Options Trading Strategies
November 5, 2012
Market Strategies Newsletter
Covering High Return Balanced Investing Strategies To
Make Money In Up Or Down Markets
A Publication of Princeton Research, Inc.
Contributing Staff: Michael King, Bill Chippas, Charles Moskowitz
$10,000 Options Trading Account
New Trades for this week
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Options Portfolio Trader’s Comments
Between Mikes traveling and the “Sandy” induced short week we didn’t do a great deal of trading for this double period. We lost $947 bringing our YTD performance down to $11,354 with only 8 weeks and 2 major holidays until year end.
This is a YTD Return of over 113%
The best thing I can say about the coming week is that all of the mud-slinging and ads containing half-truths will come to an abrupt end on Tuesday.
The week is really not set up for either the bulls or bears. We have support on the S&P 500 just below 1400 and again at 1390. Normally this would be a great buying opportunity, but the market action of a strong open and a collapse during the day to close on the lows MIGHT send us to test the 1370 level of the 200 day moving average.
Two areas that I am particularly bullish towards are the banks and the tech sector. Banks are near the recovery highs of late March (BAC 10.10) but in fact BAC has made a new closing high already. With any pickup in business, and BAC’s exposure to the housing market, I could easily see the stock $11.50-12.50 area.
GOOG has had a good pullback from $774 to $670 (aprox.15%) and has spent the last 2 weeks consolidating. With most stocks that have collapsed from earnings, there is usually a substantial overhang, however, GOOG’s earnings were released in error during market hours and the stock sold off during the trading day. Many will not make the distinction. but I believe that since there was no gap, there may not be much resistance. Should the stock close over 695.55, we should test 715-720.
Since the markets are so indecisive, I will continue to be looking for strong stocks that are at or near support, and over-valued stocks of companies like MCD that seem “priced for perfection” to be short
— CAM
Remember, these trades are based on your participation in the TEXTING SERVICE TO RECEIVE ALL UPDATES. Previous closed out trades not listed here may be seen in previous market letters.
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New trades $ 10,000 account…In Texting we have a limited amount of words. In the interest of brevity: OPTIONS ONLY: 8 August , 9 September. The Quantity and Strike Price for each trade is specific.
Past trades and closed out positions can be seen in the VIP Member Subscribers Area of our site.
Market Laboratory – Weekly Changes
Prices are copied from Barron’s Weekly and Yahoo Finance and may be incorrect
Dow 13,093.16 -14.05 -0.11% |
Nasdaq 2982.13 -5.82 -0.19% |
S&P 500 1414.20 +2.26 +0.16% |
Transportation 5,110.17 +57.82 +1.14% |
Russell 2000 814.37 +1.12 +0.14% |
Nasdaq 100 2956.28 -9.56 -0.36% |
Gold (spot) 1674.10 -36.80 -2.2% |
Silver (Dec ) 3085.7 -117.9 -3.7% |
Crude 84.86 -1.42 -1.7% |
Heating Oil 294.74 -12.90 -2.6% |
Unleaded Gas 2.6417 -.0681 -4.9% |
Natural Gas 3.554 |
VIX 17.06 +0.92 +5.7% |
Put/Call Ratios S&P 100 165/100’s +12/100’s |
Put/Call Ratios CBOE Equity 68/100’s Unch/100’s |
Bonds 148-13 +13 2.917% -0.023% |
10 Yr Note 132-25 +07 1.726% -.042% |
Copper 348.15 -6.85 -1.9% |
CRB Inflation Index 292.29 -4.55 -1.5% |
Barron’s Confidence 67.9% -0.8% |
S&P100 646.88 +0.10 +0.02% |
5 Yr Note 124-074+057 0.728%-0.012 |
Dollar 80.56 +0.56 +0.7% |
DJ Utilities 469.78 +8.28 +1.74% |
AAII Confidence Index |
||
Bullish 35.7% +6.4% |
Bearish 41.0% -2.1% |
Neutral 23.3% -4.3% |
M1 Money Supply +13.73% Oct 22nd |
M-2 Money Supply +6.46% Oct 22nd |
M1…all money in hands of the public, Time Deposits Traveler’s Checks, Demand Deposits
M2 adds Savings and Money market Accounts both compared with the previous year.
New Stock Recommendations $ 100,000 account
Each stock is allocated a theoretical $ 5,000 share of the portfolio unless otherwise indicated.
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Recommendations will be both listed in the VIP Members Letter
and texted to members
For those of you who do not buy puts to protect your portfolio, there are many ETF’s that are the inverse of the DOW. The symbols are DOG, SDS,TZA and RWM, whichgo up when the DOW, S&P 500 and Russell 2000 go down and down when they go up. The DZZ goes up double when gold goes down.
New Stock Option Recommendations $ 100,000 account
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Options Trading and Overall Comments
We lost $ 664.00 last week.
Our gain for the year was reduced to a hypothetical $ 47,027.
A YTD Return of 47%
We are basing money management on a hypothetical $ 100,000.00 and are using $ 3,840 in the three options positions and $ 44,798 in the 14 stock positions for a total of $ 59,323.00 with $ 40,677.00 in cash. These figures are approximate. We do not count commission costs and there may be errors.
Executions that have occurred at or near the open or close of trading sometimes vary from our actual numbers. For example, when something opens down and it is through our price, we take the next trade whether it is an uptick or continues lower. This sometimes results in a 50% trade that is slightly above or below the exact number…
Previous Week’s Recommendations and
Rules for the $ 100,000 account
- All options count for about $ 2,500.00 for model portfolio calculations unless otherwise stated.
- When the option has doubled sell half the position.
- Stop Loss protection is either half or offered with each trade.
- The cost of the option is the asking price (or the price between the bid and ask, whichever is more realistic)
- The options will be followed until closed out.
- Option Symbols are stock symbol with expiration month and strike price
Note: Previous closed out stock and option positions can be found in previous weekly newsletters in the VIP Subscriber Members Area.
This Weeks’ Economic Numbers and Media Data
Monday | 10:00 hrs ISM Services October
( 55.0 vs 55.1 )
U.S. and Japan hold biennial joint military exercises amid heightened tensions between China and Japan. |
Tuesday | Election Day in U.S. |
Wednesday | 07:00 hrs MBA Mortgage Index 11/3
( NA vs -4.8% )
10:30 hrs Crude Inventories 10/03 ( NA vs -2.045 mln bbls )
15:00 hrs Consumer Credit Sept ( $ 10.0 bil vs $ 18.1 bil ) |
Thursday | 08:30 hrs Initial Claims 11/03
( 370K vs 363K )
08:30 hrs Continuing Claims 10/27 ( 3250K vs 3263K )
China’s ruling Communist Party holds a congress to appoint new leaders |
Friday | 08:30 hrs Trade Balance Sept
( -$45.4B vs – $44.2B )
08:30 hrs Export Prices Ex-Ag Oct ( NA vs + 0.7% )
Import Prices ex-Oil Oct ( NA vs 0.2% )
09:55 hrs Mich Sentiment Nov ( 83.0 vs 82.5 )
10:00 hrs Wholesale Inventories Sept ( 0.4% vs 0.5% )
OPEC publishes its monthly report on oil market prices. |
Fundamentals
Dow Industrials led all ten Groups with a modest gain of 1.43%. Financials were also strong posting a 1.07% advance. Consumer Goods rallied 0.94% and Consumer Services 0.68%. Telecomm concluded the winners up 0.39%. The remaining five were losers led by Oil and Gas off 1.16%; Utilities fell 1.06%; Health Care -0.68%; Technology following Apple dropped 0.19 and Basic Materials fell just 0.04%.
Earnings were mixed: Consumer discretionary stocks outperformed due to strong earnings from several components. Priceline (PCLN 634.74, +48.64) spiked 8.3% after beating on the top and bottom lines. The travel site operator reported earnings of $12.40, which was $0.58 ahead of the Capital IQ consensus estimate. Meanwhile, the third quarter revenue of $1.71 billion represented a 17.4% year-over-year increase, and was ahead of analyst expectations. Among miners, Newmont Mining (NEM: $ 48.74, -4.48) lost 8.4% after the company’s earnings of $0.86 and revenue of $2.48 fell short of the Capital IQ consensus forecast.
Friday’s session started on a higher note after the nonfarm payrolls report exceeded expectations, and pointed to 171,000 jobs added during October. However, the bullish sentiment faded quickly, and the major averages headed into the red. The S&P 500 crossed its flat line 60 minutes into the session and held just below that level for the remainder of the morning. The afternoon brought out additional sellers as the index headed further into negative territory before ending with a loss of 0.9%. The afternoon weakness was largely driven by Apple (AAPL: $ 576.80, -19.74) which lost 3.3%.
Economic Data
Economic Reports last week were favorable if not ebullient. October Nonfarm Payrolls jumped by 171K vs a 125K consensus and 148K in September. The unemployment rate ticked higher, increasing from 7.8% in September to 7.9% in October. That was exactly what the consensus expected.
Consumer Confidence rose 72.2 vs 72.0 and the Institute of Supply Management Report ( ISM ) at the beginning of the week came in at 51.7 above expectations of 51.0
While production returned to positive territory (52.4 from 49.5), much of the gain was the result of the continued paring down of order backlogs (41.5 from 44.0). Without a steady supply of new orders, production will not remain in the black. Fortunately, the new orders index saw a solid boost in October (54.2 from 52.3).
The employment index weakened, falling from 54.7 in September to 52.4 in October. Even after the decline, employment levels have expanded for 37 consecutive months.
Technical Information
Support Levels: S&P 500 1407: 1412
Resistance S&P 500 1433; 1444
Support Levels: DOW 12990; 13030
Resistance DOW 13,318; 13,390
Support Levels: QQQ 6440; 6480
Resistance QQQ 6680; 6750
Support Levels: Nasdaq 2975; 3025
Resistance Nasdaq 3030; 3090
CYCLES
Technical: At Support. After breaking out to new recovery highs in mid-September, the market has been calmly trading lower. Technology shares lead the market higher and have been leading it lower. DJIA, S&P 500, and NASDAQ have fallen below their respective 50-day moving averages. NASDAQ has pulled back the furthest and appears to have found support at its 200-day moving average. DJIA and S&P 500 settled just above their 200-day moving averages.
Monetary: 0-0.25%. Liquidity spigots are full open around the world, but this has essentially been the case since 2008. Each successive round of liquidity has been generating smaller and smaller market returns. The Fed’s latest action, the never-ending purchase of $40 billion of mortgage-backed securities each month, could bolster the housing market, but lenders will need to relax loan restrictions for it to truly be a success. This is something the big banks are not likely to do.
Seasonal: Bullish. November is the first month of the “Best Six Months” for DJIA and S&P 500 and the NASDAQ’s “Best Eight Months”. November is also the first month of the best three consecutive month span, November-January. In elections years since 1952, November tends to perform even better on average. Keep an eye out for the Official MACD Seasonal Buy Signal. It can trigger anytime now.
*Rule 17 B Attestations:
*Princeton has approximately 2,581,578 shares of AIVN both free and restricted and represents them for I.R.. Princeton also has about 40,000 shares of TXGE. Princeton is paid $ 2500 per month from Lucas Energy. Princeton is paid $ 1,500 per month from RMS Medical Products.
When there is no movement in penny stocks, even though there is no or very small losses, we will liquidate when money is needed for other opportunities.
Pursuant to the provisions of Rule 206 (4) of the Investment Advisers Act of 1940, readers should recognize that not all recommendations made in the future will be profitable or will equal the performance of any recommendations referred to in this Email issue. Princeton may buy or sell its free-trading shares in companies it represents at any time.
NOTE: This is a Sample Issue Only!
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CONTACT
Please Direct All Inquiries To:
Charles Moskowitz (781) 826-8882
Or
Mike King
Princeton Research
3887 Pacific Street, Las Vegas, Nevada 89121
Phone: (702) 650-3000
Fax: (702) 697-8944
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