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.
Thursday, August 19, 2010
Wednesday, August 11, 2010
Here's What We See
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
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
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