Where To Invest Now – Market Strategies Newsletter April 15, 2013

April 15, 2013

Market Strategies Newsletter

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Covering High Return Balanced Investing Strategies To

Make Money In Up Or Down Markets

A Publication of Princeton Research, Inc. (www.PrincetonResearch.com)

 

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Market Strategies

$10,000 Options Trading Account

There are three open positions:

Funds in Use: $ 2,050.00

 

Options Trading Strategies Comments

We had another positive week with

a gain of $1,297

bringing our YTD performance to

another new high of $14,547

We were on our way to a tremendous week until we went back into AGQ calls (-$420) and got stopped out of AAPL 4/440 calls on the 50% rule (-$840).

The problems of the world in general, bad jobs numbers, and North Korea mean nothing to this market.  One of the issues that many do not understand about the relationship of the market and the economy is that they are rarely perfectly in sync.

The market is a discounting mechanism, and sometimes it foretells information that we don’t see as clearly as we see the daily or weekly market changes.  And as we’ve mentioned numerous times “Everyone is NEVER right.”

While the majority of traders, money managers and talking heads are looking for a 5-7% correction, you can be sure it’s not coming yet.

If you look at the Market Lab below, you’ll see that the Bullish Consensus has fallen off a cliff.  This is a contrary indicator and I’ve only seen drop this big once or twice in my 40+ years of experience.

We continue to look for stocks that have already had corrections to buy, and we will continue to take profits (probably a little early) and continue to build equity for those who follow our recommendations and abide by the rules.

….CAM

Where To Invest Now

Options Trading Strategies Table

Remember, these trades are based on your participation in the

VIP Subscriber Members Only TEXTING SERVICE TO

RECEIVE ALL UPDATES.

 

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Previous closed out trades not listed here may be seen in previous market letters in the VIP Subscribers Members Area.

Options Trading Strategies Notes: In Texting we have a limited amount of words. In the interest of brevity: we use 8=August , 9=September . The Quantity and Strike Price for each trade is specific.

The Quantity and Strike Price for each trade is specific.

We may trade weekly options and they are noted: SPY 1/25 147 for SPY Jan 25^th 147 calls or puts.

 

Market Strategies Where To Invest Now

Market Laboratory – Weekly Changes

Prices are copied from Barron’s Weekly and Yahoo Finance and may be incorrect.

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

Market Strategies

$100,000 Trading Portfolio

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 this letter and texted to members.

Note: Previous closed out stock and option positions can be found in past Market Strategies Newsletter issues available in the VIP Subscribers Members Area.

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, DXD, SDS,TZA and RWM, which go 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.

 

$100,000 Trading Portfolio

Options Trading Strategies

Recommendations And Overall Comments

We made $ 2,589.00

in closed out positions last week.

Our profits for the year were

increased to a hypothetical $ 30,411.00.

We have one open options position:

The Stock table includes the following nineteen positions:

The options call for a $ 2,500 investment unless otherwise stated; each stock position requires $5,000 unless specifically stated.

We are basing money management on a hypothetical $100,000 and are using $680 in one options position, $75,450 in the19 stock positions, a total of $76,130 with $23,870 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 Portfolio

Trading 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

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Note: Previous closed out stock and option positions can be found in past Market Strategies Newsletter issues available in the VIP Subscribers Members Area.

 

This Weeks’ Market Strategies

Economic Numbers and Media Data

Market Strategies Trading Fundamentals

Both JP Morgan and Wells Fargo beat quarterly earnings expectations, but were sold off on lower top line revenues. JP Morgan has $ 1.59 for the quarter beating the $ 1.40 expected, while top line fell from$ 25,980M to $ 25,122M off 3.6%. Wells Fargo has $ 0.92 vs $ 0.88 in earnings for the quarter but top line fell 1.7%; $ 21,619M expected to $21,259M realized.

Both trading and investment banking revenue were strong while business and home loans declined, a sign of the times. JP Morgan’s mortgage banking income fell 31% year-to-year to just $ 673 million.

Trading income grew to $ 3.8 billion in fixed income and $ 2.8 billion in equities.

The Fed policy of making money available and increasing employment will only work with banks increasing lending to businesses.

All ten Dow industrial groups were higher led by Health Care up 3.29%; Consumer Services added 3.14%; Consumer Goods 2.72%; Telecomm 2.29%; Financials 2.26%; Industrials 2.06%; Utilities 1.96%; Technology 1.95%. Even Basic materials were higher gaining 1.09%. Oil and Gas added 0.98% in a very weak commodity market.

 

Market Strategies

Economic Data

Economic reports last week were lackluster, nothing exciting to support the lofty levitation of equities.

Retail Sales were off 0.4%. The consensus called for a flat number ( 0.0% which was down from 1.1% originally reported for February, which in itself was revised down to 1.0% ). The report was negatively surprising in that business inventories had increased in each of the past five months including the +0.1% in February.

The drop in sales is likely the result of higher taxes for lower-to-moderate income groups. In addition weather played a part as inclement weather spread over much of the Central-Eastern areas. Motor vehicle sales and parts were down 0.6% in March after increasing 1.3% in February. Excluding transportation, other sales were just as weak including gasoline stations, building materials and other retail supply and department stores.

Michigan Consumer Sentiment for April fell sharply to 72.3 from 78.0.

One bright spot was in the lower Treasury budget for March to -$106.5 from -$107 expected and -$198.2 in February.

The Transportation Index has failed to make a new high in contrast to both the Dow and S&P which may be a divergence.

 

Market Strategies

Technical Information

Support Levels S&P 500    1533 – 1567

Resistance S&P 500           1598-1612

 

Support Levels DOW          14585-14645                

Resistance DOW                 14920-14960

 

Support Levels QQQ           68.80-69.30                                  

Resistance QQQ                  70.30                                                   

                  

Support Levels Nasdaq      3270  

Resistance Nasdaq             3368

 

Market Strategies Cycles

April has held up true to form as the Dow has gained 2.37%. According to the Stock Trader’s Almanac, April is the best DJIA month since 1950, second best for S&P and fourth best for NASDAQ (since 1971). In post-election years April remains a strong month. Its DJIA’s second best month, gaining 1.9% on average, fourth best for S&P 500 and third best for NASDAQ. April is also the last month of the “Best Six Months.”

This week will feature major earnings reports. Economic reports have been coming in less attractive each week as there is a pause as companies consider how to use their abundant and ‘cheap’ money.

There is an inverse relationship between bond yield and price. When yield or interest rates go up, bond prices go down and vice versa. When investors feel threatened with a potential decline in the stock market, they  allocate more money into bonds. This is often referred to as the “flight to safety” trade. Investors will also allocate more money to bonds when they believe the yield is more attractive than other shorter-term investment options.
There is no doubt that both of those conditions were met in late 2008 through early 2009.

However, even in that unprecedented time, 30-year bond price action did respect a seasonal supply-demand cycle. By going long, the 30-year bond (September contract) on or about April 24, and exiting the position on or about August 19, the Stock Trader’s Almanac discovered in the last 35 years a solid 71.4% success rate. This trade has a history of 25 wins with only 10 losses; the largest win was $20,250 in 2011 (based upon a single contract), and the largest loss was $5,906 in 1999. In twenty-four years, beginning 1989, this trade has been successful in all but five years.

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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 $ 1,500 per month from RMS Medical Products. Princeton has bought  81,100 shares of RMS Medical Products. When there is no movement in penny stocks, even though there is none or very small losses, we will liquidate if money is needed for better opportunities. We now believe the three small penny stocks we represent for a total outlay of $ 9,725 is well worth the risk.

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.

 

CONTACT

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Mike King (702) 650-3000

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Charles Moskowitz (781) 826-8882

Princeton Research

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mike@princetonresearch.com