March 4, 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)

 

Market Strategies

$10,000 Options Trading Account

 

We had a gain of $744 this week

bringing our YTD performance back

just slightly over 100% at $10,057

 

Three Open Positions

 

 Options Trading Strategies Comments

With all the choppiness and the 100 plus daily ranges we made money on both longs and shorts.

The Sunday morning news shows were pretty evenly split between whether Obama or the Republicans are to blame for the Sequester.  It was the brainchild of the President and the Democrats, as was clearly shown by new clips and of course it’s the Republicans fault that it had to go into effect.  BLAME, BLAME, BLAME…….With no one willing to do what’s needed.

From our perspective, more sharp sell offs will occur, and those pullbacks will be bought….right up until they’re not and we have a “real” correction of 4-6% or more.  This is typical action for a market that is so close to breaking to new highs.

Balanced positions will continue to be the best way to participate at this point and we will continue to look for buys at support and sales at resistance.

We believe that the piling-on on Apple will continue until nobody seems to want to own the shares, and as usual “Everybody will never be right.”

A look below at the Market Lab shows that the damage done by the big reversal day last Monday when the S&P 500 (1525 hi–1487 lo and close) scared the “public” and brought the bullish consensus back to a manageable 28%…a good sign for the bulls.

…..CAM 

 

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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.

 

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

 

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 Strategies

Recommendations And Overall Comments

We gained$ 2,104

in closed out positions last week

Our profits for the year

increased to a hypothetical $ 23,529

 

We have three options positions:

The Stock table includes the following sixteen 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 $ 5,150.00  in three options positions and $ 59,182.00 in the16 stock positions a total of $ 64,332. 00 with 35,668.00 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 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

 

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

 

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This Weeks’ Market Strategies

Economic Numbers and Media Data

Market Strategies Trading Fundamentals

Dollar Strength continued as a headwind as contention for markets to move higher.

February was a very good month for the greenback as it rallied from 79.33 to 82.36, up 4.2%.

The Dow has also moved higher 1.3% and the S&P 500 just 0.5%. World currency competition has become a factor in impeding forward progress in domestic stocks. Other nations have improved their balance sheets and global growth will outpace ours in the U.S. ETF’s such as the South Korean Index EWY which closed above its 50 day moving average Friday should be considered.

The Ten Dow Industrial groups were mixed. Five were better led by Consumer Services up 1.24% and Telecommunications gaining 1.19%. Health Care rose 0.80%; utilities 0.54% and Industrials, barely changed, up 0.04%. There were also five small losers: Financials fell the most, off just 0.45%. Oil and Gas lost 0.40%; technology 0.27%; Basic Materials 0.24% and Consumer Goods 0.02%.

 

Market Strategies Economic Data

 

New Home sales surged to 437,000 units in January up from 378,000 in December. Inventories fell to 4.1 months’ supply from 4.8 months. Actual inventories remained at 150,000. This is still not close to the 1,000 to 1,200 new home levels from ’04 to ’07 but without a doubt the strongest area of the economy. Consumer Confidence rebounded in February to 69.6, up from 58.4 in January. Confidence fell in January as the result of higher payroll taxes.

Durable Goods Orders fell 5.2% in January as Boeing’s problems and lower aircraft orders overshadowed the 13.5% increase in machinery orders that excluding transportation caused an overall increase in Durable Goods Ex-Trans by 1.9%.

Personal income fell 3.6% in January after increasing 2.6% in December even though personal Spending increased 0.2% in January. Consumers dipped into savings as higher payroll taxes had their deleterious effect.

 

Market Strategies Technical Information

 

Support Levels S&P 500    1478-1500                 

Resistance S&P 500           1528-1535

 

Support Levels DOW        13,815-13,895            

Resistance DOW               14,150-14,198

 

Support Levels QQQ           6600-6700               

Resistance QQQ                  6829-6890                  

                   

Support Levels Nasdaq      3127                           

Resistance Nasdaq             3438

Market Strategies Cycles

 

Tempestuous March markets tend to drive prices up early in the month and batter stocks at month end. Julius Caesar failed to heed the famous warning to “beware the Ides of March” but investors have been served well when they have. Stock prices could easily make a run for the highs as sell-offs have been well taken and both RSI’s and Stochastics will be turning up as declines fail to make any headway. After new highs the markets might have a propensity to decline, sometimes rather precipitously, during the latter days of the month.

Another headwind as usual is weakness in Washington. Congressional gridlock, the lack of a Federal budget and the rapidly approaching potential Federal government (partial) shutdown when the current appropriations bill will continue to cause unusual and hard to predict volatility. Balance in portfolios has never been more important.

March packs a rather busy docket. It is the end of the first quarter, which brings with it Triple Witching and an abundance of portfolio maneuvers from The Street. March Triple-Witching Weeks have been quite bullish in recent years. But the week after is the exact opposite, DJIA down 16 of the last 25 years—and frequently down sharply for an average drop of 0.5%. Notable gains during the week after for DJIA of 4.9% in 2000, 3.1% in 2007, 6.8% in 2009, and 3.1% in 2011 are the rare exceptions to this historically poor performing timeframe.

Normally a decent performing market month, post-election year payments to the Piper take a toll on March as average gains are trimmed significantly (see Vital Statistics table below). In post-election years March ranks: 5th worst for DJIA, S&P 500 and Russell 2000; NASDAQ is 4th worst and Russell 1000 is the best at 6th worst. In 10 post-election years since 1973, NASDAQ has advanced just four times, most recently in 2009 (+10.9%).

Saint Patrick’s Day is March’s sole recurring cultural event. Gains the day before Saint Patrick’s Day have proved to be greater than the day itself and the day after. Perhaps it’s the anticipation of the patron saint’s holiday that boosts the market and the distraction from the parade down Fifth Avenue that causes equity markets to languish. Or maybe it’s the fact that Saint Pat’s usually falls in Triple-Witching Week.

Whatever the case, since 1950, the S&P 500 posts an average gain of 0.22% on Saint Patrick’s Day (or the next trading day when it falls on a weekend), a gain of 0.11% the day after, but the day before averages a 0.24% advance. In 2013, Saint Patrick’s falls on Sunday which has only occurred eight times in the past 63 years. In these eight occurrences, the pattern of strength before and weakness after is even more pronounced as the Monday and Tuesday following were negative on average.

Good Friday and Easter have landed in the month 12 times in the last 63 years like they do this year. On the day before Good Friday S&P 500 has logged gains averaging 0.2% in the previous twelve March Easters. Because the holidays are near month-end, the two trading days after Easter have been weak.

 

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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

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