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.