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Author: Mike Celeste Editor: Tony Ponzo February Circulation:

Stat Sheet Week Ending February 7th 2009

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+280.0+3.5%-775.0-8.8%
S&P+43.0+5.2%-77.0-8.5%
NAS+116.0+7.9%+15.0+1.0%

Highlight of this past week: The Indicator strategy remains with a perfect record for 2009 and the Momentum strategy keeps stacking up the profits.

In this Issue---
Options---
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We still did some option writing this past week and it looks good so far. Pick your stocks, and a suggestion---write Calls at the top of the market, and write Puts near the bottom of the market. There are a couple of ways to do it---You can use the trading range presented by the indexes. Another way would be to go for short trades and base your writing on the Support and Resistance points that we give out on the Indicator page and the Momentum Active page. You would aim at stocks that generally follow the trend of the indexes. We like a goal of 1%/month, as we have said before. For example, if writing a $10 strike price for the current month, you could aim for a 10 cent profit, net--adding on a bit to cover the cost of commissions. Of course if the trade is moving fairly fast in your favor, you can hold the trade and get a bit more or possibly even a lot more depending on the move.

 Momentum Plays - Another Winning Week and More Lessons---
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We had yet another winning week in the Momentum Strategy moving ahead in our profit margin. We are now sitting on top of an 89.3% profit margin and we are feeling pretty good about that. Team members are obviously pleased as well. We do have to say though that the action was tougher this week and we had to work a bit harder to get our profits. And we did have two losses but the profits outweighed the losses and that's what counts.

Members keep reporting to us how they do on the trades and we are very excited to see some of the creative action our team members are taking. Some are going in with 50 contracts or more, some are trading more expensive options with higher strikes and bigger Deltas which makes bigger dollar profits and some are staying in a play longer than what we post. This week, those that stayed in longer made bigger profits and in a couple of instances, team members made substantially bigger profits. Other team members added to their positions when the play went in the wrong direction at first. In other words they are cost averaging. Those who did that stayed in when we cut the play and they made the right move. One team member employed the cost averaging technique, held a play overnight and got out the next day with a profit. That was on a play that we reported a loss on. Congrats to those members and keep up the great work!

More Lessons
For a number of weeks we have been giving out various trading technique tips and bits of helpful information. Our members seem to pick up on this information and use it to their benifit. Therefore here are a few more bits of information we would like to discuss today. We talked about this first one in one of our nightly recaps to the Momentum Strategy players but here it is again for all the readers to study.

1. This week we had a SPY play that moved in our favor but then it just kind of stalled for a long time. We were ahead on the play but we got impatient and sold for a small profit. But since we were ahead, we could have set up a parameter order by which one order cancels the other. TD Ameritrade calls it a "conditional order". What we would do is put a profit sell price on one side for say .40 up from buy price. Then on the other side we would put up a stop loss at our buy in price or slightly below. (Each member would choose their own parameters.) With this type of an order, whatever comes first is what you get - either the .40 profit or an out at break even or slightly below. Now then, if the trade moves further in your favor but not to the .40, raise the parameters so now you are looking at .60 profit and a .20 stop above your buy in for example. Now, you either win .60 or .20. You can't have a loss. And that can be moved up again if things keep moving your way and if you want to try for more. A play doesn't often move in a way that you can do it but it happens enough to consider the technique. If you don't have the ability to do this type of order with your broker or if you think it is too much trouble, you can always put these parameters in you mind and then execute the sell when one or the other hits. But you have to be fast and decisive if you do it that way. You can't second guess your parameters or you'll miss them. Just one more creative idea for you.

2. Member Alan brought this next issue to our attention. We knew about it but we rarely have a need to apply this knowledge but we did this week. We had a late day SPY play that ran into the close of the market. A couple members decided to hold the play as it was at a loss and they were hoping it would go back in their favor the next day. The point we want to bring up here is the SPY trades for about 20 minutes after the close and most brokers will allow you to trade the option for that 20 minutes or so. With this particular play the trade went back in the members favor and the play could have been closed out at close to even - better than the loss the play had going into the close. There you have it. We hope this information can be beneficial for you.

Learn more about this strategy.

Indicators---
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We added one more win to the Indicator list this week, on Friday. That has continued our unbeaten win streak for this year. For you readers who are interested but have not yet joined the team, this is our lowest priced strategy and with the win rate that it has, it is worth much more than the 19.95 monthly fee. Plus we have a 30 day money back guarantee. So again if you have any interest check it out at The Indicators.

Feedback---
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We want to thank all of the team members that have been sending in results of their winning plays on the Momentum and Indicator plays. It is gratifying to hear that they are doing so well.

 The Economy, The Markets & Commentary---
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This past week was the first week in a while that showed gains for the week in the markets. It seems that we are in a trading range and every time we get down under 8000 on the Dow, there is a nice rally. Now we shall see if the top of the range can be pierced.

The labor report came out and while it was substantially higher than the expected 524,000 job losses, coming in at 598,000, it was less than the "whisper number" of 600,000. Now, that's not much less, but it was enough that it was discussed. There was another added note. If part-time employees, discouraged workers and others are factored in, the unemployment rate would have been 13.9% in Jan., the highest on record, according to the AP. The markets headed higher because bad news is so bad it was felt that it pushed the urgency to get the stimulus bill through. It is getting to the point where $100 billion is a casual amount and not serious until we are talking a trillion--and that might not be enough. I'm old enough to remember when the total US budget was $100 billion--yes, the total budget. Could this be another "haste makes waste" effort? I am reminded about the tale of the "3 Little Pigs". Their mother sent them out into the world to live in their own homes. Two of them took the quick and easy way to build a house, and the wolf blew them down. The third pig took more time and built a strong home of brick and mortar, and the wolf couldn't blow it down. He did it the right way. Are we doing it the right way, or the quick and easy way of throwing money in some of the wrong places? Time will tell, of course.

The President has been on TV a good number of times this past week, explaining his position and his desires for getting us out of this mess. Of course, that is when we are done hearing about people suggested for the Administration and how much in taxes they "forgot" to pay. Right now, I guess we just have to wait and see what kind of final program gets passed and then see if it does what it is intended to do. So, again, we will wait.

An update on the gas situation. Here in southern California, we have seen our gas prices go up from $1.59/gallon to about an average of $2.14/gallon. That's a 55 cent increase, or about 1/3 more than it was---and oil has stayed in a relatively tight range. Are we being shafted? It sure seems to be the case. The refineries are not refining, pure and simple--and it is because they want to make more money per gallon. There is a plentiful supply of oil, and that has been well documented. We get small victories in our economic battles as individual consumers and we end up losing the war. Don't be fooled by any numbers that say our economy is saving 4 billion dollars by the drop in gas prices. Don't forget, it originally cost us that much, or more, when the prices went up. And now they are rising again, so the benefit is being eroded quickly.

----Stay tuned.

 Today's Thought---
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Knowing is not enough: we must apply.
Willing is not enough: we must do..............Johann Wolfgang von Goethe......German writer


Mike

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