Options Trade Alerts January 2015 Newsletter

Options Trading Strategies

January 12, 2014

Market Strategies Newsletter

Sample Issue

Read in .pdf format:


where to invest $10000

Covering High Return Balanced Investing Strategies To

Make Money In Up Or Down Markets


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

Contributing Staff: Michael King, Charles Moskowitz

Where To Invest In 2015 and

Options Trading Newsletter Covering:

Options Trading Strategies

How To Trade Options

Stock Options Trading Alerts

Best Stocks To Buy January 2015

Where to Invest in 2015


2015 Year To Date Profits $ 1,243

2014 Profits = $ 20,443

Over 204% Returns

$20,443 Profits for $10,000 Trading Account


By Following all trades in 2014 a

$10,000 account would be worth $30,443

Investing Trade Alerts

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Where To Invest In 2015

Options Trading Newsletter

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Market Strategies

$10,000 Trading Account Traders Comments


We have 4 open positions:


FB  Jan 77.50 Calls

GILD January 96 Calls

NYT January 13 Calls  and



2 GILD 100 Calls


Funds in Use $ 414


Week one was all over the place with triple-digit moves every day.  As far as the first day/ first 3 day and the first week of the year we are absolutely nowhere.  The Dow was down less than one half

of 1%.


Last years first week indicator was worthless since it forecast a down year.  While we did suffer for January 2014, looking back all we did was test the 200 day moving average and then rally to new highs almost 3000 Dow points higher.


We had a good gain of $1,243 (also YTD) and we have taken profits at what I feel is an area of some resistance.  Our position in GILD is hedged with a “covered write” of the Jan 100 calls against our position in the $96’s.  The optimum would be an expiration on Friday as close to $100 as possible but anywhere over $100 makes our gain of $646 per contract.  Not a bad return on a position that started with calls @ $1.58 and half sold at $3.00 near the 100% up rule.  I find this to be the best way to book profits and protect your capital.  As I quoted Bernard Baruch here a couple of weeks ago, “I made most of my money selling early.”  I have no trouble leaving some on the table for the next guy.


One of the reasons that I have not participated on the short side of this market is that I still believe we are still in a Bull market.  This doesn’t mean that I go completely “unbalanced.”  For example I have often taken a position in EFTs that are not exactly correlated to down moves but rather are havens of safety for when they occur.  I’m speaking specifically of the TLT, and ETF based on the 20-year US Treasuries. While the Fed may believe that the “numbers” may justify a rise in rates, the market is always the best pricing mechanism, and when there is doubt or bad news this is one of the first places money flows.  We also just missed buying the TVIX by 2 points which is a measure of volatility, usually goes up when the markets are negative.


Another market that has been the forerunner to our indexes has been oil.  As was the case with interest rates in early 2013, it wasn’t that rates had doubled, but rather that they did it in just about one quarter.  The bonds have since made a new recovery high.  The situation in the oil is similar.  Many producers, as well as refiners simply want a stable market that they can operate in.  You would think that VLO, one of the most flexible refiners in terms of their ability to produce many different products would be a major beneficiary, but it too has moved lower from $60 to $42 and is around $48 now. The refiners are beneficiaries of low crude prices. Again, the market has collapsed ($110 to $48) and the price of gas was down a record 118 days in a row….Not the kind of environment you want to try to make a living drilling, refining or exploring.


If oil can just stabilize I feel that we could rally further and the energy EFTs will certainly be one of the places to be.


Options Trading Strategies

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Market Strategies $10,000 Trading Account Trade Table

New Trades:

1) Buy 8 USO February 20th $ 20 Calls @ $ 0.50    ( Or Better ) They closed 0.49 bd @ 0.51

2) Buy 3 NFLX January 17th $ 320 Puts @ $ 2.20   ( or Better ) They closed at 2.46 bid @ 2.59


01/09 Sold 4 AA January 15 Calls 1.15       460         228 Gain
01/08 Sold 3 NAT January 9.87 Calls 1.70       510         435 Gain
01/08 Sold 4 NAT January 9.87 Calls 1.45       580         480 Gain
01/05 Bought 10 NYT January 13 Calls 0.20 200  
12/30 Sold 2 GILD January 100 Calls 2.46     496   Credit
12/26 Sold 2 GILD January 96 Calls 3.00        600         284 Gain
12/22 Bought 4 GILD January 96 Calls 1.58 632  
12/19 Sold 2 FB January 77.50 Calls ( leaves 2 lots Open ) 3.30        660         270 Gain
12/18 Sold 8 NAT January 9.87 Calls ( 100% Profit Rule  Leaves 7 lots Open ) 0.50        400         200 Gain
12/16 Bought 4 AA January 15 Calls 0.58 232
12/08 Bought 4 FB January 77.50 Calls 1.95 780
12/04 Buy 15 NAT January 9.87 Calls 0.25 375


Remember, these trades are based on your participation in the

Subscriber Members Only



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.


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


How To Trade Options

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MARKET Laboratory – Weekly Changes

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








S&P 500








Russell 2000







Gold (spot)




Silver (July)








Heating Oil




Unleaded Gas




Natural Gas








Put/Call Ratios

S&P 100



Put/Call Ratios

CBOE Equity





147-17 + 2-01

2.55% -0.17%

10 Yr. Note

128-184+1-134  1.98% -0.15%






CRB Inflation





Barron’s* Confidence







5 Yr. Note

119-341 +284

1.46% -0.16%






DJ Utilities
















M1 Money  Supply


December 29th

M-2 Money



December 29th

* Component Change in the Confidence Index


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.

Stock Options Trading Alerts

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Market Strategies Technical Information

Support Levels S&P 500        2008

Resistance S&P 500              2088


Support Levels DOW          17,465

Resistance DOW                17,920


Support Levels QQQ            100.65

Resistance QQQ                  105.90


Support Levels NASDAQ      4615

Resistance NASDAQ            4778


Closes below support triggers sales/above highs buys



$100,000 Trading Portfolio Stock Positions and

New Stock Recommendations

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

Stock Purchase Price Purchase Date Stop/Loss   Price/Date Sold   Profit/($ 920Loss)
ARRY 1000 4.78       01/05
MOS  100 45.41       01/05
BAC. Wts 5,000 lots 0.7411      12/26
SWHC 500 9.81      12/22
BSBR  500 4.84      12/18 4.54  sco
BCRH  300 17.50      12/18 17.35 sco
SAN  600 8.40      12/16
SLXP  50 100.80      11/25
FB  100 74.18      11/24
XCO 1200 3.10      11/28
INO  500 9.92      11/17
AA  500 14.21      10/16
FCX 150 34.99      09/09
NBG 300   2.95      05/19
XRGYF 5000* 0.407      03/14
RPTP 400 15.37      01/16
NBG 300 4.08 8/12
TEXQY* 200 6.56 7/11
REPR* 5000 0.22 10/22/12 .12 sco

Remember, these trades are based on your participation in the

Subscriber Members Only



Previous closed out trades not listed here may be seen in previous market letters 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.

Best Stocks To Buy January 2015

Where to Invest in 2015

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Market Strategies $100,000 Trading Account


New Options Trades:


1) Buy 16 USO  February 20th ..  $ 20 Calls @ $ 0.50  ( All Limit orders )

2) Buy   6 NFLX  January 17th $ 320 Puts @ $ 2.20            



There were two closed option positions making a profit of $ 2,381.


There were no closed out stock positions.


For the full year to date, counting the GILD Options credit of $ 984.00, we have gains of

$ 2,381


Open position losses decreased to $ 5,392.


There are three long Open Options positions:


FB Jan 77.50 Calls

GILD January 96 Calls and the

NYT Jan 13 Calls


The Stock table has the following remaining 19 positions:





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


We are basing money management on a hypothetical

$ 100,000 and are using a total of

$73,457 for 19 open stock positions plus three option long positions and the written Call requiring

$ 828 making a total of

$ 73,539 leaving

$ 26,461 in cash.


These figures are approximate and there might be errors.

We have not counted the dividends received from Apple, JP Morgan, Santander, Blue Capital Reinsurance and others.


We do not count commission costs and all trading once again is hypothetical.


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 Market Strategies

$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



Option Cost Date Sold Date Profit/(Loss)
GILD Jan 100 Calls

1.58 Wrote 412/20/14$ 492 creditGILD Jan 96

8 lots; 4 remain OpenCalls

1.5812/23/143.00 Sold 4 lots12/26/14$ 568AA Jan 15 Calls

8 lotsCalls

0.5812/16/141.15 Sold 801/09/15$ 456FB Jan 77.50

8 lots

4 OpenCalls


( Sold 4 leaves 412/19/14$ 540NAT Jan 9.87

30 lots

15 lots OpenCalls


( 100% Profit Rule sold half )


1.45 sold 10


1.70 Sold 512/18/14




01/08/15$ 375



$ 1200

$ 725


Remember, these trades are based on your participation in the

Subscriber Members Only



Previous closed out trades not listed here may be seen in previous market letters in the

VIP Subscribers Members Area.



This Weeks’ Economic Numbers and Media Data


Earnings Reports Before the Open on Top of the Row; After the Close are Below the Economics Numbers.


Monday Earnings Season Begins with Alcoa reporting after the close. Expectations are for

( 0.27 vs 0.04 ) and $6.032Bln Top LineTuesdayKB Home ( KBH 0.57 vs 0.31 )

10:00 hrs JOLTS-Job Openings Nov ( NA vs 4.834M )

14:00 hrs Treasury Budget  Dec ( 3.0Bln  vs  53.2 Bln)

CSX ( 0.49 vs 0.42 ) DragonWave ( DRWI -0.06 vs -0.12 ) Linear Technology

( 0.49 vs 0.44 ) and Progress Software ( PRGS 0.45 vs 0.43 )WednesdayJP Morgan ( JPM 1.35 vs 1.30 ) Wells Fargo ( WFC 1.02 vs 1.00 )

07:00 hrs MBA Mortgage Index 01/10 ( NA vs +11.1% )

08:30 hrs Retail Sales Dec ( 0.1% vs 0.7% )

Retail Sales Ex-Auto Dec ( 0.1% vs 0.5% )

08:30 hrs Export prices ex-ag Dec ( NA vs -1.2% )

Import Prices ex-oil ( NA vs -0.2% )

10:00 hrs Business Inventories Nov ( 0.3% vs 0.2% )

10:30 hrs Crude Inventories 01/10 ( NA vs -3.062 Mln Bbls )

14:00 hrs Fed’s Beige Book Jan ( NA )

 ThursdayBank of America ( BAC 0.30 vs 0.29 ) Citigroup ( C 0.65 vs 0.82 ) Insteel Industries

( IIIN 0.18 vs 0.15 ) Lennar ( LEN 0.96 vs 0.73 ) Taiwan Semi ( TSM: 2.98 vs 1.73 )

08:30 hrs Initial Claims 1/10 ( 293K vs 294K )

Continuing Claims 01/03 ( 2400K vs 2452K )

08:30 hrs PPI Dec ( -0.4% vs -0.2% )

CORE PPI Dec ( 0.1% vs 0.0% )

08:30 hrs Empire Manufacturing Jan ( 7.0 vs -3.6 )

10:00 hrs Philadelphia Fed Jan ( 19.0 vs 24.3 )

10:30 hrs Natural Gas Inventories ( NA vs -131bcf )

Intel ( INTC 0.66 vs 0.51 ) MB Financial ( MBFI 0.52 vs 0.43 )  People’s United Financial ( PBCT 0.21 vs 0.20 ) Schlumberger ( SLB ( 1.47 1.35 )FridayCharles Schwab ( SCHW ( 0.24 vs 0.23 ) Goldman Sachs ( GS 4.38 vs 4.60 )

PNC ( 1.73 vs 1.85 ) Sun Trust Banks ( STI 0.80 vs 0.77 )

08:30 hrs CPI Dec ( -0.4% vs -0.3% )

CORE CPI Dec ( 0.1% vs 0.0% )

09:15 hrs Industrial Production Dec ( 0.0% vs 1.3% )

09:15 hrs Capacity Utilization Dec ( 80.0% vs 80.1% )

09:55 hrs Michigan Sentiment Jan ( 94.1 vs 93.6 )

16:00 hrs Net Long Term TIC Flows ( NA vs -$ 1.4Bln )



Market Strategies Fundamentals


The DJ Transportation Index fell 2.65% last week to 8858.15, a decline of 241 points leading all indexes lower, despite plummeting oil prices. The Dow gave up 96 points, or 0.5% to 17,737.37 and the S&P 500 Index lost 13 points or 0.65% to 2,044.81. The Nasdaq Composite tumbled 23 or 0.5% to 4,704.07. Nasdaq retreated 22.75 points to 4704.07, a decline of 0.5%. The Russell 2000 declined 13.12 points to 1185.68 or -1.09%.


Eight of the Ten Dow Industrial Groups were in the red led by Oil and Gas down 3.76%; Financials were second worse falling 1.97%; Industrials lost 1.54%; Basic Materials were down 1.33%; Telecommunications fell 1.01%; Consumer Services were down 0.54%; Utilities fell 0.23% and Technology fell the least, just 0.19%. Health Care was by far the best performer up 2.32%. followed by Consumer Goods gaining 0.61%.

The top ten holdings in the XLV, Heathcare ETF, are as follows: Johnson and Johnson ( JNJ: $ 104.94 ) comprising 11.19%. Pfizer is next ( PFE: $ 32.65 ) 7.55%. Merck ( MRK: $ 62.56 ) is third with 6.23% of the index. Gilead Sciences is fourth ( GILD: $ 102.21 ) with 5.47%. Amgen is fifth: ( AMGN: $ 155.73 ).

AbbVie is sixth ( ABBV: $ 65.78 ) having 4.015 of the index: Bristol Myers Squibb ( BMY: $ 60.32 )

Celgene 3.46% ( CELG: $ 113.67 ) and lastly followed by Biogen ( BIIB: $ 342.34 ) at 3.16%. The ten leaders making up 53.24% of the Healthcare ETF, which is the best looking sector going into 2015.


No matter how you paint it, deflation was never good for equities. Charles Evans, president of the Chicago Fed said last Wednesday that he wasn’t in favor of raising rates until 2016. This caused a sharp rally in equities. The S&P rallies from below 2000 to a high of 2064 on his thinking. The Fed had been expected to begin raising rates in June or July. Once a pattern begins, of raising rates, the markets factor in a continuation, as the initial increase in rates is usually just a beginning of many raises to follow. One thing is certain. 2015 will be a year of more volatility.


The VIX is now almost as popular as the Dow Jones Industrial Average and the Standard and Poors 500 index. A Google search reveals about 28 million mentions for the VIX, 32 million for the Dow and 37 million for the S&P 500. The VIX ( VXX: 31.98 ) usually rises when stocks fall and trades above both its 13 and 50 day moving averages. For the fifth straight year, VIX futures set an annual trading record of about 50 million contracts in 2014, up 27% from about 40 million contracts in 2013. A close below the 30 level is needed to ensure a good year for stocks.



Market Strategies Economic Data


Nonfarm Payrolls came in about as expected, up 252K, a decent number in itself even though it was 101,000 jobs below the November figure of 353K. Private Payrolls increased by 240K, 105,000 below the previous month but an acceptable number. The big concern is over the decline in Hourly Wages, as earnings declined 0.2%. The Average Workweek remained the same at 34.6 hours.


December marked the 11th straight month of payroll increases above 200,000, the longest stretch since 1994. For the last year as a whole, the economy generated 2.95 million new jobs, the strongest annual showing since 1999. What came as a surprise was the drop in wages, exacerbating a trend that has been in place since the 2007-09 recession. Wages declined 0.2% last month, and for the entire year rose only 1.7%, the smallest 12-month gain since October 2012. The softness in wages is unusual given the tightening jobs market. Wages should go higher in the near future as 21 states are raising minimum wages this year.


The ranks of the long term unemployed continued to go down as those who gave up searching for jobs because they were unable to find full-time employment as a group fell two-tenths of a percentage point to 11.2%, the lowest level since September 2008. Almost two-thirds of the decline in the level of unemployment last year was among the long-term unemployed.


The Trade Deficit narrowed again, for November to -$39Bil the smallest monthly deficit since December 2013. The weakness in oil prices contributed to lowering import numbers as the U.S. remains a net importer of petroleum-based products. Imports declined by $ 5.2 bln in November to $ 235.4bln. Imports of industrial supplies fell by $4.6bln, which included the $ 2.9bln drop in crude and fuel oil. Capital Goods imports fell by $ 0.8bln. Consumer Goods imports increased by $ 1.6 bln in November, most of which came from a $ 1.8 bln increase in cell phone sales. Exports also declined $2 bln reflecting weakness within the economies of trading partners. Civilian aircraft sales fell $ 1.1bln, both auto sales and consumer goods fell by about $0.5bln each.


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 Stocks and ETF’s bought over the past few weeks:


Notice the Flexibility for whatever the market direction. Both the VIX and SPXU protect against declines while the UDOW and various stocks are from the long side. Last week the UDOW lost 1.6% following loss of 3.4% the previous week. The VXX ( volatility ) gained 3.2% for the week. following 9.5% the previous week  The VXX remains quite lofty and  higher for the month  reflecting   uncertainty and fear of the market. The SPXU gained 1.29% in each of the last 2 weeks. Both the Deere ( DE: $ 85.65 ) – $ 2.69  or -3% and DuPont  ( DD: $ 73.50 ) – 0.21 cents on the week  had some profit taking  following explosive gains last year.  Exon ( XOM: $ 92.10 ) has held quite well considering the huge drop in oil prices and if it can close above $ 92.50, the 13 day M.A., we would be long.


Symbol Name Business Description PE P/S MV mln Price Buy Limit Stop Loss

Or soldSWHCSmith and Wesson Holding CorpFirearms; Handguns Metal Processing8.50.93527.3710.299.81 AAAlcoaAluminum and Metals14.300.817.53B16.1114.5714.60DSXDiana ShippingDry Cargo ShippingN/A3.76116.806.605.90STNGScorpio TankersOil Transportation265.61.47B8.947.467.48IIINInsteel industriesMetal fabrication290.741122.2421.2221.22KRKrogerRetail Food170.2424.6K65.8448.9046XOMExxon MobilEnergy13.41.1420K92.1090.5091 scoUALUnited Cont HldTransportation161.218.1K65.344648UDOWUltra Pro Dow 30ETF   139.10104.81131DEJohn DeereFarm Equipment9.40.8029.0K85.658084.30scoBELFBBell Fuse Inc BElectronics9.50.7427626.03


Stopped outSPXUUltra Short S&PHedge purposes   38.5843.2038scoDDDuPontChemicals211.7161.3K73.5064.8073scoVXXVIX VolatilityHedge Portfolio   31.9827.1026MOSMosaic CompanyAgriculture Chemicals702.1015.3K45.9642.2843.70


Undervalued Small Cap Stocks



We have bought positions in each of these companies.


Target Energy* ( TEX.AX  0.03  Australia ), In the USA, ( TEXQY: $ 2.50 ) a new ADR.


This company trading below a nickel could earn more than where it is now trading. Perhaps 7 to 10 cents is in the Cards. Their business valuation exceeds market cap.


Leo Motors ( LEOM $ 0.07 )*


Has merged with LGM,  a wholly owned subsidiary has filed two patents that will significantly improve efficiency in the refrigerated cargo transportation of fresh food while dramatically reducing the carbon footprint of bulk refrigerated vehicles. They have the exclusive use of a new short-circuit technology for use in Cars, Boats, and energy storage world-wide.. Many new breakthroughs in electric energy are coming. Please go to www.leomotors.com ( English Version ) Risk is 3 cents.


RMS Medical Systems, Inc ( REPR 0.39 )* 


Has doubled this year already and can double again .

RMS designs, markets, manufactures portable easy to operate infusion devices, including needles and tubing. It is easy to handle by patients. The Freedom 60 is being marketed in Europe as well as gaining a footing among home-care professionals in America. The RescueVac is used in ambulances and planes for emergency suction.


Cleveland BioLabs, Inc ( CBLI $ 0.30)*. CBLI has done much research on cancer as well as developing a prevention for radiation sickness. This is a two for one play both cancer research and radiation protection. Just imagine the catastrophe if radioactive material falls into the wrong hands. The Russian Medical Federation has also invested heavily ( $ 23 million )  The Roswell Park Cancer Institute ( PPCI ) announced the publication of studies in “ Oncotarget” describing the preclinical efficacy of Curaxin CBLO137 as a single agent and in combination with the current standard-of-care therapy, gemcitabine, against different models of pancreatic ductal adenocarcinoma ( PDA ), including models of gemcitabine-resistant tumors. The studies were conducted by scientists at Roswell Park, SUNY Downstate Medical Center and Buffalo Biolabs, LLC. Pancreatic cancer is the fourth leading cause of cancer-related death in the United States and is one of the few cancers for which survival has not improved. Pancreatic cancer has the highest mortality rate of all major cancers; 94% of pancreatic cancer patients will die within five years of diagnosos. ( American Cancer Society: Cancer Facts and Figures 2014 )


Entolimod is being developed as a radiation treatment. Please go to www.cbiolabs.com for more pertinent information.


Southern ITS  (SITS: $ 0.08 )*


Southern ITS delivers proprietary innovative electronic security systems to highly regulated market sectors. Such installations include Gaming Properties, Medical Marijuana (MMJ) dispensaries and similar businesses with high compliance mandates. Their systems go beyond simple security and are designed to support their clients in dealing with the expanding burden of compliance and financial auditing. Greeniosk is complete system that allows Medical Marijuana (MMJ) Dispensaries and Recreational Marijuana (MJ) Dispensaries to document and provide an audit and verification trail of each individual MMJ/MJ dispensary transaction.

The majority of MMJ Dispensaries have limited bank service access mainly due to requirements of the Racketeer Influenced and Corrupt Organizations Act (RICO). The Greeniosk system incorporates a large physical ATM Kiosk, with a state of the art CRM reporting system that provides a detailed financial transaction audit trail and addresses and resolves issues of the propriety of the dispensary operations. MMJ Dispensaries currently transact between $250,000 and $5,000,000 in annual revenues.  The majority consist of cash transactions, however small numbers of dispensaries accept debit card payments.  Because RICO concerns cause the majority of banks to decline dispensary deposits, they also miss out on potential MMJ credit card transactions.


Labor Smart  ( LTNC: $ 0.001 )


It is unusual to say the least to find a company doing $24 million is top line revenue which appears to be the case for 2014 and projecting over $ 30 million for 2015 to be trading at one-tenth of a penny. Debt has been paid down from about $ 3 million to $ 2.5 million from the sale of shares by the debt holders, but a good banker is needed to turn this stock around as the overall business itself is good.


Market Strategies Cycles


Whew! Wow, the snapback rally over the past two and half days has put the S&P 500 positive by two hairs for January’s First Five Days. After failing to deliver a Santa Claus Rally (SCR), the S&P 500 has roared back over the past two days to post a meager 0.2% gain during the First Five Days of January. The last 41 up First Five Days (FFD) were followed by full-year gains 35 times for an 85.4% accuracy ratio and a 14.0% average gain in all 41 years. The six exceptions include flat 1994 and 2011 plus four related to war. Vietnam military spending delayed start of 1966 bear market. Ceasefire imminence early in 1973 raised stocks temporarily. Saddam Hussein turned 1990 into a bear. The war on terrorism, instability in the Mideast and corporate malfeasance shaped 2002 into a tough year.

In pre-presidential election years this indicator has a solid record. In the last 16 pre-presidential election years 12 full years followed the direction of the First Five Days; however, 2007 and 2011 did not. The full-month January Barometer (STA 2015, page 16) has an even better record as 14 of the last 16 full years have followed January’s direction.


A positive FFD has improved the outlook for 2015 following a down SCR. This will be just the fourth time since 1950 that the S&P 500 has recorded this combination. The worst full-year outcome was flat midterm year 1994. We will withhold further judgment until the January Barometer gives its official reading at month’s end. The December Low Indicator (2015 STA, page 44) should also be watched with the line in the sand the Dow’s December Closing Low of 17068.87 on 12/16/14.


The Crude Awakening of 2014


The rapid fall in oil prices is the story of the year. The WTI futures have dropped from a high of $ 107.26 in June to $ $ 48.36, a drop of 54.9% in just a little over six months.


The collapse comes largely as a result of the U.S. shale boom and other unconventional production growth globally, which are only economical at

$ 100+/BBl prices, ramping rapidly over the past few years and challenging OPEC market share at a time when global demand decelerated from previous estimates. U.S. production has been growing dramatically. For 2014 9.12 Mln Barrels per Day were produced, up 12% for the year and up 80% from before the shale boom which began around 2008. U.S. crude imports are down over 30%. OPEC crude imports have fallen 50% since 2008 peaks to around 2.8 mLn BBls/day and Saudi imports have dropped over 405 to less than 970,000 Bbls/day.


Essentially U.S. crude production growth has displaced over 3.0 Mln BoPD of crude imports, primarily from OPEC.


Additional displacement will occur as America transitions from a net refined product importer to exporter. As global demand slows production is not economical for a few OPEC members  at current prices due to large social spending programs who will not be able to balance their budgets.

Cold Winter Could Heat Up Natural Gas By Christopher Mistal


Based upon the US Nat Gas ETF  (UNG: $ $ 14.99 ) there is a seasonal tendency for natural gas companies to enjoy gains from the end of February through the beginning of June. Detailed in the Stock Trader’s Almanac 2015 on page 94, this trade has returned 17.7%, 11.5%, and 9.8% on average over the past 15, 10, and 5 years respectively. Concurrent with this is a featured trade on page 32 of the Commodity Trader’s Almanac 2013 that is based upon natural gas, the commodity.

One of the factors for this seasonal price gain is consumption driven by demand for heating homes and businesses in the northern cold weather areas in the United States. In particular, when December and January are colder than normal, we see depletions in inventories through February. This has a tendency to cause price spikes lasting through mid-April. This was precisely the situation in December 2013 through February 2014 when natural gas rallied from around $3.75/mmBtu to nearly $6.00/mmBtu.

A relatively mild start to winter this year combined with plunging crude oil prices has sent natural gas back below $3/mmBtu this week, even as many parts of the U.S. are unseasonably cold. Inventories are healthier now than a year ago, but are still below the 5-year average for this time of year. This combination of a recent sharp price decline and below average inventories represents an excellent opportunity for new long positions, especially with the coldest winter months still ahead.



Rule 17B Attestations and Disclaimers


Princeton Research, Inc. has approximately 2,581,578 shares of AIVN both free and restricted and represents them for Investor relations. 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. Princeton was paid $ 2,500 to write a report on Xinergy. Princeton has signed a contract with CBLI to be paid $ 2500 for July and August for investor relations. Princeton has been engaged by Target Energy. No contract is currently in place. Princeton was paid about 500,000 restricted shares of Leo Motors.


When there is no movement in penny stocks, even though there is none or very small losses, we will liquidate ( sold AIVN on stop ) even though we like the company, if money is needed for better opportunities.


We now believe REPR represents upside opportunity. The Target ADR trades at about $ 4.50 in U.S. vs 0.05 in Australia. Princeton owns 400,000 Australia shares and about 900 U.S. ADR’s.


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 e-mail issue. Princeton may buy or sell its free-trading shares in companies it represents at any time.





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Charles Moskowitz

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Princeton Research

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