Let’s lead off with what an extraordinary week we had, both in OEX Option profits (7 trades successful, 22 to 57% profits), and what the market did, Thursday within 12 points of 11,000 on the theoretical Dow, and moving back to the 10,700 Fibonacci re‐tracement, holding, and returning back up. Higher highs. The bulls were active.
Panera hit a 52‐week high.
BMY hit an 8‐year high.
Gold hit an all time high.
Silver is close to breakout and strongly up, approaching its top.
The shift of the market is now moving from the large cap to the small cap in general shifts as the market makers shift to entirely different sectors.
We’ve been aggressive in giving you recommendations, and were profitable 54% on our Apple Call sold last week.
We will have a new recommendation this coming week on a long‐term leap. I promised this for today, but I want to study just a few more things.
Any correction, and my Dow Projection follow, will only be a “good sell” before more upside.
Theoretical Dow Projections:
Here were our Dow projections that ran over 21 consecutive days, one of the longest runs weʼve seen.
So first, hereʼs what we said and showing you the entire range. We've noted where we believe we'll have support or resistance, but we have been extraordinary in our projections in the past 30 days. Let's hope we can do that again.
9950-10050-The struggle point 10,118-10,250-Strong Support lines.
10,416-Resistance- and Support. On any move the market seems to hesitate here. We believe this may be our deepest bottom if this market corrects.
10,550-Resistance 10,676-Strong Resistance
Our basic rules of thumb on Dow projections: When the market drops it typically moves to a total of 584 points down, in periods of time. Any move up that holds over 100 points by day end typically ends a downside, and begins an upside to the same 584 area move up.
Last week we struggled in the ranges around the Fibonacci retracement.
10,746-10,787 Fibonacci Resistance and Retracement level
Now, letʼs start fresh. We hit every level in 21 days, even down to 10,050, and closed Friday at a theoretical Dow top of 10,9000.
Much of the week the market held at 10,746 area, and truly struggled before the 200 point run up on Friday.
Hereʼs how we see the Dow in the coming week. Weʼll start “to the top”.
11,250
This would be bad news because no trends should be extremes, or they lead to reverse in extremity.
10,950-11,127 Market potential first top
10,746- Likely struggle 10,676-Support line. The market may move here in downward spurts.
10,550-Support and Resistance Line 10,416-The market has hesitated here several times.
Alan Austin with Health Connexion was introduced to me by Johnny K, our subscriber with brain cancer still spiritually strong and fighting the odds. Johnny and I met and he recommended a supplement called Juice Plus, and that his friend Alan the trader sold it.
A relationship started, and I now buy Juice Plus from Alan (it’s a multi level program) with a hell of a product. And we’ve talked trading, as he is a professional trader, as Johnny had been when our Advanced Mentoring student got “incurable brain cancer” and is living to live.
I became a true believer in the product, and we became friends, finally starting to talk about the market:
“I prefer options on underlying stocks priced from 30 to 100 or more (FFIV, VMW, BIDU), but I will trade options on smaller stocks down to maybe 15 for special situations. Underlying stocks of $10 and below I will trade as stocks only.
I usually trade higher priced stocks' options about 4 weeks out, ITM a strike or 2, and I like to be closed within 5 days and up to 2 weeks. With just 2 weeks left to expiry, I will really look to be selling at any decent price. If I buy 6-8 weeks out, I am ATM or OTM by a strike, maybe 2. I don't buy more than 10 weeks out, except sometimes...
I will second buy to add to a position only on a lower price, averaging down, but I have to like the chart and feel that my entry timing was just a bit off. For options that have given me a nice profit, I will close out and step up a strike at a time for a new position, also stepping out a month when appropriate.
With the recent September rally in stocks, the buying made its way from large caps to mid to small to speculative, for the first time in quite awhile. I like to trade speculatives when this happens, so I did some scans a couple of weeks ago, and I had already been trading URRE, and then I found REE and MCP.
Well, REE and MCP are just a couple of hot momentum stocks in the rare earth elements space that came into favor quickly. I liked the charts and knew I would trade REE as a stock and MCP as options, which fall a little outside the norm above.
I have traded REE in 4 different accounts, several times each. Started buying it under 5 and rode it to 9.5, making multiple trades according to its movement. Have won on all trades so far.
I decided to trade MCP with the Dec Calls. These momentum stocks can dive quickly sometimes, and so I wanted time on my side, so I went further out than usual. I started with the Dec 22.50 calls, which were a little OTM. Traded a few times, all good, then stepped up to the Dec 25's as the stock progressed. Traded those several more times, all good, and selling as high as 6.50 yesterday. Today I saw the opportunity @ 2.65 and BTO a block... come on, it was 6.50
yesterday! We are talking December! Anyway, got the nice fast 4-hour pop so took the 58% and sold @ 4.20. I still have another block @ 4.30 avg cost in another account, so am still comfortable with those. especially after taking a
quick profit today.
A more typical trade for me is this one... I BTO some CRUS Dec 16 Calls on Sep 22, last Wed. I sold today, 5 sessions later, for +65%. I had my reasons for the buy last week. Then Cramer mentioned last night that he liked it, so there was a pop today on volume. After I sold, I still like it, so I BTO the Dec 17.50's. Those are +13.7% tonight...
I have not been trading many options recently because the market has been less steady than it was mid 2009, and that is also why I am going out into December when I do trade something. I just don't trust it to make a lot more progress without a correction, but it might... I just want some time buffer for this reason, and will take less leverage as a result.
Anyway, REE and MCP are just crazy stocks that yield fast results if you get on the right side of them. I am also trading URRE, and even SIFY, which has a lot of negative chatter, but the trade makes $$$$$$$$ just the same!!!! “
Alan got me excited, as trading breakout or momentum stocks Blue Chip Options has been doing for years, stopping two years ago as the market collapsed.
I suggest you each begin charting every stock listed above and following it closely.
Some may only be able to trade as stocks, and some may trade as options, but be cautious if the options are “thinly traded”.
You have enough ammunition to chart any signal and play it. Each of these are “live”
Trade in a Zen Way. See the trade not as war, but a move, and a study of yourself.
Be Well
