Investment Strategies Newsletter

February 18, 2013

Market Strategies Newsletter

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Covering High Return

Balanced Investing Strategies To

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

Market Investment Strategies

$10,000 Options Trading Account

 

Five Open Positions:

 

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Funds in use $ 4,588

Options Trading 

Investment Strategies Comments

 

After 6 weeks of gains we had our first down week of the year. 

We had a net loss of $1,560

reducing our YTD performance to $10,485

 

The loss was primarily on the IPGP 3/70 calls. The stock closed at $69.48, a new recovery high and disappointed on its earnings released after the close.  We had to sell the calls at the open (they had closed @ $3.90) for $ .25 and that was 85% of the loss.

As we pointed out in early January we had a consolidation ABOVE the breakout in the S&P that carried us from under 1475 to 1510.  We now have another consolidation ABOVE the break over 1510 and while this may take a little more time between 1500 and 1520, that would put us within striking distance of 1576, the 2007 high.

If you take a look at the Market Lab below you will see that the AAII Sentiment numbers have worked off their overly bullish bent.  If we get some further rotation, possibly into the tech sector, we could see a big extension to new highs.

Our new position in the XRT (the retailer EFT) puts is based on the effect that rising gas prices, increased payroll taxes and the general narrowing of margins caused by the Q4 need of retail to make their “top line” expectations.

As always, we will continue to utilize a balanced approach to the structure of our two portfolios.

In a market that punishes even a $ .01 miss and lowered expectations going forward this is especially important.

…CAM

 

Options Investment Strategies

New Trades for this week:

Remember, these trades are based on your participation in the

VIP Subscriber Members Only TEXTING SERVICE TO

RECEIVE ALL UPDATES.

 

Where To Invest Now Options Trading Investment Strategies Table

 

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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.

For any questions please call (702) 650 3000.

 

Market Investment Strategies

Where To Invest Now

Market Laboratory – Weekly Changes

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

M2 adds Savings and Money market Accounts both compared with the previous year.

 

New Stock Recommendations

Market Investment Strategies

$100,000 Trading Portfolio

Recommendations will be both listed in this letter and texted to members.

Each stock is allocated a theoretical $ 5,000 share of the portfolio unless otherwise indicated.

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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.

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

Investment Strategies

Recommendations And Overall Comments

We lost $ 3,006.00 in closed out positions last week.

Our profits for the year fell to an hypothetical $ 23,191.00.

 

We have five options positions:

The Stock table includes the following fourteen positions:

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

We are basing money management on a hypothetical $ 100,000.00 and are using $ 9,176.00

in five options positions and $ 57,149.00 in the14 stock positions a total of       $ 66,325. 00 with 33,675.00  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 Portfolio

Investment Strategies

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 Investment Strategies

Economic Numbers and Media Data

 

Canadian markets are closed for family day.Tuesday10:00 hrs NAHB Housing Market Index ( 48 vs 47 )

Wednesday08:30 hrs Housing Starts Jan ( 910K vs 957K )

Permits ( 918K vs 903K )

 

08:30 hrs PPI Jan ( 0.3% vs -0.2% )

CORE ( 0.1% vs 0.1% )

 

14:00 hrs FOMC Minutes 1/30 Meeting

Thursday08:30 hrs Initial Claims 02/16 ( 358K vs 341K )

Continuing Claims 02/02 ( 3150K vs 3114K )

 

08:30 hrs CPI Jan ( 0.1% vs 0.0% )

CORE ( 0.2% vs 0.1% )

 

10:00 hrs Existing Home Sales Jan ( 4.94Mln vs Same )

 

10:00 hrs Phila Fed Feb ( 1.5 vs -5.8)

 

10:00 hrs Leading Economic Indicators Jan

( 0.3% vs 0.5% )

 

10:30 hrs Nat Gas Inventories 02/16 ( NA vs -157 BCF )

 

11:00 hrs Crude Inventories 02/16 ( NA vs 0.560 Mln BBls )FridayThe European Commission issues economic forecasts.

3D Systems DDD splits 3 for2 at the close.

Market Investment Strategies

Trading Fundamentals

Dollar strength continued but in a more subdued fashion for the markets last week as the Dow continued below the 14,000 benchmark and again for the second week closing slightly lower at 13,981.76. Basic Materials continued lower for the second week consecutively, off 0.65% and Telecommunications dropped 1.6% to add to last week’s loss of 0.35%.

 

There were four additional losers in the Ten Dow Industrial Groups. Oil and Gas fell 0.61%; Technology lost 0.48%; Utilities sank 0.2% and Consumer Services 0.06%.

 

There were four winning groups also with small gains: Industrials added 1.14%; Consumer Goods 0.80%; Financials 0.79% and Health Care 0.02%.

 

Market Investment Strategies

Economic Data

Retail Sales early in the week were about as expected, a lackluster gain of just a tenth of a percent.

 

However, the remaining reports last week were excellent. Unemployment Claims fell for the week ended February 9^th to 341K and Continuing Claims to 3114K, showing continued jobs recovery.

Empire Manufacturing gained to 10.0 from 0.0. Net Long Term TIC Flows for December rose to

$ 64.2B showing continued world appetite for U.S. assets.

 

Industrial production fell 0.1% but was unnoticed as Cap Utilization roe to 79.1% from 78.9%. Michigan Sentiment jumped from 73.5 to 76.3.

 

Market Investment Strategies

Technical Information

Support Levels S&P 500    1498-1505                 

Resistance S&P 500           1528-1535

 

Support Levels DOW        13815-13895            

Resistance DOW               14150-14198

 

Support Levels QQQ           6700-6740               

Resistance QQQ                  6889-6920                  

                   

Support Levels Nasdaq      3157                           

Resistance Nasdaq             3438

 

Market Investment Strategies Cycles

The S&P 500 has rallied from 1398.11 Dec 31^st to 1513.1 ( +8.2% ) and the Dow from 13,104.14 to 14,009.49 for the week ended February 1^st  ( +6.9% ) and the first five weeks of the year.

 

Devised by Yale Hirsch in 1972, the January Barometer has registered only seven major errors since 1950 for an 88.9% accuracy ratio. This indicator adheres to propensity that as the S&P 500 goes in January, so goes the year. One would expect that with the upcoming sequester, some sort of pullback is in line with the fundamentals. Cut-backs in entitlements are likely to reduce GDP by 0.75%. Volatility is very low and setbacks from current levels are likely to be well supported.

 

Once again, technical indicators and sentiment readings are at similar levels to about this time last year and in 2011 and 2010. Markets were struggling at resistance following sizeable gains in a relatively short period of time and sentiment was either excessively bullish or awfully close to it. In each of those years, the market eventually took a breather to overcome the excesses that had built up. In 2010 and 2011 the pullback was more pronounced than the brief dip in 2012 (blue arrows). Shortly thereafter, the market quickly recovered and marched onward and upward to a new recovery high.

 

Barring some truly disastrous event, we still expect a brief pullback from resistance followed by a rally over the next 2-4 months, perhaps to marginally new all-time highs for the DJIA and S&P 500 and NASDAQ 3300. Then debt ceiling, spending cut and sequester politicking are likely to exacerbate bearish seasonal and cyclical forces, conspiring to knock this bull market down off its high horse. If a major debacle is avoided in Washington and the geopolitical environment remains sanguine, then 2013 is likely to be bear free.

 

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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

Please Direct All Inquiries To:

Mike King

Princeton Research

3887 Pacific Street, Las Vegas, Nevada 89121

Phone: (702) 650-3000

Fax: (702) 697-8944

mike@princetonresearch.com

Visit: www.princetonresearch.com

Investment Strategies Newsletter