BlueChipOptions

The Floydian View:

2010-11-11T11:17:00.000-05:00

The stock market: Cause and effect = supply and demand.
• Not all that has happened in the markets is at it appears, or better, may not be real.
• Our overextended upswing built on three reasons:
1. Enthusiasm about creating 500 billion of more debt, even though Americans are appalled at the debt he has created, or assumed from the GOP last time.
2. Good earnings from the conglomerates who have fired so many people and outsourced even their companies (Halliburton main office now in Dubai)
3. Need for good. The world cannot accept the fact that it has phucked itself in a pile of fake money, first created by the U.S.A.

• We are at a short-term cycle high and our new Dow projections limit downside to two key areas, both telling if the market will hold.

Charles Nenner Research projects flags and concerns to an upward swing, and not just market highs, if:

• The Dow does not close below 11,100.
• The S&P does not make a close below 1178, or the NASDAQ below 220
Nenner sees closes below these levels as a time to take profits, but NOT a time to go short, just to sell profits.

All of our moves on Gold, Silver and Precious Metals have hit:

-We sold GLF for profits at 1110 thru 1140 and rebought at 12.10. We’ll hold until we see hesitancy around 1344, and would lock any Jan or December Gold calls, or hold on the position.

Silver could easily hit $30.00 before a slight correction.

The new best investment ETF we’ve seen, and recommended, is Glitter or (GLTR) that invests in Gold, Silver, Platinum and Palladium proportionately.

We would sell out Pan American Silver (PAAS) and SLV on dips, and reinvest in GLTR or Canadian Exchange Fund (CEF), both still undervalued.

We are long term bullish on all the precious metals, and long term BEARS on the EURO and USD.

Famed commodities trader Jim Rogers said: “I don’t know if Bernanke really understands economics”.

The GOP will work to take credit for:

-The highest market we’ve seen since the Lehman crisis.
-Improved GDP
-TARP and all bail outs a success from the creation of a massive depression
-The freezing of all bipartisan adult behavior over the past two years to create only a “one term President”.
-Sarah Palin could actually be President in 2012, you betha! And no one will blink an eye.

For the short term crude may have hit its’ high. We know we’re up substantially in Exxon Mobil, Chevron and Conoco Phillips.

Some traders in Advanced Mentoring also played XOM as a January call, and returned 26% over night.

We are still long on XOM of all the oil companies for their dividend, breadth of type of energy discovery.

If you are holders in 30-year long- term treasuries, such as TLT, we think the top has been reached and we would sell. We are profitable with our Treasury Inflation Bonds TIPS, and hold Zweig Total Return (ZTR) for 50% treasury exposure. That’s enough of the fake money for now.

Friend, subscriber, and fellow trader Alan Austin was talking with me a week ago and we discussed many of the stocks and options that have been recommended this past week.

All are volatile and exciting plays, and we’re already in movement. With each we recommend due diligence review and analysis to be done by each of you, to understand the type of holdings we are now playing

• Emerging Markets:
PXR up 14%
FXI up 112%
• Stock Takeovers or Stocks Overextended
DLIA-ripe for a takeover, long on this stock
LULU-ripe for a crash, we are short on this in options and down 56%. We may move our option out a few months if upside continues
• Rare Earth Elements- a huge and volatile surgery
-REE as January 10 Call-down 7.77% accumulate
-SHZ-our most volatile play, up and down sometimes 50% in a day. We are aggressive in our holdings, and are up 7.26%
-NENE-Truly technology more than anything else, new CEO, and ripe: up 6.14
We are also long WMT as a stock and as an option, and long RIMM with a March call.
If either falters, buy additional inventory.

Lastly our foray into legal drugs in SNY is up 2.46%.

That marijuana tax bills would not pass in California is indicative of just how powerful the drug cartels are in influencing the lobbyists to control a bill that would have brought billions to California…. and trust me, old Nancy Reagan and her bullshit line “just say no to drugs” hasn’t worked one iota.

So a great lesson in false facts:
1. One would assume that Proposition 19 was defeated because the State of California (the people) did not believe that legalizing marijuana would be good for its people.
2. One would assume there were “things wrong with the bill”
3. One would assume this is what the voters WANTED.

The fact: The vote was swung by the drug cartels of Mexico and Latin America that dug deep to make sure no lobbyist, no key congressman would support this….as it would hurt their trade. It has nothing to do with what the people wanted. My God, more than half of the people in California smoke marijuana ☺

This is much like why did the GOP win? Because of disgust with Obama and what he has done? Because of fear of deficit?

And the winner is: FEAR OF LOSING POWER.

And how did they win: INSTILLING False Facts and FEAR

Supply and Demand=cause and effect
Cause and effect = supply and demand.

Remember: The stock market is a game of Zen chess. There are no real facts and you are playing in the sandlot against others, and some are bullies.

Be Well, Do Good, Show Compassion

What Every CEO Wants

2010-10-28T09:30:00.001-04:00

• “While American democracy is imperfect, few outside the majority of this Court would have thought is flaws included a dearth of corporate money in politics.” Supreme Court Judge John Paul Stevens

• This is what every CEO wants for his company:
-to get as many favors, subsidies, and tax breaks out of Washington as possible, while at the same time stripping the government of the power to place any checks and balances on corporate behavior. It is corporate America, led by the rich that oppose all government, while making use of the infrastructures that we take for granted about government.

Let’s start the week with our newest recommendation

GLTR

ETFS PHYSICAL PRECIOUS METAL BASKET

This is a new ETF that went public Friday and closed at $75.70. It’s an interesting ETF basket that may replace many of the ways we’ve successfully traded Gold (GLD), Silver (SLV) and combinations, such as the Canadian Exchange Fund (CEF)

We noted last week that if silver closed below 23.00 it was a short term sell signal, and a move from long positions. We sold from 40% to 65% profits all of our SLV position.
We noted also that if Gold went below 1340 on a close that it was time to sell, and close our long position, for the short term. We did so and average profits on our 8th GLD trade this year averaged 37 to 44%.

We recommended keeping CEF, our Canada fund investing in gold and silver, and keeping this as the sole precious commodity trade open.

The above ETF is more unusual and we recommend buying regularly, on ups and downs, and holding for at least one year, in a core market position. GLTR, or Glitter for short, is a perfect averaging of all four precious metals, now exposing our traders to the upside we see coming in platinum and palladium, in addition to Gold and Silver

What the fund is:
“ETF Securities launched the ETFS Precious Metals Basket Shares (GLTR) today (10/22/2010), making it the first US-listed physically backed precious metal basket ETF to hold gold, silver, platinum, and palladium.
GLTR's objective is to provide one-stop shopping for investors seeking to hold all four metals with specific fixed weightings. The fund's prospectus contains no provision to alter or rebalance the holdings. Therefore, the number of ounces of each metal will remain fixed and the percentage allocations will be determined by future price swings of each holding.
On a per share basis, the fixed amount of bullion and current percentage allocations are 0.03 ounces of gold 52.8%, 1.1 ounces of silver 34.0%, 0.004 ounces of platinum 8.7%, and 0.006 ounces of palladium 4.5%. The firm provided no explanation regarding how the initial relative weightings were determined.
The fund has an expense ratio of 0.60% and additional information can be found in the press release, overview page, GLTR fact sheet , and the prospectus.
Investors comfortable with the bullion allocations of GLTR (“Glitter”) will likely find this fund a convenient way to gain exposure to all four metals”.

This last two weeks many of our open positions have begun showing steady and increasing profits:

XOM- Now firmly in the black and moving up. 25% returns plus dividends for longer-term traders, and 8% returns for those that entered this bullish energy stock months ago. We are also up with COP and CVX. All are still a hold.
We see oil topping near 84.00 and possibly correcting, but a larger upswing by end of year.
Of most importance we have picked these three stocks as stocks, not options, for their safety, and the strength of their dividends. They pay far more than a U.S. Treasury and are imminently safer.
Corporations like this run the world, not governments.

All of our long- term core stocks, such as Apple, FXI (new), PXR (new) and our Proctor and Gamble and Goldman Sachs 2013 LEAP calls are up substantially.

We will be watchful on FXI and have set a new stop loss at $44.00 for short-term traders. For longer term traders buy FXI and PXR on any drops, as we are long on the positions, just watchful of a downturn over the short term.

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Note: All of our Blue Chip holdings are updated nightly on www.stockcharts.com, including detailed recommendation summary. Study carefully.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=1394380,1&cmd=show,IDAY[Y]&disp=e

Floyd's Shifty Fifty-Public Stocks

On an overall stock market level it is not time to add to or buy new positions. We want the market to settle, correct or set new upsides, and to see the reaction to the G-20 group masturbation summit.

This week the primaries take place and America will learn just how gullible they are within their voting, not even knowing that most of the Pee Party and GOP ads are funded by overseas shell corporations represented by the NEOCONS, and set to do nothing to really change any government moves EXCEPT take back anything that has been done that has adversely affected large corporations and the highly wealthy.
We have watched news bytes and lies brilliantly developed by Karl Rove (Roveian politics) and others intent on freezing the system.
Americans, wanting change, but not even knowing what change could work, and wanting it NOW (nothing can take time in America; we are an “instant mentality”, will likely not even notice that all the bills put through in the last two years under Obama, except a few, have been stalemated and stopped in Congress by the GOP, affecting a President to actually be impotent.

So let this settle and we’ll watch for sales and new entries.
Remember, when a stock hits good profits for you follow the Floydian 1/3’s rule: Sell 1/3 at Profit A, Sell 1/3 at a higher profit point B, and let the final 1/3 “run”, as profits have already been made.

As I was trained in the Wyckoff Method I believe the stock market is fully “run” by supply and demand, set in place by cause and effect.

Supply and demand is much simpler than we make it:

1. When there are an equal number of buyers vs. sellers price is equal, and not moving up and down.
2. When there are more buyers, prices will increase
3. When there are more sellers prices will decrease
4. It is possible for prices to move higher with the same number of buyers. There just need to be fewer sellers.
5. When prices decline it is not because there are more sellers; there are just fewer buyers.

Question Authority. Question All Facts. Ignore the Obvious, as it is not obvious. Know that a rock is not hard.
Understand that you only know what you know.
This is the Zen of trading.

Be Well

Floyd

50 Lessons of Life

2010-10-21T09:27:00.001-04:00

First, please study:

http://www.marketwatch.com/story/gold-and-silver-may-start-to-buckle-under-pressure-2010-10-15

http://noir.bloomberg.com/apps/news?pid=20601087&sid=ayMiHOOvieuo&pos=5

From the chartists:

-- TRANSPORTATION ISHARES TEST SPRING HIGH
-- RAILS HAVE BEEN THE MAIN DRIVER OWING TO STRONG COMMODITY DEMAND
-- UNION PACIFIC HITS NEW RECORD
-- MOVE INTO TIPS SHOWS MORE INFLATION CONCERN
-- NEW SUPPORT LEVEL FOR GLD AND GDX
-- DOW NEARS CHALLENGE OF SPRING HIGH

Below are the 50 lessons of life that Floyd uses in trading, and in life. We believe this, and the control of emotions, is what leads a trader to success. Many of our long term and most successful traders have fought me tooth and nail on some of these statements, only to later come back saying….”yes, it’s how I learned to make money”.

You must have a basic lack of respect for authority. This is key. Authority creates facts, mostly false, that we as Americans are superb at falling for. It’s learning how to think “outside of the box” that makes trading the art of Zen.
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Weaving Straw BasketsFifty Steps to Understanding
1. A rock is not hard.
2. We only know what we know.
3. We do not know what we do not know.
4. There is no real such thing as “I”, but I AM.
5. There are people that do not read at all, and many people that do not
read well.
6. The majority always leads, and always forgets history.
7. Everything is really okay.
8. Everyone wants to dance, many in different ways, many so they are
never seen, many so they wish they could be seen, and many that are
always seen.
9. Negotiation is the art of understanding FEAR and GREED.
10. The mood of the public is first trended by stock markets, which show
levels of optimism, and supply and demand in the market place.
11. Most things are manipulated by the few at the top of the capitalist
pyramid that control the outcome, no matter what is done.
12. We only have what we remember.
13. In our reality our mission is really to give, love, flow and make and have
memories.
14. Our perspectives can change in a minute. Values and goals can shift as
fluid water. What we thought becomes not what we think.
15. Money must be understood. It is a “construed value” commodity, only
worth the value that we put on it.
16. All of life works on supply and demand, and cause and effect.
17. You are what you decide
18. If you surround yourself with people “better than yourself” in real life,
and as models, you become then and synergy can be created.
19. Everything happens for a reason.
20. Neither political party is really right or wrong; it is cause and effect in
action, because the actions of the 540 in Congress are no longer led by laws, but by corporations. This will affect the world.
21. We are always: approaching a crisis, within a crisis, or recuperating from a crisis. There is “always something”.
22. Many of us live in a circle of pain, in which we repeat the same negatively dramatic action with a group of others, all interacting within a black comedy drama. And able to be resolved.
23. Most of us do not know really know ourselves. When I ask clients to “tell me about themselves” they tell me about their jobs, their possessions, and lastly their families. They never mention themselves.
24. Most that appears obvious is not. Most that does not appear obvious is.
25. We are all in therapy at every moment. Most of us just don’t admit it, or
use it.
26. We are here to learn lessons and will struggle through until we learn
them. They may be very simple lessons.
27. In all steps of the life experience, and the dramas, people tend to put
love in the background, or it becomes part of the events.
28. Love is life.
29. If you repeat an action many times, it becomes a habit. If you continue,
“using the habit” it must be something that you value, or the habit will
become instead a self-destructive tendency.
30. Unrealistic expectations occur from being dishonest with you. If you
expect success at something you must earn it, and few that are lucky
last.
31. The question What Do I Want is the most important question you will
ask yourself in your life. Your answer defines your happiness. The question is not to tell yourself what possessions and monetary dreams you wish to come true, but to answer, “What do I want”.
32. There are simple ways to release unwanted stress.
33. There are ways to learn to relax and feel better physically.
34. There are ways to be happy.
35. Life is typically unfair and a series of negative events that are
overshadowed in our memory by the positive events.
36. Few people enjoy their work, making most of their life TV, sleeping, or
doing something they do not like. These people lose their strength and
general well being as time progresses.
37. We are fearful of our bodies. Of sex. This is true more in the U.S. than
most nations, and is something to be studied. But in the meantime,
have more sex.
38. The old funeral question has merit “What would they say for my
epitaph, and who would come?” It goes well with a general personal and introspective look that we must do and only you can do, and that is to look inside and ask what you contribute, and if you are good.
39. Things are not as they appear. What we see is not what is, but only what we know so far.
40. Much of what is smart repeats itself, and is never done.
41. All the religions really say the same thing, and sadly it will be religion
that could divide the world.
42. There is no such thing as an absolute.
43. There is no real black and white.
44. We self sabotage often so that we do not “get something we want” as we
want to punish ourselves for things we have done we feel guilty for.
45. It takes discipline to perform. Discipline is our way inside ourselves, as
we become rather than think.
46. People cannot take in more than 5 tasks/thoughts at one time.
Learning to control input is key to knowing when you are at or “over
your threshold”. We all have a threshold in which input overcomes us.
47. More could be done in business, and in politics, if simple playground
rules “no cheating” were put in place before any “deal” and a. Cheaters had to pay by doing public service, but that is just a
dream. b. I want Tom Delay mowing that White House lawn.
48. Life is too short to do business with assholes.
49. Use your time. Have your goals around your values, but be armed to
stop believing even what you believe.
50. Be open to the world. Trust no facts. Question authority.

Floydian Thoughts:

*Gold has a support line at 1350. Watch your long position only if Gold drops to this level, or take partial profits.

*Silver we are also long with 50% plus increases, and watch our long position at closes below support lines at 22.00

*Our option on PAAS (Pan American Silver Corp) expired Friday with a total return of 150%. For those that held the position until expiry a lot of money was to made.

* Oil remains strong, and we would watch for support line closes below 82.20.
It’s likely oil will remain up until November.

Charles Nenner Research:

This great stock picker sees the following as changes in the market:

1. S&P close below 1182
2. Dow a close below 10,950 might lead the market to the Fib retracement at 10,746 or a bit lower.
3. The Nasdaq closing below 2044, and we see the Nasdaq as the first to go down, and rotate into the OEX and S&P 500.

Dow Projections

Here are our Dow projections for the next 14-day period:
10,416-Deepest Support Line, unlikely
10,550-10,676-Strong Support, likely lowest low
10, 746-10,787- Fibonacci retracement. This is a key support and resistance area where the market has pivoted from for several weeks.
We now see this as our potential deepest low
Pay attention to a hesitancy area at the Fib retracement above up to 10,846
10,900-10,950 Resistance testing line
10,127-New Resistance Line

11, 250-Resistance
Last week the Dow hit theoretical tops at 11, 190 several times
11,367-Strong Resistance

Most of last week the market hovered. We dropped on the theoretical Dow several times below 11,000, but would always end the day to the upswing.

The market is vastly overbought, and the discussions between the floor traders are if the UP will hold, or IF the down will go down further than people expect.

We know:

1. Our January 2013 Goldman Sachs call returned as much as 20% within a week. Some traders sold for profits, and will re-buy and others continue to hold.
2. Our January 2103 Proctor and Gamble call is already up 10%.

Many traders ask on LEAPS like these two core questions:

1. Why would you buy so far out?
2. If the position becomes profitable early should I sell early.
Here’s the answers:

We often buy one and two year out LEAPS on stocks we believe have a strong upside potential, and we buy to hold until expiry.
At the same time if we see strong 20 to 25% returns on the position within a two week period after buying we often sell out, and re-buy the same position anytime the market lowers, and continue to do so over and over again.

Last year, as an example, we traded a one-year LEAP on McDonalds 8 times profitably, and sold at expiry for a 61% return. Coupling all of our positive returns together we traded the position 9 times and made over 300%.

The key here is what we teach all the time: Learn the option. Fall in love with a specific option so that you can follow the stock (or the index) and know what public reaction will be on the option itself.

So, what’s to trade?

Nothing right now. If you hold good profits on many of our open positions, as you should, take partial profits if conservative, as the market has more opportunity for downside than upside, although we believe the upside momentum may continue with only a short correction.

Despite all the money the GOP is spending on lies and deception if you study what has been accomplished in two years, considering the state of our economy and what has been building for 15 years, we do not have a socialistic President, but instead one dealing with a corrupt Congress.

The Pee Party, funded by Karl Rove, is right in “wanting change” and “wanting to oust the corruption”. This is the same fodder that Obama wanted in “change” and it’s much more difficult than it appears.

Just imagine Christine O’Donnell in the Senate. Imagine the naïve and blind sitting in Congress with the corrupt and slimed. Nothing will change.
Instead, fight for change within the channels we have. Stop the GOP from holding every vote back, and have the facts when one talks about the massive debt.

America is awaiting the flow of Fed dollars, as is the world, and its’ why the dollar has so devalued (Bernanke’s plan) and more debt will be created.

We’re active in TIPS (Treasury Inflation Bonds) and have a strong, strong portfolio with good stocks, that all pay dividends. This way you gain even if the stock is short term losing, and you gain by higher dividends than the CD market will pay.

Watch our daily BCO alerts this week. We will be trading, but only when we see firm market bias, or a stock that is ignoring market protocol.

Be Well, Listen Intelligently; Question all Facts, and Show Compassion.

Floyd at OEX

Trade in a Zen Way

2010-10-07T10:04:00.002-04:00

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

Trade with Calm Floyd at Blue Chip Options

2010-09-30T09:22:00.001-04:00

Dow Theorists do not yet see a buy signal. Many investors do. Here were our Dow projections that ran over 21 consecutive days, one of the longest runs we’ve seen.
So first, here’s what we said:
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
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.
If, however, the market momentum is strong any reversal move can stop near a drop between 239 and 259 points
10,746-10,787-Fibonnaci 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” 10,950-11,127 Market potential 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 10,250-Resistance. Lowest low we see
Forgive me, but the USA is close to imploding from stupidity. People are being elected in primaries based entirely on false facts and Roveian manipulation. Feel free to believe Obama the devil or a socialist, but make note of a few things:
1. The deficit was out of control when Obama took office.
2. “Deficits donʼt matter” was Bush/Cheney ideology, but now the
same spending seems “the end of the world” and lead in to
socialism.
3. Few Americans even understand economics at all, yet I hear every
day “he is spending all our money”. But no one will give up that socialist social security, which with Medicare takes up 2/3 of our deficit.
4. Republicans have been great at mud slinging, stopping bills from passing, but have yet to provide even ONE detailed suggestion on what THEY would do, and who their leader is. Could it truly be Sarah or Christine: ARE we out of our minds?
It is this that will destroy our country:
http://www.washingtonpost.com/wp‐ dyn/content/article/2010/09/23/AR2010092306836.html
or perhaps even better said by Pulitzer Prize winning economist Paul Krugman:
http://www.nytimes.com/2010/09/24/opinion/24krugman.html?_r=1&hp
__________________________________________________________________________________________
*In July TD Ameritrade reported that 22% of all options traded hit an all time on weekly items, and that all brokerages have been reporting much more interest in weekly options.
*The market is showing low volume for three reasons:
*People are scared shitless, and investing in bonds *There are 1/3 less hedge funds than a year ago *Stocks suck at earnings. What we earn we soon give up, except in options. In other words whatever we make in a month is reversed quickly so we lose the gains.
There are 30 weekly options available besides indexes options, which we only trade monthly’s on, and they include popular stocks like Apple, GE, and Micro Idiots (also known as Control/Alt/Delete, or MSFT)
Ex: You own shares of Google (GOOG), which are trading around 490.00. For about $11.00 you could buy a put option, which allows you to sell the stock if the price falls to below $480 at any point in the next month. BUT, for $2 you buy a put that allows you to sell the stock if the price falls below $480 in the next week.
If the stock goes up your option will expire worthless and you would be out the premium. However, if the stock falls below the premium price the investor could make a big profit.
You can buy a weekly call option with a strike price 1% above the price of the underlying stock for about half their value. A 2% move up could double your money, if in the right direction.
With the weeklies there is more risk, but everything is cheaper. One last example: If you own Amazon calls, AMZN trading at 140.00, and SELL Amazon puts you would be obligated to hit your exposure if the stock drops 17%; you would have to buy the stock at the same drop if the stock fell only 6%
We see weekly options on stocks like Apple, or GE as “falling in love” with an option, as we do with www.oexoptions.com, where one follows the bid/ask and 1 to 5 minute PNF charts on a daily basis.
We believe the FEDS are handling inflation/deflation well, and knowing where to spend. We further believe that less than 12 men in the world truly understood what the banks had done to us (not that we gave them all this greed money‐the Bush stimulus just before leaving office, all for his cronies) to Obama/Geitner first stimulus.
At the time all this occurred more money was being bet on cash derivatives than there was money in the world. This was already in place when that “liberal” came in office. This also confuses me, as it was conservatives that did it.
Stock Updates:
PAAS and SLV are up over 20% CEF, our bullion fund is up 17%. All three of these holdings, with silver in the mix, are long‐term hedges.
GLD is approaching all time highs, has broken through resistance, and is either due for a great fall, or the FEAR will take over.
Every holding we have in core funds pays a dividend. McDonalds, promoting obesity to the world, which we own, increased dividends by 11%.
NFG turned from a 10% loss to a 2% gain as winter oil/gas heating picks up.
Exxon Mobil remains our largest core holding in energy, followed by Chevron and Conoco Phillips. Oil will surprise us with the upside at some point.
Zweig Total Return Fund (ZTR) remains a safe way to invest in Treasuries (there is room for more upside, and high AAA bonds.
At least 20 to 25% of your assets should be in Gold, Silver, and short‐term bonds. Cash, worthless that we have made it, is still our best safe tool for any step.
We have sold all options held , including Apple this week, for a profit.
Stock Options have returned, after fees, 40% on average from January 1st, with 27 wins, and two losses.
Successful traders:

Follow rules
Study our work on the website and ask questions
Believe all facts to be false until proven otherwise.
Question Authority. It is the key to your survival.

Be Well, and Trade with Calm Floyd at Blue Chip Options

Fear and Greed

2010-09-23T08:29:00.000-04:00

Review our Dow projections carefully, which have now been in affect for almost 21 days, still operating within a 584-point range.
We believe there is a 60% chance the market could move to 10,650 to 10,746, the top Fib retracement, a 20% odds the market will hesitate no higher than 10,550, and a 20% chance the market could reverse to the 9950 to 10050 area, before another attempt at upside.
Our projections remain on track and hitting each step:
9800-Strongest Resistance, the market seems to bounce from here
9950-10050-The struggle point 10,118-10,250-Strong Support lines. 10,416-Resistance-possible highest top
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.
10,746-10,787-Fibonnaci Resistance and Retracement level
________________________________________________________________
Therapy is where the patient identifies his traits and character logy and learns how to change, or deal with them.
Many psychologists and psychiatrists spend their time with patients while the patient lies to them, never tells them the “truth” or the whole story. The Dr. will not know what the real truth is until the patient is able or willing to expose themselves to the physician, or to themselves.’
This holds true with Stock Traders who all suffer their own emotions, issues and grief’s, and have their own torments in addition to suffering with the natural traders lament of when to buy and when to sell, and more importantly, how they as a trader deal with FEAR and GREED.
FEAR occurs both in “should I buy now” and “should I sell now”
GREED occurs both in “should I sell now” or hold on, or “should I wait a little longer to buy, to let the stock go down more, before I latch on and carry it up, thusly showing GREED.
System logic traders follow flexible (not rigid) rules to trading. Quantative logic traders trade by math algorithm’s that are mechanical and take the emotion out of trading.
OEX Options.com, our sister company, is a system logic methodology that uses “flexible” parameters around basic sets of “when and when not” and how and how not”. We trade indices like the OEX pitting our trading ability against the others that are selling or buying, hence the spread between bid and ask.
As an example we recently recommend trading PAAS (Pan American Silver) ONLY when it had moved UP to 24.70. On a PNF chart we were waiting for confirmation of upside before entry.
As the stock hit 24.70 we recommended PAAS OCT 16 2010 23.00 CALL which hit 53% returns within 5 days.
This, again by example, is an October call, giving us until October 15th to sell out for profit or loss.
Here’s a view of PAAS:
Note the stock is now nearing a double top at $27.00 and if it rises above $27.00 to 28.00 will have hit all time recent highs since May of 09.
Note the stock is now above the simple moving average and hitting the Bollinger Band top.
Watching Silver (SLV) which we also own, and being believers that Silver many have more long term upside than Gold for the short term, (GLD) which we also own, traders will have two choices:
1. Lock in profits now at 53% returns.
2. Sell partials (at least 1/3) of your position at the top we are at or near, and hold the final position for more upside, having already gained profits to cover their buys. This is called “letting an option run”
3. Hold it all. Wait for the stock to hit over 28.00, to new highs, and reap much larger returns.
Fear and Greed will play a huge role in what decision the trader makes. For the trader that bought just the stock, they know what could be a stop loss ($23.00) if trading “tight” or if risk oriented and wanting a deeper stop loss or a place to take a larger second buy of the stock, watching for a drop to $20.00, the most recent lowest low.
Who you are is defined here. How you emote, how you feel, where you have FEAR or GREED, all come into place.
Now, in turn, let’s look at GLD and CEF, both stocks we own, not options. GLD is simply gold and CEF is gold and silver bullion, on the Canadian market. And SLV is the indices like GLD that holds only Silver. We own all three:
We would begin watching Gold (GLD) for the highest top at 1290.00 per oz, and a stop loss near 1200.00
This fund has shown a double top break out, confirming the same as PAAS that silver is on an upswing. We’d look for tops at $22.00, and stop loss at 17.50 for tight traders
This stock shows lower volatility, and lower volume in trading. Because it combines Gold and Silver in real assets and is not traded by the minute as GLD and SLV often are we would see this only as a long term hold, using both the Gold and Silver highs and lows as recommended points to exit the position.
However, for those keeping 15% of their trading capital in real assets, CEF is the best longterm trade for steady accumulation.
Longterm 10year treasuries have dropped 2.5% in two weeks, raising their yield. We’re out of TLT, as you know, and have reinvested in treasury inflation bonds, TIPS, which we will hold while the world economists argue whether we are approaching deflation or inflation.
We’d like to cover 4 more holdings this week, all part of Floyd’s perma bull thinking on oil. Most systemologists see energy stocks on the downturn, which they are, and Crude Oil not hitting and holding above 78.00.
Short term this is true. Long term we think not, and have invested in three stocks that all pay dividends, that all have lots of cash, and all also invest and reconnoiter around liquid and natural gas also.
COPConoco Phillips. Buffet owns it, and so do we. Buy and hold.
XOMExxon Mobil This is our largest holding. ExxonMobil has more money than most countries combined and is undervalued in the market. Continue to buy.
ChevronCVXThis is another stellar, volatile energy stock we feel undervalued in the market.
Traders should own the stocks, and be accumulating them all on dips, all with a trailing stop loss of 20 to 25%.
If option trading these positions we only recommend long term calls that are at least 6 to 9 months out, and being ready as a trader to hold and accumulate on volatility.
If we can learn compassion we can build peace. If we can learn not to fight “dirty” (the GOP not allowing any bill to pass) we foster dissent. Dissent builds resentment and anger, and irrational behavior.
When we are smart enough to not even read the news bytes on a Sarah Palin we have begun to understand that reading false facts and manipulation only confuses the issue, for the lady with the “good looking legs and the new boob job”, and begun to understand self promoting vs. content.
Have a good week trading.

Self Promoting versus Content

2010-09-16T08:59:00.005-04:00

Review our Dow projections carefully, which have now been in affect for almost 21 days, still operating within a 584-point range.
We believe there is a 60% chance the market could move to 10,650 to 10,746, the top Fib retracement, a 20% odds the market will hesitate no higher than 10,550, and a 20% chance the market could reverse to the 9950 to 10050 area, before another attempt at upside.

Our projections remain on track and hitting each step:
9800-Strongest Resistance, the market seems to bounce from here
9950-10050-The struggle point
10,118-10,250-Strong Support lines.
10,416-Resistance-possible highest top

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.
10,746-10,787-Fibonnaci Resistance and Retracement level

________________________________________________________________

Therapy is where the patient identifies his traits and characterology and learns how to change, or deal with them.

Many psychologists and psychiatrists spend their time with patients while the patient lies to them, never tells them the “truth” or the whole story. The Dr. will not know what the real truth is until the patient is able or willing to expose themselves to the physician, or to themselves.’

This holds true with Stock Traders who all suffer their own emotions, issues and grief’s, and have their own torments in addition to suffering with the natural traders lament of when to buy and when to sell, and more importantly, how they as a trader deal with FEAR and GREED.

FEAR occurs both in “should I buy now” and “should I sell now”

GREED occurs both in “should I sell now” or hold on, or “should I wait a little longer to buy, to let the stock go down more, before I latch on and carry it up, thusly showing GREED.

System logic traders follow flexible (not rigid) rules to trading.
Quantative logic traders trade by math algorithm’s that are mechanical and take the emotion out of trading.

OEX Options.com, our sister company, is a system logic methodology that uses “flexible” parameters around basic sets of “when and when not” and how and how not”.
We trade indices like the OEX pitting our trading ability against the others that are selling or buying, hence the spread between bid and ask.

As an example we recently recommend trading PAAS (Pan American Silver) ONLY when it had moved UP to 24.70. On a PNF chart we were waiting for confirmation of upside before entry.

As the stock hit 24.70 we recommended PAAS OCT 16 2010 23.00 CALL
which hit 53% returns within 5 days.

This, again by example, is an October call, giving us until October 15th to sell out for profit or loss.

Here’s a view of PAAS:

Note the stock is now nearing a double top at $27.00 and if it rises above $27.00 to 28.00 will have hit all time recent highs since May of 09.

Note the stock is now above the simple moving average and hitting the Bollinger Band top.

Watching Silver (SLV) which we also own, and being believers that Silver many have more long term upside than Gold for the short term, (GLD) which we also own, traders will have two choices:

1. Lock in profits now at 53% returns.
2. Sell partials (at least 1/3) of your position at the top we are at or near, and hold the final position for more upside, having already gained profits to cover their buys. This is called “letting an option run”
3. Hold it all. Wait for the stock to hit over 28.00, to new highs, and reap much larger returns.

Fear and Greed will play a huge role in what decision the trader makes.
For the trader that bought just the stock, they know what could be a stop loss ($23.00) if trading “tight” or if risk oriented and wanting a deeper stop loss or a place to take a larger second buy of the stock, watching for a drop to $20.00, the most recent lowest low.

Who you are is defined here. How you emote, how you feel, where you have FEAR or GREED, all come into place.

Now, in turn, let’s look at GLD and CEF, both stocks we own, not options.
GLD is simply gold and CEF is gold and silver bullion, on the Canadian market.
And SLV is the indices like GLD that holds only Silver. We own all three:

We would begin watching Gold (GLD) for the highest top at 1290.00 per oz, and a stop loss near 1200.00

This fund has shown a double top break out, confirming the same as PAAS that silver is on an upswing. We’d look for tops at $22.00, and stop loss at 17.50 for tight traders

This stock shows lower volatility, and lower volume in trading. Because it combines Gold and Silver in real assets and is not traded by the minute as GLD and SLV often are we would see this only as a long term hold, using both the Gold and Silver highs and lows as recommended points to exit the position.

However, for those keeping 15% of their trading capital in real assets, CEF is the best long-term trade for steady accumulation.

Long-term 10-year treasuries have dropped 2.5% in two weeks, raising their yield. We’re out of TLT, as you know, and have re-invested in treasury inflation bonds, TIPS, which we will hold while the world economists argue whether we are approaching deflation or inflation.

We’d like to cover 4 more holdings this week, all part of Floyd’s perma bull thinking on oil. Most systemologists see energy stocks on the downturn, which they are, and Crude Oil not hitting and holding above 78.00.

Short term this is true. Long term we think not, and have invested in three stocks that all pay dividends, that all have lots of cash, and all also invest and reconnoiter around liquid and natural gas also.

COP-Conoco Phillips. Buffet owns it, and so do we. Buy and hold.
XOM-Exxon Mobil - This is our largest holding. ExxonMobil has more money than most countries combined and is undervalued in the market. Continue to buy.

Chevron-CVX-This is another stellar, volatile energy stock we feel undervalued in the market.

Traders should own the stocks, and be accumulating them all on dips, all with a trailing stop loss of 20 to 25%.

If option trading these positions we only recommend long term calls that are at least 6 to 9 months out, and being ready as a trader to hold and accumulate on volatility.

If we can learn compassion we can build peace. If we can learn not to fight “dirty” (the GOP not allowing any bill to pass) we foster dissent. Dissent builds resentment and anger, and irrational behavior.

When we are smart enough to not even read the news bytes on a Sarah Palin we have begun to understand that reading false facts and manipulation only confuses the issue, for the lady with the “good looking legs and the new boob job”, and begun to understand self promoting vs. content.

Have a good week trading.

Historical Validation

2010-09-09T08:41:00.002-04:00

Perhaps, just perhaps, the fact that “if you look back over the year, you will see the historical validation of the first trading day of the month having an “upward bias. We saw rallies on the first trading day of the month in January thru June. In July the market did not rally until the third day. And in September we saw an up day one and day a down, despite a hugely oversold market”

We saw this as a severe test, as did many chartists of the cash indices reacting in an oversold market.

Initially we saw a stronger summer, and a fall that led to more downturn. We may have actually seen a bottom instead this summer, followed by highs and ending last week UP, an unusual occurrence

To lead our discussion, an understanding of FACT vs. DESIRED FACT:

http://abcnews.go.com/Entertainment/wireStory?id=11542570

_______________________________________________________________

WE believe Treasury Inflation Protected bonds (TIPS) remain a good investment, linked to the consumer price index, and yields are currently less than with a 10 year Treasury.

However, Treasuries, which pay no interest worth beans, are in a bubble.
For example a ten-year tip means annual inflation needs to rise only above 1.6% for TIPS to generate a better return.

With all the talk on” deflation” TIPS continue to sell, and we recommend them as a cash position alternative.

It is also interesting to note that short sellers were not aggressive this summer, despite the market weakness.

________________________________________________________________

We use high/low/open/close as a fundamental of our option and day trading, and it’s an important part of both candlestick charting where, for example, there are many types of single candles, each telling a different aspect of he battle just waged.

Point and figure will show where the stock is on a 1-minute increment, and enough minutes at looking at a minute and one begins to see cycles.

At the same time the trader using Pn F charting on a daily sheet is only seeing the close of the prior day, and if there has been no defined large movement, not even seeing the nuances of a move. This eliminates the noise. If trading to identify a trend, use point and figure charting. And remember:

1. Use 1 minute, 5 minute, 1 day and 1 week settings to get even more “feel” for the move of the market, without noise, and make changes on your charts from standard 3:1 ratios to 2. /. 50 just to see how the same chart can look differently from views of it.
__________________________________________________________________
I am copying over an article that well explains one view of excessive borrowing; much of what the GOP uses part of now, despite having left us with the last three Republican Presidents leaving massive deficits. Within the article, however, are the basic premises of “something to do”. Please remember as the Pee Party and the GOP have only told us what is wrong, but in no way have offered any suggestions on what else to do, except renew the tax exemption for the rich, and tell us we are raising too much debt.
Perhaps now that we have” won the war” in Iraq some of our massive spending there, all for naught, will reduce our deficit.

More likely we will use it to “win” the war in Afghanistan.

For the greatest country in the world we have never won a war without allies.

Here’s the study:

The New Republic: The One Way Out Of The Recession
by William A. Galston
The New Republic - August 26, 2010
William A. Galston holds the Ezra Zilkha Chair in the Brookings Institution's Governance Studies Program, where he serves as a Senior Fellow. He is also College Park Professor at the University of Maryland. He is the author of eight books in the fields of political theory, public policy, and American politics.
Average Americans are noticing what wise economists have been arguing for quite some time: Bubble-driven economic downturns differ qualitatively from standard business-cycle recessions. Not only do they go deeper; GDP takes longer to rebound, and job creation proceeds more slowly.
The mechanism is straightforward. As the value of assets used as collateral collapses, so does borrowing. This depresses consumption, and the real economy dips, making it much harder for businesses and households to service the debts incurred during boom times. Household consumption remains sluggish until debt is reduced to a level that can comfortably be serviced out of current income, a process that cannot proceed without an increase in the household savings rate. The larger the debt overhang, the longer it will take to work off the excess.
As recent as the late 1990s, total household debt stood under $5 trillion, roughly 90 percent of disposable income. After a decade-long borrowing binge, debt peaked in late 2007 at about $12.5 trillion—a stunning 133 percent of disposable income. According to the latest report from the Federal Reserve Bank of New York, the total had declined to $11.7 trillion by the first quarter of 2010, a reduction of $812 billion (6.5 percent) from the peak. During the same period, not surprisingly, the household savings rate rose from 2 percent to more than 6 percent.
While these are sizeable changes, there is good reason to believe that the process of household debt reduction is still in an early stage. Writing for the Center for American Progress, Christian Weller points out that total debt now stands at 121.7 percent of disposable income, still higher than at any point before the second quarter of 2005. In an analysis published in May of 2009, the Federal Reserve Bank of San Francisco suggested that the household debt/disposable income ratio might well have to fall much farther, to around 100 percent, a process that could take much of the decade, even if the household savings rate were to rise to 10 percent.
This extended deleveraging would have a substantial effect on the economy. The FRBSF estimates that it would reduce annual consumption growth by three-fourths of a percentage point from the stable-savings baseline, which would "act as a near-term drag on overall economic activity, slowing the pace of recovery from recession."
This is exactly what we’re now seeing. In a superb piece, The Washington Post’s Neil Irwin gets outside the Beltway and beyond its stale arguments to probe the real reasons companies aren’t hiring. His conclusion is worthy of extended quotation:

Many Democrats say the economy needs more stimuli. Business lobbyists and their Republican allies say it needs less regulation and lower taxes.
But here in the heartland of America, senior executives say neither side’s assessment fits.
They blame their profound caution on their view that U.S. consumers are destined to disappoint for many years. As a result, they say, the economy is unlikely to see the kind of unbroken prosperity of the quarter-century that preceded the financial crisis. . .
They see Americans for years ahead paying down debts incurred during the now-ended credit boom and adjusting spending to match their often-reduced income.
"It’s a different era," says Daryl Dulaney, chief executive of Siemens Industry, which has 30,000 U.S. employees who make lighting systems for buildings and a wide range of other products. "Our hiring and investment decisions have to be prudent and reflect that."

A different era ... How long will it take our policy makers and political parties to absorb the implications of that stark, undeniable phrase? When they do, they will realize that we have only two strategic options: Either we accept years of sluggish growth and high unemployment, or we shift to a new model that mobilizes the record level of private capital now sitting on the sidelines for public investments that will boost economic activity and employment in the short term, and economic productivity and growth in the long term, while generating rates of return sufficient to interest investors.
This is why we need a national infrastructure bank as the linchpin of a public investment strategy driven by economic analysis rather than congressional politics. Rather than bridges to nowhere, we need a bridge to the future. It’s time for hide-bound appropriators to get out of the way. [Copyright 2010 The New Republic]

This follows well the Floydian premise that “everything has changed”. Unemployment will stay high because companies make more money with fewer employees.
It will stay high because we are spending less money, the Global top 50 companies hold VAST amounts of cash from their restructuring, and many of the jobs lost are simply not going to be replaced.

We are perma bulls. Again, we believe each of the following stocks, energy related, that we own, are hugely going to benefit:

1. Exxon Mobil (XOM)-undervalued-BUY
2. Chevron (CVX)-strong on natural gas-BUY
3. Conoco Phillips (COP)-a Buffett holding on the forefront of new discoveries
4. NFG-National Fuel Gas-serving oil to the NE
5. ITC-a major infrastructural move to the changing of the grid.
Each of these are accumulate, and each are “close your eyes and hold” stocks.

________________________________________________________________
We will become bullish if and when the Dow tops 10,609 and holds. There is the same necessary trend line in the S&P500, where we must watch to see if 1040 is breached. If 10,609 is not reached we simply have a rally, and if S&P500 hits 1040 we have headed back to downside oblivion.

The NASDAQ we see as having the greatest potential for breakout. Tech stocks have taken a massive beating, and as we watch, we see lots of news that can trigger upswing:

1. Oracle, (ORCL), which we own just bought Sun, and has only upside, but is down.
2. HP, who are idiots for letting the CEO go, just paid huge premiums for a company that has never made a dime.
3. Google is now being sued by the state of Tx on their search engines
4. Intel continues to make brilliant moves
5. Apple is a good buying price, and held up well during the downturn.
This document is being written on an ipad, a completely ingenious piece of equipment that sells despite downturn

St. Louis Fed Reserve Bank of St. Louis President James Bullard has said “instead of pledging to keep rates near zero percent, that we should resume purchase of Treasury securities if prices begin to fall. He sees us as closer to the Japanese deflationary period, and that by doing so inflation will go away”.

As usual, this is another guy that never had a real job. Human psychology enters the picture and blows their quantitative analysis. WE see inflation as the greater issue, and its’ why we are out of Treasuries and into TIPS.

“Everyone you talk to thinks the dollar is going to collapse because of all the federal spending. Dumb. If the dollar were going to collapse, the bond market would be dropping and yields would be rising.”

It will take some time to unravel the world’s (not Obama’s) debt bubble. Most of this world debt is denominated in dollars. As the debt collapses there is no way to amortize the write off of the debt, and as credit card holders fail we see even more of the issue. Some banks are accepting 30 cents on the dollar for bad credit card debt. Trust me, credit card debt with the banks will be the next crash.

We are still strong believers in community banks reviving as the public finally realizes they have been raped multiple times by the big banks, and our investment in QABA-

Study this: http://www.etfexpert.com/etf_expert/2009/06/etf-expert-first-trust.html

Buy QABA and keep buying it.

Gold and Silver are on a run again. We bought in again at the right time, taking good profits, and entering again on the upswing. Gold could reach 1289.00. Watch for any close below 1225 as a bottom and a time to watch. We would sell at 1289 area, or at least reduce exposure.

With Silver we are very bullish. SLV is a good buy, even up 14% from our buy, and PAAS (Pan American Silver) we bought in on the upswing at 24.70, both call option and stock. We will continue to hold Silver, which we think has more strength short term than gold, and is more undervalued.

Deflation may well occur, and if so, it’s a good thing. Those with CASH will win.
It will end the debt bubble, and likely follow with a period of hyperinflation, making our situation seem even direr.

We consider this an excellent time to be investing in equities, as the majority pull out, and while we watch for a potential upside to the Fib retracement at 10,776.

And lastly, learn the lessons of life and trading:

1. Question all authority
2. Question all facts. Most are false
3. Have a basic “lack of respect” so you can see through the bullshit piled on you by the journalists and politicians
4. Question yourself or any “anti Obamer” as what should be done that is not being done, or better yet, what their plan is. I am always most amazed as we badmouth all that we do, but have no solutions.
5. Take nothing seriously.

Be Well and Do Good. Take Prudent Risk.

Floyd at Blue Chip Options

Follow the rules of Trading

2010-08-26T08:35:00.001-04:00

It’s important we think of Dow projections to understand the condition of the market.

Here’s how I project the Dow over the next 7 to 10 day period:

Dow Projections:
9800-Strongest Resistance, the market seems to bounce from here
9950-10050-The struggle point
10,118-10,250-Strong Support lines.
Twice last week we hit theoretical Dow tops at 10,250, and 10,200 last Friday

10,416-Resistance-possible highest top
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.
10,746-10,787-Fibonnaci Resistance and Retracement level

I use an exponential factor in H/L/O/C (High, Low, Open, Close and when studying or playing stocks or options focus on these factors first. I like the theoretical Dow, which shows the “true” tops and bottoms.

Want to understand our use of the theoretical Dow?
Study:
http://www.investopedia.com/terms/t/theoreticaldowjonesindex.asp

*Warren Buffet likes it, and I am a perm bull on energy of all types, I see much good in their $20 billion restructuring, and $10 billion to retire debt and buy back their own stock.
This is a blue chipper, with a dividend. Add it to our underperforming oil and energy core portfolio right now. We own XOM, and continue to buy and Chevron (CVX)
Conoco Phillips is an integrated oil major player. And a great symbol: COP
Buy it following the charts. Always buy up. We’d buy this at $55.50 and use a stop loss of $49.00 unless holding for the long term. If planning to hold for five years or more, just buy it.

The growing debate on whether GLD or SLV as an ETF is even real money is true.
Each of these funds “holds” actual bullion but issues their returns in Paper, or ETF stock, which to the true cautionary investor becomes suspicious as we realize there is no real “paper value”

ZKBGF

http://moneycentral.msn.com/companyreport?Symbol=ZKBGF
http://en.wikipedia.org/wiki/Gold_exchange-traded_fund

http://www.marketoracle.co.uk/Article9030.html

These three links will show you this Swiss fund, also available as a Silver ETF.
What the true Gold and Silver strategist is looking for is a fund that redeems in actual bullion.

We’re beginning research here.

In the meantime we find the Canadian Exchange Fund (CEF) remains an attractive and conservative way to hold gold and silver bullion.

Last week Pan American Silver (PAAS) hit our buy signal at 24.70 and we took entry in both long-term core positions, and as a call. Showing just trend lines, watch to see if 24.70 holds and begins upside. We’ll keep a tight eye on this for stop loss, or for a breakout stock.

I know you’ve been worried. Pages of Blue Chip without Floyd’s usual inflammatory and provocative liberalism. It’s because I’m tired. 23% of Americans believe Obama is a Muslim.
This is not just our stupidity, but pure Roveian (Karl Rove Theory of intimidation by false facts) politics, and our nation now blames Obama for what has been 40 years in the making.

And here I see how religious wars begin over stupidity. Religion breeds hate, it so appears.

Hmm, what I’ve always believed. Conservative with no vision are just like jihadists with a singular vision

http://www.huffingtonpost.com/markos-moulitsas-z/post_743_b_693281.html

Control your greed. Watch your fear. Follow the rules of trading and question the rules of life.

Be Well and Do Good

Floyd at OEX

Trade With Focus

2010-08-19T09:37:00.000-04:00

The market all of last week showed bearish cycles, and most of 2010’s gains were wiped out beautifully with the downside. This will sure have the mutual funds that were buying so heavily near 10,600 wondering what they did.

Trading is always light in August, but we see another high that could develop sometime before the end of August, as the “end of the summer rally”.

As we write this week we intend to develop even more on our Dow Projections:

9950-10050-Likely Deepest Bottom

10,118-10,250-Strong Support lines. Thursday of last week we hit the 10,250 range, and by Friday’s futures last week there was already “confusion” in the market.

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.

10,746-10,787-Fibonnaci Resistance and Retracement level.

Charles Nenner Research, who we believe have a firm handle on the market in general, have bottom tests of S&P 1197 and Nasdaq at 1800.

This same company seems Gold struggling at 1230, and is a Silver buyer on a close above 19.00.

We at Blue Chip Options remain a buyer of Pan American Silver (PAAS) at 24.60 or up. We do not want to buy this silver position until we see it show stronger upside on a PNF Chart. It’s very close, and we are more bullish overall on Silver than Gold as a hedge against inflation or deflation at this time.

Here is our opinion on the ongoing debate as to whether we are in inflation, or coming deflation.
During the two years we suffered true recession, before the Great Recession, the Bush Administration and numerous analysts (at that time not yet caught, jailed, or out of a job) argued that we were not having a recession.

This was a true sign, in our minds, of stupidity. We were in a clear recession, giving us every sign that things could be worsening, but were constantly placated by Bubbles Greenspan and Big Ben Bernanke that all was okay.

Of course, things weren’t. The entire amount of the money in the world times four were being bet on credit derivatives. Translated: money was being bet that didn’t even exist, even on paper.

That is much the argument now between deflation and inflation, and we think completely irrelevant.

The Euro is a big part of the overall financial picture, with FEAR brooding on decline. We see the Euro perhaps hitting lows of 129.60.

Oil surprises us constantly, with crude hitting Point and Figure sells at 78.60.
Charles Nenner Research studies oil carefully and is watching for a low to 75.50 to confirm that we have hit our high, and that oil could lower to 70.00.

One hurricane of real strength will change these charts in minutes.

In an alert this last week a trader had written, “I am panicked to invest in stocks, Floyd. Nothing I choose on my own holds up, and the constant whipsaw makes me ill, I make money only to lose it. What would you do in the Blue Chip Option fund if you wanted to not look at the market on stock holdings, and then just play options?”

This is a very sound question.

We answered as if we would invest:

Buy three Vanguard low cost funds:

Total Stock Market
Total Bond Market
Total Global Market

Reinvest dividends, and continue to buy on any dips. Never even follow the holdings.

Couple this with a core position in Canadian Exchange Fund (CEF) that holds Gold and Silver bullion, and CASH (short term Treasuries)

Traders that want the lowest risk long-term investment strategy will do well with this simplified “Gone Fishin” Portfolio.

Then, trade options, and keep these other holdings long term.

Many traders have also written recently about our use of 2X of 3X Bull and Bear ETF’s or their corresponding options. It’s simple what they offer. They bet multipliers of options on UP moves, which cause stocks like FAS etc etc, all the Proshares ultra shorts and ultra longs to hugely fluctuate.

It’s a great way to get rich right now, and an equally great way to lose your complete ass.
We find the various 2X and 3X funds are often not as they first appear and with whipsaw as strong as it has been, and the advent of the electronic high-speed traders whipping and confusing all momentum, we’re simply steering clear of them.

We have been profitable on all options that were held open over the past 10 days, except for our October 290 Call on Apple (AAPL), which is down 50%.
We continue to hold this position. Some of you have taken larger second buys, and others still hold for more downside. We will not stop loss this. Apple, when you view it carefully, under several views, appears ripe for a calming, and more upside. We think Apple will consider stock split or a dividend of some sort, as they hoard more cash than the U.S. has.
However, Jobs is an autocrat, and a brilliant one, in how he values and markets his company, and it’s up 2500% in ten years. Perhaps, for those that only buy “dividend paying stocks” the value of the dividend is in the massive increases in stock value, and great products.
(Attached document also on charts if these do not show)

For those of you trying to sell near what we think will be the top for some time, begin selling at 10,690. We could likely see a high sometime this week.
It would be a natural for a early rally, and a shift on expiry day, with a larger downturn.

Nonetheless, we do not see good things for the market into the fall. Certain stocks are safe, but even they will fall. Unless something happens that aspires Republicans and Democrats to see to agree on anything, we will deadlock our President, and nothing will be done.

We will most certainly then require another stimulus, what Geitner and Volker thought at first, and what the President knew he could not sell to the American people.

Question authority. Question facts. Watch emotions. Trade with Focus.

The political situation in the country is a large part of the lack of renewal, and the whipsaw.

Simply put, the 50 top multinational companies are all paying good dividends, have assets all over the world, and are just hoarding cash. All of them are really doing well. Few pay attention to these hoards of cash, and instead follow the short-term trend of the stock, missing the true nuance.

This same nuance takes place in the fact that the top 50 are really doing well.

Here's What We See

2010-08-11T10:04:00.006-04:00

Here's what we see, using the Dow and the S&P:

1. Downside is clear if and when the S&P closed below 1086, the Nasdaq below 1850, and the Dow at 10,147

2. We see the deepest downside 10,127-10,250 unless massive world news triggers events, but even then believe the market will hold near 10,000

3. We see first tops at 10,746, and the possibility of the market summer rallying to potentially even above 11,000. If this occurs we will begin selling most we own in Blue Chip Options.

4. It is more likely for a larger correction if the market euphorically rises again to the 11,000 area.

Silver remains a long-term play, but watch carefully if it closes below 18.20
And note again, if Pan American Silver closes above 24.60 it’s a buy, and not before.
We want to see a solid return to upside for PAAS.

Short term we may see a top in silver, just as we are seeing gold hold at 1200.
Both are temporary but Gold may have more downside, while silver shows more upside.

Our best investment is AU (Anglo Ashanti), which, if one holds a large block of stock (20k or more) can return up to 1600.00 every few weeks as the stock vacillates 10% up and 10% down. I personally have sold 400 shares in/out and profited 4 times on this in the past 6 weeks as the Gold market was topping.

We will hold this one, and be in and out of Silver, and have our eyes on PAAS.

Remember, at Blue Chip Floyd will almost always “sell us out of position 10 to 15% from the market top”. We’d rather leave the and higher risk to others.

I see the market in a trade range and a time to take profits on upside, sell options on “fair profits”, and watch the mood carefully. Doomsayers see the great correction, in which FAX and FAS (study these ETF’s) will become good methods of high-risk returns, but they remain high-risk methods to shorting the market.

Option Report:

(Email anytime if you need the signals themselves as we do not keep up with options on our website)

*Google-hit 37% returns first week
*Mosaic-hit 37 to 41% in 14 days
(Both could still be held in partials, but 1/3 of the profits should have been taken)
*Amazon-down 21%. Hold
*Apple-two buys have been made on this option or it was stop lossed. If two buys have been made, we’re down 18%. We’ll hold for now and watch carefully.

Oil remains confused to us. If it holds below $79.00 at any time it may have topped, but we still consider our oil stocks huge value buys, and have seen ExxonMobil, our largest holding, come “up “ to only 5% down.

I see spending in the economy, and the top 50 global companies just rolling in the dough, and companies learning that downsizing merely removed the bloat, and we are now responsible for creating NEW jobs.

In my own small firms that I own I have found in cutting staff, as I’ve had, that people suddenly work harder. And, that I probably had been employing too many.

We hear that Americans want to work. Are willing to work. I believe this is true.
And I also believe that the majority of our labor force are overweight, and do not have a high work ethic.

I recently gave a seminar to 18 small business owners (500,000 a year to 5 million) and I saw work ethic in each owner, and their comments that as they downsized they have learned more about did not get done.

This is not Obama’s lack of jobs. This is America’s last of forethought.
As our importing increased, as did our exporting, more jobs moved overseas not because of laws, or “dollar raiding to enter”. Normal free enterprise occurred and the cycle of life continued. Our economy is now the U.S. and U.S. made may be harder to achieve. We must create immediate jobs, sure, but bigger picture…

The jobs during Bushy time were primarily and so ironic, in the oil, banking and real estate construction boom (blame going right back to Bubbles Greenspan)

I believe we must have a deficit, and we must pay for our mistakes. I also believe that Keynesian economics will hold true here where the world debt of paper becomes valueless, and the commodity that is valued (gold, to beads) will have allowed us to “pay off” our mistakes.

Millions of lives have been affected by the change of cause and effect, supply and demand, and the “paper value” collapsed.
At one time Geitner and Paulson saw the screens and could figure that more money was being bet on derivates than there was in the world.

I’m watching on two new stock options, and just waiting out in the market and I’ll report in.

Be Well and Do Good

No Free Lunch

2010-08-05T09:09:00.001-04:00

I received the following email “advertisement” this past week after Bernanke spoke:
“Fed Chairman Ben Bernanke Drops the HAMMER!
*** "This is the worst labor market since the Great Depression." ***  *** "The market remains weak, with the overhang of vacant or foreclosed houses ... ***   *** "...uncertainty about the outlook for growth and unemployment as greater than normal....." ***  My Friends, This Market is Fragile and can CRASH ANY DAY
NOW.   This is a DIRECT WARNING from the FED CHAIRMAN.   It can not be more clear! I warned about this LAST WEEK!    I'll Tell you "What To Do
Right Now to PROFIT BIG. Options that can skyrocket 300% 400% even 700%
800% or more.
This time around Cash In on the Turbulence, Cash in on the Crash with a small cash outlay.”

As I read the above jibber jabber I thought this might be what the Pee Party reads and believes and I simply am awestruck that a company would attempt to advertise so deceitfully, ready to let people lose thousands of dollars “dreaming of the 800% return.
Instead, Iʼm jumping up and down on our play with Mosaic Calls that are up 49% from purchase in a 5 day period. MOS SEP 18 2010 45.00 CALL we just recommended, and itʼs up 33% as of Friday, and hit 49% highs the day prior. We consider returns like this EXTRAORDINARY, meaning truly out of the ordinary, and not to normally be expected in most trading.
Reality. There Is no such thing as a free lunch. As Malcolm Gladwell teaches us one becomes an expert at something with 100,000 hours of work at it.
We did this a few months ago with our TLT call that hit 60% returns, albeit a long call that we had bought, and most traders sold out. Some may still hold, and the option is in the red. There come the nerves of steel, as there are another 6 months in this option.
And we hope to do it now while we think the market will rise short term, and we will begin liquidating some more of our holdings, locking profits, as the longer term view of the market is that it will end.
The debt the world has built up over the last 30 to 40 years is essentially “being liquidated”; the house of cards coming down.
Keynesian economists will steer us that the ongoing debt will essentially recycle and by itself creates no danger, as long as growth continues.
Others see it as the debt of the world eventually collapsing, not overnight, but over a tell telling time of high unemployment, homes being rented more than bought, and people working into their late 70ʼs. All of that time the dollar will be collapsing, but actually the dollar will be increasing.
The value of companies, the way we trade to create market share, this many think will end in just a few short years, and that there will be no stock market as we know it, no trading as we have it, and values having been changed. A perfect example of a “rock is not hard”.
As we trade options, we trade for fast profits. As we have traded stocks weʼve often bought on dips, but will not be doing so now, but instead selling for profits at various market tops, ALWAYS leaving money on the table for someone else to make. Rockefeller made his money by selling just before the top, and my Dad taught me well to always have a regret that I could have gotten more, because with the gains I got I could watch as the market or stock went “just a bit higher”, leading to GREED.
It confuses all of us. For example, Floyd here got us out of the Gold and Silver market when gold hit 1170-1180 ranges, and we missed the trade range increases to 1280. But as Gold has fallen we bought back in, and Iʼm not sure I should have recommended Gold. From a contrarian perspective I see tops no higher than 1270, and soon leading to lower lows For the short term. Gold may NOT be the frenzy.
Silver, however, should be, and to most is not even noticed. We own SLV and CEF which holds silver billion.
Here are recommendations to our portfolio:

Decrease or do not buy more of GLD.
Increase your position in SLV, the counter index for Silver to Gold. In Blue Chips we own Silver, in three ways: a.through Canadian Exchange Fund, (CEF), that holds both gold and silver bullion b. through SLV or SSRI, both excellent Elfʼs c. through shares of the Pan American Silver Fund (PAAS)
This play is a stock, and making trading news:
“Shares of Pan American Silver Corp. edged up $0.33 (+1.44%) to $23.25. The stock closed at $22.92 in the previous trading session and opened today at $23.18. The price of the stock ranged between a low of $23.04 and $23.67 respectively. The trading volume of 702,941 is below the 90 day average volume of 1,193,300 shares. PAAS is trading below the 50 day moving average. The stock's 52 week low is $18.11 and 52 week high is $28.41.”

Letʼs watch PAAS. As it shows upward trend near $25.00 this is an excellent buy as a stock or a long term call option.

Now to clear your mind of the sadness of our world, the news bites of false facts, here are some REAL ones to help us understand our transition as a human race.

*BP contributed 77,051 to Barack Obama through 2004-2009.
*The average American paid 17% of their personal income in taxes last year, the lowest since 1971.
*There were 116,782 immigrants deported during Emperor Bush’s first year in office; Obama the communist has only deported 387,790 immigrants.
*Five finance firms hold 97% of the cash derivatives on the market.
*49 states have laws making certain physical appearances legal to have companies not hire the individual. It is said that Pee Party members are scrambling to find this in the Constitution.
*17% of all Catholics believe in the “evil eye”
*There are 23 nuclear reactors being built in China
*IN 2009 52% of U.S. personal income came from wages, and 17% came from horrifying socialistic government programs. Since 1929 these figures have never been so low and high. So, I’m asking all Pee Party folks holding their Constitution in hand, pray to their God (Christian only, I think, allowed in Pee Party, as in constitution, and voluntarily offer to give up their federal programs to “do the right thing”. Simply denounce your public library, public schools, social security, Medicare, and all else that we have wrought.

Be Well and Do Good
Trade for the right reasons
Floyd

Floyd, the Trader

2010-07-22T10:39:00.001-04:00

In our ongoing portfolio commentary, beginning with last Monday’s alert, we’ll first finish up on the holdings, charts and spreadsheets all updated on the website.

Principal Financial Group (PFG)
We think one of the best run of the insurance giants, a quiet giant.
Buy. 25% trailing stop loss.

MTN Group Ltd (MTNOY)
For fun feel free to do your own due diligence on this newly recommended international telecommunications trade.
Buy, using a 25% trailing stop loss

Oracle (ORCL)

This is a long-term speculative trade; we think is the best positioned in the tech field,
as the sector shifts . Long term we believe we have the right stock.
Buy. 25% trailing stop loss

Johnson and Johnson (JNJ)

As soon as we bought in all the news was announced on bad product, packaging, and the brand name of all time became tarnished. We saw the initial recommendation decline 11%, and as we had said “buy, buy, buy”, we bought again at lows and will continue to. A strong dividend and brand name that will overcome this quickly, and bounce back.
Long term speculative hold, using a 25% trailing stop loss.

Panera Bread (PNRA)

When we sold slimy YUM Brands recently for 60% plus profits, and knowing we already held the slime of slime, McDonalds, Panera Bread charts as a break out stock, and is a superbly run restaurant chain.
Buy as a speculative position, using a 25% trailing stop loss

National Fuel Group (NFG)

This is also a new long-term speculative purchase. It’s another method of distribution of core commodities, and worth your review.
Buy. Accumulate. 25% trailing stop loss, in a speculative portfolio.

Monsanto (MON)

The next sector growth play we think is in “soft commodities”, which in the agricultural world means chemicals, pesticides, potash, and shit.

Monsanto has hit a real bottom, with its patent rights gone on its moneymaker pesticide this year, but sells many things, and performs many services.
We bought MON and have continued to recommend within decline, and are now about 3% off .
Accumulate. 25% trailing stop loss

Our recent recommendation on a call on Mosaic MOS SEP 18 2010 45.00 CALL
were spot on. Investors required the second larger buy on this position but hit 34% profits over a week ago.
As we recommend options, remember-SELL at your risk level. For some a 34% return is superb, and for others, they will hold closer to expiry and follow the charts.

The only other sector not covered in our portfolio takes a unique conversation.

We have owned, and do own TIP, the government inflation bond, and we have played TLT calls regularly reaping 35% returns in days with no losses.

Both TLT and TIP remain sound investments long term, to just hold and buy, and short term, to trade on the momentum as these currencies shift with and against the EURO and GLD and SLV

We remain active in review of AIG and TOY. We would like to buy QABA below $20.00My comments will be in bold black, and are to lead you to more questions and answers.

The first step in trading is the identification of personality type, your core “character logy”.

The next step is to let your subconscious just open a bit to your conscious, by taking honesty in, and not “I want or “make up” stories to yourself about whom you are.

From Charles Nenner Research, the Netherlands stock prophet that used to analyze for Goldman . He spoke on CNBC last Wednesday.
*************************************************************************************************

“The Blue cycle line that signaled the prior highs and lows is topping again
This is the reason that we exited long positions when the S&P reached 1200
The very long Red cycle that bottomed in 1990 is now turning down
It bottoms only around the year 2025
This is the reason that we expect a continuation of the overall bear market for many years, with several up moves along the way”

We must recognize that Nenner uses algorithms and cycles to foresee the market and is probably best predicting what we already know. We’re phucked.

Here's what the stock chartists tell us about the massive drop:

-- STOCKS MOVE SHARPLY LOWER TO AFFIRM RESISTANCE ZONES
-- BREADTH INDICATORS REMAIN BEARISH OVERALL
-- RISING EURO WEIGHS ON GOLD

-- GOLD BREAKS WEDGE SUPPORT

-- VOLATILITY INDICES TEST IMPORTANT SUPPORT ZONES

-- ELLIOTT WAVE COUNT SHOWS THE S&P 500 IN WAVE 4

 AN ALTERNATIVE ABC CORRECTION AND SUMMER RALLY

At Blue Chip Options we are not considering 25 year periods, but do recognize and believe there will be far fewer “stocks” to invest in that “win”, and that the market will take years to sort itself out of what it did, and what those behind it continue to do.

At Blue Chip Options I've been recommending watching Gold and Silver for months, and we sold our position at 1170. We've just re-entered with Gold and Silver and will watch this. We may have entered too early and that we have more downside to surprise us.

We believe we will have an alternative ABC correction and a summer rally. Our bullishness is short term, but truly there. We see more upside before downside short-term, and more downside than upside long term (6 months).

Friday was indeed a feeding frenzy of downside, lightened by Apple hitting the stages at 1 pm. and telling the world that only 165,000 have complained out of 3 million sold, that all smart phones do this, and that we have created frenzy.

People want Apple to fail, because Apple is successful. People always want to find fault with success.
I own this product and watched with amazement at what a feeding frenzy it has become, when almost every Smartphone has the same problem, and suddenly this is “news”. Lobbyists played Apple, or the human psyche did…..upset that a company could seemingly do “no wrong”.
We’re bullish on Apple and own AAPL OCT 16 2010 290.00 CALL.

We are also bullish on the right Blue Chips, which are bargain priced.

Accumulate IBM, ORACLE, MON, MOS, and any blue chip that is bargain priced.

We will close our weekly commentary with two new recommendations.

1. -BP101016C36
BP OCT 16 2010 36.00 CALL
Buy at up to market. Best buy at 4.85 or less.
Hold and accumulate on any large market dips.
Use a stop loss of $31.00 and sell to 49.00

This is only for high-risk traders

2. Buy Google. (GOOG) Complete our vision. We own ORCL, AAPL, AMZN (both in calls) and think that Google has not lost a bit of its focus, just a bit of attention has softened its profile.
Barron’s this week surprised me with this being their primary recommendation. They are in good company with old Floyd, who recommends it as a core holding using a 25% trailing stop loss.
Buy at market and accumulate.

We will watch for a call on GOOG in the near future.

Here’s partly why. Viral marketing is our future, and GOOG will lead in the producer of the product, AAPL in the display, and ORCL in being ORCL

Here’s the first genius viral marketing:

http://blog.entrepreneur.com/2010/07/lessons-from-the-old-spice-man.ph

Do no harm. Question authority. Question all facts. Do not trust people that want to force their beliefs on you. Be Well.

Floyd, the Trader

2010-07-15T09:52:00.001-04:00

The most important piece of the jigsaw of a rising economy is not bullshit like "buy less from China", or "the government caused this and now we're becoming socialists".

Idiots think this. (Sorry if you are one). But, it’s time to get REAL, as we watch stock market take away any profits, give them back, and resolutions being “stuck and lobbied”

A large part of the jigsaw is that consumers owe $14 trillion. This is all Obama's fault, like everything else. He and those Democrats (not a single Republican) are not focusing on JOBS that will allow people to spend.

Here's the facts:

1. There is $14 TRILLION in household debt, and $10.5 TRILLION of that mortgage related, thanks to Bubbles Greenspan.

2. Americans have now decided being upside down that is okay to PHUCK your bank. We predict more and more will just walk away from their mortgages as their homes lose more value.
Reduced spending may occur with this, as will rising delinquencies on credit cards and mortgage accounts.

3. A Floydian Fact of real merit: There is an astonishing decline in bank deposits, clear evidence we as a public are starting to burn through the cash.

4. Stephanie Pomboy, Market Maven, says there is almost a zero chance of our ratio of debt returning to 65%, what it was before Bubbles Greenspan came to head the FEDS, and we all believed him GOD, because the money was free. She analyzes that to decline our debt by 6.3 trillion, or increase income by 9 trillion would bring us to this 65% reasonable and healthy rate, would take up to 10 years to occur, and has a ZERO chance of occurring because 40% of our households now spend every dollar they make just to keep their heads above water.

Last week we updated our portfolio on the website and made a number of recommendations for sales of positions. We are continuing to do so, and to do our mid-year “MRI” of our holdings. It’s been an exceptional year and a half for Blue Chip Options.

We’ll begin in the Monday commentary with our analysis of our holdings, and continue through the week, so that all of our holdings are covered by weekend.

Please Make Note: People invest for different reasons, and at different times in their lives. Planners call this allocation. Traders call it sector changing. Money magazines explain to the average Joe investor that it is good to have holdings in a variety of positions, and of course, never to have all your money in your company stock, as they are likely going to phuck you.

We pick both stocks that we buy and hold (and buy more on downturns) that ALL pay dividends. These are our CORE positions.

Our SPECULATIVE positions we may hold days to months, and with some over a year. We consider these potential break out positions, or trade them as options.

We will utilize our discussions about holdings in the order they list in our portfolio on the website.

Also make note that on our website we have a direct link to our up to date point and figure charting for all positions, and also positions we “watch”.

Chevron (CVX)
We bought this well and continue to hold. Nice dividend and the oil industry will rebound. Chevron has much risk inherent in lawsuits, and is aggressive in their exploratory methodology.
Hold, and use a 25% trailing stop loss

EXXON Mobil (XOM)
This is our largest single CORE position right now. We believe XOM is undervalued to the market, is being aggressively shorted, and will surprise everyone. It’s simply CHEAP under $60.00, we’re already up 17%, it pays a dividend, and Floyd believes it’s a potential $90.00 stock.

If trading options, trade ATM or ITM long -range calls. If buying the stock, use our traditional 25% trailing stop loss.

Health Management Services (HMSY)

We also read this speculative trade right, up over 44%. As healthcare changes (you know, we become communists) we will first have to figure out how we have created a “clusterphuck” of paperwork in the medical industry that RAISES cost. HMSY is an organizer company, managing and improving systems.
It’s well run, and has more upside.
We’d take 1/3 profit at 55% area. 25% trailing stop loss. Hold the position; do not buy at this time.

ITC Holdings (ITC)
Is an incredible concept -http://www.itctransco.com/
We bought and are up only 20%, because the stock is not yet known, and their concept of modernization of grid just beginning to be understood. It’s speculative, but a great move.

McDonalds (MCD)
1. Horrible food, builds obesity
2. Ugly buildings
3. Hideous customer service
4. Terrible dangerous little toys for children
5. The best system of “average” in the world. The food tastes like the same crap anywhere in the world, except for the French fries which they put drugs in
6. Execution business A+ BAR NONE.
We’re up 30%, it pays a dividend, and we’ll buy McD on any downturns. It’s a great “bad company”

Analy Capital Management REIT (NLY)

At one time last year we had a 120% return on this position and many took their first 1/3 of profits. The position is now up over 85%
Keep a 25% trailing stop loss, and HOLD

YUM Brands, Inc (YUM)
Pizza Hut, KFC, Taco Bell, etc.
And here’s McDonalds again, with a few changes:

1. Horrible food, builds obesity
2. Ugly buildings
3. Hideous customer service
4. Terrible dangerous little toys for children
5. The best system of “average” in the world. The food tastes like the same crap anywhere in the world, and it appears Asians are fried Chicken addicts
6. Execution business A+ BAR NONE.
We list this having just sold it for between 47 and 68% profits, plus dividends, but will be entering it again soon.

Wal-Mart (WMT)

Sadly this is another stock I love to hate. It’s a large box at the end of
a town that destroys local businesses, imports everything from China, and sells volume.
This company is the great logistics distribution company in the world. It has more money than we can imagine and executes.
A steady dividend, we hold this in our CORE account as a steady investment , using our standard 25% trailing stop loss.
Entry with WMT is fine anytime, and continue to buy.

Berkshire Hathaway B Shares (BRKB)

We know the story. The greatest investor in the world. We’ve shown returns of 50% in the old days, but did not add to the position during the downturn.
Many of our traders are sitting on hefty profits, having held the position with us over 5 years.
For the first time in BRKB charting history I am noticing a struggle at selling, and a more noticeable potential resistance area.
BRKB may be ripe for a drop. If you are profit oriented short term within your CORE account, we suggest selling 1/3 to 2/3 of your holdings if your returns are greater than 30%, as most of our traders are.

Templeton Emerging Market Fund (EMF)

We have owned this fund forever, and will hold it as long as Mark Mobius, the famed international trader, runs it. As a student of Sir John Templeton Mobius has allowed us returns as high as 200%, and currently over 150%.
We use a strict 25% trailing stop loss on EMF as emerging markets are volatile and unsteady. When many trading services recommend a variety of stocks and “plays” on China we sit back by the pool and let Mr. Mobius do our work.
Always a good buy on any dip. We list in our spreadsheet no trailing stop, for those that are risk oriented and simply accumulate on volatility.

Bristol Myers (BMY)

Blue Chip owns two pharmaceuticals and we’re in for the long term.
Hold, and use a 25% trailing stop.
BMY is sound, and has break out potential

NetFlix (NFLX)

Daughter Jenn who is learning the business and writes much of our final work recommended this on a simple “Dad, they have it together. None of the other ones do”. She’s been right. It’s up 60% and we’ve made money several times on calls.
We just recommended to sell a 1/3 of this position to lock in some profits.

JM Smuckers (SJM)

A kick ass “family company” that makes great profits and advertises perfectly.
We recommend this position be held if already accumulated, or purchased if not owned. Accumulate as a CORE position that has a dividend.
SJM actually looks like it has a healthy upside potential.

Caterpillar (CAT)
CAT is like a drama in the volatility that occurred during our ownership.
We’ve continued to add on dips and stand now with a 93% average gain.
Accumulate this position on any dips to a Point and Figure support line.
If you have great profits, take 1/3.
This is a long term CORE position charged for the” building of economies”

Each day this week we’ll outline in detail the rest of our portfolio.
Again, go online and see our charts on these holdings.

Be Well and Do Good

Floyd at Blue Chip Options

Good Trading

2010-07-08T21:20:00.001-04:00

My muses in valuable order, as it is time to think a bit about what our portfolio is, and what/where the stock market trades.

I read this from a Gann analyst:

KeyTurningDates.com: “ There is a major cycle due to turn the week ending July 30th. This cycle is aligning with three very strong Gann Angles, as follows:
1. The week ending July 30th is 90 trading days from the November 2008 low
2. The week ending July 30 is 144 trading weeks from the January 2008 low
3. The week ending July 30 is 180 trading days from the February 2007 high.

The November 2008 low occurred on November 21st, 2008 and was a panic climax to a strong sell off. The January 2008 low occurred on January 23, 2008 and also was a panic climax to a strong sell off. The February 2007 high occurred on February 20th, and was follow 5 trading days later by a one-day Dow crash of over 400 points.

Rarely do we see a set up like this one. And, as of this writing, I feel the odds favor the turn due the week ending July 30th being a high, followed by a possible strong decline into the first week in August”.

KeyTurningDates.com is a service that uses W.D. Gann math to calculate the where and when, and the “dates” that things could occur.”

What stood out in the summary I read above were first his Gann math, and then his use of astrology “when planets are at difficult angles, stocks can be risky”. The Foundation for the Study of Cycles, they claim, studies every Dow move since 1900 and notes that when the planets are at different angles, stocks can be risky. The correlation is too great to be a coincidence:

"On August 1st, with orb of a week on either side, we will have the most five planet alignments in thousands of years”.

As a psychologist Floyd knows that planetary alignments are typically non-events to the human mind, but the tight alignment of planets “will cause an enormous stress on mass human psychology, which is exactly what guides the financial markets. Transpersonally,however, in my study of psychology I believe there are key numeric patterns, planetary patterns and even doors to other universes on this earth.

Anything is truly believable. We know only what we know.

Bottom Line: We could see a repeat of the fall of 2008.

It is a full moon on 7/25. Floyd constantly sees correlation between market uneasiness and “crazy moves” on full moon days.

Okay, so now if you see nothing more in this downside and believe long term the market will rally and take us back in the 10,600 - 10,900 range, all highly possible, than consider:

*Buy FXI at market. 25% trailing stop, watched daily.

*It is a big win for small banks (QABA) as they will be exempt from many FDIC requirements and actually provide them with an advantage over larger banks with certain securities. Buy more QABA. This will be a good long-term hold.

*This is the shifting of the bases of power that Obama was elected on, yet cannot pass the grassroots of the Tea Party.
I worry about this, as the more bipartisanship that is created merely separates the positions of power, and nothing is really “given back to the people”. Nothing will then get done.

*600 million passenger cars are on the road around the world.

*There are 40 “megacities”-urban areas with more than 10 million residents living within the city, that are expected to develop by 2030.

*45% of the estimated amount of traffic in Brooklyn is caused by people looking to park.

*Real analysis of unemployment shows that we are 4 million below where we would be in a normal recovery, while the unemployment rate is 1.4 points higher and the employment-to-population is 1.4 points lower. Study this when you read the unemployment figures on Friday.

*Barron’s predicts “The Democrats will retain control of Congress this fall-just barely. Get ready for more intense gridlock and the end of Big Government.”

*My favorite measure of unemployment is U6, which includes the seriously underemployed, weighed in at a highly elevated 16.5%.
I also don’t believe anything but time will lower our unemployment rate, and our creation of new work concepts. Products, services, needs, ways to afford “pricing”.

*Half of our problem was within our consumption decades as a world that we wanted to buy more and more, and thusly had to have it cheaper, lowering wages to accommodate prices.

*We all know now that the G-20 agreed to “try” to cut deficits in half by 2013, but the Bank for International Settlements said doing so without hurting growth would be difficult.
Obama was snubbed at G-20 as he continued to define “deficit cuts are necessary, as is ongoing stimulus money that may have occur in both Europe and the U.S. again”.

*It is not as simple as jobs, or buy American, or boycott BP.

*We at OEX and Blue Chip Options continue to believe we are only in a deep correction, and NOT a fresh bear market.
We also do not understand how a market can move 400 points in a day will allow profits to be made for first the electronic high speed trader/hedge funds, and how rules must change.

*The market has moved 57% down in the last 18 months, followed by a 80% rally in 13 months, and that the size of the retrenchment to the size of the rise. 1000 is a key area on the S&P and Ramsey predicts we may have to hit it, or Dow 9520, former lows, before any “end of the end” can start.

Please stay with me. I flit around but there is a pattern and you can make money with what I uncover.

______________________________________________________

We are intimidated by fast food.
It has overcome us, we are controlled by it, and it is making us obese.
We are doing this to ourselves.

This is a story of rape, fraud, bribery, greed, lust and free enterprise.
It begins simply.

Vix comprises a group of option contracts that reflect how much investors believe the S&P100 and S&P will move in the next 30 days.

We have been much more interested in Vix trading after review of Ipath S&P500 Vix Short Term Futures ETN (Symbol VXX).

VXX mirrors VIX and rises when option traders take out the most insurance against a falling stock market.

We’ve recently been testing a pretty simple formula: “if its above its 50 day moving average you buy because the trend favors increased volatility. If it falls below the 50 day moving average you sell.

This is betting on volatility. It is betting on how fast the game will get before it is played.
VIX investors must stay right on the chart, and right in the market.

It is partly the volatility, mostly the uncertainty, which drives Gold to record levels. The 12% drop the other day shocked a few folks, and notes again most gains flattens gold back.

S&P-must hold at 1025, would like to see moves of 1037, Nasdaq above 1762. See this and you’ll see the Dow and OEX trigger right back to each support and resistance line we post and TWEET.

Many traders see an overall weakness in oil for 2010, and many of the “grab it while it’s cheap” oil game has been hard to sell stock moves people have made (buying old oil greats,expecting a rebound) better be praying for a quite a few hurricanes, and supply outweighs demand.

With exception we again discuss XOM or Exxon Mobil.
Some analysts are pointing out that key investors are now shorting XOM.

We don’t know why. It’s got cash, reserves, new acquisitions, and is the most conservative of the slime, moving their way into natural gas and all energy revenue streams.

We are long XOM, and still see it at $90.00.
At 59.00 it’s a steal for a long-term core portfolio.

We made great money on our second TLT call, both long range. Many hold these positions through volatility and breath in panic screams….
We suggest locking in all of your profits at 50 to 70% when we hit the right signal, and just moving on.
TLT is a great ETF to buy to hold cash. It’s paying 4%.
For the many subscribers that write and ask “when to get into TLT again”, sorry, TLT is best as a trade only at certain times, and we teach TLT only in our Advanced Mentoring service , currently on wait list http://www.oexoptions.com/AdvancedMentoring/AM.html

This is a Floydian Rant:

Typically various groups take over the Republican Party over the years. Let’s see, we’ve had ( to name names) the gun owners, the Christian ultra conservatives, the business lobby, the defense hawks, and the anti-abortion activists.

This year is my favorite. It is now the “cut spending” party, SHOCKED that the liberals have brought us such a deficit, and accusing Obama of just throwing money at problems.

The facts: Federal Spending rose 36%, moving from surplus to deficit, when Georgey Bush and the neocons were in full control.

Yet, the stimulus bill, which was enacted to stop the out of control lack of regulations on Wall Street, the ignoring of our economic infrastructure being built only on “build for war, and build houses” collapsed.

Health care reform was carefully orchestrated by Karl Rove and team to “spin” socialism” and “kill your Grandmother (by Sarah Palin with the new tits), and that it would cost more, and the Tea Party movement was born on:

*Follow the Constitution ( we have not done so for over 40 years)
*Stop spending money (but do not cut my schools, roads, bus services, or libraries)
*Begin judging our teachers, the core of our lifeblood, on “performance”, but the “performance” being linked only to “tests” that show understanding of specific facts, and will cause a general revolution amongst teachers, already acting like Mom and Dad, and the caretakers.
My 28 year daughter, who teaches “inner city” South Florida, gaining her Masters in Education, and planning it as her career, is now ready to quit entirely off the testing and the publics lack of understanding of how complex the education system is.

The Republicans, of course, are leading the bandwagon on cutting of spending, yet in their tenures, have never done so, or have done so only to have the deficit pass to the next Democrat in office who shrinks the deficit.
The facts on this are startling, yet 9 in 10 Americans will tell you that the Republican are against “more taxes”.
And they are, for a select few.
And they are, as cutting spending now makes them blame others for 2/3 of our deficit alone being Medicare/Medicaid amortizations of debt, put in place by Democrats, yet not one Republican I’ve asked willing to “give these benefits up”.

It’s my favorite question: Whenever Floyd hears a Tea Party or Republican babble on the deficit he always says “ I so agree. Did you know you can “cancel” your rights to these socialism programs and return the potential funds”? Each answer is the same “but it is due me, and I am not willing to give it up.

We will see the end of paper money in our lifetimes. There will be a world currency controlled by a large committee that disperses to each nation. Oligarchs will rule.
All kinds of shit like this could really happen. This is a bad movie with comedy characters, and we watch them.

Good trading. Lots of information above. I’ll work on the website this week (I promise) and update holdings.

Dance-even with your relatives.

Be Well.

Floyd, the Trader

2010-07-01T09:27:00.001-04:00

Run to the store and buy Rolling Stone July 8^th-22^nd Issue to read for yourself the great uncovering of our General that was just fired for being an idiot.

Then, turn the page and read “BP’s Next Disaster” by Tim Dickinson

http://www.rollingstone.com:80/politics/news/17390/120130

Here we get to read more about BP’s move into the Arctic, politics controlled by lobbyists and more of the rape of our people and earth.

It’s rather intimidating that Rolling Stone Magazine as uncovered, just this year:

-Matt Taibi’s expose on Goldman Sachs that later lead to the fraud investigation.

-Tim Dickinson’s expose on how the former Bush Administration used the Whitehouse

-Tim Dickinson’s above expose on Arctic Oil, sure to stun you

-Michael Hastings expose of “The Runaway General” that got him fired.

http://www.rollingstone.com:80/politics/news/17390/119236

Sad that true facts seem available only in “liberal” newspapers that truly hire freelance journalists.

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.”

Ahh, the Constitution. Right up there with The Bible. The Koran. Misinterpreted, and believed to be “law”

It is this kind of thinking, and you’ll read more below, that makes our country paralyzed without action, and the same type of thinking that has made our stock market a poker’s game at high speed.

On the "government's recommendation that BP pay $20 billion in damages, from Investors.com:

"Where is the Constitution does it say that a President has the authority to extract vast sums of money from a private enterprise and distribute it as he sees fit? Nowhere. It says that private property is not to be confiscated by the government without "due process of law". If you believe that the end justifies the means, then you don't believe in constitutional government, and without constitutional government, freedom cannot endure".

This is a perfect example for traders to learn from, to understand how false facts and "mis-information" clouds judgment. Sorry to Investors.com, and whatever Tea Party guru wrote this, but here's the Floydian rebuttal:

1. Nowhere in the Constitution does it say to invade a country without provocation, or does it "draft" only certain types of people.

2. The Constitution does not mention lobbyists and bribers, much as work during the writing of the Constitution (by a few guys that when you study them are truly not the "greatest of men", but what we have "historically made them out to be"

3. I believe the ends do justify the means under extreme conditions, and believe most everyone does, when they think clearly and not with some ingrained "bullcrap spiritual stuff" that we choose to interpret as we see fit, such as the "jihad" vs. "eye for an eye" vs. "thou shalt not kill". I also believe BP are phuckers, and we had to steal the money from them, as they stole the environment and livelihoods of millions for GREED, and would never have paid this back. Private enterprise does not work to well in a democracy, much as you may have been led to think otherwise.

4. There are many governments that are non-constitutional in which freedom endures.

5. Silly silly people. The Constitution is NOT the word of God, but words of men hundreds of years ago. A country in 2010 cannot be run by these rules, as there aren't even rules for many of the things we deal with. Where's North Korea, Afghanistan, or taxation of tanning salons and cigarettes, in the Constitution.

So to trade....what do you learn? Do not believe this fodder as it comes across the boards, the Palin to compare Obama to Hitler (Floyd hated George Bush II beyond comprehension for what he and gunman Cheney did, but even I would not compare their work to Hitler.

Do not listen to those that call names, and create their interpretation of scholarly works.

Do not fall for false information.

___________________________________________________________

Last week saw 1024 advances and 2419 declines. However there were equal new highs to new lows on the NYSE, and the Dow Jones s Industrials lost 2.94%, less than most of the major exchanges.

Oracle, (ORCL)which we own and are down 10% on, we have bought ongoing, and fourth fiscal quarter earnings at the business software giant surged 25% as revenue began to come in from its Sun Microsystems acquisition.

This stock will perform in the tech sector over time and we recommend as a buy.

We continue to also recommend Exxon (XOM), a value stock that has strength with their acquisition of XTO. Dividend. Long-term core holding, and a true chance at breakout to highs of $90.00.

We’re up 25% with Exxon from long term holding, with dividends always reinvested, and we’re buying more now. XOM is dirt-cheap.

And don’t worry, just as slimy and even more profitable than BP J

________________________________________

Turmoil has marked events more this year than ever before.

Toyota was a crisis. Worldwide panic. News everywhere.

Toyota still has a good quarter, learns their lesson on quality control, and soon thereafter every major car company except Honda is hit with massive recalls also, but the “hit” is not there.

And from Toyota there was soon thereafter “the flash crash”, a 20 minute trading period in which companies that are well known actually hit zero, and more 25% trailing stop losses were executed by funds, individuals, and all of finance on the massive drop.

Okay, so some say it was a blip, and I’ve also read an intriguing study on how this 1000-point drop that shattered Wall Street could have occurred on a full Fibonacci retracement….and on and on.

I don’t really care.

What I care about is that it does not happen again, or that if this is the “new way”, let’s get ready, and buy gold bullion and run.

What concerns me is that no one talks about it and you can find little internet feed explaining the true precautions being set up, or if they are; it is as if the exchanges see it just as a “blip”, “easily corrected with a simple remedy: the adoption of cross-market trading halts for individual stocks so that that buyers can catch up with the sellers and vice versa.” (Jim McTague, Barrons).

It goes back to the story of the circuit breakers, what we had been told in the past was “failsafe” for moves like this. Proctor and Gamble gossip cost us billions? Something is wrong.

Even VIX feels different. Buying fear is a good trade, just as selling confidence is usually a good sale. Sear, in Striking Point, says “ People are buying puts because fear is high , Vix at a lofty 35…..and remember “the market’s mainstay strategy remains selling stocks to increase investment returns, or selling puts to lower the cost of buying stocks. 14 million contracts trade on an average day.

Much of that option volume is institutional: buying hedges, adjusting hedges, puts against positions taken. Options are an art, science, and card game.

The rules are changing in the card game.

Over the next week we will be updating our core and speculative portfolio performance on the website, and updating buy/sell/hold recommendations.

For new traders with us: we do not keep track of options. When Floyd recommends the rules of engagement are out there, with buy/sell, stop loss.

We have many types of traders: brokers, analysts, big investors, and small investors. You define how to take profits.

As examples, our recent long call on Apple (AAPL) has been profitable to 40%

Our long-term TLT call has come back, and our new recommendation to a Sept TLT call is 8% up. We’re down 10 to 30% with our long-term call trades on Amazon and Mosaic, and are following the rules of our original recommendations.

During the week when we make comments “long the market” or “Dow or SPX tops” we are providing long-term trend indicators.

As an example, and a sad one, we saw Gold topping at 1170 and sold our final thirds at 1170. We’ve missed another 70 points of profit, and we now hold an OTM put on Gold, continuing to see a Pause and breakdown in Gold and Silver, very short term, and we obsess about it daily.

We’re up with AU, our gold mine, and we continue to want 15% of our portfolio in Gold, Silver or Platinum in the next three months. We’re just waiting for the right entry.

And, just back from a trip overseas, I am proud of this vast nation, this country, and our will.

I only question our understanding of cause and effect, and our ability to be led by the charismatic and the thieves, believing in “right and wrong”.

There is no such thing as black and white. This may take a lifetime to learn.

Be Well and Do Good

Floyd the Trader

Uncertainty, Fear and the Whipsaw

2010-06-24T09:19:00.000-04:00

Stocks rebounded for their best week last week , since March. It seems hard to believe this, judging from the uncertainty, the fear, and the whipsaw. The market tried to go up.
This week I read a classic example of stupidity in motion in the Wall Street Journal, out in print in the letters to the editors to the world. First, the letter:
“Arthur Laffers’s June 7 op-ed “Tax Hikes and the 2011 Economic Collapse” will be ignored or denigrated by the left. Yet Mr. Laffer uses facts of the past to get glimpse of the future. He implies that the current “low growth” for 2010 may be the high-water mark for our domestic economy given the higher tax rates on the horizon in the coming years.
The Reagan economic program was tinkered with and modified slightly, but it resulted in strong growth with minimal inflation from 1983 through 2007. Reagan was not successful in getting Congress to restrain spending,, but the impasse between Congress and the executive branch created with the election of a Republican Congress in 1994 allowed for a government surplus.
Once again America can grow with low inflation, restrain spending and lead the world out of its economic wilderness. The nation that did it once can do it again, but it will have to throw out the Democrat socialists and the Republican accommodations to do so. I hope this in November that process begins.
John L. Sorg McCordsville, Ind.”
Mr. Sorg sounds great, doesn’t he? It’s patriotic, the “we can do “ attitude”, and makes one bypass four key things:
1. Facts from the past are what we learn about the future from. 2. The Reagan economic program, great actor that he was, allowed for the
largest deficit we had ever had as a country for the following
administration. 3. Low inflation and restraining spending will alone NOT lead the world out of
its economic wilderness. Only when greed is regulated will this stop. 4. Democrats are not socialists.
Sarah Palin should be his President. She can make you feel good too.

Arthur Hill with Stock Charts announces Friday:
-- A POSSIBLE BROADENING FORMATION FOR THE NY COMPOSITE -- NASDAQ HOLDS ABOVE FEBRUARY LOWS WITH VOLATILE RANGE -- NY COMPOSITE UNDERPERFORMS NASDAQ -- NYSE AD VOLUME LINE IS WEAKER THAN THE AD LINE -- VIX AND VXN REACH MEDIUM-TERM EXTREMES
This isn’t the beginning of the end of the U.S. inventory cycle. Rather it is the destocking, the recession induced paring back that has largely come to an end. This is why the GDP is up, because manufacturers are building inventory. People are buying more. Retail sales showed a blip, and no one followed the facts, that in general, wholesale spending is up, and companies are doing well.
*There was a 14% increase in the number of millionaire households in 2009, to 11.2 million.
*There are 111.5 trillion dollars of global assets under management in U.S. dollars in 2009
The CEO slime of BP slime is on top of Capital Hill Thursday to talk about slime, to those that took slime to let slime through.
Whether Kroger is able to match Wal-Marts’ massive influx to retail grocery will reflect entirely on price, sadly. Does Kroger have the ability to buy as well as slimy Wal Mart. As Wal Mart cuts, as will Kroger. Margins may be affected for Kroger shareholders.
SanDisk (SNDK) is one to watch. It's getting huge revenue from Apple's ipad, and is being used in digital memory for cameras, Blackberries, and all smart phones.
We typically steer away from semi-conductor stocks because they are so volatile, and have very bumpy and hard to read cycles, but SanDisk has strength, name, and lots of future.
Hereʼs another stock we will recommend, but not track or put in our portfolio. Buy SNDK under $45.00. Set a tight stop loss of 42.00 or 39.00, and hold the position for at least 6 months.
If buying a call option choose a Sept or later ATM call, and expect two buys.

Use the same stop loss as for the stock, or take greater risk and buy the seconds at 39.00 and average cost.

The Gold Rally is far from over. We sold early on GLD, SSRI, and CEF, recommending sale at 1160 to 1190. The market has since rallied Gold to over 1240, and we’ve seen a recent but slight breakdown.
We recommend building new inventory in GLD, SSRI and CEF in stock positions first, buying on all dips, and returning to a 15% minimum allocation to Gold, Silver and Mining. We continue to hold a large position in AU, the largest mining company.
We have a cheap .23. put out on Gld now, hoping to scalp some fast profits on any day that Gold takes a more serious dip, and it will. When we buy again, we will be buying stocks, and then long‐term call options.
Gold will easily hit $2000.00, and should. Buy it, hold it, and hoard it. For those that have access to safe storage we also recommend the buying of Gold Bullion bars, now available at ATMS in Dubai and Saudi Arabia, a sign of what is to come.
I take you back to two realities:
1. Money is not real. Gold is.
2. The earth did not begin with the birth of Jesus Christ, or any such nonsense. It’s been empirically proven otherwise and the babblers that use a book translated 16,000 times and take things out of context , are no better than any fundamental radical group, including those of Islam.
There is a philosophy I take to heart in trading: *I have no enemies. *The only war in trading is within myself *All facts are false until proven facts
*FEAR is false evidence appearing real
*Question all authority and all rules. Do not trust those in uniforms enforcing laws. Do not trust or be willing to have your rights invaded
*Question all rules and regulations to yourself. Do not follow stupidity. Be good, but be human and test boundaries, not human and confined to boundaries. You’ll find those that set the boundaries quite narrow ‐minded. Stay away from all narrow‐ minded people, and all people that are assholes. Life is much easier.
We see Gold, which is now trading equally to Treasuries, a converse reaction, as mildly correcting to 1199, to as low 1140.

USE FACTS AS CIRCUMSTANCES, AND THE EMOTIONS OF THE MARKET AS FACTS, AND YOU’LL TRADE BETTER

2010-06-11T10:10:00.003-04:00

In zero velocity the human brain will scan endlessly, like a computer, in the attempt to impose order on chaos.

The body is just a glass around a light bulb. You’ll hear more on this as I learn about it. I am being taught.

The goal of trading is managing risk. We will have wild swings most possibly continue through all of 2010, and we believe the real profits will be in “holding on to your own”.

We are all aware of May 6^th, and the 1000 point drop, and the “flash crash”.

We suggest this was not the only wild trading day, and May 6^th thru May 25^th, and now ongoing, we have seen enormous opportunities for sales or profits.

Remember, low volatility will always lead to high volatility. For months we have been experiencing no volatility. We were bored. And volatility came back.

During low volume March I wondered if traders were spending or were waiting for volatility. We were.

The 1000 points may not be a “glitch”, but a true Fib retracement.

We experienced true FEAR in the market. And, it will come again. The end of the fear is not over, and the greed will come back.

Many chartists follow a 20-year cycle. This is much like those that follow the 200-day moving average. Using a cycle like this we would go back 20 years to 1990, when prices rallied in January, fell in late February, rallied again, had a higher low in April, a significant high in July, and then collapsed in October.

From a Fib level: The market 3/09 to 4/10 retraced almost exactly 61.8% of the decline of October 2007 to March 2009 (from www.keyturndates.com).

So some might say we have see the high of the year in April.

Key turning dates notes, using Fib, “the low of the 1929 crash to the high of 1930 took a Fibonacci 5 months to complete.

The Fib numbers near 9774 are key to watch, says Key Turning Dates, and they concur with our use of Fib to provide Dow projections for weeks now using what I think are the “scary bottoms” that could occur. Going below this number would not brood well, just as we saw 10,746 as a key resistance area, as the market moved into the 11,000’s.

So Friday last week we see futures negative by 181 points and a market that opens right at 10,050 with in two minutes.

More instant volatility.

There is a mathematical term called fractals. Using 9774, which was the May 25^th low, and near the low of the first and major recessionary drop.

This was not a lower low, so there are positives chartists will see that the 9774 low will hold for a while. If we see more it will be concerning.

An oversold market that cannot rally will often crash. Crashes will occur from very oversold levels.

Subscribers should note that we provide a great number of option recommendations. Our instructions for stop loss and sale of the option are clearly noted within our opening instructions, and we often then stop "discussing" the trade, as it is in process.

Because we have so many options open at this time, here's a quick update on the last few we've picked:

1. GLD Sept 18 2010 90.00 Put

This position we bought in at an average of .23, and continue to hold.

No stop loss, as it’s far OTM, and returns begin watching for sale at 1199 to 1140, where we see strong Gold Support lines

2. GS July 17 2010 160.00 Call

This position we bought in at an average of 2.50 to 3.50. Use a stop loss at 1.00, and look for profits at up to 4.40.

3. AMR Aug 21 7.00 Call

This is a NEW recommendation today. This call closed at 4.00 on Friday.

Best buy at 3.50 to 4.50. Stop loss at 1.75. Sell to 10.50

4. USO July 17 2010 33.00 Call

This position are also newly recommending today for those that think oil will see an upsurge. It’s higher risk. It closed at 1.75 Friday. Best buy at 1.50 to 2.10, sell to 3.90. Stop loss at 1.00

5. AMZN Oct 16 2010 120.00 Call

We think AMZN bottomed and has a long way to go back up and newly recommend this October call. This one closed Friday at 14.90. Best buy at 13.40 to 15.90, sell to 24.90. Stop loss at 9.00

With all options we recommend selling in partials, in 1/3 increments.

That’s why you’ll see “open” options on our website portfolio area to show what could have already been fully sold for profits, but traders may still hold the final third. We have taken no option stop losses with any open positions, and are profitable on all, excepting our new trades listed above.

Any interpretation can change reality. Here's an example.

1. I bought IBM a year ago and have greatly profited.

2. There is gossip that IBM will come out with "great earnings" tomorrow

3. Based on cycles, the stock will either go up or down.

4. If tomorrow is a cycle low, and IBM shows great results, the stock will go up.

All the news services will write: "Results for IBM were good and the market liked it and bought IBM

5. But, if the cycle is high, the stock will go down, even on positive results

The news will then say: Investors took profits with good earnings, as they see IBM waning over the next year.

Again, on cycles:

*The perception of a rate hike will affect the market".

*Cyclists feel that predicting market behavior before economic news comes out-by studying the past effects of the numbers and the reactions to them-is more important than predicting the number itself".

*Cyclists, for example, from historical numbers, don't see a lessening of unemployment numbers until year-end. We believe unemployment has TOPPED, but have at least 6 months before we can begin to really track if unemployment is truly improving.

This is because there are many false facts that begin around unemployment numbers, and the tendency of the news to "rate the numbers".

These are journalists, please remember, not economists that you read and "see" the news on.

We count on this with our OEX Option trading:

OEX trading is around moments to days, following cycles and patterns around support and resistance lines. Within it we utilize the Dow (which runs in correlation to the OEX well) for tops and bottoms to look for.

Cycles in which one trades, however, are much longer as we analyze the series of events that create longer-term triggers. Charles Nenner of Nenner Research states: " A period of 250 years is the minimum for the student of the business cycle. Only detailed historic knowledge can answer most questions. Without it, theoretical analysis is inconclusive. Looking at the facts of the prior quarter or even the half of a century is, in our opinion, quite inadequate."

We use cycles in our Blue Chip Option trading, and the longer historical events to help us see what will trigger movement.

Comparisons, for example, to the 1930's crash, are interesting, but don't take it far enough back, NOR include current events that have changed from the 1930's. As examples:

1. Our greed of oil was just beginning then.

2. China was not a factor then. China is now a factor, because investors concentrate on it.

3. Deflation/Inflation was less, as the world was less, in people, in manufacturing, and in money. We still had a Gold Standard.

Lastly, there was not any form of media that instantized news. We now deal with 1000's of "instant" facts and opinions.

USE FACTS AS CIRCUMSTANCES, AND THE EMOTIONS OF THE MARKET AS FACTS, AND YOU’LL TRADE BETTER.

No One Wants Oil on the Beaches

2010-06-03T00:11:00.002-04:00

Some say by June 4^th the market will be in freefall and our Dow projections you see could easily occur.

Others think there will be an upside, a reassurance budge and the market will hold flat in the mid to low 10,000’s for the summer.

Not one soul knows. This one is part of something much bigger, no matter what your religious beliefs.

The U.S. deregulates and Bush/Cheney allow their banker buddies, and all the “not for bid” to steal lots of dollars, to lots of people.

Obama enters hell, and the story just gets more dark in comedy each day with what is occurring around the world.

Europe will worsen, and will have to make many changes. Life will change. The Euro is so damaged and has lost value and respect. People now speculate about how long it will be around.

Meanwhile all are long the USD. This is both good and bad. Our debts lead in the world’s debts, and make it suddenly really real, what Floyd has been soap boxing about for years.

As our debts were exposed, the house of cards only began. There will be every nation found so deeply in debt that all paper currencies become value less.

This is a very real group of statements. Many that do not know my commentary do not realize I meander all over the place, and am difficult to read. You must pull out of what I write to you what you study that seems right to you, but give me time to fully go through this twice.

Half the power we consume comes from coal. Solar and wind will never happen, and natural gas will become so plentiful we’ll see shifts to natural gas.

No one wants oil on the beaches. And no one really has ever been in charge, we are now realizing, except the very oil companies that can cover up spills, BP being famous for it.

But hey, I live in Florida. My family is here. This is coming at me and may destroy our beaches, The Keys, our coral, and the true and dramatic Atlantic Ocean.

What you don’t want but you use. Each of us watches this environmental catastrophe and begins to see that the corporate conglomerates are the ones that have the money. This is it. No one wants oil on the beaches, but we need oil.

We use 30% of consumer sales worldwide and now globally oil based resins have formed our new materials, dependent upon oil.

So let’s get past that, and move right on to the fact that now no country really has any money

Everyone else has debt, the countries, the consumer, and the conglomerates have the cash, as do the Chinese with huge gold hoards, and the quiet Saudi Arabians amass gold. Check what George Soros has been buying and hoarding for the past year. Gold. GLD or gold bullion for the true fanatic. Or CEF, a brilliant Canadian Fund that holds actual gold and silver bullion. SSRI or SLV for silver, and there you have the doomsayers holdings. And we are much with them.

We exited Gold and Silver at 11.40 and have missed the last upswing, but continue to see a correction for gold and silver that will give us a great buying opportunity.

We continue to have a sizeable investment in AU AngloGold Ashanti Ltd. (AU), the largest gold miner, and will hold this long term. Traders that may wish more volatility in the trading of gold stocks should look at ETF’s that track a group of mining companies. Mining company investment is much riskier than actual inventory in Gold or Silver

We will buy gold again when it closes below 1199, and will continue buying.

We will by silver again at the same time.

Our investment vehicles are:

GLD

SLV or SSRI

CEF

Only CEF does not trade in options

Traders Choice: Many traders like to trade the volatility of the various gold mines. We recommend Gold Miners ETF GDX if you want to trade the miners themselves. Note true support at 42.00, and a push above 54.00

You might run their chart in various “views” on PNF charts to see what it is.

Study and due your due diligence.

We will not enter this into our portfolios, as they are not our moves, but it’s an excellent way to track miners.

Once anyone begins to study how the EU has their central bank (ECB) is now following the U.S. on creating more debt to solve the debt. Things will either change, or we will hit the debt ratio sometime that blows it all and makes currencies worthless. This doomsday theory has merit.

For example, follow the financials of Verizon. They are burning thru cash reserves and have big Smartphone bets out. They are actually paying out more in dividend than cash flow, so they are borrowing from themselves to pay a higher dividend.

Risk Traders: Watch Verizon for a signal of a put. Its’ prime for someone with extra cash to take a Sept put issue, unless you see upside with the phones they are selling.

For traders that bought Johnson and Johnson with us before the downfall, remember that JNJ is a long-term hold that we do not want to sell, and do not want a trailing stop on. Like Disney, it’s one of our “forever stocks”.

Many of our traders increased positions in their core holdings, following the “buy, hold” we showed, lowering their average cost. We do not buy stocks to “double bet them”, but those stocks that we continue to just buy we think are the safest investments in the market.

Until the end of the United States there will be Smuckers Jam.

We are extremely long in our investment of ExxonMobil (XOM). We’ve owned in some time, and doubled our position during its recent 10% correction.

XOM is not just oil. They bought XTO, they are working natural gas. We believe they are the Goldman Sachs of oil, ready to return stellar returns over the next two years, and paying a good dividend.

So where are we. Are the doomsayers right, and with the electronic manipulation , impossible to now trade in the market because we are being controlled, or those with the end of money and only hold gold bullion.

Something is up, that’s for sure. We’d like to see a general flat lining and trade range build in the low 10,200-10,300 and if so the market may settle. Further dips below 10,000 increase the strength of the bear market.

My Tea Party Question: Okay, I read the Constitution you gave me when I went to one of your meetings. It doesn’t talk about immigration, or N and S Korea, or stuff like that.

Could perhaps a logical person realize that these were just visionary men writing down ideals, and a couple of them were corrupt? Check up on Jefferson.

My Republican Question: Why do you respond to all by aggression, never offering to open up? Karl Rove and Rush Limbaugh run you.

My Democratic Question: What happened? This was to be your glory moment in history where fundamental change would take place. Are you doing this?

My American Question: What it is that we really want? We talk so well, but are shocked when things go away without the fake money.

Be Well, and Do Good.

What Happens Next is the Key

2010-05-13T10:04:00.001-04:00

McDonalds released April sales. Holders in our Blue Chip option (www.bluechipoptions.com) have already seen a 36% rise on this option, and will hopefully be selling the rest of their position Monday when slimy old McD, worst hamburger made, ugliest buildings, promoting a fat culture, will again BOOM.

Meanwhile, Friday we stop lossed on the call, our first loss in 16 days of trading, but took nice profits on the May515 Put.

Actually astute day traders reported in following our support and resistance lines and our mid day recalculation sent by Twitter were able to trade both put and call profitably several times during the day as the market massively whipsawed.

China will most likely show a second month of a trade balance, showing a deficit and this might trigger the market.

Fidelity Brokerage, and I'm sure others, has defined that all trades on May 6th between 2.40 p.m. and 3.00 p.m may be deemed "clearly erroneous" and corrected.

Of course you have read that it was Proctor and Gamble hitting new lows on "gossip" that new Pampers caused skin rashes, and falling 22% in a minute, leading the market down.

You have also read it was the fast transaction electronic trading that caused this.

Traders with us at Blue Chip Options have heard from Floyd the past 8 weeks that the market was overextended, and likely to have a 3% retracement to the 10,746 line.

That 3% runs with Elliott Wave and Fibonacci movements. However, chartists can easily prove the 5.5% actual moves we saw in the market can be correlated with extreme cycles around Elliott Wave.

More important, it is the speed in which we saw FEAR spread, and shows Floyd (screw all the reasons why, even Goldman's President says he doesn't know (sure) is correct on one thing:

When euphoria moves the market as much as we've seen in the insane run up to new highs, without healthy consolidations, the market itself takes over and "cuts your nuts off".

That's what happened. A consolidation, for whatever reason, needed to occur, and it did.

What happens next is the key.

*As Accenture hit .01 Thursday a trader theoretically could have bought 500,000 shares for .01, selling to 41.22 40 minutes later, and pocketing 20,610,000 in profit.

This is conceivable.

*It is also conceivable that the 5.7% drop we saw was NOT a glitch, NOT a computer error, or a keypunch stroke, but real.

If this is true it shows just how untrusting the public is and how nervous they are about a fall, enough to follow the hedge funds, and sell off in a panic.

*Europe’s ills have unnerved us. I have no idea why because even a high school economy student with analysis could see that the same debt game had built in the old country. We are a world of debt, all fake money, all a “house of cards”, and it’s being proven to us again and again.

*This week McDonalds, Toyota, Nissan, Macy’s and Sony report earnings.

*Porter Stansberry, one of the best market predictors out there, wrote:

“ Jimmy Cayne is a truly despicable liar. You might not be familiar with his name, but Cayne was, until late 2007, a titan of Wall Street. He was the CEO and chairman of Bear Stearns.

For a long time, he was also the single-richest banker in history. Over his long career, he amassed more than $1 billion in compensation from Bear, mostly in the form of stock. Today, Cayne testified before Congress that the collapse of Bear Stearns wasn't his fault. In fact, if you believe Cayne, the collapse of Bear was everyone else's fault:

The market's loss of confidence, even though it was unjustified and irrational, became a self-fulfilling prophecy. The efforts we made to strengthen the firm were reasonable and prudent, although in hindsight they proved inadequate. – Jimmy Cayne's written testimony to Congress, May 5, 2010

I know very well that when you look at the mortgage debacle, you won't find any saints. Nearly every market participant was guilty of irresponsible or illegal actions. Borrowers willingly lied about their incomes and assets. Mortgage brokers willingly underwrote loans they knew couldn't be repaid. Real estate agents deliberately sold homes to buyers they knew couldn't pay for them at prices they ought to have known were unsustainable. Bankers behaved with reckless stupidity; buying loans they knew (or ought to have known) were garbage and reselling them to investors, who were stunningly ignorant of the risks of the securities.

Having said that... few people have more personal responsibility for the crisis than Jimmy Cayne. And no one is more at fault for the company's collapse. I say so primarily for three reasons...

First, Bear Stearns was the undisputed leader in the securitization of residential mortgages into bonds on Wall Street. No other firm was more aggressive or made as much money as Bear did on residential mortgage-backed securities (RMBS). Had Bear insisted on higher lending standards, Wall Street's capital would have never poured into subprime debt. Crack houses would have never come to stand behind triple-A-rated securities. Jimmy Cayne should have made sure this never happened.

Second, no other banker was paid as much or had more authority in his firm than Jimmy Cayne. Few people on Wall Street had enough power, experience, and gravitas to stop the kind of mania that gripped Wall Street during 2005 and 2006. Out of the handful that could have prevented the crisis, Jimmy was, by far, the most experienced, highest paid, and the most respected. If Jimmy Cayne had announced at the end of 2004 that underwriting standards had collapsed and Bear wouldn't securitize any additional mortgage bonds without vastly higher lending standards, the credit crisis wouldn't have occurred.

Finally, evidence shows that had he taken steps to raise large amounts of capital in 2007, Cayne could have saved the bank... Yet he did almost nothing to prevent Bear Stearns' collapse. In fact, during those critical months in the summer of 2007, he was routinely out of the office, playing golf in New Jersey or bridge at tournaments in Nashville and Detroit.

No one disputes these facts. Default rates on subprime mortgages soared in early 2007. Investors in the "equity" tranches of Bear Stearns' mortgage securitizations began blowing up in early 2007 – starting with Dillon Reed Capital. As the default rates worsened, one mortgage company after another went bust.

On July 10, 2007, Moody's and S&P downgraded $12 billion of subprime backed RMBS. As a result, two of Bear Stearns' hedge funds collapsed. One lost 100% of its investors' money.

Jimmy Cayne cannot testify he was unaware of these events. He cannot say he didn't understand the direct threat to his firm – his own mortgage hedge funds collapsed. Nor can he say he didn't know his firm was leveraged more than 50 to 1, implying that even a 2% reduction in the value of its assets could wipe out all of its equity.

Most important, Jimmy Cayne cannot pretend he didn't understand how the collapsing price of RMBS would hurt his firm, which held more than $15 billion worth of these securities. As I explained to our subscribers on August 14, 2007, the downgrade of previously triple-A-rated securities would require all of Wall Street to raise enormous amounts of additional capital:

To hold AAA-rated paper, banks, and other financial institutions need only to maintain $0.56 in capital for each $100 of paper. But as the paper is downgraded, the amount of capital they're required to hold goes up, exponentially. At a BBB rating, financial institutions must hold $4.80 of capital. At BBB-, they must hold $8 of capital per $100 of asset-backed securities. Thus, as the crisis worsens, the demand for capital from these firms could grow substantially. – The S&A Digest, August 14, 2007

Here's a question I wish Congress would ask Jimmy Cayne. He continues to claim Bear Stearns sank due to a crisis no one could have anticipated or prevented. If that were true, then how did I write what I wrote? In August 2007, I explained all of the core problems Bear Stearns faced. These facts led us to recommend shorting Lehman, Fannie, and Freddie. They led us to doubt (correctly) Goldman Sachs' accounting and to predict the collapse of Merrill Lynch.

So I wish someone would ask Jimmy and all of the other leaders of Wall Street: "How did you miss problems so obvious to everyone else?" For Pete's sake, even Fortune magazine pegged the housing bubble as early as 2004. Yet supposedly, none of Wall Street's most elite bankers saw it coming? I don't believe it. And neither should you.

The truth is, dear subscribers, these men – the top executives at all of the biggest institutions on Wall Street and most of the people in Washington who were supposed to be regulating them – took insane risks with enormous amounts of borrowed money. They did it because they thought, quite simply, that they'd get away with it... that, in some way, shape, or form, they could hedge their risks and still make a fortune.

They tried to pull it off by selling their mortgages to suckers from foreign countries and idiot hedge-fund managers. They believed they could hedge their risks by buying insurance from companies like AIG and MBIA, which were actually leveraged more than the investment banks themselves. In short, they willingly bought into the giant delusion that they could get rich at someone else's expense by selling toxic securities as being "triple A."

It was a lie. But it's a very powerful and seductive lie, and it fueled literally billions and billions of dollars worth of compensation. Keep this is mind: Wall Street banks routinely paid out 40% of revenues in employee compensation.

Keep this in mind too: Washington continues to take insane financial risks with a phony triple-A credit rating. That scheme won't last either.

A U.S. currency crisis will come sooner than most anyone thinks possible. A global run on the dollar could happen at any moment. And the dollar isn't just another major currency. It is the world's reserve currency, the foundation of the entire system.”

*Floyd’s Seven Questions for Tea Party Advocates:

-With less government (how does this occur) and less taxes (how does this occur, take it from the government, that has no money) we will rely on Free Enterprise.

Is that right?

-Does Free Enterprise really even exist? (Read article above)

-When we take back our rights who is in charge of helping us keep them?

-If we are to “follow the Constitution” than that means there will be a complete separation of church and state?

-How many of you have studied the writers of our Constitution to prove they were these ideologues we live by. Were these just men leading us? Do many know how Jefferson profited immensely from the first setting up of banking and unscrupulous behavior occurred then?

-What is it you really want?

-Do Tea Partiers promote offshore drilling surrounding the U.S.?

There is a point to these questions, and it’s not political. Much as I think we are hearing the “people are fed up” we also have people (us) that have no interest in changing their ways. We would have to all have less, live with less, and live differently. Hundreds of thousands of jobs would be lost working with “less is better”

I led these questions so it was hard to answer, but also to show there is no logic to the anger, as it is not focused, but purely emotional. And I worry when I see even more bipartisanship entering our lives. Diversity in people and thought is life, but “game players” and KarlRoveians have created almost a series of false perceptions so believable that only those that analyze lobbyists, holdings, and the self serving of many of the beliefs, both Democrat and Republican, hinder movement.

The bottom line: Politics now more than ever dramatically effects market reaction.

Fear and greed based motivations (Proctor and Gamble on Thursday) around support and resistance lines, with pivot points, are the core of how we train, all around “no noise” point and figure charting”.

What we now have to study is the correlation with the fear in the marketplace, the good earnings and manufacturing reports we’ve been reading about, and whether some group was profiting, or computer mistakes can destroy economies in seconds.

I’ve wondered for years; who is in charge? Not God, not spiritual, but how does this whole infrastructure we have built continue to self evolve? I think I have learned that in all of this no one is really in charge.

Last weekend we provided an update on all of our holdings. Of course, we’ve dropped with the market, but have no changes to our recommendations.

Many traders have asked us why we sold our final positions in Gold, Silver in all forms. (We held SSRI or SLV, GLD, and CEF). Gold has more upside and is still on a buy signal, silver is showing a bit of weakness, and we’re convinced that the precious metals will have a fast decline on any strong market upsurge.

Our rule is NEVER to sell at the top, but to SELL near the top. We think we took safe bondage to exit the metals, but we will be buying heavily in GLD, SSRI, and CEF in coming months.

What trades to make: Any of our core positions that have lost value is an excellent buy. We built inventory, for example, in 7 or 8 holdings Thursday afternoon, all stocks that we want to hold long term and have so advised to you.

Johnson and Johnson, Bristol Myers Squibb, Exxon-we aggressively added to these positions. We are long long on all three of these core positions, all paying dividends.

We made great money on our Sept TLT Call. Two days, 40%-60% final results, and many still hold.

Long-term bonds, we think, will have a short shelf life of high prices, but now is the time to take advantage of them.

Many traders are turning short on oil, thinking it topping.

Buy into weakness this week, carefully watching our Dow projections, and seeing just what happens.

Good Trading!

From the Road

2010-05-06T17:23:00.000-04:00

As the market reached new highs this past week, with a nice healthy consolidation, we thought it time to update subscribers on all of our holdings.

Floyd will first admit that he is TERRIBLE at this. I have made a new promise to try to keep my spreadsheet of stocks bought, and current guidance. (Thanks subscriber Cheryl for nagging me and for Ron helping me calculate correctly.)

Our spreadsheet shows all of our current holdings, with our current profit/loss, and guidance as to buy/sell. You will note that we hold a total of 50 positions, and list buy price, current price as of 4/29 when we updated this, and guidance on each position.

Additionally, we have listed on our spreadsheet several positions we have recently recommended as new “long” buys. These positions were recommended in recent commentaries as a long -term buy.

Many of our subscribers buy the many options we recommend. We provide initial instructions for our option buys, but do not follow the signal after the recommendation.

Here are a few updates:

· Buy TLT Calls (June 2010 90.00 call) IF and when TLT reaches 91.50,but not before then. (Purchased on 4/20/10)

· RDY 2010 September 2010 22.50 call, buy at 2.70 to 4.40. Profitable to 6.10, and still holding.

· January 2011 Leap Call-Arch Coal (ACI)- profited to 40%

· January 2011 Leap Call-KRAFT-up 21%

· January 2011 Leap Call-AAPL-up 167%

· June McD Call-sold at 36% profits

· July GS Calls, two issues, profitable ITM to 20% 4/20/10, and 25% on OTM. One day increases

Commentary from the Road:

This to Floyd, a subscriber quitting:

“You don’t understand what the tea partiers are talking about. It is not just about free enterprise (we hardly talk about that) rather about less taxes, less government, no more “bailouts” upholding the U.S. Constitution and resurrecting the principles of out nations founders, people like Washington, Jefferson, Madison, Franklin, Adams and others; Remember them? I am an original tea partier and proud of it. A corrupt generation and people beget and condone corrupt leaders (including business leaders).”

Floyd Comment: It’s good they don’t talk about free enterprise much.

It’s good they want to go back to the founding Fathers; read the history on how Jefferson created the most corrupt banking system possible, and read how we created generations of slaves. Yep, great guys.

We live with myths that we create.

Next, we speak of immigration here and how we are manifesting various responses. There is real anger in the air.

We are all immigrants.

OP-ED CONTRIBUTOR: Why Arizona Drew a Line

The new law governing police action with suspected illegal aliens is humane and constitutional.

http://nyti.ms/9NG6C6

From The New York Times:

EDITORIAL: Stopping Arizona

President Obama needs to do more than mildly criticize Arizona’s new law that turns all of the state’s Latinos into criminal suspects. He should act.

http://nyti.ms/9nT2fZ

Cycle lows may complete on Monday, and hold to “trade range” to June.

The information we provide in this area of our Monday commentary may not provide “signals”, but provides directional bias and our recommendation/prediction. As some examples:

*Gold and Silver still show upside. Sell finals on all Gold and Silver no later than 11160 for Gold and Silver going under 18.00.

We see a correction coming in Gold and Silver, only to go to nice bottoms allowing us entry again by fall when we see precious metals starting to really move up.

So be careful of tops and close Gold and Silver except for a 5% hedge within a conservative portfolio.

*Natural gas is in whipsaw, unable to go short or long. It’s not a sector we want to be in.

*The Euro has held up well, and it’s something to watch. If it were to collapse on PIGS, or be restructured, the European economy will be vastly effected, as ours will.

Dear Owners of Ford 150’s that do not use it as a truck and all 4 wheel drive SUVS that live in southern states:

Did you notice that oil spill? At the tea party meetings what’s our solution?

Shame enough on Obama just giving in to offshore drilling. I would think now due diligence might be done. Polluting our own country with oil would be the ultimate end, and some smoker out on the ledge for the “smokers” area blows us up.

It’s a movie, and we’re making it.

And you who want oil, and drill baby drill…is the light on yet?

We have two new buys this week

•PNRA Panera Bread Inc should be studied and charted. They show growth, strenuous execution, and even held steady during recession.

Buy PNRA at up to market price on 5/3, or wait for any market drop near 10,800

* ORCL Oracle stands to win best with the growth in tech, with IBM, and we are adding to our core portfolio. Again buy at market, buy on dips and use a 25% trailing stop loss.

Both of these stocks have been added to our updated StockCharts.com charts,

and with the spreadsheet attached you are all current on our holdings.

We’ve had an extraordinary set of returns. Note that on market bottoms at 6700 to 7000 we doubled down on a number of positions, increasing our yield as the market turned. And, we also sold a great many “partials” of positions.

We think the market may be in for a bad surprise come fall….the euphoria has been too much. We will watch how bonds trade over the next few months (we bet up), and if GLD and SLV turn down, as we expect, thusly allowing a new buying opportunity before Gold truly does hit $2000.00 an oz.

Good trading. Take Prudent Risk.

Good Trading

2010-04-22T13:00:00.000-04:00

9 months ago I first shared the excellent articles of Gonzo journalist Matt Taibii as he articulated and proved that Goldman Sachs were a bunch offucking thieves.

Sorry, but Matt Taibbi swears a lot in his journalism, as he so chooses, so God forbid, many cannot read his fine study of healthcare, or of this slime that oozed through Wall Street, because he swears often with his prose.

As I review old Blue Chip and OEX archives I find that since November 2009 to date I have recommended or commented on 14 of Taibbi’s pieces, most of which only make Rolling Stone because they don’t give a shit if he swears.

Goldman Sachs literature doesn’t swear, but they sure fuck you, and finally are getting their first hit. It will be an important trade. First read through to hear how Bloomberg cleaned up Taibbi to help us understand what he first uncovered.

“April 17 (Bloomberg) -- From July 2004 through April 2007, as credit markets boomed, Goldman Sachs Group Inc. created 23 financial transactions called Abacus, the word for a relatively crude counting tool involving the shuffling of beads.

Yesterday, the Securities and Exchange Commission sued the bank for securities fraud in what would be the penultimate offering in the series, according to Bloomberg data.

The bank used the deals to off-load the risk of mostly subprime home loans and commercial mortgages to investors, either as hedges for similar positions or to bet against securities itself. While the data show New York-based Goldman Sachs issued at least $7.8 billion of Abacus notes, the risk passed to investors was multiples higher.

The Abacus transactions are so-called synthetic collateralized debt obligations, which marry two financial innovations that contributed to the worst collapse in financial markets since the Great Depression.

“Investors needed to ask some questions about synthetics they didn’t need to ask with other CDOs,” Joseph Mason, a finance professor at Louisiana State University in Baton Rouge, said in a telephone interview.

The financial tools, often called technologies, are credit- default swaps, used to transfer the risk of losses on debt, and securitization, used to slice the risk in a pool of assets into various new securities.

Abacus deals were filled with default swaps that offered payouts to Goldman Sachs if certain mortgage bonds didn’t pay as promised, in return for regular premiums from the bank.

Upfront Cash

Some of the cash needed for the potential payouts to Goldman Sachs would be raised upfront, and essentially placed in escrow, from sales of Abacus CDO notes with varying ratings. The grades were tied to how many of the underlying securities needed to default before the CDO classes would.

Such securitization enabled debt with the lowest investment-grade ratings to be transformed, in part, into AAA securities that turned out to not be as safe as that ranking suggested. At least $5 billion of Abacus slices now carry junk ratings, below BBB-, from Standard & Poor’s, or have defaulted, Bloomberg data show.

The SEC said that Goldman Sachs created and sold Abacus 2007-AC1 without disclosing that hedge fund Paulson & Co. helped pick the underlying securities and also bet the CDO would default. Paulson was proved correct, and his hedge fund eventually turned a $1 billion profit and CDO investors lost a similar amount, according to the SEC.

ACA Management

The deal was different from most Abacus CDOs in that Goldman Sachs said that a third-party, ACA Management LLC, was choosing the underlying debt instead of the bank itself, according to prospectuses.

At least $192 million of the debt was granted top grades by credit-rating companies, and an additional $1.1 billion was supposedly even safer, according to Bloomberg data. The latter, super-senior portions were derivatives and not securities.

“This would never have been possible if the ratings had been correct,” said Gene Phillips, director of PF2 Securities Evaluations, a New York-based advisory firm. “For these trades to come out so well for Paulson, the ratings agencies would not have been able to identify as well as Paulson did that these were crappy assets.”

Synthetic CDOs

An explosion in synthetic CDOs began in December 1997, with the first of the so-called BISTRO deals created by a predecessor to JPMorgan Chase & Co. The transaction involved the bank laying off some of $9.7 billion of its risk tied to financing for 307 companies, according to “Fool’s Gold,” a book by Gillian Tett(Free Press, 2009).

Shortly after that, JPMorgan helped Bayerische Landesbank of Germany unload the risk of $14 billion of U.S. mortgages and then completed one more mortgage-linked BISTRO transaction, before stepping out of the market for home-loan deals because it couldn’t get comfortable assessing the risk it needed to retain amid a lack of historical data on how the debt would perform, according to the book.

UBS AG, in a series called North Street from at least 2000 through at least 2005, and Deutsche Bank AG, through its Start program in at least 2005 and 2006, also issued synthetic CDOs tied to mortgages, according to Bloomberg data. Doug Morris, a spokesman for Zurich-based UBS, and Renee Calabro, a spokeswoman for Frankfurt-based Deutsche Bank, declined to comment.

Goldman’s Role

In 2006 and 2007, the distinction between synthetic mortgage-bond CDOs and “cash” ones, or those made only of actual debt, broke down as “hybrid” deals, filled with both securities and credit swaps, began to dominate the market, meaning that almost every major bank was underwriting CDOs filled in part with their own bets against homeowners.

Investors “came to Goldman Sachs and other financial intermediaries to establish long and short exposures to the residential housing market,” and the bank’s protection against home-loan bond defaults represented a way to offset risk it took on by selling the opposite position to clients, Chief Executive Officer Lloyd Blankfein said in the company’s annual report.

In 2006 and 2007, when the residential and commercial mortgages with the highest default rates now were made, the bank created more than $4 billion of Abacus notes, Bloomberg data show.

That figure doesn’t reflect the fact that banks such as Goldman Sachs often would retain some of the slices they created. The bank said in a statement yesterday that it lost $90 million on the transaction the SEC sued it over. The $7.7 billion in Abacus CDOs doesn’t include most of the so-called super-senior tranches that were supposedly safer even than AAA debt. Super-senior transactions were often private.

Super-Seniors

For instance, with Abacus 2005-3, initially 68 percent linked to subprime-mortgage securities, Goldman planned to create a $1 billion super-senior class along with $825 million of notes, according to a May 10, 2005, preliminary term sheet. Super-senior classes, or those in which the cash that would be potentially paid out to Goldman Sachs wasn’t collected upfront, often made up larger portions of the deals.

American International Group Inc., the insurer whose mortgage losses led to its need for a U.S. bailout, took on the super-senior risk on the 2005-3 deal, along with six others, according to an internal memo posted on CBS News’s Web site.

That included the last Abacus deal, which priced April 17, 2007, and focuses on commercial-mortgage securities, Bloomberg data show. Its most-senior class below the super-senior one is now rated CCC by Fitch Ratings, its third-lowest level.

$6 Billion

AIG guaranteed $6 billion through Abacus deals, a person with knowledge of the matter said this month. That figure shrank to $4.3 billion by November 2008 as some of the mortgages linked to the derivatives were repaid or refinanced, the person said.

The insurer last year terminated about $3 billion of the swaps with Goldman Sachs that made up the super-seniors, resulting in $1.5 billion to $2 billion of realized losses, said the person, who declined to be identified because the specific transactions weren’t disclosed. AIG, based in New York, has about $1.3 billion in remaining swaps tied to the CDOs, the person said.

The swaps weren’t included in AIG’s 2008 government rescue because they insured pools of derivative bets, rather than actual securities. AIG and the Federal Reserve Bank of New York retired $62.1 billion in swaps by fully reimbursing bank counterparties in exchange for obtaining the securities, which are held in a taxpayer-funded vehicle called Maiden Lane III.

Other CDOs

Still, some Abacus classes are in Maiden Lane III, because they’re held by other CDOs. One is Davis Square III, a CDO underwritten by Goldman Sachs in 2004 and managed by TCW Group Inc. that bought $24 million of Abacus slices, including some created after Davis Square III was, according to Moody’s Investor Service reports.

The holdings of CDOs by other CDOs mean that some bond buyers and insurers may not know they’re exposed to Abacus deals. Royal Bank of Scotland Plc, the bank now controlled by the U.K. government, was the bigger loser in the deal in which the SEC alleges Paulson & Co. was involved, paying out $840.9 million to Goldman Sachs in 2008, most of which it then passed to Paulson’s hedge fund, according to the SEC complaint.

Even as subprime defaults soared in 2007, more than $1.1 trillion of CDOs were created, about the same as in 2006, according to JPMorgan data. The figures, which also include CDOs backed by assets such as buyout loans and bank capital securities, include unfunded super-senior classes. Funded issuance totaled about $1.05 trillion during those two years.

New Investments

Some of Goldman’s Abacus CDOs were “static,” meaning the portfolio of securities they referenced didn’t change over time, while others allowed for reinvestment into different investments as initial holdings paid down, with Goldman choosing the new securities.

That’s partly because investors including Dusseldorf, Germany-based IKB Deutsche Industriebank AG, a buyer of part the CDO the SEC is suing over, asked for the reinvestment because they would be given higher yields, a person familiar with the matter said earlier this year.

A dispute over replacement collateral involving UBS landed in New York Supreme Court in 2008. Hamburg-based HSH Nordbank AG, the world’s biggest shipping financier, said in a complaint that UBS had been “deliberately selecting inferior quality” assets for a synthetic CDO called North Street 2002-4.

Goldman Sachs may have lost money on Abacus 2007-AC1 because in at least some Abacus deals, the bank used the cash raised from note sales, which would be owed to either the owners or itself, to buy securities including AAA-rated mortgage bonds and CDOs, according to Fitch and Moody’s Investors Service.

It then guaranteed that, in most cases, it would buy the escrow account securities at face value if needed to pay the owners of the Abacus notes, unless those escrow holdings defaulted, according to the rating firms’ reports. Declines in the value of the purchased securities could limit how much Goldman Sachs could pay itself.”

What you just read just begins to summarize how the games began and the manipulation had been in place for years.

And, of course, all the financial boys are giving it a go. JP Morgan Chase, one of our holdings, just reported great first quarter earnings

The bottom line is that Goldman will get out of this, and it’s a minor fine. And last Friday the reaction might have been a bit too strong, with a 13% drop to Goldman (GS) within the day.

Note how the stock moves right to its moving average, not yet approaching lower Bollinger Bands. We can wait the market out until hits our lower Dow projections, under 11,000, for entry as a stock or as an option. GS is a great long slimy investment with people that are brilliant at fucking other people over fake money.

Play the stock or play an option.

Buy GS at market. Set a stop loss at 156.00 or 154.00

GS January 2011 165.00 Call. Closed at 18.20 on Friday.

We’d buy this on any market dip, at up to a 15% discount from prior day close.

Hold for this price. Sell to 100%. Stop loss: 50%

For traders wanting a shorter-term trade use an ATM 3 month out option, buying on any market dips and continuing to buy. 70% returns: Stop loss:50% from the second buy

And remember; let’s watch the market Monday.

MACD chartists measure momentum. They study divergence.

There are bears in the chartists and as you review our Dow projections, a return to 10,746 (Fib retracement) still holds a strong possibility of our bouncing down to.

We doubt it. A fast move to 10,920 would be comfortable, a faster move to 10,846 uncomfortable, but we still see only bullish signs, and the Goldman Sachs news as simply the trigger for a healthy sell off. A few days of this would be fine. A few weeks, a bull market busted.

Top market analysts were agreeing Thursday that “sector rankings show bullish confidence…the top 2010 performers are financials, discretionary, small caps, transports, and the Nasdaq.Defensive groups lag behind. Market breadth remains positive.NYSE Advance/Decline hits record highs. Chevron’s breakout hints at stronger energy sector”

This is a busy week and we’ll end with one more stock and option recommendation:

Best Buy (BBY) we think is undervalued and just beginning to be noticed for it’s superb gobbling up of the Circuit City bankruptcy, and the Wal-Mart Plunge:

Many chartists can argue well that we have hit a bearish rising wedge pattern that also occurred in December and early January. These periods led to lower highs, rather than the higher highs we have been seeing.
MACD chartists measure momentum. They study divergence.
There are bears in the chartists and as you review our Dow projections, a return to 10,746 (Fib retracement) still holds a strong possibility of our bouncing down to.
We doubt it. A fast move to 10,920 would be comfortable, a faster move to 10,846 uncomfortable, but we still see only bullish signs, and the Goldman Sachs news as simply the trigger for a healthy sell off. A few days of this would be fine. A few weeks, a bull market busted.
Top market analysts were agreeing Thursday that “sector rankings show bullish confidence…the top 2010 performers are financials, discretionary, small caps, transports, and the Nasdaq.Defensive groups lag behind. Market breadth remains positive.NYSE Advance/Decline hits record highs. Chevron’s breakout hints at stronger energy sector”
This is a busy week and we’ll end with one more stock and option recommendation:
Best Buy (BBY) we think is undervalued and just beginning to be noticed for it’s superb gobbling up of the Circuit City bankruptcy, and the Wal-Mart Plunge:
We would buy BBY at market and on any dips to 10,746 and continue to buy.Stop loss at 33.00 or 38.00
As a stock option trader, consider BBY January 2011 45.00 Call.
It’s high volume and trading at 4.75. This one can be volatile.
Let’s start an open position and just begin to watch how it holds up.
We would trade lightly at first, and we’ll advise as increase exposure.
A good friend yesterday shared that “the mind does not allow a vacuum”; this means the mind will find something to “create” or think about at any given moment.
This is true. And in trading you must focus in on not the facts, but what caused the fact. For example, GS fell 13% Friday. People saw this as what caused the downside, when in fact, the downside was already prepared to occur because we had hit upper resistance lines, and GS was just this catalyst.
Imagine if Obama accomplished only a “consciousness of change and of all people” in his four years, yet little else was done. Most will think empirically, around taxation, and not around hope.
One can dance alone; it is no easier to dance with another, there is just more spectacle.
Think about that one.
Good Trading

The Dow Over 11,000

2010-04-15T07:57:00.000-04:00

The Dow may hit and hold at 11,000, and may go above it (see Dow projections), but all 0000's are a psychological anchor point that often is followed by a drop. Couple this with a market that has been going up far too long without consolidation, and bears see a downside turn.

At the same time this week begins earnings reports, and we believe the first quarter will look good for a number of companies, which could bolster the market up.

Floyd's bet: Good earnings will bolster the market to as high as 11,176. Any bad earnings could take the market to consolidation of 3%, or near 10,841.

While most of the investing crowd is thinking optimistically, the market is apt to do the opposite. We are entering the 14^th month of a bull market, so the Obama haters may have a bit of an argument to deal with on what must come first to build jobs, and that’s a good earnings from companies.

Earnings reports begin this week.

Many people who bought in September 2008, when the Dow last closed above 11,000, and then rode the market down to the bottom in March 2009 may be inclined to sell at 11,000 to get back to break even.

Rising optimism also shows in that three of four stocks in the S &P 500 are overbought, says Bespoke Investment Group. Polls of financial newsletter editors (such as Blue Chip Options) have seen bullish sentiment rise seven of the past eight weeks.

Our Dow Projections see potential new market highs, and a tighter correction.

Earnings will show well, but the first “bad earnings” report from a Blue Chip stock this week we believe will trigger consolidation. From there we see new highs and a breakout to the market. From Wyckofff, there may be a “shake out” to the market to prompt profit taking, only to then see the market truly break out.

The following Big time stocks report this week, and trigger points that could move the market:

Alcoa earnings on Monday

International trade deficit could widen to 40 billion on Tuesday, analysts project

Consumer Price Index

JP Morgan-which may trigger the market downward, as it may not hit analyst earnings also on Wednesday

On Wednesday the beige book is out, YUM Brands posts results, and Thursday Google reports earnings after the market close.

On Friday Bank of America reports, and GE reports before the market opens.

These are facts that show consumers showing even more signs of deleveraging, or not borrowing:

5.6% seasonally adjusted annual rate of decline credit

A decline of 11.5 billion in consumer credit from the month prior, of the whopping 2.448 trillion out in consumer credit.

But there are more signs of a new “anchoring” to not spending, with a 9.4 billion decline in revolving debt, such as credit cards, the most in 3 months

Floyd Logic:

There is less spending because the consumer is paying off debt.

There is less spending because the consumer is not buying “new debt”

This means lots of stuff doesn’t sell

There are fewer jobs.

I mean, really, we are firing our teachers while we fight over how staggering the job loss is.

I contend under 10% unemployment will remain a GOOD recovery as the manufacturing and retail sector will only produce as much as sells, and the cycle of not spending is worldwide.

We may be entering an era of change in which we are not the “nouveua riche,” but the austere and humbled.

The hardest part as one trades the short term is anticipating the public reaction to something and how the media will actually “build frenzy” (not as liberal conspiracists but electronic journalism at its beginning.)

For those of you hold ETF’s long term, not to trade, some interesting results:

Passive ETF’s had a long period of slow growth, and active ETF’s will have a similar trajectory.

ETF assets have more than doubled in the past five years.

The highest risk bets, financials and real estate, showed the highest rate of growth in mutual funds.

We think there may still be advantages to financials, and are waiting for a buy point to recommend an option and stock advice on some banks that are still a steal.

But we will sit on our hands until we see a bit of savings to our first buy on the financial sector for the value investor.

We’ll let you know. Floyd calls this “watchful” of a venture, a stock, or the news around any part of how the stock moves.

Remember, we are often short term trading stocks, and options, and as we learn a stock’s range on a PNF chart it can be easy to trade IBM for $1.00 a share if one has good capital or margin, and really be investing safely.

As an example, IBM trades at 128.76. Someone purchases 5000 shares, or 643,800.00 and trades it in upswings for $1.00.

It’s how the option contract was created; greater risk, but greater reward, IF you can find a buyer.

We are also watchful of TLT, I shares Barclays 20+year Treasury Bond Fund, as T-yields go through a form of divergence. I think what I’m learning is that it soon time to be long TLT.

VIX is at two year low, which would normally mean the stock market will be subdued, and calm.

And as one views it, part of this is true, and our bull progression has seen many bumps.

We stay more in a trading range now. Again, hit by the psychological 11,000

Whatever move the market makes a converse move must still occur, or the rise will become euphoric, a sure sign of a shocking turn.

We only know what we know.

A rock is not hard.

Money is not real.

We are spiritual beings going through a human experience

People can become evil

Life is sometimes hard

Someone somewhere is singing a song.

These are things we must learn.

The State of Things

2010-04-08T11:19:00.004-04:00

· China grows, and Chinese stocks go up, and many analysts believe they will continue to. In fact, we see China Mobile (CHL) and Petro China (PTR) are undervalued.

· Turkey is three years behind the market, and will move up dramatically in years. We’re high on GARAN.Turkey, Turyklye Garanti Bankasi on the Turkish Exchange.

This will be hard to find to trade, but check with your brokerage:

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

· We are also high on CZZ, Cosan, on the advent of what we think are higher sugar prices.

· Each of these above stocks we will list in our stock charts, and begin posting as buys. We want to buy on any dip to 10,780 or less. And hold.

· We will then hold each of the above positions with a 25% trailing stop loss, in our Speculative portfolio, also utilizing PnF charts.

· If your holdings approach 50, trim positions.

· Silver is actually leading Gold higher, while Gold holds in a trading zone that many believe will be a dip to support lines and several slow months, and others believe will it may follow commodities and the unstable Euro.

· There is a strong likelihood of the S&P below 1160, and the Dow below 10,790

· The NYSE composite and SOX hit new 2010 highs.

· Manufacturing is breaking out. Follow Market Vectors Steel ETF- SLX

SLX is a great ETF. We recommend following classic Pnf stop loss around support lines, watch the moving average, and begin taking profits at 25%.

· Crude is running up beautifully for the summer season, just as planned. Watch 83.20 for a sell signal. There may be a breather to crude

· Bonds should have more upside until late April, when we might have a correction, before a stronger upturn to bonds for the rest of 2010.

· A T & T pays a 6% dividend. How can anyone with cash not put cash someplace like this?

· We’ll go long on the Canadian dollar after a nice 2% correction, and stay long.

· Many Dow Theorists subscribe to our service. For those that understand this first note that it was the Dow transports that hit the new highs ahead of the Dow. Bears then saw that not as much was following along. This is called non -confirmation, or bearish divergence. In our daily OEX I call this “a trading range”. There is tight divergence, bullish or bearish, and we’ve seen many days of even moves up, always to show a bearish influence, but steady grounds.

_________________________________________________________________________________________________

· Typically April has sell off built in. The market has edged up day-by-day, but # of stock advances to declines has not been rising. A move to 10,746 and to overall possible 486 point drop from the highest highs, or as low as 10,514.

· Floyd believes proper sell off, or distribution, “shakes out investors” and often then prepares the market for further upside.

· Far from guaranteeing success monopolies and cartels-whether devised businesses or conferred by government regulation-tend to make American companies lazy, fat, and dumb. And in stifling innovation, they shorten a corporation’s life

· And to counter this, French President Sarkozy said: “World economic regulations cannot go on as they are. We can’t accept a capitalist system with rules anymore”

· And Floyd said, “U.S. Stocks posted a fourth straight quarterly gain in the last three month period. The Dow itself rose 4.1%, its best first quarter performance since 1999, yet regulations have not yet begun, and more money in the market is still made manipulating stocks and options, and the facts of shortening corporate life are now false, as the economy is global.

· To the stupid old GOP: The U.S. Treasury plans to sell its 27% stake in Citigroup common stock in the next six months, potentially turning a profit of more than 7 billion. To all those in “The Tea Party” make sure not to mention any of this when you discuss deficits, so as to continue the half lies being spread. This we have found Sarah Palin is best at….stirring up false facts with “cute little lines” like “take America back”.

· Obama’s “drill baby drill” shocked us all, but those that know he is strategic in all of these moves and does plan to “Change” America he promoted this “give strategy” when all of us know that more drilling is not the answer to our consumption. However, Obama plans to push more for environmental protections, lost during the Bush years, and he “gives” before he pushes, I’ll bet.

· 228 stocks on average reached new 52-week intraday highs each day during this last quarter.

· Bullish? Birinyi Associates as top analysts see a 1325 S&P top, which would “translate to a multiple of 17 on the 2010 consensus, neither cheap or extraordinary”. He could be right. Some likely give back would be good, leading to more of a bullish run in 2010.

· The bottom line is that job growth momentum is improving. John Hermann at State Street says “by the third quarter, profits will be at a new all-time record high. That is a plus for the jobs outlook.”

· It’s taken a year, as the market began performing, for corporate profits to begin to catch up. Early last year the corporate profits were made because of the vast reductions in staff. This was a V shape bottom in the stock market; and we are seeing a V shaped chart building in the development of earnings.

· We assume that the first quarter earnings are going to be good, and that this will buoy the market; however, we also believe analysts will be watching and listening to the “tone and comments” of future earnings.

· They will be doing so because the great fear of a W, or a “double dip”, the fear of a return to 9750, will lessen if job growth, higher earnings, and capital spending.

· We’ll see financials again gaining, this time 194% for the quarter. But again, this has a false fact within it, as the value for quarterly earnings in the financial sector was 50 to 60 billion three years ago, will be 20.1 billion this year, and was 6.9 billion the first quarter of last year. We are seeing steady improvement.

· Earnings lead to business spending, which leads to hiring, which leads to consumer spending. The cycle may be returning. Typically 60% of companies beat estimates, so there’s a good chance, analysts think, that we’ll hit 35 to 36% earnings growth.

Thusly the fiber to this commentary shows bullish tendencies, and ones that are stronger than before, and with less euphoria.

The bubble was broken and many people will never return to what they knew, while others will have more than imagined, and more will have less. This is the state of things.

Lean To Trade Calmly

2010-03-25T10:04:00.000-04:00

So we find another 50 billion in Lehman stock fraud with Goldman, and Goldman playing the fake financial game with Greece, and the entire EU is affected.

The unraveling continues.

The GOP destroys all that is being attempted, and most of the U.S. doesn’t even know what is being discussed. Washington has become a card game.

90% of stocks are right now straining above their 50-day moving average.

Please, let me help. Keep perspective:

We are spiritual beings having a human experience. Learn to trade calmly, as an art, almost a way of Zen.

Falling in love with a stock is how we trade. We truly know very few stocks, and regularly update them on www.stockcharts.com for your review. We buy both value and breakout stocks, and split our holdings between core, speculative, and “rolls of dice” option and stock trades. Many of our traders use our services at Blue Chip for various types of information.

Telecommunications show the greatest actions while technology and oil and gas are the most out of favor sectors. It is never a bad time to buy more XOM (Exxon Mobil) and Chevron (CVX).

Gold could still hit 1160, but long term we are not as bullish for large increases, but merely stability. Traders may consider trimming or selling positions in GLD and CEF, but continue to hold AU. We will increase GLD and CEF again, never fear.

Crude may top out at 92.00, allowing more upside.

With the Aussie doing relatively well our investment in FAX should profit, as its based on Aussie, and Asian bonds.

With the upsurge the market has shown, and the number of days the market has been up, many analysts see April as a bullish month, with a sell off in May and June.

Upside target on the S &P of 1171.

Here are trends in ETF’s on moving sectors:

Nickel-26%

Biotech-19.66%

Homebuilding-19.12%

In today’s world these %’s will have changed within hours of the writing, and the analyst that shared “we just broke out to a new 18 month high” will be surprised by a 100 point sell off the following day.

It will soon be time to go long the Euro, and we believe the Euro will help the U.S. actually potentially show 3% growth in 2010, not because of our finances, but because of what we see happening with the Euro long term.

For all except the shortest-term players, the important question isn’t whether the market retrenches a bit, but whether this would like seguing into a definitive top.

I’ve said this before: in 1980 household debt was about 50% of GDP; by 2007 it has reached 100% of GDP. Prior to 1980 usury laws were set at 10%; former Fed chairman Volker altered usury laws, allowing interest rates to rise to levels not seen since the days of ancient Rome. Volker with this move did break the back of runaway inflation; however, at the same time the change in the usury laws set in motion the doubling of the debt.

Now couple this with Greenspan’s experiment of unique ways to finance real estate (to keep his bubble going), and finally the great unraveling of our financial pyramid scheme. If one asks the average American the “cause” of the recession over 76% answer “Housing”, when it was only a small part of the meltdown.

However equivocal the message from the FOMC, and for all Mr. Bernanke aims to please, he’s plainly antsy about the ultimate consequences of zero interest rates. It’s time to buy TIPS again, and it’s time to buy long term Treasuries, TLT.

We know TIP, we trade it regularly. Just add this back into your core portfolio, with no trailing stop, and continue to hold.

With TLT, we have not traded this often in this past year, so an update.

When we last sold TLT we netted 20% returns, and we were doing so as a stock.

In 2007 and 2008 we had an amazing run trading puts and calls on TLT as we watched the stock (falling in love with it). Buy TLT when it closes above 91.50

We’ll issue a buy on TLT, no trailing stop, to be held in the core portfolio and also list a call on TLT for the higher risk trader.

Buy both TLT (only other specific market conditions) and TIP and hold

Consider as a call option on TLT the following:

TLT100619C90

TLT JUN 2010 90.0000 CALL

Best buy: When TLT closes above 91.50

Do not trade until it hits this number. Hold for some time, and on any downturn with another 20% drop buys double in your position. Buying at 91.50 assures we are already in breakout

Hold for 80% to 100%, no stop loss

We believe everyone is wrong on the Chinese Yuan, and it will go much higher.

Washington’s emphasis on China’s currency may miss the bigger point of how dramatically the country is changing in other important ways.

IBM remains one of the absolute best buys in the market. Technology is an out of play sector, at a bottom, and IBM stands in a unique position. Continue to buy IBM on any consolidation.

Recession or Depression, Thoughts and Commentary

2010-03-18T09:22:00.000-04:00

There is much to talk about, and many recommendations within this commentary. As the market corrects in coming weeks or days we see a number of buying opportunities.

For Conservative investors, consider:

Evergreen Investments Large Company Growth Fund

7.6% in Google, 7.4% in Amazon, 6.8% in Visa, 4% in UPS, 4.5 % in Oracle. Are just part of the top holdings that had it reach 63.07% growth last year, with a 5.38% year average.

This is a great mutual fund for a new subscriber that wants to buy a well diversified stable fund.

Now some “facts”

· 4100 executives, directors, and analysts chose these 10 as the most admired companies:

1. Apple

2. Google

3. Berkshire Hathaway

4. Johnson and Johnson

5. Amazon

6. Proctor and Gamble

7. Toyota

8. Goldman Sachs

9. Wal-Mart

10. Coca-Cola

· The total household debt in 2009 was 13.5 trillion, doing a proportionately good job to our national debt.

· Christopher Hayes in Fortune sounds just like Floyd, but nicer:

“In the past decade nearly every pillar institution in American Society—whether it be GM, Congress, Wall Street, Major League baseball, the Catholic Church, or mainstream media—has revealed itself to be corrupt, incompetent, or both.

And at the root of these failures are the people who run the institutions, the bright and industrious minds who occupy the commanding heights of our meritocratic order. In exchange for their power, status and remuneration, they are supposed to make everything operate smoothly.”

From Floyd: Simply put, we believed the fucks were in charge and were protecting us. We will now, and being fought all the way by the above, have to reform our institutions to reconstitute a more reliable and democratic form of authority.

However, Hayes says, “scholarly research show a firm correlation between strong institutions, accountable elites, and highly functional economies, compared to mistrust and corruption (what we have now) that creates mistrust and corruption, meanwhile, feed each other in a vicious circle.”

If our current crisis continues we risk a long and ugly process of “de-development: higher levels of corruption and tax evasion, and an increasingly fractured public sphere, in which both public consensus and reform become all but impossible.

In fact, a recent ad tells us “Achievement very rarely happens while doing yoga on a hilltop at sunset”.

Then, what is achievement?

Wilbur Ross: “I think a big opportunity is coming in the municipal bond market. Even if it doesn’t default, some state or local government will come close enough to scare everyone to death. That will be a wonderful buying opportunity”

Any of the Vanguard Municipal Bond Funds, either by your state and tax exempt, or general grade bonds, should be considered for their low fees and “index” management.

Are you shocked by Wall Street’s role in the now known Greek Debt Debacle? You shouldn’t be. This is how the big banks grind out the profits, on falsified financials and hiding data. After they did this Goldman and the boys actually placed bets that the debt wouldn’t be paid.

Remember this when you realize that 80% of the bills and cabinet posts Obama has tried to build or get through are NEVER EVEN VOTED ON, but held in some form of evil GOP filibuster to make an administration look as if they have done little right, when in reality they are thwarted by those (the GOP) that actually care less about their country NOW, but more about being the majority again in 2012.

We believe there are deep value opportunities in insurance stocks, which were beaten down because of their exposure to the subprime crisis, and commercial real estate. Many of these companies used to trade at 1.5 to 2.0% times earnings, but now trade at .75% of book value

Principal Financial Group, Des Moines, Ia, is a well run, conservative insurance company with no dirty hands that have touched it.

· We would recommend PFG at market with a PNF stop loss of 18.50 to 20.00, or double buys at these support lines for a long-term hold.

PFG will be held in our core portfolio.

Students of the future should be studying Africa, the new frontier for growth. More companies are cultivating change by making sure their investments are inclusive and sustainable in Africa.

They are figuring it out.

Bankers remain upbeat about the economic outlook for Africa a year after a drop in demand for commodities hit it. Longer term the need for commodities Africa holds will shift cycles in the laws of supply and demand.

Africa comprises 20.4% of the Earth’s landmass, and GDP growth keeps Africa in a positive relation to BRIC nations.

In the world of mobile telephony, Africa is the last great growth frontier, where penetration rates are 40 to 50%. MTN Group (MTN), which trades on the South African exchange, and over the counter as MTNOY. This is fast growing, cheap, risky value stock. Value stocks are typically not risky, but MTN faces the rivals of a burgeoning and confusing African economy, which we think is also the next international growth frontier

· MTNOY is so unknown it’s not yet even listed as a Pnf Chart, but it is not unknown around the world. It showed a 70% growth last year, and currently trades at $16.14. MTNOY is a value, long term play, we recommend in any speculative portfolio, using a 25% trailing stop loss.

Apple (AAPL) has hit new highs of 226.60. Those of you that joined us on our January 2011 $300 Call Leap on Apple have been pleasantly surprised already.

Holders of the stock in our portfolio have been handsomely rewarded.

This is a $300.00 stock. Buy it on any dips, or as the “world is falling” and hold.

They will have failures, successes, but Apple has CASH, brains, and thinks out of the box. They are innovators.

As an example, with Microsoft I think (control, alt, delete). They are a manufacturer, and less of an innovator.

“What has always distinguished a recession from a depression is that a stock market drop may signal a recession, but it is the collapse in debt that signals a depression” -keyturningdates.com

Do NOT Trust Facts

2010-03-10T09:52:00.000-05:00

So many of our subscribers have requested the "more lengthy" OEX and BCO commentary, outlining the week, that we're changing our format to so accommodate.

You will see more commentary, more "definition" of the market, and more of Floyd's thoughts for the week with the Monday commentary from now on.

For example, our concern with the banks may now, in lowered mode, actually restrain the market from last year’s exuberance. Further, many Americans are now paying down credit card debt (a house of cards ready to tumble) over paying their mortgage in their "upside-down" home values.

To the experienced trader reading here I am “watching” to short the financial sector, and perhaps consider a Proshares Short REIT Fund. We are watching market conditions.

Floyd believes there is MORE downside possible in both residential and commercial real estate that coupled with finance as a languishing sector may flatten the market from any growth.

At the same time, as the gambler, I am certain that American exuberance and lack of execution (look at Congress) will continue. This actually may falsely prop the market up in some ways.

Make specific note that when using a .50/2 ratio on the Dow we can see we are a Bollinger Band top, above the moving average, and the next market tops are 10,650 and 10,700.

Using the theoretical Dow (exponential average, which is much more accurate) we believe we have seen market toppings in Friday's run up, and further upside will be predicated on "trigger news", like Greece and the Euro, or copper or oil exploding.

We have adjusted our Dow projections from our normal 21-day cycle this week. We typically project movement that could occur in up to 21 market days, but we sense from the excellent accuracy we've had in our recent Dow projections, we may be in a shorter cycle for the Dow in such movement for some time.

Study our current Dow projections on the website.

Large moves are very possible. The Euro is in deep doodah, the largest gainers in the stock market last year was Bank of America at 345%, with a close third with JP Morgan Chase at 169.3%

I've yet to find even a Republican that can explain how what uprooted us to near depression became the winners of the next year.

Our Congress, and it seems the goal of half in Congress, is simply to get nothing done, allow no votes, so that they can gain power again.

At times I am a loss for our stupidity as a nation, so spend my time "getting my share" back in trading options as I watch the fraud be perpetuated.

If you'd like to know the fraud, email me.

I like to use 30 day moving averages, and also adjust my Pnf charts, and I know some professional traders that use Fibonacci based numbers of equally weighted averages but personally find that charting to see an 89 day simple moving average can “take much of the noise” out of the market.

Netflix we believe will continue to dominate the market, and have gained enough market share to be a strong buy as a core market trade.

Buy NFLX at market price and set a 25% trailing stop loss. Use PNF stop loss lines to your risk tolerance level.

"We're paid - well paid - to cheat countries around the globe out of billions of dollars. A large part of our job is to encourage world leaders to become part of a vast network that promotes U.S. commercial interests. In the end, those leaders become ensnared in a web of debt that ensures their loyalty. We can draw on them whenever we desire - to satisfy our political, economic, or military needs. In turn, these leaders bolster their political positions by bringing industrial parks, power plants, a and airports to their people. Meanwhile, the owners of U.S. engineering and construction companies become very wealthy." - Confessions of an Economic Hit Man

I tire of our incessant “fear of the debt HE is creating” when for 8 years no one seemed to question the deficit increase by the nana-second.

Paying off what we owe seems prudent. But it could also wreck America’s economic future.

The U.S. has to invest and spend to build a future, to help re-create a workforce, and for now, debt is the only means to that ends.

Capitalism will NOT work by itself, as the Libertarian’s think, as capitalism itself does not work. We do not have a liberated “free trade”, but a country really controlled by less than 15 companies.

Much is often discussed that the DJIA moves contrary to the movement of the USD.

We do not believe the USD leads the DJIA, or the movement of the markets. When good fundamental data comes through, the Dow disassociates itself from the movement of the USD.

Remember, what we are often taught is not even the truth, so we lead our thinking and premises to conclusions with false information. Do NOT trust facts.

OEX Option Trading

2010-03-05T16:00:00.002-05:00

In my OEX trading over the past several weeks I’ve had personal extraordinary success, with daily returns in my personal journal of 11 wins at 33% average, and one loss at 50%.

Just prior to that I had several weeks where I simply did not trade, uncomfortable with the market moves and lack of VIX volatility, and then I “felt” it time to trade and had these wins.

I fall in love with an option. This is the most important option secret I teach, that few ever truly follow.

I watch it as I trade it, noting the bid/ask, but trading it around support and resistance lines, and recalculating my Pivot Point analysis.

I watch the volume, the times it moves, where it moves, and I begin to build inventory. Remember, that’s how I see it…fruit to be traded.

Using ATR, Pnf charting, and Dow Projections many of the stocks we own are tradable as options. We do not do complex covered calls, or butterflys.

If we are serious on a stock, we buy the option, and perhaps the stock.

But when we are short term trading, or day trading a stock or index, we are trading one option, and trading against other traders that are also buying and selling the same option. This is a game of bid/ask, nothing more than a card game, if trading an index.

The merit of how simple this correlation is (the odds are stacked against you) is how to make simple and fast trades on tight movements

Do not think long term. Have your investments, make sure they are sound, and do not watch them. Invest only what you can risk to trade, and that which you know is your “limit”. There are ratios one can analyze, but I find if our traders keep diversified portfolios, often with our Blue Chip holdings, and trade “investment and risk money” in their option trading, whether it be long term LEAP Options (the least risky) to any OEX or SPX option, or an option on any stock.

Check the website, subscribers. Many do not take advantage of how I teach, making note……..you are free to write to me and I will personally respond.

Euro Funds

2010-03-04T10:51:00.001-05:00

For those of you that would like to trade on the Euro there are many funds, but we would pay special attention to EUO (ARCA). This is the Proshares Ultrashort Euro Fund. Germany was in the news they might buy some Greek bonds up, raising the Euro. Long term Euro disbelievers think it will be the “first currency to go”.

I believe there will be a one-world currency within my lifetime. I am 59.

Who knows if I’m right, or what it would be.

Right now, the Euro is worth watching.

Nature of Governments

2010-03-03T09:30:00.001-05:00

Of course, I distrust the nature of all governments. But even I am amazed at how Greece was able to fake budgets, have inaccurate financial statements, and are affecting all other countries in the EU.

I find it hard to be positive on the Euro in general, and do not believe countries like Germany will put up with the disorder too long.

Now the EU will have to print more money (just as we did), and bearish bets on the Euro are at their highest since September. The ratio is 59,422 more trades to the downside of the Euro.

With whatever happens short term, it is likely this currency will crash.

This is why GLD and CEF remain up to 15% of our portfolios, as hedges against the Euro now, and the USD, which has created the circle of debt that, circles the world. Each of our shell games is dependent upon each other. The house of cards is much larger than people realize.

Don Peck is a deputy managing editor of The Atlantic. His article “How a Jobless Era will Transform America” is available on line at:

http://www.theatlantic.com/magazine/archive/2010/03/how-a-new-jobless-era-will-transform-america/7919

I consider this superb journalism, and a author that clear sees and filters through the masses in input we receive.

Much of what you will read in this article is my thinking exactly, and will be part of how I’ll consider a 17.5% real unemployment rate (my definition: people that want to work full time) what I believe will be standard for a number of years.

It is not Obama. It is even now not Congress. Goldman Sachs and the Greece game should show us what the “money” made goes to, and what is faked.

There will simply not be enough jobs. People will be spending less.

Please read this article and form with me our plan for how to stock and option trade to make money in an environment like this.

If I am predicting, from outside the economic circle, and as one of the most cynical of analysts, it will be interesting to hear what is discussed, vs. what is executed.

America is clearly seeing that things do not execute well in our government and that we are frozen.

We are in turn not executing well within many of our businesses, and this will compound the unemployment, as people are a variable cost that can be cut.