Mutual Fund Blue Chip Holdings End of Year Update

Blue Chip “Mirroring Funds”

Most mutual funds are simply a bad buy. You’re paying institutional investors a fee each month to manage your account, and it’s been proved that the actively traded (vs. index) funds often boast high fees, and low returns. These “mirror” funds are either ETF’s or unique funds that are well managed, with low expense ratios.

SPDR DJ Global TITANS ETF Symbol: DGT

https://www.spdrs.com/product/fund.seam?ticker=DGT

Rationale: This ETF mirrors perfectly and is easy to trade. The SPDR^® DJ Global Titans ETF, before expenses, seeks to closely match the returns and characteristics of the Dow Jones Global Titans Index (ticker: DJGTR). Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs

Guidance: We began buying 2/29/08 at 48.70, and doubled our purchases on the market bottoms at 6800 at 36.00 for an averaged cost of 40.23. Currently at 58.41, and paying a dividend, we consider DGT a long-term hold. Stop loss at 20% trailing stop loss or PNF stop at 49.00

Third Avenue Value Fund Symbol: TAVFX

http://www.thirdavenuefunds.com/ta/

Rationale: We’ve invested here with Marty Whitman, who we believe equal to Buffet, but as one of the greatest value investors in the world. We usually enter and exit TAVFX with 20 to 25% returns in 6 months, if we time it right, and have returned over 65% annually several times, when value stocks were prime. It’s a core position for any conservative investor.

Guidance: We recommended this position in March, 2009 at 30.00. This is long term hold position, using no stop loss

Zweig Total Return Fund Symbol: ZTR

(also a bond fund)

http://www.etfconnect.com/select/fundpages/other.asp?MFID=3867

Rationale: “The fund seeks high total return over full-market cycles by investing primarily in high quality bonds and to a lesser degree stocks. The fund will normally invest between 50% and 65% of its total assets in the highest quality fixed-income securities and between 25% and 35% in equity securities. Our objective is to participate solidly in rising stock and bond markets and protect the bulk of those gains in declining markets.”

This is a closed end ETF that is currently 10% below Net Asset Value, making it a bargain, and paying a dividend annually of 10.84%. The great stock trader Martin Zweig advises the fund.

Guidance:

This is one of our largest and longest term buys. Paying over a 10.55 yield we originally bought ZTR at 3.00 in January 2003, and doubled our position at 2.50, for an average cost of 2.66. ZTR is a long term buy on any dip, with no stop loss. With such a high dividend it’s best held in an IRA, 401k, or SEP.

Real Estate Blue Chip Holdings End of Year Update

Real Estate

Proshares Ultrashort Real Estate ETF Symbol: SRS

http://www.proshares.com/funds/srs.html

Rationale: This is short on the real estate market, in an ETF fund, and one of our best investments. www.bluechipoptions.com believes we still have a huge commercial real estate bubble ready to burst. Banks/insurance companies, and many investing companies are behind the great strip and commercial mall expansion during our “years of greed”. Tenants are already requesting “price adjustments” for their declining business, and we think it’s a big surprise for America when this one bursts. We often trade this as an option.

Guidance: We do not have a current position in SRS. Watching

Annaly Capital Management REIT Symbol: NLY

http://www.annaly.com/

Rationale: Annaly Capital Management, Inc.manages assets on behalf of institutional and individual investors worldwide. Annaly’s principal business objective is to generate net income for distribution to investors from our investment securities and from dividends we receive from our subsidiaries. Annaly has elected to be taxed as a real estate investment trust (REIT)

Guidance: Long-term subscribers with us bought NLY 11/23/04 at 9.60. It currently trades at 18.08. We have not taken second buys on NLY. It currently pays a dividend of .69% and has been a core investment REIT holding for many years. Do NOT buy at today’s prices.

Computers/Internet Blue Chip Holdings End of Year Update

Computers/Software/Internet

Apple Symbol: AAPL

http://www.apple.com/

Rationale: Floyd has been trading Apple for over 15 years, and considers both it as a company, the products they make, and the way they market sheer brilliance.

We invest long in the position, and also buy puts and calls.

Guidance: Do not currently own position. Watching.

Research in Motion Symbol: RIMM

http://www.rim.net/

Rationale: Floyd has been trading Blackberry for over 8 years, and considers both it as a company, the products they make, and the way they market sheer brilliance.

We invest long in the position, and also buy puts and calls. RIMM is a small version of Apple, with less invention, but a strong following. They constantly surprise.

We buy this position long, and also play puts and calls on it.

Guidance: Do not currently own position. Watching.

Google Symbol: GOOG

http://www.google.com/finance?q=NASDAQ:GOOG

Rationale: All their money comes from advertising, a scary model, but Google is far ahead on their own version of Microsoft Office, and “Free” services that can attract even a business network. At www.bluechipoptions.com and www.oexoptions.com we often recommend Google email to subscribers having difficulty getting our bulk mail subscriptions. We advertise with this company.

Every part of doing business with this company is good, and it also trades amazingly close to the OEX projections and system. We play long on the stock at times, and often buy puts and calls. One of our traders 5 years ago made over $300,000 on one Google call. It’s one of our favorites.

Guidance: Recent moves at Google have us interested in this stock again. It has another incredible run up in the past year, and we’ll be watching for entry on any good “breakdown” of the stock.

Yahoo Symbol: YHOO

http://finance.yahoo.com/q?d=t&s=YHOO

Rationale: Yahoo is the underdog in the game. They never seem to get it quite right. But they are close, and have a brand name. With the right leadership we continue to believe Yahoo has great merit as an internet stock, and watch/play it long, and buy puts and calls at various times.

Guidance: Do not currently own position

Emerging Markets-Blue Chip Holdings End of Year Update

Emerging Markets

The Templeton Fund is our core investment. We often find “break out” emerging market stock that we also invest in.

Templeton Emerging Market Fund Symbol: EMF

http://quote.morningstar.com/etf/chart.aspx?t=EMF

Rationale: Mark Mobius is simply the greatest student of Templeton, and understand the Global markets well.

http://en.wikipedia.org/wiki/Mark_Mobius

Guidance: Originally bought 12/1/2008 at 6.90 EMF has hit highs of 22.00, and appears headed there again. Blue Chip Options uses EMF as its core international holding, and its holdings in various Blue Chip Stocks, specifically DGT, to mirror additional international exposure.

Retail/Distribution Blue Chip Holdings End of Year

Amazon Symbol: AMZN

http://finance.yahoo.com/q?s=AMZN

Rationale: Amazon is far ahead of the game with Kindle, the electronic reader. Many think Apple and Steve Jobs will do a marketing shift and soon have their own electronic reader.

Amazon just bought Zippo.com, and remains a top distribution model with Jeff Bezos, CEO, as a visionary. We trade the stocks and puts and calls.

Guidance: We bought Amazon 3/30/09 at 64.50 and have doubled our money with current prices at 127.80. Amazon is light years ahead in its retail distribution model, of all brands, and has a time advantage on this product over Apple and Sony, both hot behind in the electronic media format. Traders should always consider selling 1/3 or more of a position when we’ve seen this many highs and a doubling in less than a year.

La-Z-Boy Symbol: LZB

http:// www.la-z-boy.com

Rationale: La-Z-Boy has cut costs, and we think home redo’s, part of “cocooning” in the “new economy” will be a consumer spend. As the economy improves, LZB has great potential for earning jumps

Guidance: On 9/2/09 we recommended this position at 7.90 to hold in our speculative portfolio. Use a 25% trailing stop loss or PNF chart stop loss at 6.50

JM Smuckers Symbol: SJM

http://www.smuckers.com/

Rationale: Smuckers is well run. It is THE brand. It’s also a value stock that got hit by the crash, and we recommended 11/9/09 at 53.90

Guidance: . Use an pnf stop loss at 45.00, or increase your exposure if holding long term. We see Smuckers hitting 80.00 in 2010.

Smith and Wesson Symbol: SWHC

http://www.smith-wesson.com/

Rationale: American has a fascination with GUNS. We love WAR. WE love our RIGHTS. Obama will destroy America conspiracists will continue to raise gun sales, and unneeded murders. Buy what is selling.

Guidance: This is simply a remarkable family owned business with all the brands, and catching all the waves. Pays a dividend. Set stop loss to Pnf charts. Use an pnf stop loss at 45.00

Retail/Distribution Blue Chip Holdings-End of Year, sect 1

Retail/Distribution

Prestige Brands Symbol: PBH

http://www.prestigebrandsinc.com/

Rationale: Prestige Brands, Inc. markets well-recognized, branded consumer products in over-the-counter healthcare, household cleaning and personal care categories.

Guidance: On 9/14/09 we recommended and bought PBH at 7.16. Use a 20% trailing stop loss on this position. Pnf chartists may take a larger second buy, however, and defined support lines. This position will do well over time

Wal Mart Symbol: WMT

http://walmartstores.com/

Rationale: This is another company we hate. They import over 90% of their non-food products, put them in large unattractive warehouses, and sell the hell out of them. This is the greatest distribution company in the world. They’ve just opened an “all Hispanic” Wal-Mart store in Texas, testing regional ethnic distribution.

This company has revolutionized the blight of our small downtowns, while creating a distribution model that has “created the cost plus” mentality of our economics.

One cannot be part of it. We trade the stock, and options.

Guidance: New subscribers should look for entry in WMT at 51.00 or less. Long-term subscribers bought this in 2007 at 44.00 and doubled their position with us at the October 08 market bottoms, averaging our cost to 45.33. Currently at 55.00 we suggest a trailing stop loss of 20% or a pnf chart stop loss at 48.00

Berkshire Hathaway B Shares Symbol: BRKB

http://www.berkshirehathaway.com/

Rationale: This is Warren Buffet. The greatest investor of all time. It’s a superb long-term investment, at bargain prices.

Guidance: One of our largest holdings in our CORE investments BRKB we first bought in 8/05 $2013.00 and doubled our position again in October 2008, and have recommended added to the stock several times since then on dips. We now have an averaged price of $2205.75.

We consider this one of the safest long-term investments, and a long-term hold.

Agricultural Blue Chip Holdings End of Year Update

Agricultural

Caterpillar Symbol: CAT

http://www.cat.com/cda/layout?m=8703&x=7

Rationale: CAT is agriculture. It is the big machinery to move the world. CAT follows both agricultural and industrial development. We play it short/long, and puts and calls.

Guidance: Long-term subscribers bought this with us at 42.00 in March of 2008 and added to our position in October 2008. Our averaged cost is now 30.66. With the stock trading at 59.05, and dividend producing, traders should have sold at least 1/3 of their positions.

Use a 25% trailing stop loss, or a PNF stop loss at 42.00

Powershares DB Agricultural Fund ETF Symbol: DBA

http://dbfunds.db.com/dba/index.aspx

Rationale: This ETF mirrors agricultural/farm products well and we trade as both put and call.

Guidance: Not currently trading

Intrepid Potash Symbol: IPI

http://www.intrepidpotash.com/

Rationale: What Potash is: http://en.wikipedia.org/wiki/Potash

We play this both long term at times, and are new to trading to this position, replacing another Potash manufacturer.

Guidance: We bought IPI 7/19/08 at 26.00 and doubled our position near market bottoms at 18.00. Our average cost on IPI is 20.66. IPI has just passed a double top breakout on a PNF chart and we continue to hold.

Use a 20% trailing stop loss on IPI, or a PNF Stop at 27.00, to preserve profits.

Entertainment-Blue Chip Stock Holdings End of Year

Entertainment

McDonalds Symbol: MCD

http://www.aboutmcdonalds.com/mcd

Rationale: McDonalds builds ugly buildings worldwide, advertises “FAT food” to kids, and serves a terrible product.

Everything about their model of “food crime” is perfect, and we are a long-term holder of both stock, and call.

Their foray into “designer coffee” concerns us, and is the only negative on the stock. Buy grease and little toys.

Guidance: We bought McD in March 2009, at 50.75, right near the bottom of the year to date. With a 3.43% yield and a firm understanding of their market, we’ve also returned up to 80% on recent call options, which expire in January.

MCD is a strong buy any time under 57.00. Use a 25% trailing stop loss

Disney Symbol: DIS

http://corporate.disney.go.com/careers/who.html

Rationale: Disney is entertainment. They do it right. As America comes from recession entertainment will prosper, and Disney is the perfect “American Dream” company. A very conservative investment long term.

Guidance: We have owned Disney since 2007. We bought more at 6800, doubling our position. Our average cost for most traders is $12.00 to $13.50 a share.

Use a 25% trailing stop loss.

Smith and Wesson Symbol: SWHC

http://www.smith-wesson.com

Rationale: America believes in guns. It’s like entertainment to me, as we must protect ourselves, while we grow fatter. This is my sin stock. Sales and earnings are bound to go up as America arms itself by the TV.

Guidance: It concerns me that SWHC has not grown with the recent market upswing, but it’s a low priced stock with good potential.

Use a PNF stop loss on SWHC, bought at 4.96 average, of 3.50. We’re seeing a double bottom Breakdown that is holding, and either time for a shift in position, or stop loss.

YUM Brands Symbol: YUM

http://www.yum.com/

Rationale: Pizza Hut, Taco Bell, and KFC-it’s simple. Terrible products, horrible for you, and loved worldwide. We’re impressed with their international expansion. They control costs well. We play this as a long-term stock, and put and call.

YUM is often replaced in our portfolio for extraordinary gambling, video, or other entertainment companies.

Guidance: We bought YUM originally in January 08 at 32.00 and doubled our position at the market bottom when we saw 23.00, for an average price of 26.00

Currently trading at 35.71 we believe YUM is strategically in the sweet spot for international development, selling our food slop to others.

Precious Metals Blue Chip Holdings End of Year Update

Real Money Commodities

Spyder Gold ETF Symbol: GLD

http://www.spdrgoldshares.com/s ites/us/value/

Silver Standard Resources Symbol: SSRI

http://www.reuters.com/finance/stocks/overview?symbol=SSRI.W&rpc=66

or we often use Silver (SLV)

Canadian Exchange Fund Symbol: CEF

http://www.centralfund.com/

Rationale: All three ETFS/funds invest in core commodities and are excellent barometers for the price of Gold or Silver. We trade both options and long trades on Gold and Silver.

CEF invests in actual gold and silver bullion and is a very underpriced, not yet known, core way to invest in Gold and Silver.

We believe the world should be, and will be again, on the Gold Standard.

AngloGold Ashanti Ltd Symbol: AU

www.anglogold.com

The world’s largest gold mining company, value priced as of 10/1/09

Rationale: Gold is the strongest asset in the world, and more nations are beginning to hoard, and to value our actual debt to the Gold Standard the value of gold should be between $6200 and $7333.00 per oz.

Guidance:

Purchase Price Symbol Avg. Cost Status

55.12 GLD 55.12 2/3 of position sold at up to 60^ % profits by 10/1/09. Hold 1/3 of existing buy position taken 3/17/07 and on.

40.00 AU 40.00 Began buying 11/09

7.40 CEF 7.40 Began buying 11/08

CEF is still recommended as a superb hedge in ACTUAL gold and silver bullion, backed by the Canadian dollar. It’s a sleeper fund that holds gold and silver.

11.50 SLV 11.50 Began buying 9/08

SLV is a core commodity that is less expensive than Gold, and will share in the precious metal boom.

13.00 SSRI 13.00 Began buying 3/09

SSRI shows more stability yet volatility than SLV for playing options and is easier to track.

AU we consider a superb mining play on Gold that is undervalued and we began buying 11/09.

CEF we consider a slower, but better long-term investment vehicle for Gold and Silver than any other.

We believe Gold commodities can reach $3000 per oz.

Industrial Blue Chip Holdings End of Year Update

Industrial

KHD Humboldt Symbol: KHD

http://www.khdhumboldt.com/phoenix.zhtml?c=92949&p=irol-irhome

Rationale: Many of our traders still own this in our speculative portfolio, bought at 7.40 range

We recommend buys at any time this stock is available at 9.00 or less, long-term hold.

Guidance: KHD was a seriously undervalued industrial behemoth last year, just now catching momentum and almost doubling in value.

Use a 20% trailing stop loss on KHD, or a pnf stop loss at 8.00

L-3 Communications Symbol: LLL

http://www.l-3com.com/

Rationale: This is Defense Company on the cutting edge of electronics and technology, ripe for $100 a share, and more ripe for takeover.

Waste Management Symbol: WM

http://www.wm.com/

Rationale: Bill Gates owns 16 million shares. The largest trash recycler and trash Management Company in the world.

Guidance: We bought 11/23/09 at 32.30. Use a tight stop loss of a pnf support line at 27.00, or a 20% trailing stop loss

Republic Services, Inc Symbol: RSG

http://www.republicservices.com/

Rationale: Warren Buffet has built a 3.62 million-share portfolio in the #2 trash recycler.

Guidance: We own with a stop loss at 23.00 using PNF, or recommend a 20% trailing stop loss. We purchased this position on 11/23/09 at 27.40

Healthcare Blue Chip Stock Holdings-End of Year Update

Healthcare

Shares Dow Jones U.S. Healthcare Sector Index Fund Symbol: IYH

http://www.reuters.com/finance/stocks/overview?symbol=IYH.W&rpc=66

Rationale: Healthcare is “it”. We follow this sector for long term holds, and for puts and calls.

Guidance: On Watch. Do not hold

United Healthcare Symbol: UNH

http://www.unitedhealthgroup.com/main/default.aspx

Rationale: United is a terrible company that I hate immeasurably. They’ve destroyed healthcare, and are one of the largest Medical Criminal Corporations out there.

We follow them as a stock, and puts and calls.

Right now we’re waiting to see how the healthcare bill plays, before we even think more of this sector.

On Watch. Do not hold

Health Management Systems Symbol: HMSY

http://www.hms.com/

Rationale: This Company provides cost management services for government sponsored health programs. 80% of its revenue comes from Medicaid. It’s involved in 37 state Medicaid clients, and 100 Medicaid managed care plans. With our current health insurance situations it’s a money machine.

Guidance: We bought this 9/3/09 at 37.58. On 11/30/09 it’s at 44.85 and remains a buy. Use a 25% trailing stop loss on this stock, and pay to highs of 47.00. It has just broken a double top and if it can hold has strong upside potential around healthcare.

Banking Blue Chip Holdings End of Year Update

Banking

Wells Fargo & Co. New Symbol: WFC

https://www.wellsfargo.com/

Rationale: The best and brightest in the banking industry. We recently played calls on this for 50% to 64% profits.

We often watch this position for put and call, around the sector.

Guidance: We initially began recommending WFC as a call option, returning 60%^ in the summer of 2008. We also took a core position in Wells Fargo at that time at 15.50. WFC has doubled during this time and most traders have taken at least 1/3 of their position off the table at a doubling.

Stop Loss: 20% trailing stop loss, or PNF support lines at 20.00

Oil/Energy Blue Chip End of Year Update

Oil/Energy

Chevron Symbol: CVX

http://en.wikipedia.org/wiki/Chevron_Corporation

Rationale: Chevron has reserves, and a long-term business plan that can environmentally support change, and still profitable

Guidance:

First bought 12/30/08 and ongoing on dips. Average cost 56.40.

Use a 25% trailing stop loss.

Up to 79.64 11/30/09

Exxon Mobil Symbol: XOM

http://en.wikipedia.org/wiki/ExxonMobil

Rationale: Exxon is the big ugly. It mirrors the oil distribution/refinery market well

Guidance:

Most of our long-term traders have owned this since 2007, bought at averages of 50.00, and have doubled their money several times.

We now recommend new buys at any price under $60.00. We’re far from that now, but oil will drop.

United States Oil Fund Symbol: USO

http://www.reuters.com/finance/stocks/overview?rpc=66&symbol=USO

Rationale: This ETF holds a variety of oil and oil transport issues, and we often trade as a put or call.

Guidance: Not currently owned, but tracked. We see oil trading in a range between $65.00 and $100.00 a barrel for an extended period. At $100.00 oil becomes supply and demand come into full force.

ITC Holdings, Inc Symbol: ITC

http://www.itctransco.com/

Rationale: Really study the website and learn the transmission service this company leads. We think they are the future, and we are trading for the long term.

Guidance: We first bought ITC 4/28/9 at 44.08 and have lowered our price a bit with a second buy on a dip to 43.40

ITC is holding steady, and doesn’t seem to yet be noticed by institutional investors.

Study this stock. We think they are on to something, sound, and will blossom as a break out stock as they become noticed. Buy.

Use a 25% trailing stop loss.

Van Eck Market Vestors Coal ETF Symbol: KOL

http://www.vaneck.com/index.cfm?cat=3192&tkr=KOL

Rationale: This ETF invests in over 50% of the largest coal producers across the world, and has a low expense ratio. It’s the perfect way to “play” Coal”.

Guidance: We use this as an option trade or an ETF at various times. No current position is held or recommended

Bonds-Blue Chip Holdings End of Year Update

Blue Chip Bonds

Aberdeen Asia Pacific Fund Symbol: FAX

The Fund is managed by Aberdeen Asset Management Asia Limited and advised by Aberdeen Asset Management Limited. The Fund's shares trade on the NYSE AMEX under the symbol "FAX".

Rationale; In order to achieve its investment objective, the Company may invest up to 80% of its total assets in "Asian debt securities", and may be denominated in an Asian Country currency or in Australian, New Zealand or U.S. dollars. At least 20% of the Company's total assets will be invested in "Australian debt securities. This is a closed end Fund, at a 9% discount, and currently paying dividends of .47 a share per month thru June of this year. Safe international income, at a discount. Long-term hold

Guidance: Long term hold. Pays strong dividend. No stop loss

Treasury Inflation Protected Securities Symbol: TIPS

http://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm

Rationale: Inflation bonds are a great hedge against both inflation, and fear of future inflation. These are CASH alternatives. We currently hold.

Guidance: Buy

Barclays 20+ Year Treasuries Symbol: TLT

http://us.ishares.com/product_info/fund/overview/TLT.htm?c=JAC01&gclid=CLCe94OF9JsCFRJ4xgod_Gxf_w

Proshares Ultra short 20+ Year Treasuries Symbol: TBT

http://www.proshares.com/funds/tbt.html

Rationale: U.S. Treasuries, short and Long: TIPS are inflation protectors. TLT is a long term Treasury, so a deflation protector. TBT plays long-term treasuries short.

We use all three instruments as a large part of our CASH porfolio.

Eaton Vance Senior Floating Rate Trust Symbol: EFR

http://individuals.eatonvance.com/fundinforedesign/fundspecific.asp?Type=closedend&fund=EFR

Rationale: This is a senior secured floating rate bond fund that ranks well for inflation with gold, real estate, and TIPS. This trust is currently trading at a discount, and has a yield of 6.6%

Guidance: We bought on 9/28/09 at 13.15. Strong yield, and a good cash alternative to prices near 15.50.

I Shares Barclays 7-10 year Treasury Bond ETF Symbol: IEF

www.ishares.com

Rationale: This ladders our portfolio now completely, with money in early October 2009 now moving to shorter-term treasuries

Guidance: Adding to our overall Treasury portfolio we replace shorter term Treasuries, and sell longer term TLT as the market shifts, keeping a base in Inflation Bonds, TIPS and now EFR.

Profits could rise 10% with most companies in 2010

*Top Stocks have EPS growth rates of at least 40% prior to major advances. This is an easy way to help identify strong potential breakout stocks. Make note, however, that with breakout stocks it is critical to buy at the pivot point that springboards to upside, and to set tight 7-8% stop losses on your buy. This makes it harder and harder to effectively buy a break out stock that won't lose 7 to 8% on any now typical 2% Dow move day.

With the market itself spring loaded, however, for upside profits could now exceed and leap 10% a quarter; that is, if we follow history of recessions.

This is important.

Gene Epstein in Barron's 11/16/09 issue strikes a logical argument in Upwardly Mobile. There is logic to his thinking, based on a "scaled back company", and IF unemployment stays high:

http://online.barrons.com/article/SB125816514286948047.html

If Playboy sells to Iconix (Playboy one of our Blue Chip recommendations) one of the largest assets being sold for the $300 million price tag is the rabbit ear logo.

Here it is proven that something worth nothing is worth something and that what is not real has value.

Fibonnacci Patterns

We are sending this as a combined OEX and BCO alert as our instructions are similar, and the market tendencies on the OEX and DOW are showing strong characteristics.

1. A Classic 3:1 OEX And Dow Pnf chart show higher highs, almost to the point of frenzy

2. Alternate views show more hesitancy, but strong bullish tendency

3. More and more investments are moving to the "blue chip" stocks, by traders institutionally, and by the hoards of cash Joe the Traders have that bulls believe is just now being invested, "don't want to miss out" and is what will fuel more upside.

4. This is likely. At 10,740 the market hits a 62% retracement from our market bottom, a Fibonnaci top.

5. This has occurred much more quickly than the market itself can believe and it is now possible by Fibonnci chartists to see up to a 38% retracement from these highs.

We see the move to blue chips as a strategic and smart move by institutional investors, shielding in dividends, and more solid balance sheets.

Short term Floyd is bullish to the market. We may see the Fib tops soon. As we see these tops technician Robert Prechter, Elliott, and others believe we have a chance to head back down to March lows. Using Fib patterns Elliott, back in the 30's, found intricate patterns based on the Fib number sequence (in which, after 01 and 1, each number is sum of the previous two: 1,2,3,5,8,13, etc). The Fibonnaci series, like pi, appears frequently in nature.

For the market: Many retailers report earnings today. The Japan markets were closed yesterday for Labor Thanksgiving Day.

Special Appeal from Floyd: Right now subscribers of Stocks and Commodities Magazine are voting for the 10 Ten Advisory Services, on their website

www.traders.com

You must be a subscriber to vote, and if you are not a subscriber to Stocks and Commodities you should be. And I want your vote.

It was the thrill of my life to be ranked in the top 10 advisory services in the U.S., up against some huge companies in both 2008 and 2009.

I'm asking for your vote now. It would be a "personal best" for our small company (Jenn, Terry and myself) to win this again, and your vote can help.

If you like this service, please vote.

Let's Buy Trash

We will close this trading week with two potential new speculative trades, either or both to be held in our speculative portfolio.

Let's start with our sponsors:

1. Berkshire Hathaway (Warren) own s 3.62 million shares of Republic Services (RSG), the number two payer in the waste management industry.

2. Bill Gates, Buffets's buddy, has a built a 15% stake in Republic over the years, and has doubled his holdings in industry giant Waste Management (WM) to almost 16 million shares

These are well managed, asset rich companies positioned to benefit from an economic revival. Both are "value" stocks in that they are selling at a discount to the companies intrinsic value.

With both positions use PNF support lines for stop loss. As an example, with WM stop loss at 27.00,and with RSG stop loss at 23.00

These are speculative but long term trades

ExxonMobil Buy Signal

Barrons last week had a cover that said "4 Reasons to Buy ExxonMobil". Simply put, Barrons saw it as "best management, best reserves, best balance sheet and best returns, and the best long term bet".

Exxon is one of our Shifty Fifty simply because of these traits, and we've made great money on the issue in options this last year. We also think it's a great long term CORE investment now, and will be more so on any consolidation, and recommend XOM ExxonMobil at current prices and below:

Buy to 74.00. Use a stop loss of 64.00 on a pnf chart, or use that as a time for a larger second buy.

“The idea that there is a competitive “private sector’ in American is appealing, but generally false. No one hates competition more than the managers of corporations.

Competition does not enhance shareholder value, and smart managers all know they must work at ways at “controlling” government intervention.

This is is not new. This is not Obamaland. When Congress created the first regulatory ageny, the Interstate Commerce Commission, in 1887 the railroad barons quickly recognized they were to be subdued, but could benefit. “The older a commission gets to be the more inclined it will be take the business and the railroad and business point of view. It thus becomes a sort of barrier between the railroad corporations and the people and a sort of protection against hasty and crude legislation hostile to railroad actions.”

All the above from Richard Olney, a railroad lawyer during that time period that lived his thinking, as soon after this quote he got himself appointed to run the U.S. Justice Dep, where he spent his days busting railroad unions.

Trader Tips:

*Trend Lines should connect at least three lows and occur over several months.

*The Price Expansion Rule: Model stocks experience an average P/E expansion from the first stage pivot point to typical peaks of 130% rises.

China, Debt, and How to Invest

*China is taking on record levels of debt to keep its’ economy running. Sound familiar? Some say it can’t last. China has had the smallest of hiccups of all global economies, the nation grew at a brisk 8.9% rate, and many economists expect it to expand even faster over the beginning of the year. And it could.

Over the past decade China has spent on roads, bridges and infrastructure.

We have been making just a few men very rich.

Those bullish on China think the government will keep spending (as ours should) no matter what to keep the economy humming, given it’s relatively healthy domestic balance sheet compared with the U.S.. Skeptics reply that if the debt taken on by provincial governments is taken into account (much like really straightening out our state debt, many in bankrupty), that growth looks questionable.

Emerging markets in general are highly risky and America has plowed our funds over there to “protect ourselves’” from out own stock market.

Temptleton EMF (EMF) remains our “mirror mutual fund’ of choice as a superb way to play the emerging markets safely. No stop loss. Just buy on dips, and hold.

Leggett and Platt-Stock Buy

For investors seeking dividend and long term return we are ready to buy Leggett and Platt (LEG)

Study this company: http://www.leggett.com/

It's in classic restructuring:

1. No longer growing from acquisition, but from streamlining

2. Yields 5.1%, and company has raised dividend for 38 years

3. This could rise to the 28.00 range in a year, return a dividend, and be a great value stock investment.

4. Watch for any consolidation and slight dip and buy LEG at market price, with a stop loss at 17.00

It's not part of our Shifty Fifty, just a stock we follow well that we think will grow well with economic upturn long term.

Buying Paint Cheap

*There is a triangle pattern in point and figure charting. When a stock’s chart is bullish and goes into a triangle it typically will break out to the upside. If the stock is bearish, it will break down. The triangle is an easy “charting” technique.

Here's a new stock recommendation, one that we will not be adding to our portfolio, but offering as a "roller" stock for those that want additional stocks to trade:

Sherwin Williams has taken a real hit with the slowdown in housing, but shown real resilience in bottom testing and looks ripe for upside. Most analysts see upside of 61.00 to 72.00, but risk traders may want to consider Sherwin's increasing market share, and that is value priced, spring loaded for an economic upturn. We'd set buys to take place during consolidation and we would buy it to $54.00, setting a stop loss by point and figure charging support lines of 52.00.

The USD and Carry Trades

Right now the real money has been made in investing in dying stocks (banks) and watching them skyrocket, or in investing in small cap stocks. We in the U.S. have over 75% of he world's great quality franchise stocks.

Blue Chip stock buyers, watching the large caps, should take particular interest in the laggards in the S & P 100 and S &P 500, and look at the stocks that trade at lower than market price/earnings multiples.

Real brand names that we all buy all the time are bargains: JNJ, MSFT, WMT (under $51.00), Proctor and Gamble (PG), MCD, etc.

We believe that U.S. growth will, over time, accelerate, the rise in low quality stocks will resume, and Blue Chip growth will resume, albeit at a slower pace. However, if growth disappoints we'll see a shift from the high fliers to the "sleep at night" stocks that work better with normal growth, which we anticipate in 2010.

Review our core and speculative portfolios both online, and at www.stockcharts.com where all our holdings are listed, and continue to invest a portion of your investments in the quality names; they will pay off.

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Of real interest, the International Monetary Fund (IMF) said Monday " traders are probably using the dollar to fund "carry trades which upward pressure to the Euro and in investing in Emerging Markets.

Economist Roubini, who forecast the financial crisis in 2006, says that investors are "unknowingly" making the "mother of carry trades"

Definition of a carry trade: http://en.wikipedia.org/wiki/Carry_(investment)

With investors able to borrow at near zero interest rates some traders are concerned that the investing idiots will continue to borrow for carry trades, with the USD suffering. In a carry trade investors borrow in countries with low interest rates to invest in higher yielding assets.

Investing in Bloodshed

For years we followed defense stocks as Bushy battled Iraq, and did well. We played the
edges on the TASER, and the armed battalion gear companies, and got out.It's time to get back in. L-3 Communication Holdings (LLL) has a unique category, so even with cuts to defense that some investors are concerned about, L3 focuses on technology and asymmetrical warfare.
In the defense sector I often review NOC, RTN, LMT, GD,and LLL. Right now LLL is selling for only 9.5 times 2010 earnings, which is a 30% discount to the sector.
Three reasons to buy:1. It's cheap2. It pays a dividend3. It's ripe for takeover
This stock could hit $100.00 next year, and we'll use a point and figure stop loss at first at 70.00, and then shift it to a 20% trailing stop loss after a few months.LLL should be bought on any market dips, as a stock in your speculative portfolio.

The GDP and False Facts

Last week the third quarter GDP showed the economy growing at a 3.5 annual pace. This broke the pace of 4 negative quarters in a row, and prompted "we are coming out of recession" talk.

The reason the GDP grew, however, should be noted that it came from GOVERNMENT intervention, not from growth in the private sector. We have to understand the facts:

1. Almost 1% of this growth came from motor vehicle production, around the cash for clunkers intervention

2. These buyers won't be there in the future, so the figure is already inaccurate.

3. Spending in research and development and product design are never figured into GDP, so if these are being cut (and they are) we are not finding new ways to produce product that we can manufacture.

So, short term we appear to have come out of the downleg, and intervention did help this. Sadly without it the bankers bets would have destroyed us all; sadder still the bankers are betting again, and no one is stopping it.

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Roubini, my favorite economist, believes we are always "creating bubbles from stocks to gold to commodities". As there are few USD bulls right now it's likely as a contrarian viewer to see that the USD could stage a serious rally, and this could effectively stop the "shorting of the USD" that the bond buyers are creating. If the USD rebounds dramatically this means the world markets will be effected negatively.

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Numerically I see us topping by early January , 2010, when more of the Fibonnacci retracement (10,700 area) could hold, and the numerical significane that numbers is 0 have. As 2010 approaches I believe a combination of what we have "believe" (that it is over), what we have "created" (a false dollar), what we have "not done" (created product to sell), could catch up with us in early 2010 and force a declining optimism, and another crash, and another stimulus infusion.

General Stock Ramblings

Just a few thoughts today, to help you think.

Vaccines give us a false sense of security. When you have a strategy that everyone thinks reduces death by 50%, it’s pretty hard to invest resources to come up with better remedies.

This is your "think" question of the day.

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And some ramblings.

The recent surge in oil prices hasn’t benefited Big Oil much, and the moment may be passing. Last week we had earnings from BP, Conoco Phillips, Exxon Mobil, Royal Dutch Shell and Chevron.

It’s hard to compare the gang rape that was occurring a year ago and more in oil speculation, and the recent run up to oil at 81.00.

The refinery business is at 81% of capacity and our U.S. Oil Supply is up 28% over last year. We see oil as ready for a major correction, perhaps to $50.00. We are these prices right now because of supply and demand, entirely to excess global liquidity.

As long as profit remains the driving force, health care will remain a commodity, instead of a human right.

The political focus on the federal stimulus package and Bernanke’s own professional mildness have deflected attention from how radically the Fed Chief has acted. He dropped target interest rates to near zero for the first time in history; made trillions of dollars in government cash available to financial institutions; expanded the Fed’s lending and relaxed its collateral requirements; bought up billions of dollars in securities backed by consumer debt, and mortgages; protected the collapse of AIG, Fannie Mae and Freddie Mac; and somehow found time to bear the made for TV harangues of the financially illiterate members of Congress. The particulars of the Fed’s intervention remain lamentably shielded from oversight. But in the Great Recession, Bernanke’s approach may have spared the world a true nightmare *Every stock leader pulls back to the 50 day moving average 2, 3 or 4 times before the move is over.

*Study only 50 stocks. Own no more than 10. Know what you own.

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Lots of big money portfolio managers believe the money in 2010 will be in Microsoft, GE (which we just recommended to all traders that held to sell) and Bank of America, and not in Apple, Google, and AIG.

They may be right.

The great risk has really already been taken as investors flocked back in at 6500 and watched this meteoric rise, on no real results. In other words, their appetites opened to risk, only to last week begin to hesitate that this entire expansion has been built on inflated GDP numbers, restructuring, and falsified earnings growth. The game will get harder as the "good months" progress.

Stocks To Buy and Sell NOW

Stocks we are watching:

1. For those of you that hold GE in any portfolio (not our recommendation). WE do not believe GE has strength long term, and is a losing bet

2. Traders that worked with us last year in our buy on COACH (COH) should consider this again. We think Coach has strong upside over the holiday season, and could rise to 42.00

Any downside is good for buying on this, using a stop loss at 27.00, a strong support line