SUCCESS STORY

Jerry,

Out in the real scary world after your fantastic Wednesday AM classes -

Just sold 5 contracts of MED Jan 30 Calls purchased 11/24 for $1.20 - I kept moving my stops to lock in profits - stopped out today at $5.70. Pretty nice for just over a month!

Thanks!!!

Mike S

SUCCESS STORY

Jerry,

Based on your recommendation on NFLX, I have bought Netflix Jan 55 call at 1.7 on Dec 17. And sold it at 3.1 on Dec 24. This has given me approximately 80% return in about 1 week time. I have also bought AAPL shares on your recommendation and holding at this point at 10% profit.

Thanks for your commentary and recommendation. Have a great holiday season and wonderful new year.

regards,

Kenneth N.

SANTA CLAUS RALLY

We had a nice Santa Claus rally this year. If you traded any of the picks I gave you over the last week, you most likely did very well. AMZN and AAPL were huge! Those that did trade those picks most likely paid for your Christmas...and then some. Other big picks included EOG, APA, APC, MAC, BUCY, RAX, SCSS, and NOG. If you did have success stories over the last two weeks, please send them to me so that I can post them. Have a very Merry Christmas and get ready for a huge money making New Year!

MERRY CHRISTMAS!!

I hope everyone has a very Merry Christmas, Happy Holidays, and a prosperous New Year! The market will often rally on these days before Christmas. When it does pull back, it usually doesn't sell off much. This creates a pretty nice reward to risk. The market didn't pull back as much as I wanted it to, so I didn't come out with a full "buy" recommendation. If you want to make some trades here at the end of the year, I would recommend the technology sector. Many stocks have pulled back. Make sure you trade the trend and look for good reward to risk entry points. I like the position of AMZN and AAPL.

SO MUCH FOR TAKING A BREAK....

With the recent sell off in the market, there is a great reward to risk situation developing. If the S&P 500 finds support at the 1086 area again, I will probably call for an aggressive buy back into the market. With the 50 day MA sitting at 1087, there is a lot of support in this area. I've told you over the last couple of weeks that this sideways trend is most likely setting up for a breakout to the upside. This means that if the market holds support at the 1086 area, it could run up to at least 1116 again...if not higher. If it finally breaks the 1086 support, you could stop out of the trades. This would create at least a 2:1 reward to risk. I would like to see another 8-10 point drop in the S&P 500. This could happen tomorrow...but with RIMM earnings being good and December option expiration, the market could take a couple more days to get there. This could lead to one heck of a Santa Claus rally!!! This might be your chance to pay for all those Christmas gifts!! Watch for a rally in technology tomorrow. RIMM was trading at $71 in after hours trading after posting a great earnings number. AAPL should also rally off of that report. AAPL is sitting near a $188 support area. Although it is below its 50 day MA, it could rally up a bit. Be careful not to chase it. It will most likely gap up along with RIMM. I personally would love to set up a credit spread if it does gap up. Maybe the 190-185 spread. Let's follow up on a few of the successful picks over the last week. AEM has moved down about $9 since I re-entered the bearish trade. Remember that I was stopped out the first time. It has worked out to be a very nice trade. It is also a good example of getting a second chance. Just because you get stopped out doesn't mean that the opportunity is gone. I was just a bit early on that first entry. HPQ up $2. CAT - flat since the recommendation, but looking really nice if that 50 day MA holds. EOG up $6. RIMM - up $3 now, but could be up $11 tomorrow. CSCO down $1. SHOO - up $3 at peak...currently up about $1. AAPL - down about $5, but that could change tomorrow. Some of these picks were credit spread recommendations. TS - up about $1. MEE - up $3. MMM - up $2. TCK - up $2. OMG - flat. DSX - flat. Some bearish trades include HANS which is up $1 (that's not a good thing for a bearish trade), BAC down $1.50, and C down $.75 (which is a big move down for Citi...almost 20%). Not bad results for a choppy market. Some of those trades were spreads which are working great in these conditions. Happy expiration friday tomorrow and have a great weekend.

RESISTANCE?

It appears we are bumping up against the resistance around 1115. It looks like we could move back down to the 1087 area in the next few days. We could possibly break out of this range and start another move up, but the price action over the last three days doesn't look like that will happen. If we do end up finally breaking out, there are a few stocks that I want you to keep an eye on. I like VCI, BUCY, NFLX, VPRT, RAX, SCSS, NOG, and MAC. For lower priced stocks, I like IVAN and CSUN. I know that CSUN has been moving a bit flat lately, but it looks like it could be ready to run up to that $6 area. This would be a stock trade, not an option trade (there are no options on this stock, but it costs as much as an option...$4.45) which is why I'm considering it with a flat to slightly down sloping 50 day MA. For a credit spread, I like HGSI (Jan 27 and 26 puts for the spread). If we continue to move down in the next few days, be patient and start planning your trades. If the market pulls back down to the 1087 area, we want to be ready to set up our bullish trades. The longer the markets move sideways (and don't break that 1087 support), the higher the probability for a breakout to the upside in the near future.

HOW DO YOU PLAY THE XOM/XTO NEWS?

The big story today was the news that Exxon Mobile (XOM) is going to acquire XTO Energy (XTO). This caused a big move today in the natural gas stocks like APA, CHK, APC, and EOG. I received a few e-mails asking "Is it too late to get in?" I don't think it's too late to get in, but I do think that you need to be very smart in how you play it. I don't think a directional option trade (buying a call or buying a put) will work very well for this situation. Not only is the market expected to chop around a bit, but history says that these stocks will probably move sideways for a few weeks. For a more current example, look at the railroad stocks. Warren Buffett announced his purchase of BNI stock on 11/3/09 and the stock gapped up $20. Since then, the stock has flatlined. Some of the other stocks in that sector moved up a bit on that announcement (like GWR, CSX, UNP, NSC, and KSU), but for the most part they have been moving sideways since then. The way I am going to play the news is through the use of Credit Spreads. On CHK, APA, and APC, I would set it up under the 12/9 low. On EOG, under the 50 day MA. On XTO, somewhere below the 10/21/09 high. There is no guarantee that these stocks won't come crashing back down, but the probability is pretty high that they will stay above these levels until the January expiration. If you place these trades, make sure you understand the risk and know how to make the necessary adjustments if it goes against you. If you want to learn the details on these spread trades, make plans to take the Advanced Option Strategies course. As for the market...we are nearing that 1115 resistance area. We might break above it this time, but we could also pull back a bit and continue this sideways trend. By the way....I have been having some trouble with my Option Magic and Virtual Investing Club e-mail accounts. Some of you might still be waiting for replies on your e-mails or invitations to a class. If you have not received an invitation to a class this week, keep in mind that you can use a previous invitation to enter the class. You can also call into the conference call number at the start of class and I can give you the login information over the phone. Please try using a previous invitation first as it could take a long time to start class if I am having to help everyone get logged in. I have also set up a temporary e-mail account at myoptionmagic@yahoo.com. If you feel you have unanswered questions, please resend the question to this e-mail account.

SUCCESS STORY

Bought 20 contracts of WY December 1/09. @ $2.15

Sold December 3/09. @ $4.00

$3700.00 Gross Profit

Thanks for all your help Jerry!

Craig B.

VERY IMPORTANT!!! PLEASE READ

I want everyone to do me a big favor. Please go to http://www.growthstockwire.com/ and read the article titled "The Government is About to Destroy the Market". In my 6 years of coaching, I have always been careful not to bring politics into my discussions. There are always two (or more) views to almost every issue out there, and a trading class is no place to try to sway political opinion. However....this bill will affect everyone who trades...no matter what your political views! It will be especially difficult on those of you that are starting out with smaller trading accounts. Please read this article and sign the petition. If you feel as strongly as I do, please contact your congressman and stop this ridiculous bill. If you have friends that trade, get this link to them and ask them to sign the petition and contact their congressman. Please understand that I would never ask you to do this if it wasn't so important. Thanks!

SUCCESS STORY

Jerry, I am in your Wed. night, 7 pm CST class. I made my first option trades last Thursday. Before beginning this class, I didn't understand anything, but after the first class and listening to the assignments, I jumped in. I invested $2078 and sold them today for a $1076 profit! I am now understanding all the examples in Jesse's marketing info. This is awesome, can't wait till each class to continue my learning. Thanks for all your explanations and demos, so far I am very impressed with the program. Bill A.

WE GOT A BOUNCE!

We did get a bounce today. It looks like the trading range is still alive and well. Expect more choppiness in the markets through the end of the month...unless we break out of this range. Spreads are working best in this environment. I know that many of you haven't taken Course 2 yet and don't know how to use the spreads. That's okay, just be patient right here and try to limit your directional trades. Part of good trading is learning when so sit tight and wait for the probabilities to move into your favor. You could try using some shorter term trades if you have the ability to watch them throughout the day. Make sure you calculate your reward to risk and make sure that the reward to risk ratio is in line with your winning percentage. Until this range is broken, try to enter your bullish trades near the support of this range (about 1086) and your bearish trades near the resistance (about 1115). Below is my response to an e-mail from a student. I thought my commentary might be of some worth...maybe just a little. Many of these stocks would be great picks because the reward to risk is great. That doesn't mean they will necessarily go up, just that they have the potential to give twice as much if they do...compared to what you could lose if they don't. These were all bullish trade patterns. Thanks JJ.

SWM - I wouldn't chase it here. It's gotten too far away from the 50 day MA. It could move up a bit more due to the volume of today's move, but I don't like the reward to risk from right here. 11/27 to 12/1 would have been the ideal days to enter. Even 12/4 was good.

SHOO - This would be a good one.

AAPL - I'd use a Bull Put Spread or Bull Call Spread on AAPL. I think it could chop a bit sideways over the next few weeks.

TS - This one is nice. I might use the 10 day MA as extra confirmation. I do like the reward to risk.

MEE - I'd definitely want confirmation on any energy related stock right now. If the dollar continues to rally, there will be more pressure for these stocks to go down. The rest of the coal sector has struggled. This one could lead a new rally in coal. The reward to risk isn't too bad if you place the stop below the 10/20/09 high. I do like the ABC pattern and the Fib retracement levels.

MMM - I like this one for a Bull Put Spread, placed below the 50 day MA if possible.

MT - I don't like this one. Too close to overhead resistance. If it does break out above the 10/15/09 high, you could use a Bull Put Spread.

TCK - I like this one.

OMG - I like this one. Very nice reward to risk.

DSX - This one is okay if it can get above yesterday's high (12/8/09) for confirmation.

WILL WE GET A BOUNCE?

The S&P 500 has found support and rallied the last three times it has hit 1087. I would expect a little bounce here tomorrow. It might just be an intraday bounce, but see if the market starts to rally a bit at the open. If it is below 1087 near the close tomorrow, we might start to get some heavy selling that could break us out of this sideways trend we have been in over the last few weeks. I feel that we will probably continue to chop around for the next few weeks, but I am prepared if the selling starts to increase. If we rally a bit tomorrow, look at the 1099 or 1100 area as a target.

HOW TO TRADE A SIDEWAYS TREND

With the market chopping sideways over the last few weeks, it can get frustrating when you buy call or puts and the stock doesn't move very much. One way to deal with a sideways trend is to use spreads. I teach several spread trades in the Advanced Options Strategies course (Course 2). A bullish credit spread (set up below a support area) would allow you to be profitable if the stock went up, moved sideways, or even moved down a little. That is a 2.5 out of 3 chance of making money! You do need to be careful since the reward to risk can be negative. You need to know how to make adjustments if the trade goes against you. My favorite credit spread is the Bull Put Spread. I really like this spread in these current market conditions. If we do chop sideways or move up a bit in the next few weeks, these trades should work very well. The profit percentage is lower than a directional option trade (about 20% to 30%), but with a sideways trend it can give you a better chance to make money. Some stocks I like for Bull Put Spreads include HPQ, CSCO, CAT, RIMM, and EOG. For Bear Call Spreads, I like HANS, BAC, and C. More than 42,000 January $23 Call options were purchased today on the UUP. This suggests that there is speculation that the dollar could continue to rise through January. There is no way to tell for sure if these call options were bought or sold. Shorting that many calls would be very dangerous. It is more likely that they have been purchased on a directional bet that the dollar will go up...or that they have been bought to protect a short position. Either way, it signals a bullish view on the dollar. This could cause gold and other commodities (like oil) to continue to sell off over the next few weeks. However...today's price action on gold (gap down followed by a rally) suggests that it could rally a bit in the next day or two. If it does, it would allow you to set up your put option trades on some of the gold stocks or ETF's.

WHAT'S UP FOR MONDAY?

I jumped back into one my gold trades last Friday (puts on AEM). I took a smaller position and I'm not using a stop this time. I think that gold is starting a pullback. I still think that gold will probably end up going higher after it corrects so keep a nice watchlist. I liked the pattern on AAPL until it broke its 50 day MA on Friday. If it can get back above it soon, it might still be a nice short term bullish trade. I like HPQ (call option) in this current position. EOG has a nice symmetrical triangle pattern. If it breaks to the upside, it would be a nice bullish trade. If it breaks to the downside, I don't like it as much since the trend is still considered up. CAT is also looking nice for a bullish trade. Having said all that, I'm still having trouble being bullish on the whole market right now. Like I said in earlier postings...we might find a way to inch higher until the end of the year which is only a few weeks away. I don't see much to be bullish about beyond that...not yet anyway.

FINANCIAL DOUBLE DIP?

The market continues to find resistance at the 1112 area on the S&P 500. Although I think we will eventually breakout and move up to around 1120, I'm not currently feeling like we will go much higher than that. Having said that, the trend over the last 9 months has been to avoid shorting the market at all cost. A result of that trend has been that many of my bearish predictions have not worked very well. I'm not discouraged because my job is not to predict the future...it is to trade the current trend...whether up or down. My experience tells me that I'll still get my big trades. I was shorting the market late in the summer of 2008. I was a bit frustrated because I was expecting a decline but the market kept chopping back and forth...even breaking above and below the 50 day MA. I suffered a draw down in my account as I was stopped out of many trades. Then came September. I made most of my money that year during those last few months as the markets collapsed. What caused me to remain bearish that year (besides the trend) was the collapse of Bear Stearns that happened in March of 2008. I knew it was probably the first domino to fall, but I didn't know when the others would start to go (I had been predicting a financial collapse as early as 2005). Now we are nearing the end of 2009. We've fully recovered from the financial collapse and the economy is back to normal...right? (I hope you caught the sarcasm in that statement). I say that sarcastically because that is what many would have you believe. I've felt very strongly since March that there are deeper problems with the financial institutions that we just don't know about. My nature is to ask questions about market news and commentary. I'm always asking myself "why". Why is this happening? Why are they telling me this news? Why is the news different from what the chart is telling me? Last year they talked about the credit markets freezing up...about banks not wanting to lend money. This didn't make sense to me. Banks are in the business of lending money...that is what they do! That is how they make more money. Why don't they want to lend more money? Well obviously, they don't want to lend money if they feel they won't get it back...especially if their reserves are not high enough to endure a run on the bank. In other words, they are a "house of cards" that is trying to look like a fortified castle until the economy turns around and bails them out...or in this case the U.S. government bailed them out. I found it very interesting that the banks didn't rally until the government eased the "marked to market" accounting rules. This allowed them to play with their numbers a bit and possibly make their current condition look better than it actually was. I was also suspicious when the government wouldn't let some banks pay back the TARP money early. When banks came out and said they wanted to pay back the TARP money early, I questioned whether they were saying that because they really could pay it back...or because they knew the government wouldn't let them pay it back early anyway so why not say it and make it appear that they were in good shape. Most of the rally in the financial stocks was due to the government assuring us that they were "too big to fail". So in a nutshell, I've had this lingering doubt about the recovery of the financial sector and thus the economy...especially since it has been fueled by borrowed money. Now the Dubai meltdown hits. Is this just an isolated case, or possibly the first domino of the second wave. We know that the banks will probably get hit with another wave of foreclosures starting around the second quarter of next year. As the S&P 500 reaches the 50% retracement of the 2007-2009 drop, the XLF (financial ETF) has barely retraced 30% of its drop. Some may look at that as an opportunity for more upside. I look at it as a divergence. Many financial stocks have moved below their 50 day moving averages and are starting to trend downward. I don't know what the market is going to do over the next few months. I hope it goes up...I love it when it goes up. But if it trends down, look at the financial sector as a starting point to buy puts. I love the current reward to risk positions on many of these financial stocks. JPM, C, BAC, and WFC. Even MS and GS are starting to roll over. Keep an eye on the price action. If you see days when good news comes out, but the stock goes down or is flat on heavier than normal volume...look out!

GOING HIGHER?

The sideways movement over the last two weeks is looking more and more like a bullish ABC pattern correcting the move up from 11/2 to 11/16. I think if we move back up above the 10 day MA tomorrow, we could rally up to the 1120 area in the S&P 500.

A very successful trader friend of mine posted these 5 steps in his newsletter. Although it may seem too simplistic on the surface, it actually nails the key steps you need to be working on in your personal trading. It is also a good summary of what I taught you in Course 1.

We have found that traders who find success do the following very well.

• They Have a method. Simplicity is a good thing. They learn a trading method and master it.
• They control emotion. They do not let fear or greed rule their decision making
• They understand that all trades do not work. As predictable as we try to make the market, it can be very unpredictable.
• They manage risk. The market place is risky. Managing that risk is essential. They don't allow one trade to make or break them. They have a level where they will exit if the trade moves against them and they avoid justifying themselves for remaining in the trade longer.
• The are honest with themselves. They recognize and learn from their mistakes. They are able to say they were wrong. Being right is not the important thing, making money is.

DITTO

Not much different from yesterday. Keep watching to see if the dollar rallies and gold drops. Also, watch this area of resistance for the S&P 500. I'm sick again...that's right, sick AGAIN! I can barely talk and my head is about to explode. I don't think I will be posting anything else until Monday, unless something very significant happens. Have a great Thanksgiving holiday! For those outside the U.S. that don't celebrate Thanksgiving, go out, eat a big meal, and watch football games all day long...everyone can "celebrate" a day like that!

MARKET TREND SIGNAL

I'm looking for success stories for the Market Trend Signal website. If you have been using this service for your trades, please send me success stories. For those that aren't using the service, go to www.orbisadvisors.com and sign up for the free 30 day trial. There are new and exciting tools being added to this site just about every week. It will soon have a backtesting feature which will allow you to test the buy/sell signals over any period of time. A test on one stock showed that if you had traded the buy/short signals over a five year period, you could have turned $10,000 into $150,000...and that wasn't using options...just buying/shorting the stock. Also...if you are making money with these recommendations, use some of that money to take the other courses we offer. We have an Advanced Option Strategies course that teaches you option spreads and hedges. I also just started an Elliott Wave course that takes you into the psychology of why the market moves the way it does. You will learn to see advanced patterns and cycles that will almost make you feel you can predict the future...I did say ALMOST, didn't I? This analysis is what helped me predict and recognize the crash last September (of 2008). I will have an evening Elliott Wave class available in January. If you are interested in any of these additional courses, please contact your enrollment advisor or e-mail me at jerry@myoptionmagic.com.

SCROOGE

Leave it to me to find a reason for the market to go down during the start of the holiday season here in the U.S. We'll start by looking at a weekly (longer term) chart of the SPY (S&P 500). The latest rally brought us to the 50% retracement of the move down from October 2007 to March 2009. This Fibonacci retracement is in the same area as the downward resistance line (black line on the chart). If the market isn't going to rally into the end of the year, this would be the place for it to start moving down. The problem with this analysis is that too many traders are looking at this area and are expecting it to act as resistance. We are at another critical intersection in the market. The dollar is testing a support level (see UUP), gold is showing signs of resistance (I'll talk about this later), and the VIX is retesting its lows around 20.25. I'm not suggesting that anyone go out and buy puts on the SPY right here, but it is another reminder to build you cash. I was stopped out of AEM today on the intraday rally. I knew that might happen. I normally like to have my stop above (or below) the 50 day MA, but this trade didn't allow that (a move above the 50 day MA would have all but wiped out my option value)...unless I decided not to use a stop. I did use a stop and was stopped out when the stock hit about $64. I will look to re-enter in the next day or so if gold starts to sell off. I still like this pattern and I still think gold is about to correct. Look at the gold charts that are in strong uptrends. They all have a very bearish candlestick. They all gapped up today, only to fade downward the rest of the day. In other words, they were down for the day, but still up compared to the close on the day before. In almost every example of this type of price action, the stock will go into a correction. In some cases immediately, and in others a short time later. If we "fill in" the gap tomorrow (or in the next few days), it will be time to jump back in. I didn't get stopped out of all my gold trades. I'm still in HMY and SA.

WHAT ABOUT GOLD???

I got a few e-mails about my comments on gold yesterday. In my haste, I didn't specify the context I was referring to. I see a possible short term pull back that could cause gold to come back to the 1010 - 1040 area (101 - 104 on the IAU) to retest that previous resistance. This would create another buying opportunity on gold. Ultimately, I think that gold could go to around 1300 to 1400. This is a good area to take profits and wait for another good entry. If you don't want to sell your long term hold position on gold, you could consider using a protective put on the IAU or GDX and ride out any correction. Also, take a look at how far gold is from its 50 day MA (see chart 2). It hasn't been this far away from its 50 day MA (above it) since early 2008 when it made a nasty correction. I might be early in my prediction, but it is a good area to start lightening up on your gold positions. Also, I've seen nothing but "invest in gold" commercials on CNBC. As a contrarian...when I see that, I start running for the exit. Now I don't want to try to buy puts a stock that is still in a strong uptrend. That is risky...but what if I can find a gold stock that is already in a downtrend and could be set up for another move down? That pattern is AEM. It is hitting resistance around $63. It is also at a 50% retracement of the last move down. The stock is below the 50 day MA and the 50 day MA is moving flat...or slightly downward. I like the reward to risk on this pattern because you can stop yourself out if it breaks above all that resistance...like around $64. The downside initial target would be around $52-$53. That could be as much as a 3 to 1 reward to risk! In other words...if you win, you are looking to make three times what you would lose if you are wrong. We know that we can still be wrong...but with that type of reward to risk, we only need to be right 30% of the time to make more money than we lose. Yes that is right...just 30% of the time!! For a safer entry, you could look for a closing price below the 10 day MA. Other nice bearish gold patterns include HMY and SA.

SUCCESS STORY

Jerry,

Based on your recent recommendation on IPI, I have bought Nov 28 calls at 20 cents and sold it today at 55 cents.

That is 100%+ gain in one day turn around. That is a direct contribution from your blogs. Keep it coming.

I appreciate it very much.

Kenneth N.

MARKET PAUSE

The market paused a bit today after a nice run over the last couple of weeks. I still think we could move a bit higher, but I would recommend building your cash. IPI finally moved today...as did all the agricultural chemical stocks. I'm glad I gave the pattern a bit more time. The volume was above average, so it could continue to move higher over the next few days. I don't like an entry right here. If you missed the move, you missed the move. Be patient and wait for either another opportunity to get in or an opportunity with another stock. Watch out on any gold trades that you are in right now. It looks like gold could be topping out and might start a correction soon. A correction in gold would probably be accompanied by a correction in other commodities as well. I will be lightening up my trading through the end of the year. I'll try to post patterns when I see them, but I might not be looking at as many charts as usual over the next few weeks. If you see a pattern you like...or you wonder if it is a good pattern...send it to me in an e-mail and I will look at it. If I like it, I will post it on the blog and give you credit for the find.

BUILD CASH...AGAIN

We broke out today on the S&P 500. I told you last week that if we broke out, I would look to build cash and cut back on the trades. There is a chance we could rally into the end of the year, but we are approaching some nearer term resistance around the 1120-1125 area in the S&P 500. This area is a 50% retracement from the move down starting on 10/11/07 to 3/6/09. This area is also about the same distance away from the 50 day MA where other corrections have started over the last few months. There are several divergences, starting with the RSI and MACD. Today's volume was decent, but the earlier moves were on lighter than normal volume. I exited most of my positions on AAPL and AMZN. I will probably close out the entire trade on the next move up (or down). I'm holding on to APA for another day or so. I'm interested to see if the dollar (UUP) breaks support and heads lower. If APA rises on a break of the dollar support, then I will probably stay in the trade. If APA doesn't rise on the break of the dollar support (or if the dollar rises), I will probably exit the trade. I liked IPI last Thursday (when it broke above its 10 day MA), but these last two days have caused me to worry a bit. It's possible that IPI is completing a "B" wave of a bullish ABC pattern. If this is the case, then it will probably break below its 50 day and 200 day moving averages before it completes the "C" wave of that pattern. I will keep the stop just below the 50 day MA. It wouldn't shock me if this makes one more move down. The more it continues to move sideways, the more likely it will break lower. I will keep my eye out for some new trades to post, but I still recommend that you start to build cash and take some profits off the table. Any new recommendations will include a caution to use smaller amounts of capital.

SUCCESS STORY

Hi Jerry,

Just wanted to share one of my recent successful trades.  Bought calls in the Nasdaq index valued at $1.7 per contract on November 4, 2009 and sold on November 11, 2009 for $2.89.  A gain of 70% in 7 days!

Justin B.

SUCCESS STORY

Hi Jerry,

Your course has been great. My success story: I bought aapl jan.190 on 11-09. I sold half on 11-11 for a move of 5.32, 36% gain.

I'm looking forward to your next course.

Roy

OIL DROPS

I haven't had much of a chance to post over the last few days. Tonight's posting will be brief. I hope to be back on track next week. We are working on several project which are taking up a lot of time. The drop in oil caused most of the weakness in the market today. I like the drop in oil. It could open up another nice trade on APA, APC, and EOG. I would really like the market to pull back a little bit more...maybe 1080 on the S&P 500. There are a lot of stocks that have pulled back a bit, but they need to pull back a bit more to create better reward to risk. I don't know that I would buy into a breakout in the S&P 500. The last few times the S&P has broken out to a new high, it has gone into a correction a short time later. If we breakout in the S&P 500 tomorrow, I would look to begin a move back to cash. I like the pattern on IPI. I really like the reward to risk. You could place stops below the 50 day MA or the 200 day MA. The first upside target would be at around $29. Further weakness in the market or in commodities could bust this pattern...or at least delay it, but it is one of the few patterns that I like right now.

SUCCESS STORY

Jerry;

I have a couple of recent success stories:

1. RDY: Dec 17.5 calls: entered Oct 23; sold 1/2 of positions with a gain of over 55%; remaining positions are currently up over 85%

2. IBM: Jan 125 calls: entered Nov 4; currently up about 50%

Thanks for the great course and skill building! I am looking forward to the next course

John M.

THE GENERALS ARE LEADING

The DOW broke out today to a new 52 week high. The S&P 500 and the Nasdaq also had good runs today. I'm still a bit concerned about the volume behind the moves, but you can't ignore the price action. The generals (larger companies) are definitely leading the rally. I don't know that I would chase the move here. If you didn't get into any bullish positions on Thursday or Friday (or even early this morning), I don't recommend chasing it right here. Wait to see if there is a pullback tomorrow that you could buy into. If a pull back doesn't occur, wait until there is a better reward to risk for a trade. You could keep an eye on the financials. They moved up big today after not participating much in the market move on Thursday and Friday. Some of the stronger patterns include COF, AXP (although I would wait for a pull back), MS, and USB. I'd include GS on that list if it can get back above its 50 day MA. My "A" trades have been doing well...AAPL, AMZN, APA, and APC. My puts have lost value, but they provided a nice hedge for this latest move. The market is in a shorter term overbought condition, which could mean that a short term pull back could happen soon. I've noticed that a lot of pull backs within this latest uptrend have occurred intraday. In other words, the market could pull back 50 points at the open, but end up rallying 100 points before the end of the day. This is an advantage if you can watch the market throughout the day...but also a big disadvantage if you cannot. CVX has a nice ascending triangle forming and could continue to move up if it break above that resistance. There are a lot of fund managers that need this market to continue to go up through the end of the year. This doesn't mean that it will, but it does mean that there will be some buying pressure going into these last eight weeks. I'm still amazed that this market continues to go up despite some of the technical breakdowns. If anything, you have learned how important it is to trust the trend...even when you think the market should be doing something else.

FLIP FLOPPER

Yes, I am. As I've always said in my classes...flip flopping in politics is deadly, but flip flopping in the market is absolutely necessary. You've got to be willing to change an outlook based on the clues that are coming in. Our job is not to predict the future, but to analyze the probabilities. In other words...I need to be careful not to trade according to what I HOPE to happen, but rather what is ACTUALLY happening. Today we had a huge move up. We broke back above the 50 day MA and the 10 day MA on the S&P 500. Since the trend of the market is still considered up, this move back above these moving averages indicates a break back above two resistance areas...which is a characteristic of an uptrend. I will now state my dilemma and my solution. The dilemma is that I still don't trust this rally. The volume was pretty light despite the big point move. If the buyers were fully behind the move, the volume numbers would have been considerably higher...or at least higher than the last few days. Although I don't trust the rally, I can't completely reject the other clear bullish signals that the market gave today. In other words, I've got to be careful that I'm not trying to project a "hope" or "wish" on the market. Again, you can see why even the most brilliant traders are a bit confused right now (keep in mind...with that comment...that I wasn't necessarily including myself with the "brilliant" traders). Here is my solution to my dilemma. A few days ago, I bought some put options on the market. I didn't buy them at the market low. I waited until the market rallied up a bit (possible bearish ABC pattern) before I bought them. I also decided not to use a stop loss on those puts. Because I bought them when I did, I still have a chance that they could go up in value if this rally sputters and we continue lower. With today's break back above the 50 and 10 day moving averages, the current trend signals are saying that I need to be buying calls or buying the stock. What I did today (near the close) was to buy some calls on stocks that didn't break below their 50 day MA on this last pullback. Stocks like AAPL, APA and APC (although that rally in the dollar sure scares me), and AMZN. What I am doing is using those put options (that I bought earlier) as a hedge. If we rally to a new high in the market, I should make money on the calls...more than enough to offset the loss on the puts. If this is a suckers rally and we drop much lower, I will lose money on the calls...but the money I make on the puts will just about get me to breakeven. On the surface, this would look like I can only make money if the market rallies from here. This is not necessarily true. If we break back below the 50 day MA for a third time, I will probably start buying a lot more puts...thus increasing the leverage to the downside. This would allow me to be profitable if the downward move does continue...which it should at that point based on what would be a triple break of the 50 day MA support. If all this seems confusing, just stay in cash right now. This is a dangerous market for big bet trades. Sit out a while until things settle down into a clearer trend. When you take on multiple positions like I did, you need to have a clear game plan and an understanding of just what you are going to do if the market breaks one way or the other. I'm not worried about what the market will do in the next week or so...as long as it moves one way or the other. I can only get crushed if we stay in this range and keep moving sideways...which is always a possibility. I do have a plan for that possibility, but you will need to take course 2 to learn those adjustments. I don't think this is a market that should be traded by beginners...at least not right now. Just about every move needs to be hedged. If you don't know how to hedge a move, your best bet is to be patient and sit out for a bit. This market has some of the best technical analysts shaking their heads in confusion.

WHAT A FALL INTO THE CLOSE!!!!

I was in Jesse Webb's office about 45 minutes before the market close today. I remember glancing at CNBC on his T.V. screen and seeing the Dow up 120 points. We had a discussion on some work related stuff for about 30 minutes. With 15 minutes to go before the close, I glanced back at the T.V. screen to see the Dow only up about 40 points. That was almost a 100 point drop in 30 minutes!!! For most of the day the market (S&P 500) flirted with a break back above both the 50 day MA and the 10 day MA. The sell off at the end of the day confirmed the sellers strength, but I can still see a strong battle taking place right now. As you know, I am currently bearish on the market. I did not like the second break below the 50 day MA that took place last Friday. You might even consider today's move a third break below the 50 day MA since the market was above it for most of the day. Although we have rallied since last Friday, the price action has looked a bit choppy while it has been rising. This is often a pattern setting up for another move down. On the other hand...I was watching to see if we could close back above the 50 day and 10 day moving averages. The market has reached some shorter term oversold levels and could bounce up a bit right here. It will be interesting how the market reacts to the Fed decision to hold its course on interest rates. The bullish view would be that the interest rates will still remain low which should continue to help stimulate the economy. The bearish interpretation would be that the Fed still thinks the economy is in trouble. Either way, the dollar will probably continue to get hammered. This could be good for potential bullish trades on commodities such as gold (GDX and AUY) and oil...or natural gas (which is the trade I like right now). APA and APC are still rallying off their 50 day MA. I'm still not sure if this is the beginning of another move higher or a "B" wave (suckers rally) that is setting up for one more move down. This is a similar pattern that is showing up on a lot of stocks right now. This only adds to the uncertainty of the next expected move of the market. Has the correction completed?...or do we have one more move down? The RUT and the Nasdaq look very weak while the DOW has yet to break below its 50 day MA. Who is leading? This is why it can be common to have conflicting opinions among a lot of good traders right now. Although I always reserve the right to change my mind from day to day, I've placed my bet already...I'm currently betting on another move down. However...if we show some strength in the next few days...or more importantly, if we get confirmation of a possible bullish move...I will be ready to trade that move as well. The VIX has pulled back a bit with this latest market rally, but it has pulled back with a possible bullish ABC pattern. It also rallied in that last hour off of a previous support level at about 26.60. I will be watching to see if it spikes tomorrow on a downward market move, or breaks that support area on any market rally. Clues, Clues, Clues...we'll keep looking for the clues.

GOLD RULES THE WORLD...AND NOW INDIA AS WELL

Gold and other commodities had nice moves today as India purchased 200 tons of gold from the IMF. I'd be happy with 200 pounds of gold...or a call option trade on BNI before Warren Buffett announced his takeover today. Those were some nice moves. I panicked a bit when I saw how strong the Dow Transportation index had come back today. It looked like it was leading the market down. Then I made the connection with the Warren Buffett news to acquire BNI. All the railroad stocks gapped up off of that news. Which stocks make up the Dow Transportation Average? BNI, CSX, NSC, and UNP. Four of the 20 stocks are directly or indirectly related to the Warren Buffett acquisition. I would completely ignore that move on the Dow Transports. I think gold could go higher, but I just don't want to buy after a move like today. I'll look to see if it pulls back a bit in the next few days. I still like my put option trades on the SPY, DIA, and RUT.

SUCKERS RALLY

Today's move is exactly what I wanted to set up some put option trades on the SPY and DIA. I also set up a bearish trade on the RUT (Russell 2000). For those that are worried about getting into a counter trend trade, stay in cash for the next few days. Look at an intraday chart on the SPY. Notice the choppy and rising price behavior. This looks to be setting up for another move down. I like to buy puts on these types of rallies because the options aren't usually inflated from the fear that is usually generated from a move down. I took smaller positions because of the whipsaw nature of the market over the last few trading days. I'm not using a stop on these trades. Instead, I used my money management. Here is an example. Let's say that you planned to buy 4 contracts of an option at $2.50. Your total cost would be around $1,000. Now let's say that you planned on using a 50% stop. This would mean that you would stop yourself out of the trade at $1.25. That would represent a $500 loss. If you were willing to lose $500 on the trade, why not just buy $500 worth of the option and not use a stop? So in this example, I might just buy 2 contracts instead of 4 and not use a stop loss. This is what I did on some of these trades today. I feel that over the next few days (or maybe even weeks), we could move lower. However, we could also have some whipsaw days like we saw last week. By not using a stop, I would protect myself from getting stopped out on a whipsaw day...only to see the market continue to move lower. At the same time, if I am wrong about the downturn of the market, I won't lose very much money because I have already defined my risk.

ROLLER COASTER

The market sold off hard on Friday creating a pretty good three day roller coaster. We didn't get the confirmation that I pointed out last Thursday. There is a real battle going on right now between the buyers and sellers...and with Friday's move the sellers are winning again. These types of moves can be frustrating, but there is really no way to predict them in the short term. If there is someone who accurately predicted the last three market days, they are lucky...not brilliant. I will probably look to buy puts into any rallies that may occur in the next few days...unless we get another 200 point rally on Monday. If that were to happen, I might just sit out for a few days until the market decides which way it wants to go. Friday's move burned a lot of professionals who bought back in at a panic after Thursday's rally. They won't be as anxious to do that again...which means that the market could really start to sell off hard if it opens lower on Monday. I usually don't like to buy put options during the drops because the options tend to be more inflated. I like to wait for little rallies to take place. I also like to just trade the market using the SPY, DIA, or even the QQQQ. Unless the market trend is down, I usually don't spend much time looking to buy put options on individual stocks.

199.89

I'm sorry for being so far off. I said 200 points yesterday and I fell short by .11. Let's be realistic here. I didn't predict a 200 point rally yesterday...but I did point out that if we rallied back hard (like a 200 point rally in the DOW), we would need to consider a continuation of the uptrend...and that the break below the 50 day MA could be a false breakout to the downside. Now I don't want to cause a rush back to bullish positions. We probably need to see if there is going to be some continuation tomorrow. The fact that we completely reversed Wednesday's sell off was impressive. We are back above the 50 day MA on the S&P 500. If we can get back above the 10 day MA (which is currently at about 1069), I think we could rally past 1100 and go to a new high. However...if this scenario does play out, I would only trade the move with a small percentage of the account. It feels like we are nearing a top. I will trust the trend, but I will also try to manage reward to risk. If I feel like the reward for staying long isn't work the risk of the market correcting, I will reduce the amount of money I have in trades and keep a larger percentage in cash. The thought is that if we really move higher, it would only be an opportunity cost. If we do sell off hard, it could save my account and allow me to have most of my money ready to play the next uptrend. I'm also watching the VIX right now. The VIX is the volatility index. It dropped significantly today (as the market rose), but it pulled right back to its 50 day MA. I'll be watching tomorrow to see if it drops below that average, or if that average acts as support. Also, the dollar (UUP) is sitting at a key support level as well. If the UUP breaks below 22.55, you should see commodity stocks rally hard. These would be gold, oil, copper, natural gas, etc. Do you have your watchlists set up? APA bounced off its 50 day MA, this could be a great play if the UUP continues to drop. Same with APC. Look at the GLD or AUY for gold. FCX for copper. Technology has been really weak during the last sell off and it didn't rally as much today. I might avoid these stocks right now...but I reserve the right to change my mind if things change in the next few days. A word of caution before I close...on September 28th we had a strong snap back rally...one day...which led to another move down. I'm not expecting that here, but it is worth watching. Also, keep an eye on the RUT (Russell 2000) and the DJT (Dow Transportation Average). The RUT didn't wipe out Wednesday's losses today. The DJT exactly reversed yesterday's losses...but didn't go further like the DOW and S&P 500 did. What I'm looking at is to see if these averages are leading or lagging...they usually lead, especially at tops.

IS A RALLY IN THE FUTURE?

The market has sold off pretty hard over the last four trading days. The Dow is the only major average that hasn't broken its 50 day MA...at least not yet! The market is in a position where it could bounce a bit...maybe tomorrow...maybe in a few more days. If it bounces up tomorrow, you should use that as an opportunity to get out of any recent bullish trades where the stock has broken below its 50 day MA. In other words, it may provide a second chance for you to stop yourself out of a trade. If we don't bounce tomorrow, I think it would be risky to continue to hold those losing trades in the hopes that there will be a rally to bail you out. Don't plan on a rally to bail you out! We may get a rally, but it probably won't be big enough to bail you out...just possibly lower the loss. If we do get a rally tomorrow (or within the next few days), look for possible put option trading opportunities. Ideally the market would rally up in smaller increments over a few days. This would create an ideal pattern for another move down. If we rally back hard...like a 200 point rise in the DOW...then I would be hesitant to buy puts out of fear that the recent break below the 50 day MA could be a false breakout. In other words, we want to watch the price movement over the next few days. If we get a choppy and rising price action, we will very likely head lower. I don't see any patterns that I like right now. I don't trust any bullish trades right now...not even the ones with nice bullish ABC patterns. I'm not ready to recommend bearish patterns just yet, but it could be soon if the price action sets it up. Remember to watch for the trend characteristics that I taught you in the course (lesson 3). These are the clues as to what could happen next.

GO TO CASH!!

The market has broken down below its 50 day MA with about a half hour to go until the close. This was anticipated due to the conditions pointed out in the last posting. Many individual stocks have moved below this important trend indicator. Now is the time to make sure you have a large cash position. It is not the time to try to overcome any major draw downs. If you try to get back your losses right now, you will inevitably increase the draw down. The trade here is to wait for the next little rally and look to buy some puts. Although the overall trend hasn't turned completely down, short term put options will probably be the best way to make some money in the short run...but not until we get a little rally. For those that want to just trade calls or buy the stock, you would want to sit back and wait for this correction to complete. There is a support area at 1040 on the S&P 500 where we could get a little bounce. In the short run, we'll look to see if the 1000 area holds as support (I don't expect the 1040 area will hold). Beyond that, we could ultimately end up testing the 950 level. This could get ugly.

IS THE UPTREND ENDING?

This is the question that many traders are asking themselves after the market sold off over the last two days. Last week I recommended that you start building your cash. This should have protected you from the sell off over the last two days. We like sell offs because they can create new buying opportunities. Before any new buying takes place, we want to make sure we are done correcting. There is a possibility that we have completed a bullish ABC pattern and the market is going to rally back up. All we have right now is a 44.7% Fibonacci retracement acting as support. There would definitely need to be some confirmation for that outlook. There is some evidence that the overall uptrend could be in jeopardy. Stocks are having trouble rallying...even when their earnings are positive. I gave the examples of AA, IBM, INTC, and GS last week. Earnings season has about another 10 days. After that, it is hard to see what news will push these stocks higher...especially if the earnings didn't do it. There are some other clues that we need to pay attention to. First, look at the DOW Transportation index. This is often a leading indicator of the market. Notice that it has already dropped below its 50 day moving average. This is the second time it has done this in the last month. The VIX rallied up to its 50 day MA today. Remember the inverse relationship the VIX has with the market. If it breaks above its 50 day MA, we could be in for a larger correction. If the 50 day MA holds as resistance, we could be in for another rally. The dollar has also started to strengthen which could put pressure on the commodity stocks. The best advice for tomorrow would be to sit on the sidelines and wait to see how the market reacts. If we start to rally, you could look at stocks that are sitting at their 50 day MA. Many financial stocks are in this position like GS, JPM, AXP, and WFC. I also like some of the gaming stocks like BYD, MGM, and WYNN. Again...that is if the market begins to rally. I like the reward to risk on those stocks...particularly if a stop is placed below the 50 day MA. APC and APA have made nice pullbacks and could be good potential plays if the dollar continues its downtrend. AAPL could be nearing another buy postion. AMZN has made a sweet move, but I wouldn't chase it right here. It will give you another chance if you are patient.

CONTINUED WEAKNESS

I think that not only describes the market, but also my current condition after being hit with the flu this week. I won't be writing much tonight. I just wanted to get something posted because I do see some weakness in this latest sell off. It started with the Alcoa, Intel, and Goldman Sachs earnings. They all had huge quarters, but the stocks ended up selling off after they gapped up. The divergences are showing up again on the RSI, MACD, and CCI. There was a big reversal today as we were up about 80 points before we sold off in the last two hours to close down 92...that's a 172 point reversal! The volume was higher than normal which causes me to think there will be more to come tomorrow. If you want to hang on to some hope, we are sitting at the support of the 10 day MA and the previous high (9/23/09 high). This could act as support. You should probably abandon that hope (at least temporarily) if we open the day any lower than today's close. I'm not saying to go short the market. For now, we will treat this like the other pull backs...as another buying opportunity when the pull back is complete. That is unless we start to see signals of the uptrend breaking down. It is probably best to go to cash and wait for the correction to complete. I'm not saying to just bail on all current positions...I could be wrong and we could snap back tomorrow...but you should at least make sure you have defined your stops.

SUCCESS STORY

Jerry,

Just wanted to give you an update of where I am at. Have been very successful in a number of positions, as shown below

KOL - stock is up 25% since I took position, still showing strong trend
HOG - bought Jan 28C and sold about 5 days later when they more than doubled
NSC - went long when it was at about $43, now nearly $50
SOHU - went long when the latest correction hit the .786 retracement and the trendline. Has taken off from there - very strong move today, up over $5
LVS, SWKS, CHK, BAC - have long positions, all are promising

Appreciate your coaching and support. Love the Blog - keep it going

Frank C.

SICK

I've been out the last three days with the flu. I won't have any blog postings until I feel better...hopefully that is soon.

SUCCESS STORY

Hi Jerry:

I am currently trading LULU. I found this stock on the Orbis Advisors website. I went to "Muscle Stocks" and looked at the "spring loaded" section. When I did, I found many stocks forming bullish ABC patterns.

On October 2 I purchased the Dec 25 calls at the .618 fibonacci retracement level. There was confluence with the fibonacci extensions as well.

This is an upwards trending stock, above the 50 day moving average. I am currently up 100% on the calls.

--
Cheers,

Roland

ARE WE DONE?

I've been a bit concerned with the price action of some of the stocks that have reported earnings. AA gapped up then promptly sold off. INTC did the same. GS has gapped down...up...then down again...all in the last three trading sessions. This has caused me to take some profits off the table. The trend is still up though. I'm not predicting a reversal here. In fact, I'm keeping a close eye out for some new buying opportunities. Technology has sold off lately which could create some new trades. I've decided to wait until after AAPL reports on Monday. If AAPL follows the tech trend, it should sell off after the report comes out. If it does, I will look for some opportunities. I don't have anything I want to post tonight, but I will get some patterns to you when I see something I like.

SUCCESS STORY

Jerry,

I'm a new student in the Option Academy - attending my 3rd session today at 10:00.

I started monitoring the Virtual Investing Club about 6 months ago, and have made a few trades along the way. I was so impressed with the performance of the trades (that I was monitoring) that I had to sign up for the mentoring program.

I purchased 2 CLF OCT 30 calls on Aug 18 for $1.59 ($159.00 each) and sold yesterday at 7.98 ($798.00 each) for $1,252.06 profit!!!!

Needless to say, I'm very happy with that trade and look forward to continued success!!

mike s.

10,000

I'm not talking about the DOW...I'm talking about how much money you should have made today. We broke through all the resistance (and support) levels we talked about yesterday. DIA, SPY, QQQQ, and Oil all broke above resistance. The VIX and the dollar broke their support (although the VIX rallied back up the the support/resistance area at the end of the day...I'll address this later). Most sectors were up which means that most (if not all) of the stock picks over the last few days have gone up. Like I said the other day, I loaded up ahead of the move in anticipation of a breakout. Because I was aggressive, I was able to participate in the gap up this morning. Financials did lead the way...as I mentioned yesterday...and they should continue to move with C, GS, and BAC reporting over the next few days. The market should continue to move up tomorrow with GS and C reporting in the morning and GOOG, IBM, and AMD reporting after the bell. If GS and/or C don't shine, the market may pull back a bit as investors take some profits. If this happens, look at it as a possible buying opportunity or a second chance to get into the trend. If you haven't gotten into anything by tomorrow (if we go higher tomorrow), just continue to sit on the sidelines. There comes a point where you begin to chase the trend and it sets up bad reward to risk trades. You can buy some breakouts, but stick mostly to the trade management technique I taught you (or will teach you) in the course. Most traders buy breakouts when they are late to the trade or they just don't know how to recognize and trade ABC patterns...or they are waiting for additional confirmation which is what we have done sometimes in the past. The VIX spiked up a bit at the end of the day (back up to the support/resistance area at about 23). I think most of that was due to a rush to buy protective puts on the breakout. It shows that the institutional investors are still a bit worried as to how far we can keep going up...but it doesn't signal any panic. The protective puts are relatively cheap right now so it only makes sense to buy that protection. It also puts my theory (October 2nd posting) on hold for another month as the institutional investors were able to buy cheap put protection for another month...we'll see what happens in November.

Some students have found nice patterns in the past. If you find a pattern that fits the trend criteria that I taught you in the course, e-mail it to me and I'll see if I can post it on the blog. The rule is that it must fit the course criteria and I must like it. I don't want to post something that I don't have confidence in...I can't...I have a responsibility to the Followers. However...if I do post the pattern, I will give you full credit for the pick...well almost full credit...just first name and last initial. You can e-mail me those patterns at jerry@myoptionmagic.com. Alester R. found the RIMM pattern a month ago that made about a $10 move when it broke out. That was before the drop that followed...but we were out of most of the trade by then. By the way Alester, I'd like your success story from that trade...that is if you traded it. I hope you did.

IT'S ALL ABOUT...FINANCIALS?

Everyone is looking at the technology sector tomorrow because of Intel's earnings report. Don't get me wrong...Intel had a great quarter and the market should gap up tomorrow because of it...but the main focus this week is on the financials. JPM reports tomorrow morning, Citi and Goldman Sachs on Thursday, and BAC on Friday. We should gap up tomorrow because of Intel. If JPM disappoints, we could sell of a bit after that. If JPM beats estimates, we will keep going higher. We are sitting at so many critical resistance levels. Oil is forming a double top (make that a triple top), the XLF has a double top, the SPY and DIA have double tops, the dollar has a double bottom, and the VIX has a triple bottom (both are inverse indicators). I've been a bit more aggressive and have gotten in ahead of the potential breakout. For those that are being a bit more cautious, wait for the breakout. If the DOW is up more than 100 points tomorrow, we will have broken above the resistance. AAPL is probably going higher. I got into AAPL ahead of the Intel report and it will probably gap up tomorrow. Other tech stocks that could move include AMZN, GOOG (which reports on Thursday), BIDU, SMH, QQQQ, AMD, PMCS, BRCM, ALTR, CREE, and MRVL. GS is an interesting pattern. It gapped down $4 today, but formed a perfect "doji" candlestick pattern. Also, the 60 minute chart shows a possible bullish ABC pattern. The stock has rallied back up to $189 in after hours trading. I was stopped out on the gap down, but I might jump back in if we open near that $189 area. C is starting to breakout of a triangle pattern. I also like JPM, BAC, AXP, WFC, USB, and PNC. If all the analysis and stock recommendations are making your head spin, just trade the DIA, SPY, or QQQQ. In other words, just trade the whole market. That is what I end up doing most of the time. Many stocks will move if we break out right here. If you have favorite stocks, check them for possible trading opportunities. Make sure they have strong trends based on the trend analysis I taught you in the course. If we somehow don't breakout tomorrow, I will try to post something before the market closes.

KEY AREAS OF RESISTANCE...AND SUPPORT

Today we retested the 1080 area on the S&P 500. We need to pay attention to what happens next. If we blow through this resistance, like we have done to the last 3 or 4 resistance areas, the trend should continue to 1100. Watch the price of oil and the value of the U.S. dollar. Oil is at a triple top around $74 a barrel. Triple tops almost always break out to new highs. If it does, we could see a run to $90 a barrel. The U.S. dollar is sliding, but it has managed to form a double bottom. If this double bottom holds...and it begins to rally, you will see oil retreat to levels below $74. Since oil and the dollar have an inverted relationship right now, we could get breakouts on both. Oil would continue the uptrend and the dollar would continue the downtrend. Be ready with your trades. The futures market should give you a clue before the market opens. I'm loaded up because I'm confident that Oil is going higher. If you want to be conservative...and I wouldn't blame you based on the last time I got real confident, you can wait for the breakout. There will still be money to be made when it breaks out. Trade your strongest energy stocks. APA, APC, EOG, CHK, NGS, ERX or XLE (ETF's), NOV, DVN, KWK, HAL, DO, and FSLR. I'll even look at AAPL for one more move up. I know...they aren't an "energy stock", but they do have a lot of energy in their trend. That's got to count for something.