil company, the Senior Bush on the Board, had in the BP oil drilling, and how much they have with other companies.

It is a myriad of complexity.

________

Advanced Mentoring client MR always reads my "Floydian Rants" and does his research. On my last rant to the Tea Party's, created by Karl Rove, I noted that these idiots handed out The Constitution before each meeting, as if it were the Word of God. I pointed out one of the dudes that wrote this might have had good theory, but.....

"I read up on Jefferson (based on a Floydian Tea Party Rant) and found out things like: Jefferson was again slavery in theory, but was so in debt that he could not afford to free the ones that worked for him - and never was able to escape that within his life time. Interesting that the virtue of life long indebtedness was already instilled by the 1700's. Seems like we need to keep searching our history books to find how "it ought to be." Maybe in truth it never really was "how it should be" which wouldn't be all that surprising, after all - we're human - and awfully dishonest, unfair, and brutal to each other historically....I see there is more. Reportedly fathered some children to one of his slaves. Allegedly questioned the existence of God. He diverged greatly from the orthodox christian views of the day. Seems like he was rather liberal in some of his thinking. Died broke, the only reason he wasn't evicted from Monticello was because of his stature as a politician. He was in France during the drafting of the constitution, fine dining and having his slave trained as a french chef."
There is good reason for my angry rants. Much of our action and reaction as a nation is based on propaganda, and false facts, and as innocent citizens just "working and living" we don't fathom the details of the dishonor, or the deceit. Sadly we are obese nation reading at an 8th grade level, watching TV 2.5 hours a day or more, and believing FOX news or any extremist, right or left, that "plays well."

This is true in the market also. Some stocks "market" well, and have a brand. Some stocks follow few chart patterns and live on "innuendo and hype." And Dow projections, support and resistance, and pivots often get caught up in the volatility that is created over exposure. Think carefully about these statements, and when I rant, recognize I am acting again as the provocatuer, and helping to fight false facts.

Allan Abelson says it well: " Mr. Obama was NOT the agent of the credit crunch or the Great Recession. But voters thought he would get things cracking again."

And that alone is our issue....things are not better instantly. We can't go back to the way it was. Thusly, he's probably not an American citizen and should be impeached.

It's Far From Over

Yesterday through noon the market began "flat lining" or trade range hesitating trying to study all the different news and decide what should be "marketed." Believe this...the analysts and market makers get ready to build up before any "bad" or "good" news.
We saw classic trade range moves from Theoretical Dow Lows of 10,061, and highs of 10,241 thru the 3.30 p.m. hour

We see a market that has increasing chance of volatility and increasing "tops and bottoms". Study always the support and resistance lines and be sure to re-calculate intraday or take advantage of our Twitter email for any moves around 100 points.

Announcements: Construction for May Car Sales
Pending Home Sales ISM Manufacturing Report

All of these will be announced at 10 a.m. EST


Europe's financial-stability facility-emergency loans for euro-zone countries-is expected to be activated. This is a big deal

_______________________
The great burst upward by equities, speculative bonds form the March 09 bottoms lent a credence to the anticipation of a dramatic and sustained recovery for the economy.
Oops, later we figured we better take some profits from this 1000 point meteoric rise, and the bottom began falling.

This leads the talking heads babbling about another recession, and a second housing bust.

The housing bust may well occur, as it's far from over, and nothing was that much better as the market rose meteorically,EXCEPT the economy was slowly recovering, and the Blue Chip companies were doing well, and still are.

The nature of trading in the market has changed dramatically.

And we are now led by fractions, divided, of no bi-partisanship, no willingness to work together, and arguments over whether Obama is an American citizen.

This is my favorite of the day: Brewer: Most illegals are 'drug mules' http://www.cnn.com/2010/US/06/25/arizona.immigrants.drugs/index.html
This person was elected as a Governor and honestly believes this crap. It's amazing.

It's How We Chart

Last week was exceptionally profitable for OEX Options and we were profitable in 8 of 8 trades. To trade successfully last week took nerves of steel just to watch the market vacillate.
We did act contrarian last week, believing the market had more upside potential, and would "hold" at the head and shoulders pattern. During the week we heard from every bear in the world that we were ready for another and deeper correction, and a new "bottom test."

This may be true but we continue to see more economic good news than bad, and think contrarian again that the market has more upside potential, to 10,450 area before hesitancy, actually breaking the 10,350 resistance struggles we've been at for a week.

We "fall in love" with an option. It's how we chart. We effectively are learning the trading range of an option itself around the support and resistance lines. For over two weeks we've been playing the July OEX 500 Call, and it's our contrarian trade to start the week.

----------------

Hmmm:

1. 39 trillion is the collective worth of millionaires in 2009, an increase of 19%
2. There was a 17% increase in just the number of millionaires in 2009

3. Not including the primary residence there were 10 million people who had a net worth of at least 1 million.

*The Feds have announced that rates will hold "for the near future" with no inflationary plans. Translated: The FOMC is a valueless instrument that creates much of our financial greed and panic, and have told us yet again what is obvious.

*It has been made clear now that President Obama is responsible for everything wrong, and Sarah Palin wants us to compare him to Hitler. He can do no right with BP (Government intervention to the conservatives, amateur belief in BP by cynics, and not enough of a hard stance by others.

I'll stick with Hitler.

This is all important as it shows how we are being misled, and we "fall" for tricks. The Palin babbles, split votes, are all signs of dissension caused by two things:

1. Karl Roveian politics, the brilliant way we got a guy with an IQ of 98 in the WhiteHouse for 8 years so that "the boys could do their thing."

2. An immature party of people that will allow no bill to pass, effectively stalemating the country in any decisions.

________
Simply put we are a nation, and perhaps a world, that have polluted ourselves, in all ways, with "plan b" for when the pollution begins rotting us.

A Rock is Not Hard

By 1.30 p.m. the market had hit lows, again, of 10,123. The world is babbling about another large correction, that Europe will bring us down, that Obama is at fault for the BP disaster (my favorite), that half the country now believes we are heading in the wrong direction, and that much of the country believes we have become a socialist country (we have been one for over 40 years).
I often hit a point of laughter as the talking heads explain away what just happened, or why it happened, or why they recommended BP just before it was found guilty of faulty rigging, safety regulations, and compassion.
I still remain amazed that it takes Rolling Stone Magazine to first uncover:

1. The Goldman Sachs fraud
2. The oil fraud
3. The Afghanistan idiocy.

They are not paid off by lobbyists. Matt Taibbi, son of the veteran newscaster, is a "gonzo journalist." He can't be argued on this factual analysis, and he speaks in his language. which includes swear words so it can't make "the honest papers."

Chartists following the head and shoulders formation we wrote on yesterday saw the immediate downside that occurred at opening.
Chartists again had reasoning behind the FEAR. Floydian comments filled with satire are in bold

----------
-- LINK BETWEEN BONDS AND STOCKS CHANGED IN 1998-
-- FALLING BOND YIELDS ARE NOW BAD FOR STOCKS
-- FALLING RETAIL STOCKS ARE ANOTHER SIGN OF WEAKNESS
-- SO ARE DROPS IN HOME DEPOT AND LOWES
-- 13 and 34 DAY EMA LINES ARE STILL NEGATIVE

Retail sales are far off because we are saving money as a people.
Home Depot and Lowes are off because retail sales are off, and the economy is off
Chartists that give us this type of information are responding to what occurred that day.

________

We have done well in our Blue Chip Options stock and stock option picks this year as well as trading the OEX successfully.

We've certainly noticed the rules of stock trading have totally changed, and most of the stock books are now outdated.

"The thing always happens that you really believe in; and the belief in a thing makes it happen." - Frank Lloyd Wright
The most successful of our students and subscribers adhere to higher risk orientation, strong capital, and complete control of emotions. Brokers that use us, usually the most emotional,
or analysts that are ready the "project the Dow" to know where to "insure a position" are looking most for the trade ranges that they will occur in.

PNF charting does this perfectly, from the one minute to the weekly chart, and with the various "views" that one can have of the supply and demand in real view; a chart without noise.

Set your rules of loss and risk ratio. Decide what you are trading, for the day, for a few days, for the longer term. How often do you want the excitement or FEAR of watching the market by the nanosecond.

If you are going to get good at something, you have to do it 50,000 times. A proven fact. Study. Paper trade. Ask questions. Trading is an art, a zen in the way of what we have made money, which is not real.

As a rock is not hard. It is only as you know it to be.

99.4% of all Talking Heads are Wrong

The General should have been fired for being so stupid as to be interviewed by Rolling Stone, who has two other journalists uncovering Goldman Sachs, the actual oil game, and now a General in dispute with his own side. Please note this "liberal" publication has broken three stories that have all been "shock and glory." I have so much fun watching Goldman take a dive.

I smile at our euphorias, and frown at our greed and fear.

"When you learn not to want things so badly, life comes to you"- Jessica Lange
I believe the repetition of core rules constant and fundamental to a traders success:

1. It doesn't matter what you think should happen.
2. 99.4% of all talking heads are wrong
3. Set your buys and stick to them. Set your sells and stick to them. Have parameters
4. Take losses. It is the sum of the parts that make index option trading profitable
5. Paper trade for at least 90 days. Anytime you are doing poorly, stop, and paper trade again
6. Anytime you are doing well do not stop trading. It means you have caught the wave, or the "breath of the market."

Will there soon be a world currency? Is this the "new world order" or is it that we've all phucked up our own currencies so much it's best to start fresh.

"Medvedev Shows Off Sample Coin of New ‘World Currency’ at G-8

July 10 (Bloomberg) -- Russian President Dmitry Medvedev illustrated his call for a supranational currency to replace the dollar by pulling from his pocket a sample coin of a “united future world currency.”

“Here it is,” Medvedev told reporters today in L’Aquila, Italy, after a summit of the Group of Eight nations. “You can see it and touch it.”

The coin, which bears the words “unity in diversity,” was minted in Belgium and presented to the heads of G-8 delegations, Medvedev said.

The question of a supranational currency “concerns everyone now, even the mints,” Medvedev said. The test coin “means they’re getting ready. I think it’s a good sign that we understand how interdependent we are.”

Medvedev has repeatedly called for creating a mix of regional reserve currencies as part of the drive to address the global financial crisis, while questioning the U.S. dollar’s future as a global reserve currency. Russia’s proposals for the G-20 meeting in London in April included the creation of a supranational currency."

A Large Lesson Learned

" We make things happen by wishing them, because we are not the only observer of what we experience, but also the creator"-Vilayat Khan

A large lesson learned: The long recession has cast a glaring light on the fact that public and private workers increasingly live in separate economies.

___________

In our Monday commentary we mentioned that we are watching steel. U.S. Steel had 850 $46.00 calls and 800 $50.00 calls; overall 29,000 call trades, and 20,000 put trades.

We think much of this might be moving from the "front month" (July), and traders looking for more time. We saw the same thing in AK Steel Holdings, with 13,600 August $15,$16, and $17.00 calls changing hands.

So, there is a bet going on sparked by China's move.

An Easing of the FEAR Index with VIX

Wheee! 130 point run up at the start, all on the Chinese devaluation. Everything will be "fair" now :) Done before the G20 meeting, this allowed an early upside to 10,634, very close to a Dow top. A few traders had not followed rules and kept some of the July 500 Call over the weekend and were rewarded to sales of 16.60.

So, what we are saying is: The market hit theoretical highs of 10,634 by 10 a.m, and lows of 10,410 by 1 p.m., showing massive volatility. And by 3.30 p.m. had turned and hit theoretical Dow lows taking us right back to Dow 10,350.

There has been an easing of the FEAR index with VIX; this means outperforming stocks will break away and have the chance for break out, or to be judged as a stock itself, not part of the "slide" in general.
We now approach a Fib top at 10,746 and a very nervous world about G20, the yuan, the Euro, Gold falling (as we predicted-but perhaps just short term)

"You can have anything you want if you will give up the belief that you can't have it." Dr. Robert Anthony

Analysis of Logic: The very thought that BP should cancel the dividend on its common stock, or put all that money into a fund administered by the government, is truly Floydian comical.

About 39% of BP shares are owned by U.S. Citizens through individual accounts, mutual fund companies and pension plans, and of course the huge amount of Brits that have this in their pension plans.

Grandma will not be getting her quarterly dividends, and we've robbed the shareholders of the company also. Not bad management alone, but simple lack of regulation. The Bush Administration took all those "silly rules" out as they lowered the chances for fast oil exploration, to help pay many cronies off.

As Obama is now criticized for "too late, or not enough sympathy," make logical note that this was not a predicted force of weather, but a man made ongoing catastrophe.