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February 25, 2013

Market Strategies Newsletter

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Balanced Investing Strategies To

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

 

Market Strategies

$10,000 Options Trading Account

Five Open Positions:

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Market Strategies

$10,000 Options Trading Account

 

The choppy nature of the market caused us a loss of $1,172

this week reducing our

YTD performance to a still respectable gain of $9,313 or 93%.

 

Eight Open Positions:

Funds in use $ 7,118

 

Options Trading Strategies Comments

To say that some of the crosscurrents made little sense is an understatement.  The FOMC minutes released stressed a better economy and the possibility of less need for QE longer term, and yet the TBT calls (rates up/TBT up) sold off.

While we are pretty well balanced in this account there will be no new trades recommended today.  Even though the true equity in the account is $19,313, we operate on the original value of $10,000 for money management.

We have funds in use of $7,118 and I do not feel as if we should expand the use any higher at this point.

The areas of concern relate to the Italian elections as well as other Euro issues, a nuclear IRAN as well as problems related to Syria, Egypt and Israel. The purported Chinese hacking issues are extremely troubling.

Sequester fear tactics and their inherent effect on the markets psyche will certainly add no stability.  Again, I remind everyone that our downgrade on debt did not have its cause in ability to repay but rather the dysfunctional nature of our politicians in Washington.

….CAM

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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 the Market Strategies Newsletter Archives 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 lost $ 1,766 in closed out positions last week

 Our profits for the year fell to an hypothetical $ 21,425

 

We have eight 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 $ 14,256  in five options positions and $ 55,155 in the14 stock positions

a total of $ 69,411. 00 with 30,589.00  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

 

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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

The dollar was again very strong accelerating to new highs at 81.46, the best level seen since the end of August rising 1.1% and completing a huge head and shoulders bottom. The markets held very well in face of this obstacle. Precious metals fell sharply as did other commodities, oil and grains. The worst effect in stocks fell to the Basic Material sector which fell 3.33% and by far the worst performer of the Ten Dow Industrial Groups. Technology fell 0.91% and Consumer Services 0.86%. Dow Industrials dropped 0.75%; Oil and Gas fell 0.46%. Financials lost a small 0.24% and Health Care just 0.07%. Telecommunications the best performer, bucked the strong headwinds of the greenback rising 1.39%. Utilities gained 1.16% and Consumer Goods 0.53%.

 

Market Strategies Economic Data

Most of the economic reports were below expectations. Housing Starts were just 890K vs a consensus of 914K and a huge 973K in December. Permits were slightly better at 925K vs 918K and 909K. keep in mind that in 2009 Housing Starts fell below 600K vs over 2000K in the halcyon days of 2005-07.

Most of the decline came from multi-family construction which fell from 365K in December to 277K  in January. Single Family construction increased 0.8% to 613K in January from 608K in December.

The number of homes under construction has increased at a steady pace since August 2011 and is on a strong steady upward recovery path.

Initial Unemployment Claims were higher at 362K from 342K the previous week. The Philadelphia Fed Report was a negative 12.5 when a positive 1.5 was expected. Crude Inventories catapulted to a buils of 4.14 Mln Bbls showing much less demand and well above expectations.

                                                

Market Strategies Technical Information

Support Levels S&P 500    1478-1500                 

Resistance S&P 500           1528-1535

 

Support Levels DOW        13815-13895            

Resistance DOW               14150-14198

 

Support Levels QQQ           6600-6700             

Resistance QQQ                  6889-6920                  

                   

Support Levels Nasdaq      3127                           

Resistance Nasdaq             3438

 

Market Strategies Cycles

Both the Dow and S&P 500 had to struggle last week after putting together strong 11-12 week performances. The Dow had twelve up weeks out of the last thirteen while the S&P 500 had ten of the last eleven weeks up with the slight inside down day on the one in between “ inside day.”  The vertical trajectory preludes bull years that lasted until Presidents’ Day. The Dow has gained 896 points or 6.8% and the S&P 89.41 points or 6.3%.

On the day after Presidents’ Day, the Dow and S&P 500 often began a three-and-half week pullback that eventually erased much of the yearly gains before bottoming in mid-March. The week after February options expiration ( this week ) often was a down week. This year with the sequester ahead is a favorite to follow the previous cycles of a down type week.

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.

 

NOTE: This is a Sample Issue Only! 

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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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