HAPPY NEW YEAR!!!

Happy New Year everyone!!! I hope that I can help it be your best year ever! I hope everyone has enjoyed their holiday season. We'll start to get back to normal next week.

PRECIOUS METALS UPDATE

This post is from a commodities trader that writes a monthly newsletter on the precious metals market. He is a current Option Magic student and has agreed to post his newsletter on this blog so that you can benefit from his experience in the gold and silver markets. As a disclaimer...I (and Option Magic) are not responsible for the content or recommendations in this newsletter.

Merry Christmas traders. It is Christmas Eve and all is quiet and well. But not for long. As a Christmas gift to you , I am sending this update before Mondays open. The March silver chart clearly shows a pendant formation on top of another pendant formation on top of a bull flag. It just doesn't get much better than this. Even though this past weeks activity was quiet and less than hoped for, I can assure you that this market is coiled up tighter than a rattlesnake in a Dixie cup. It is highly probable this market will begin to break out starting on Monday. If it doesn't begin next Monday then look for major movement the first week of January and carrying into the second week and possibly the third before we see a corrective pullback. I fully expect silver to trade in the $35 range by mid January unless a major unforeseen event occurs. A strong possibility remains that it may very well trade much higher. Possibly $40 or more but I suspect that may be a little too optimistic for right now, but not for long. This market is CLEARLY going to go much, much higher in the very near future. As always, consider your investments carefully before placing your trades. DO NOT rely on ANY one source. Consider several sources that you trust and THEN make your trade decisions on your own. Never blame bad trades on info given to you by others. YOU are ultimately responsible for telling your broker to place the trade. WATCH your trades daily and exit them if they start to look bad. LEARN all you can. Education is your best defense against losses. God bless you and yours this holiday season. May all your trades be happy trades.....Chaz.

MERRY CHRISTMAS

I hope everyone has a very Merry Christmas, a happy holiday season, and a very prosperous New Year!!

BULLISH PATTERNS

As you know...I don't like to do much trading during the last 2 weeks of the year, but there are a lot of bullish patterns showing up lately that might get me into a few. I will just list the ticker symbols and I will try to list them together with their sectors. Some have already started to move. Others might need some confirmation (i.e. a move above the 10 day or 50 day MA).

Agricultural Chemicals - MON, MOS, CF, and IPI.
Coal - JRCC, PCX, BTU, ANR, ACI, and KOL
Railroad - CSX, NSC, KSU, CNI, and ARII
Gaming - LVS, WYNN, BYD, and IGT
Gold - GLD, GDX, GDXJ, SLV, AUY, GG, and SLW
Technology - AAPL, AMZN, AKAM, MELI, YHOO, NFLX, GOOG, and IBM
Chips - MRVL, INTC, AMD, and ELX

The markets look like they might be able to rally through the end of the year. These stocks could provide some opportunities over the next few days. Don't try to trade all of them....unless you are paper trading them, but do try to diversify some of your option trades.

PRECIOUS METALS UPDATE

This post is from a commodities trader that writes a monthly newsletter on the precious metals market. He is a current Option Magic student and has agreed to post his newsletter on this blog so that you can benefit from his experience in the gold and silver markets. As a disclaimer...I (and Option Magic) are not responsible for the content or recommendations in this newsletter. You can trade precious metals in the equity markets using ETF's. Some of the main ETF's you can use to trade gold and silver are the GLD for gold and the SLV for silver. You can also use IAU, GDX, and GDXJ. I also like SLW as a way to play silver. There are also options available on these ETF's. Thanks Charles for your insight on this market.

Hello traders, Its time to suck down some caffeine and pay attention. Exciting news is on the wind. Some of you know that I frequently take financial education courses. I am a firm believer that any day that goes by without learning something new is a day that has been totally wasted. I have recently taken an excellent course on stock options that I am VERY pleased with. Most of these course's cost thousands of dollars so they are not for everyone. If any of you have a desire to learn more about stock options, email me and I'll pass the info. It's a very good course. It has changed my whole outlook on option trading. As a result of taking this course and getting to know the instructor, I have been invited to submit articles on the metals markets that will be posted onto his blog. As a result of this invitation, I have decided to ramp up my postings on a more frequent basis. Since this event happens to be coinciding with what I believe are about to be major moves in the metals markets, I am sure that many of you will be pleased with this decision since a large number of you have informed me that you have profited very well from my commentary over the last few years. Congratulations to all of you who have been with me since I started this seven years ago. You have done VERY well, but the best is yet to come. Without any further ado, lets get on to it......GOLD...We will start with a quick review of the barriers. They are, 1444,1521,1600,1650,1681,1764,1849,1936,and 2025. (These numbers are provided courtesy of Jim Sinclair , whose opinion I deeply respect) These numbers will act as RESISTANCE and then SUPPORT after they are broken and surpassed. REMEMBER, there will be battles around these numbers above and below until a clear break takes place. It usually takes about three assaults on a barrier to break through but not always. Sometimes , it just blows through. The gold market is looking very bullish. I see NO REASON to change my belief that gold will hit 1624 on or before Jan. 14th. Jim Sinclair picked this date and target price. After reviewing the evidence, I am in total agreement. NOTE... I am NOT saying gold will CLOSE at or above this level by 1-14-11, I am saying that it will at least REACH this level during interday trading and then fall back, probably to the 1525 area or possibly below. This is NOT a science. It is a highly educated guess on the MOST LIKELY probabilities of what will occur based on the analytical evidence we have available. I believe we will soon see days with $100 swings. This means VERY volatile moves. Then it will settle down and retrace until it is ready to make the next assault. This will be repeated over and over for the next few years. Some of these moves are going to cause some traders to have religious experiences. I STRONGLY recommend that you DO NOT trade futures contracts from NOW ON. Its just too dangerous. Trade options only. Gold stocks are a good play. Just make sure the company isn't hedging. Hedgers will suffer badly. And remember, most gold mining companies are nothing more than a hole in the ground with a liar standing over it and pointing down......SILVER...OH BOY, OH BOY, OH BOY. The March silver chart looks VERY GOOD. EXTREMELY BULLISH. Several months ago, I told you my best guess for silver was anywhere from $30 to $60 by Christmas. We are at $30 now and I expect this week will be very bullish. The chart is beautiful. I will not be surprised if silver is near $32 by Friday. And I don't think $34 is impossible. Silver is EXTREMELY difficult to predict but I am SURE this market will EXPLODE in the near future. Maybe this week , maybe in 6 months, maybe 12. I think by mid summer, I'm going to have a hard time slapping this grin off my face. I wish I could give you barriers for silver but I cant. This market is just too hard to predict. It has to be watched daily and can change with no warning. My only consolation is that I believe I've been a lot more accurate about this market than most of the newsletter writers. ....DISCLAIMER.... I COULD BE WRONG!!!... But I don't think I am. MAKE YOUR OWN DECISIONS ABOUT YOUR TRADES. I ask nothing for the info I give you. Use it as you deem fit but DO SO AT YOUR OWN RISK. I have tried VERY hard to give you sound information based on a lot of hard work. I hope that those of you who choose to use it will profit handsomely. Kindest regards and HAPPY TRADES to you.....Chaz

BULLS ARE STILL GOING STRONG

With today's move in the Dow, all three major averages have now broken above their November highs. As stocks break out to new highs, it confirms the bullish trend. This doesn't mean that stocks have to go higher or will go higher...it just means that they have a higher probability of going higher. This means that we need to have more of a bullish bias on our trades until we start to see signs of the bullish trend breaking down. Another reason to have this bullish bias is due to the current policies of the Fed. They are pumping money into the economy (and the stock market) in an effort to jump start a sluggish economy. They are attempting to inflate our way out of the recent recession. Although this policy is experimental, it does appear to have propped up the stock market over the last few months. This doesn't mean that the market can't have sell offs, it just means that the sell offs should just be pullbacks within the larger uptrend. I still expect a decent pullback in the early part of January, but the market could rally through the end of the year. One thing that could trigger a major sell off sooner would be final decision on the extension of the Bush tax cuts. If these tax cuts aren't extended, there will be many wealthy investors that will sell their current positions before the end of the year in order to get the lower tax rate on those capital gains. This would create a short term opportunity to really profit from some put option trades. I personally think they will be extended, but congress will put on a show for the next few days before finally passing it at the very last moment. How can Congress go into the holiday break without creating a lot of drama. They find a way to do it every year. I don't do a lot of trading during the last two weeks of the year, so I might not have very many blog postings until January. If I see a pattern that I like...or if anything major happens over these next 17 days, I will post it on the blog.

SUCCESS STORY

Hi Jerry,

I've completed my first complete option transaction today. On Dec 3 I place an EMS Dec call buy at a total cost of $1034.98. On Dec 10 I placed a sell to close on this option for a net price of $1215.00. I was well pleased with the $180.02 net gain. I now have 8 open option trades.
I've learned a lot already and wouldn't be doing any of this without your training.

Thanks,

Dave

PRICE ACTION...WEAK!

Today's price action looked very week. The market should start to sell off a bit, but who knows what the Fed will try to keep it propped up. If we show any buying strength tomorrow, I'd assume we will continue higher. If there is a strong 200 point drop, I'd look at the 1174 area for eventual support. Some bullish patterns I like today...YHOO, BIDU, EBAY, and IBM (with confirmation).

More on Gold:

http://www.tradervibes.com/blog/pattern-stocker/gold

BUSH TAX CUTS EXTENDED

With the Bush tax cuts extended, the market could stage yet another rally. If we break above 1227 tomorrow in the S&P 500, start looking at buying calls on good uptrending companies. Many believed that if the tax cuts weren't extended, the market would have a big sell off going into the end of the year as traders booked profits to avoid paying higher taxes next year. Now that there isn't a need for these traders to dump stocks for tax purposes, the market will likely continue its move higher. If we somehow rollover here and start moving down, look at the 1172 area as a place to find support and start buying again. The market really needs a brief pullback which I hope would take place over the next week. The natural gas recommendations have done very well with APA and APC leading the way. If NFLX can get back up to around $200, there will likely be another short squeeze that could push it back up to over $210.

NEARING 1227

The S&P 500 is only a few points away from 1227. This is the previous high and a possible resistance area. The market has had an incredible two day run...but it started the week with an incredible two day drop. We could continue to see some swings. The market will likely move up to the 1227 area tomorrow. If it does, see if it starts to sell off. If it moves up at the open and sells off later in the day, it could signal a reversal. If the market does start to sell off, look at GMCR and BA as possible bearish trades. I might even look at puts on the GLD...although I would want it to move below its 10 day MA first for confirmation. If we break above 1227, then we might continue the Santa Clause rally right up until Christmas. Ho, Ho, Ho!

SUCCESS STORY

Hi Jerry, I hope you had a nice Thanksgiving this past weekend, I got to enjoy mine last month being in Canada.

Once again it's been a while since I've emailed you. Mid September to mid October did not treat me well as far as trading goes. It's been really frustrating at times because I like to hold a position for a week or longer before getting out. I found it very difficult to do that for the past few months. However, for the past few weeks I've been getting in and out of trades the same day or holding for just a few days. It's been working out much better in this market, especially in the past two weeks. The gains aren't as nice as when you can hold for a longer period of time and I have only closed out 11 winning trades this month. Most trades made between 20 and 40 percent, with a few below, that did just a bit better than that.

Today (Nov. 30) I got out of a trade in Ebay. I bought in on Nov. 26 for $47 a contract and sold today for $120 a contract. About 150% in four days. Nov. 4 bought Nov. 65 rig calls for $142 and sold for $204 same day. Nov.10 bought Nov.122 spy puts for $117 and sold next day for $160. Nov. 15 bought Nov. 47 VXX calls for $120 sold next day for $180.

I want to thank you for the time you put into the blog postings and for your continued support.

Mike

"B" WAVE?

Today's price action and breadth was very strong, but we've learned over the last few months that the market moves can sometimes be deceptive. Many individual stocks that I have looked at appear to be in a "B" wave. "B" waves are often referred to as suckers rallies. We will likely open higher tomorrow...and maybe even move higher...but we could still get more of those wild swings I talked about on Monday. Technology stocks have started to fade a bit. NFLX had a very bearish day. GOOG has been dropping fast. AMZN's price action was fairly bearish today as well. The financial stocks have also failed to significantly participate in the rally. Gold looks like it is in a classic "B" wave. This market really shouldn't be rallying. The only reason it keeps going up is because the Fed wants it to. This is why the last few months have been maddening. My advice is to not hold positions very long. Try to take profits early. I exited most of my bullish trades at the end of the market today. I held on to a few contracts in case we open higher, but I will be quick to take those profits as well. For a pure speculative trade, I like puts on BAC. The rumor out there is that WikiLeaks might have documents that show that Bank of America is in worse condition than we originally thought. WikiLeaks didn't mention Bank of America by name, but they did say "a major financial institution"...and last year they did say that they had obtained documents off of a Bank of America executive's computer. Bank of America has been in the news over the last few years for not only their exposure to mortgage backed securities, but also the recent foreclosure mess. I stated in a blog entry back in 2009 that I felt that the banks were in much worse condition than we have been told. I still feel that way. I have often compared the governments handling of the financial crisis to the story of Enron...except when the government does it, it's legal. As much as I hate WikiLeaks, they have often been right when they've said that they have damaging evidence. Whether it ends up being Bank of America or not, that type of negative news would likely cause a major sell off in all the banks. I personally like a put option trade on BAC simply because the trend is already down...and seems to want to go lower. Let me be clear though...this would not really be a trade. It would be more like a gamble. A gamble that there could be some really negative news leaked soon. This would purely be a speculative trade and one should never put large amounts of their trading capital in such a position. I like calls on CSX, IBM, and BIDU (if it can close above its 10 day MA). I won't recommend any puts yet, but I did say that I'm seeing a lot of "B" waves out there. GLD and FCX might be at the top of the list if this market starts to turn down again.

FOR ALL YOU NETFLIX TRADERS OUT THERE

I came across a few stories recently on Netflix (NFLX). For those that feel this stock will go up forever, you might want to at least consider some of this information. You can click on this link to get some of the chart and fundamental analysis.

http://www.tradervibes.com/blog/pattern-stocker/nflx-patterns

ASIA TRADER AND INVESTOR CONVENTION

If you find yourself in China this weekend, stop by the Asia Trader and Investor Convention (ATIC) in Shenzhen, China. Jesse Webb will be doing a couple of seminars on his Market Trend Signal software. The conference website link is http://www.theatic.net/?cdid=30&lang=en

For more information on the Market Trend Signal software, go to www.markettrendsignal.com.

BE READY FOR THE ROLLER COASTER

I hope everyone had a nice Thanksgiving weekend. I tried to get away from trading for most of last week which is why I didn't post anything. I don't like to make many trades during the week of Thanksgiving due to the big decrease in trading volume that usually accompanies a holiday weekend. The market will likely whipsaw back and forth over the next few days. We could see some wild swings like we did today. This creates some nice short term swing trading opportunities for those that can take advantage of them. Financials (particularly GS and AXP) could provide some shorter term bullish opportunities. Technology stocks should continue to rally over the next few days as well. One stock I like in the technology sector is CRUS. CRUS looks like it could be done with its correction and ready to make another bullish run. The range I am looking at in the S&P 500 is between 1172 and 1228. I think the market could fluctuate back and forth within this range for the next several days.

INTERESTING ARTICLE

Here is an interesting article on Natural Gas: http://www.tradervibes.com/blog/professor/long-term-look-nat-gas

I've know Jeff for several years. He's a very good trader. I totally agree with his analysis. Jeff mentioned UNG as a way to play natural gas. I also like APA, APC, and CHK. These are some of the larger natural gas companies.

VIX DROPS

The volatility index (VIX) dropped considerably today. It ended up closing on its lows. This could indicate that the buying might continue for the next few days. Today's move was not the rally that I was expecting. I was expecting a rally over the next few days that would look more like a "B" wave...choppy and sideways looking. Instead we wiped out Tuesday's drop in one day. That price action is more bullish than bearish. I would hold off on buying put options until we can see if there is a strong follow through to today's rally. If we do rally higher over the next few days, I like the bullish pattern on Visa (V). I'd like to get the confirmation of a close above the 10 day MA. The commodity stocks also rallied pretty strong today...especially silver.

MARKET RALLY TOMORROW?

Today's news was dominated by the GM IPO which is scheduled for tomorrow. The market could rally tomorrow based on the anticipation that the GM IPO will go well. The overall market still looks weak. Any rally should be looked at as an opportunity to buy puts for the expected next move down. A rally back up to the 1200 area on the S&P 500 would represent a 50% retracement of the recent move down. This could be the target area if the market rallies for the next few days. I'm not touching GM tomorrow. I don't see many patterns that I like right now...at least none that are in good entry positions. We'll see if anything changes tomorrow.

TECH STOCKS SHOWING WEAKNESS

Gold, Silver, and now Tech. The market is showing more weakness since last Friday's break of the 10 day MA. I think that any rally that we see this week should be used to buy put options. The GM IPO (now officially slated for Thursday) might not be enough to boost the market higher. I still like VMW to drop to around $70 to $71. NFLX should drop and fill the 10/20/10 to 10/21/10 gap up. A drop to $153 would fill that gap. AMZN could make a big move lower, but wait for it to rally back up a bit to set up that next move down. I do like the bullish recommendation on CIT...if this market can somehow rally. If you entered into that trade, consider a tight stop below today's low. If we reverse today's move in the next day or two, it might not be ready yet to rally.

IS THIS THE CONFIRMATION WE ARE LOOKING FOR?

All three indexes closed below their 10 day MA last Friday. This was one of the signals I was telling you to look out for. I'm still waiting for the other two signals. We did get a little spike in the VIX, but not enough to signal any sort of panic setting in. We also closed up off the lows on Friday which also gives me a little concern. There were some buyers that came in at the end of the day. I think there is a chance the market could rally up a bit next week as we approach the GM IPO (initial public offering) on Wednesday. After that, I don't see anything that will hold up the market...except for Ben Bernanke. That is why I'll still go into this week a bit cautious. I know the Fed is trying everything it can to prop up the market. It will probably take some panic selling in order to offset what he is trying to do. This is why I'd like to see a close at the lows and a bigger spike in the VIX. The dollar is continuing its rise which should put pressure on all those commodity stocks that have gone straight up. If you have gold or silver bullish trades, I suggest you take some profits or tighten up stops. This would go for energy trades as well.

SUCCESS STORY

Jerry,

I think I have it finally. Table one includes only closed trades after commissions. Table two is one stock the system identified and I have had these positions only since yesterday. NFLX will be good for quite a bit more gain before I close it out. I am averaging about 18% gain per trade and average hold time is 7 or 8 days. Things finally fell in place after a year. This must be old hat to you but to me it is a near miracle. I made back the cost of your course today with a couple grand to spare. See table two for substantiation. I keep my own records on an Excel worksheet as the trades are made.

A belated but sincere thank you. You have my permission to publish this, but use my first name only, please.

Best,

Larry

		Date	Purchase	Date	Unit		Gain	Percent
Symbol		Bot	Price	Sold	Price	Price	(Loss)
Closed trades

NFLX	10/150C	9/20/2010	1809.95	9/22/2010	11.25	3364.7	1554.75	85.9
NFLX	10/155C	9/21/2010	1279.48	9/22/2010	8.50	2539.71	1260.23	98.5
BIDU	10/85C	9/3/2010	1255.24	9/21/2010	7.40	2209.72	954.48	76.0
MELI	1/75C	10/11/2010	1131	10/12/2010	1.85	728.98	-402.02	-35.5
NFLX	12/190C	10/12/2010	859.48	10/23/2010	6.45	1280.49	421.01	49.0
NFLX	11/170C	10/11/2010	1132.22	10/23/2010	11.65	2320.48	1188.26	104.9
OPEN	1/70C	10/11/2010	1240.24	10/20/2010	0.25	604.74	-635.5	-51.2
LVS	10/38C	10/11/2010	316.24	10/12/2010	1.65	484.75	168.51	53.3
ARUN	11/23C	10/12/2010	386.77	10/19/2010	0.25	116.97	-269.8	-69.8
GMCR	10/30C	10/12/2010	251.77	10/14/2010	0.51	246.71	-5.06	-2.0
FFIV	11/100C	10/13/2010	1360.24	10/18/2010	2.55	754.74	-605.5	-44.5
NFLX	12/190C	10/12/2010	859.48	10/23/2010	6.45	1280.49	421.01	49.0
NFLX	11/170C	10/11/2010	1132.22	10/23/2010	11.65	2320.48	1188.26	104.9
OPEN	1/70C	10/11/2010	1240.24	10/20/2010	0.25	604.74	-635.5	-51.2
LVS	10/38C	10/11/2010	316.24	10/12/2010	1.65	484.75	168.51	53.3
ARUN	11/23C	10/12/2010	386.77	10/19/2010	0.25	116.97	-269.8	-69.8
GMCR	10/30C	10/12/2010	251.77	10/14/2010	0.51	246.71	-5.06	-2.0
FFIV	11/100C	10/13/2010	1360.24	10/18/2010	2.55	754.74	-605.5	-44.5
FFIV	11/105C	10/15/2010	168.01	10/18/2010	0.80	72.03	-95.98	-57.1
NTAP	11/50C	10/13/2010	547.08	10/15/2010	2.96	582.51	35.43	6.5
NTAP	11/50C	10/13/2010	839.69	10/28/2010	3.70	1099.74	260.05	31.0
BIDU	11/50C	10/5/2010	1711	10/28/2010	11.00	2190.49	479.49	28.0
BIDU	12/105C	10/13/2010	1339.48	10/28/2010	5.31	2112.95	773.47	57.7
THOR	11/33P	10/13/2010	369.48	10/18/2010	1.10	210.51	-158.97	-43.0
PCLN	11/400C	10/14/2010	368.71	10/23/2010	5.40	531.28	162.57	44.1
AAPL	11/320C	10/29/2010	110	11/9/2010	5.6	279	169	153.6
RADS	11/20C	10/15/2010	199.48	10/20/2010	1.60	310.51	111.03	55.7
FSLR	11/150C	10/18/2010	723.71	10/29/2010	1.55	147.03	-576.68	-79.7
NFLX	11/155C	10/20/2010	1779.48	10/23/2010	20.02	3994.45	2214.97	124.5
BUCY	12/70P	10/22/2010	1053.48	10/28/2010	5.81	1152.5	99.02	9.4
NFLX	12/185C	10/25/2010	1615.24	10/26/2010	10.55	3154.7	1539.46	95.3
CRM	11/125C	10/25/2010	1720.24	11/8/2010	4.75	1414.73	-305.51	-17.8
LNN	12/50P	10/25/2010	561.77	10/28/2010	1.05	513.22	-48.55	-8.6
PCLN	12/380C	10/26/2010	2348.71	11/9/2010	46.80	4671.21	2322.5	98.9
FCN	11/33P	11/8/2010	1015.29	11/9/2010	0.25	237.35	-777.94	-76.6
PCLN	12/380C	10/26/2010	2348.71	11/9/2010	46.80	4671.21	2322.5	98.9
RIG	11/65C	11/4/2010	926.77	11/9/2010	4.25	2113.19	1186.42	128.0
AAPL	11/320C	10/29/2010	1000	11/9/2010	5.6	2790	1790	179.0
PCLN	1/390C	10/27/2010	2418.71	11/10/2010	47.40	4741.2	2322.49	96.0
BR	12/20C	10/21/2010	182	11/10/2010	1.1	100	-82	-45.1
AGU	11/33P	11/5/2010	815.25	11/8/2010	0.55	534.4	-280.85	-34.4
TSLA	11/24P	11/9/2010	915.59	11/10/2010	0.20	189.92	-725.67	-79.3
WTS	11/35P	11/4/2010	386.55	11/10/2010	1.70	838.21	451.66	116.8