ADDING TO YOUR POSITIONS?

If you want to add to some of your positions, here are a few confirmation areas to look for. I prefer that you try to look for this confirmation at or near the close of the market. They are: SPY closing below about 109.40 DIA closing below about 101.80 QQQQ closing below about 45.25. This still wouldn't mean that we couldn't get one more up move next week before going lower, but it would get you in near the start of the next move down.

DOWN?...NOT JUST YET

The price action was bearish today as the market erased a 136 point gain to finish down 70 points. That is a 200 point reversal! At first I was feeling like we might skip the rally and just head down from here. That is still a possibility. I still feel like this market needs to be played to the downside. However...as I looked more closely at the intraday chart pattern, it looks like the rally might not be done just yet. There can be a time element with some of these pattern formations and I just don't think today's short rally was enough time. I still think we will rally up towards that 1100 to 1120 area on the S&P 500. Time wise, the rally should be done by around Monday of Tuesday of next week. After that, we could possibly see one of the biggest moves down. We could chop back and forth a bit in the next few days...kind of like today's move. The point is...if you made some initial put option purchases on the SPY, DIA, or QQQQ, you might need to be a bit patient. The good news is that if I'm wrong and we drop straight down from here, you'll be glad you opened up a small initial position. If we get up towards that 1100 area, I might start to recommend that you consider buying some more puts and increase your bearish positions. If we happen to move below Tuesday's low of 1040 on the S&P 500 tomorrow, we will likely be in the huge sell off and we might want to consider adding to our put option positions. I'm looking at a move below 1050, but 1040 is even better confirmation.

SHORT TERM RALLY?

The market reversed a 300 point drop today and the S&P 500 was able to finish in positive territory. Tomorrow will be an important test to see if there are real buyers out there. As I mentioned last night, I am planning on the possibility that we could get a short term rally to around the 1100 to 1115 area on the S&P 500. Any rally should be a set up for another move down. I still feel the S&P 500 will end up below 1000 soon...possibly the 925 to 950 area. Watch the 1050 area on the S&P 500. If we drop below that area tomorrow, you would want to load up on your put options. Otherwise, wait for the rally to stall and look to get in or add to your current position near that 1100 to 1115 area. This 1050 area is a shorter term Elliott Wave confirmation point. If we drop back below this point tomorrow, it will show that the buyers are still not there and we would want to get aggressive to the downside. If we do rally tomorrow, I don't think it will last very long. I think it would be too risky to try to play any bullish moves...unless you already have some great day trading skills. If you are holding puts, be patient. If anything changes and I see any strong bullish signals, I will make sure I let you know.

Coaching Services

This blog is designed for my coaching students. For those that may have found this blog by other means, please contact me at jerry@myoptionmagic.com to find out more about our coaching services. The next success story could be you! Besides, you can't expect to get the most out of the blog if you don't learn the techniques taught in the course...especially the trade and money management techniques that are so crucial to your success.

For my coaching students...If you have only taken Course 1, see me about any current deals on Course 2 and/or Course 3. Put some of your profits back into your education. There is a lot of Elliott Wave analysis that I am using in the market right now...along with several advanced spreads.

ARE YOU READY FOR THE NEXT MOVE???

The market continues to show weakness as it sold off going into the close. The market still looks like it wants to go down. The market will probably gap down at the open tomorrow. If the S&P 500 goes below Friday's low (about 1055), BUY SOME PUTS ON THE SPY!! The other scenario I see is that the market rallies up to around the 1100 area and we get a huge drop from there. I know that the market is extremely oversold and that we are due for a bounce, but today's price action showed us that there still aren't any buyers. In other words, it's not low enough yet!! Usually when I see this, it means that we could get another violent move down. Get out of your bullish positions. If you buy some puts and the market rallies a bit...buy more puts! Don't ignore sound money management, just understand that the money to be made in the market right now is to the downside. If you are worried that the buyers might suddenly show up and rally the market, then just buy a couple of put option contracts. You can always add more later. Look at July or August expiration so that you'll have enough time. Don't ignore the confirmation levels that I mentioned earlier in the posting.

Be ready to buy puts on Gold (you can use the GLD). We still need confirmation...I'll repeat...We still need confirmation, but Gold could be ready for a huge move down...possibly to 1000 (or 100 on the GLD). Wait until the GLD drops below its 50 day MA, then wait for my recommendation.

Don't get suckered into AAPL on the news today. Morgan Stanley raised its price target to $300. This is an attempt to bailout large institutional investors (Like maybe...Morgan Stanley?). It was not an official upgrade. It was an analyst who raised her price target. This is classic smoke and mirrors meant to hurt the retail investor and help her institutional buddies. View the lesson 4 recorded class (Sector Analysis) in your Option Magic Homework e-mail if you want the details of how this works (It is actually under the Lesson 3 homework assignments section). Let me be clear, it's not that I don't think that AAPL will eventually get to $300, but that is why the Morgan Stanley analyst will probably still be able to claim she was right. In the near term, AAPL will probably drop...possibly to at least the $200 to $210 area...maybe more. The institutional investors already unloaded a bunch of their stock today with the news of the higher target. They will likely continue to sell into that rush of buyers. After AAPL is done dropping, it could possibly work its way up to $300 a share. This could take several months, but it doesn't matter. The Morgan Stanley analyst would still be able to claim victory on her price target while still helping her institutional buddies (or more specifically... her employer) in the short term.

SUCCESS STORY

Jerry:

I purchased “put” contracts spread out over the SPY, DIA and QQQQ. In eight trading sessions, I am up just a little over 100% and sold out this morning. There may be more downside coming, but I decided it was time to exit. My initial exit target was higher, but Friday’s action made me change my mind. I never liked roller coasters.

I must thank my husband for getting me interested in the option’s market and you for your fine teachings. I am infatuated with the market and loving it!

Looking forward to your next “blog”.

Again, thanks for everything and MUCH SUCCESS TO ALL!

Lucy C

SUCCESS STORY

Hi Jerry,

I wanted to write to let you know I bought calls on the VIX for 2.45 and closed the trade out last week for 8.90 per contract! A 362% gain.

Jake

SUCCESS STORY

Jerry,

I'm excited to be sending you my first success story! Wednesday, May 19th, I was hopping on a plane for work as my SPYJun10 116 puts were becoming very profitable. Like you, I rode through the last little bounce as the SPY still never broke above the 1170 to 1175 resistance. I entered this trade on May 11th for $3.55. As I was boarding the plane it was up around 70%, so I picked an exit price of $7.15 and placed a stop limit sell to close. I knew from your blog that the retracement levels indicated that the S&P could go as low as 1000, so I was confident there was still room to profit. When I landed my order had been filled and it was my first 100% return! Having the ability to monitor and execute trades using my phone is awesome! It's actually amazing if you think about it.

Then, yesterday the same thing happened again! I was boarding another plane as my SPYJun10 114 puts were doing very well. This put, I discovered came with a premium price tag because I opened the position on May 6th at 2:20 in the afternoon for $4.43. Obviously the options were expensive that day...

(side note- I closed SPY, AAPL, and FAZ puts on May 6th just shy of the flash crash for about a 60% return, which was also great! I definitely missed a boatload of profits by selling early, but who can argue with 70%????!!)

Anyway, as I was boarding yesterday, I was watching the SPY drop and picked an exit price of $7.75 on the puts I had initially purchased for $4.43 When I landed an hour later my order was filled!
Now, I'm happily in cash, and paper trading for a bit to learn more and see what happens next.

Over the last few months, it's been amazing to see how powerful these strategies are...to think that I can get generous returns on my investments whether the market is trending up or down...that's VERY powerful information!

As a beginner trader, I'm so grateful for the knowledge you have passed on to me so far in courses one and two. I feel that I'm learning a new skill that is going to open many doors for me in the future. BIG doors.

Have a great weekend Jerry!



Matt F.

NO BUYERS

Stocks fell hard again today on fears that the European financial crisis will slow down global recovery. I still think there is more falling to come, but we are extremely oversold right now. This means that we could get a small bounce soon. We are only 15 points away from the May 6th "crash low" or "glitch low" for those of you that still don't believe that was a real move. That is where we could get a bounce....about the 1055 area on the S&P 500. If that doesn't hold, the next support area would be around 1044 which is the 2/5/10 low. Ultimately I think that the S&P 500 will get below 1000, but we could get a bounce before getting there. Keep in mind that the buying that takes place in this environment is usually from short sellers that are closing out their profitable positions...not from buyers that believe the stocks will start trending back up. I'll repeat what I said on Tuesday, this is not a good area to enter into new trades. If you still have existing trades, start taking profits (if you haven't already done so). Tomorrow is May option expiration. I've said this many times, but weird things can happen on option expiration...things that don't have anything to do with the expected future movement of the stock. Expiration Friday's are usually a good day to play a round of golf and stay out of the market...unless you are closing out some spreads. Have a good weekend!

SUCCESS STORY

Thanks Jerry, I just took 109,000 dollar profit selling out my 50 puts on Apple and my 100 puts on Dia ,100 Puts on spy ,and 100 puts on qqqq. I have to tell you that you have changed my ability to make money in the stock market completely.

I do bet big but I can afford to lose what I trade and with your money management technique, I have minimized losses.
However we all get caught and I have taken hits... The key of course is your money management and the technical side helps to really keep the emotion in check..

On the virtual investing club side my biggest win to date was with RDN , GCI and LCC last year..... On RDN alone I made 192,000.00, buying it at 1.90 and selling it around 8.50 ....... 48,000 on GCI and I can't even remember on LCC but it was up there along with many other club picks... Like I said, I did have losses and they were minimized because I got out with your stop loss system... You guys have developed a great system and I refer people to your site on a weekly basis..

My true success story should read.....

Last year I was up late one night and googled how to make money in the stock market.... I found your club and was intrigued as , I needed help and although I have made money in the markets and do have some experience , I still thought I had a lot to learn.

I listened to the course videos online 2 times and still review them today.... I started trading and buying the club picks last year and felt that the whole system you taught really had something I had never been exposed to before in the market.

I was often on the wrong side of Fear and Greed..... It wasn't until I signed up for your option course that a few new light bulbs went off... Realizing the secret of trading is really to understand who you are and what type of resistance you have to stressful trades... I heard once that Rockefeller said he made all his money by quote " Selling to Early"

Suffice to say you have changed my outlook on trading and helped to line my bank account substantially in the process.

I consider your morning blog a " Must Read " and always respect the replies I receive from you by email...

I follow the market morning and night and yes '' my wife thinks I am obsessed" but it is paying off and I love it.

To anyone considering trading in the markets the Virtual Investing Club is a must ....

Thanks again

Richard R.

SUCCESS STORY

Hi,Jerry,
As you know I am a married, 74 year old lady, who decided to try to learn how to trade options. Prior to these courses I knew nothing except, what an option was.
I opened a $10,000.account with TRADEKING,on 03/09/09.I only bought 1,2,or 3 contracts at a time.,trading calls mostly ,AAPL,BIDU
GOOG and a few others,twice my account went up to a little over $20,000.then dropped back down close to $10,000. I ended the year with $23,984. that was a 140% gain in 10 months.
Now here are the WOE'S this year, it has been crazy. My account is down to $22,760. I have sat out a lot this year. I don't have enough money in my accouunt to do some of the trades you taught in course 2.I have one more course the ELLIOTT WAVE I am looking forward to it, You are an excellent teacher. THANK YOU AGAIN. This has been a huge accomplishment for me.
Patsy S.

SUCCESS STORY

Thanks for the spy puts the other day. i'm up about 25% on those. My QQQQ puts aren't quite to the plus side yet, cause i bought some of those the day after the big drop.

I also bought AXP puts from the recommendation on the VI club after it dropped and closed below its 50SMA. After the close Fri, they were around 50-60% profit--i think. I bought it on the options express account, and haven't logged into it yet to check it.

I ended up getting triggered on two spy puts i had for a $930 profit(150%) the Thursday of the big drop. That's the largest profit i've had since i started trading options. They got triggered literally seconds before the market went haywire. when that happened , i watched bid prices go from the 7.00's to 2.15 and ask go to $200,000 for the strike price i had durring the market tanking. I wonder if that triggered someone's stop loss even with the stock decreasing??? after i saw that, i went in and cancelled all my bracket orders to keep a stop from getting triggered on the drop (all i had were puts no calls), and i just watched with a mental profit exit. I was a little dissapointed to start with that my spy Puts got triggered, but after seeing a 400 point gap up the next week, i'm glad i stuck to my plan which you taught so well during your class--THANKS!!!

anyway hope you have a good weekend, and looking forward to reading your blog postings next week!!

Thanks,

Howard

ONE HOUR RALLY

We got a rally today, but just for the first hour. The sellers came in and pushed the market lower. The sellers are strong right now. Although I can't predict the market on an hour by hour or day by day basis, the probability is that the market will continue to drop. Put options should be considered on any rally. Although I think the energy sector is due for a rally, the sellers have proven today that they can continue to push the market lower...despite its already oversold condition. I said last night that Monday's price action was bullish. Today's price action was very bearish. With the failed rally today, we could get a violent move down in the near future. Buy June or July puts on the SPY, DIA, or QQQQ especially if we rally up at all at the open tomorrow. For higher beta trades, you can look at the financials or even technology. AAPL could even get down to near $200 when all is said and done. Gold might have one more push in it, but it will soon be the next big put option play...yes, I said put options. I thought gold was topping out a couple of weeks ago. With this latest run, I'm even more convinced that it is getting ready to drop. Keep in mind that I did say that it might have one more push up before going down. It might not be ready to trade yet, but start keeping an eye on it.

MARKET REVERSAL

The market erased a 170 point drop on the Dow to close positive for the day. This is considered a fairly bullish move. This could lead to a market rally over the next few days if there isn't any unexpected bad news to drag it down further. I don't see it being any more than a suckers rally that sets up for a continued trend downward. The safer trade would be to wait for the rally to run its course and play the next move down. For those that want to be more aggressive, you could try to play the rally...provided that the market does start to rally tomorrow. The UUP looks prime for a short term pull back and the FXE looks like it is finally ready for a short term rally. Notice how I said "short term". The energy stocks might get a nice bounce in the next few days as there appears to be a solution to the Gulf of Mexico mess. I feel sorry for you guys that live near that coast. Maybe you can try to scoop it up and sell it.

MARKET UP...BUT VOLUME IS LIGHT

The market was up today, but the volume...particularly on the S&P futures...was lighter than normal. This could mean that the rally over the last three days could be near an end. Having said that, there have been some buyers over the last few days. The buying could be just short covering, which might help explain the lighter-than-normal volume. I still feel that we are at a top in the market. We are currently at 1171 on the S&P 500. On Monday I mentioned the 1170 to 1175 area as the next resistance zone to watch. If we drop, my conservative target would be about 1000 on the S&P 500 (about a .382 retracement of the March 2009 low to April 2010 high), but there are other opinions that it could be much lower. We've seen how fast the market can move down. I think this is still a good place for new put option trades on the SPY. For those that got in yesterday, I still feel that the trade will work out fine. This is why I decided not to use a stop on this trade. That doesn't mean that I didn't calculate the risk. I need to remind everyone that just because I get aggressive or get confident in a trade doesn't mean that I throw money management out of the window. Money management will always be the most important part of trading. Not every trade will work out according to the plan. I do not have a crystal ball and I can't predict the future. I have posted many success stories from the week. These stories can be a source of motivation to keep working hard at mastering this craft. They can also cause some to be blinded by greed. This strong emotion of greed can cause some to abandon sound money management principles and gamble away their trading accounts. Some of these same traders might be eager to blame me if their gambles don't pay off. Those students will have missed the whole point of the coaching program. They will have ignored all the warnings that were taught in the classes...and increased the cost of their education. I have often stated that we will learn these important lessons eventually. The question is how long will it take and how much money will it cost before the lesson is learned. If you follow the guidelines in the course, the tuition cost will be seen as the biggest bargain in the world...compared to the losses incurred by not applying the information. Many of my students have come to my course after having lost money in the market for years before they finally learned correct principles. I'm sure if you asked them, they'd say that they wished they had learned some of this stuff years ago. I hope everyone profits from this next expected move down, but more important to me is that I hope that no one gets wiped out if it doesn't work out. Be smart.

BUY PUTS ON SPY OR DIA

Here is a rare intraday posting on the Blog. There is about an hour to go in the trading day. The rally looks like it is breaking down. The next move should be either a mild move down to fill in the Monday gap, or a huge move down to continue the downtrend. Either way, the market should move down within the next few days (I'd say 1-5 days). Buy puts on the SPY, DIA, or QQQQ. Give your self plenty of time (June or July). Initial target should be to fill in the gap (Friday's closing price). The market should not get above the 4/26/10 high for a while...maybe even a long while. If we do go higher, you would need to flip the switch and go bullish. If you had call options over the last few days, it's time to take profits off the table. Those bullish trades recommended Sunday night were for a short term bounce. I believe the short term bounce is near completion.

SUCCESS STORY

Morn' Jerry:
Back Ground:
What has happened to us, both myself and my wife feel is amazing. I admitted
to you when I first started the Options Magic class that my entire trading
career was riddled with one disaster followed by another (1987, 2000 and
2008/2009). Always trading on the wrong side of the market it seemed. Make
some money, then lose it all in the next deep correction, followed by
periods when the market rebounded and I wasn't in it. Never once, may I
repeat that a little clearer - NOT ONE TIME in my thirty year trading career
have I been successful .... before now.

I only trade now with a small percentage of my trading portfolio compared to
in the past after I finished Options Magic. Because so many of my trades
turned positive quickly I find I can't stay invested. I seem to take profits
too early but gains up around 100% to 150% get tempting because of my past
failures. I would like to have up to 75% of my trading portfolio invested
but I'm only keeping 20% to 25% in the market at a time generally. Usually a
mixture of Stocks and Call Options in Bull Markets. Puts and Reverse ETF's
during corrections. Since I started trading options on March 1st of this
year, I have had many One and Two Day Doubles.

I just went back and added up my trading gains since I begin trading
following Options Magic course one. My gain since that time is $90,800 - all
coming in just 9 short weeks. I keep this pace going my net gain for the
year could be up around 1,000% pretty easily. 

Thursday, May 6th Crash:
Ahead of this event I started getting very nervous and went totally cash
about a week before the event. Jesse Webb was telling his subscribers to
Market Trend Signal well ahead of time this thing could be coming. He even
said 48 hours before it happened we were "Close to a Market Sell Signal".
Then made what I call a "Genius Market Sell Signal" the night before it
happened. He said liquidate everything at the opening bell. About four hours
later it tanked - big time! Jesse couldn't have made it any clearer to us
and knowing his background and success, I knew I would be one to follow it.

That day I placed the following three trades thinking he would be right.
Remember, I was already all cash so at Thursdays opening I placed a PUT
OPTION trade on the QQQQ's using June 19th expiration date - Strike price of
$47.00 (which was just barely out of the money). I bought 150 contracts at
$1.48 ($22,320)- plus $82,000 split between two Reverse Leveraged (3x) ETF's
- the SQQQ and TZA.

Then I watched the action on my computer and sorry to say, I found myself
becoming a cheer leader. During the peak of the frenzy my Put Options hit a
profit of $48,000 on the screen. Ironically, this happened on the only day I
wasn't playing golf so I was watching it take place. That night Jesse's
Market Trend Signal said we could get a bounce in the next couple days so on
Friday I sold all three trades at a profit of $20,941 after all commissions.
I couldn't even begin to calculate an annualized profit percentage I made
from one day of trading. I got my sister going along with what I am doing
and following my trades. She's like a little kid in a toy store with what's
happening. Lucky for me she lives in Texas and I'm in Montana - being around
her could drive me nuts she's so giddy! Might as well be her - I have to
follow orders from Jerry McCann and stay level headed!

I cannot Thank You enough for the training I was given and the market
trading advice I receive from you daily. I feel like I have a Guarding Angel
walking beside me every step of the way, even though I am investing on my
own. My wife would like to send her Thanks along with mine - adding "It's
about time someone straighten him out."
Smile one all all!
Sorry this message is so long - it is worth telling and it was also fun
recalling the last two days.

Harley R.

SUCCESS STORY

Jerry, I had some awesome successes over the last week. I got into some TZA calls last week and made about 100% overall on these, getting out of the last of them this morning. I also got into some SQQQ shares & TZA shares yesterday morning before the monumental drop and finished up on those this morning for a quick one day profit.

You had also given us a couple stocks to think about for some puts last week—AAPL & GENZ, and although I got out way too soon on Apple, it was still a very nice profit of well over 50%. I will never argue with profits—a lesson learned from you. This will make up for a few long calls I am sitting on with PMCS & F, which still may be ok in the long haul of summer.

Thanks, John N.

SUCCESS STORY

Hi Jerry

It was a crazy day, and definitely an experience I won't forget for a while!! I had a small call on the S&P 500, which I sold at 1:57 PM eastern, cause it was going against me, and I decide that rally was not going to transpire, and then things went wild... I'm glad I had the opportunity to watch it all happen. Certainly a learning experience.

My Success story didn't happen on May 6, but rather on May 4/10... On April 27, I bought puts on the SPY, DIA, and QQQQ in the amount of $6000, and on May 5, just before the close I added another $8500. On Tuesday, May 6, at the close I sold all those puts, to realize a Gain of $16,000... Nice, and I was certainly happy with that!!

Now, on hind sight, and you know the rest of the story!! Yes I wish I had of hung on to those puts, and sold them exactly when the DOW was down 1000 points yesterday!!

I want you to know, that the courses were great, and I can't thank you enough for being an awesome teacher. I learned lots, and continue to learn every day. I look forward to your blogs every day, and when I don't see a post, I miss it. I always am curious to see what your view is and often trade on your advice. Thanks again, and I hope we all make some money in this market,

Lorne

ANOTHER MOVE DOWN?

Remember what I said last night, there could be some wild swings in the next few days. Today's move will inevitably cause many traders to think that things are back to normal and that we will continue to "melt up". I'm looking today's move as a set up for another move down. I still think we can move up a bit more over the next few days, but ultimately the next easy money play will be to the downside. It is hard to know how far the market can rally because I don't know if I can use the 5/6/10 low for my retracement measurement. There is a debate going on right now as to the legitimacy of that 1000 point drop. I've been using Friday's intraday low for my retracement calculation. If that is correct, we are sitting near a 56% retracement of the move down. I'm looking at the 1170 area on the S&P 500 for the next resistance (maybe 1175). If we get up near these levels, you should consider buying more puts and preparing for another move down. If any bad news comes out overnight, it could accelerate the drop. If you want to be more cautious in your trading, wait until the S&P 500 drops back below 1150 before you buy your puts. You could set up contingent orders, but I can understand if you would want to avoid any computerized orders after last week's free fall. Be careful on any Gold trades. I anticipate more of a deflationary environment over the next couple of years...not inflationary. This means that gold could continue to drop...particularly off these latest highs. The safest position is in cash. If you want to sit out of this market volatility, stay in cash...not gold.

MARKET APPEARS OVERSOLD

The market is very oversold due to the drop over the last 4 trading days. Look for a rally soon...possibly Monday. The market is very volatile right now so it is possible to get a 300 or 400 point rally (on the Dow)...maybe even in one day. If this does happen, be careful in planning your trades. During the fall of 2008, there were 700 point drops that were followed by 500 point gains which were followed by 700 point drops. When markets are volatile, they can swing back and forth with big moves. It can be a dangerous game to play these swings. If you are going to do it, do it with smaller amounts of capital. If you notice, we are now pretty far below the 50 day MA. Stocks like to come back to the 50 day MA when they get too far above or too far below it. For those that have take my Course 2 class on Option Spreads, this is normally a good area to look at some Bull Put Spreads or Bull Call Spreads. We would need to be a bit more cautious in these conditions due to the higher volatility in the market. If the European Union countries can come up with a plan to help reduce the anxiety associated with their condition, these spread trades could work very well. If we do rally tomorrow, look for short term trades in well known stocks that have been beat up a bit...like AAPL, GOOG, and GS. I also like some of the stocks that have outperformed over the last year like CREE, NFLX, PCLN, HPQ, and AKAM. The play on these is for a short term bounce which should happen within the next few days. A word of warning on my bearish recommendation on GENZ. Although the stock has been moving down and appears to be in a downward trend, it did not move down much during the tumultuous days of last week. The price action is showing that it is fighting the move down. This makes me a bit nervous for a bearish trade. If you are in this trade, stick to your original plan. I don't like the idea of stopping out before the stock reached your stop loss area. Case and point is this latest move down in the market. I was able to profit because I didn't panic and get out of my bearish positions before the stop loss area was reached. If you are in a put option trade on GENZ and you don't have a stop loss plan, make sure you decide on one soon. You are suppose to have an entry, stop, and profit target plan for every trade you get into.

SUCCESS STORY

Hi Jerry,

I'm sure you've had plenty of success stories this week but I'd just like to add a couple.

I bought put options on SPY for $1.53, they're currently at $9.22 so took some profits.

Also bought Apple May 250 puts two days ago for $5.80 and sold half today for $20.20 - and bought a MacBook Pro!

Thanks so much for you mentoring and especially your blog.

Shan

SUCCESS STORY

never bought a put in my life,but with your savy i did and my acct has gone fr 9000 to14000 in last two days. wow
still am holding puts onspy and qqqq.europe is falling apart, but thats good for shorting isnt. john

1000 Points!!! WOW!!!!

Now that was something I have never seen before! For those that missed it, the Dow was down almost 1000 points at its low today. It was incredible to see the market drop about 500 points in 5 minutes. It brought back memories of 2008. There were two things I told you last night to watch today. The first was to see if the S&P 500 could rally above its 50 day MA. This would have been confirmation for a bullish move for the market. The second was to watch for a break of the 1150 support area (for the S&P 500). I even used all caps to emphasize the importance of that level. I said that if that level gets broken, the S&P 500 could end up at or below 1000...but I didn't expect it to get there in one day...or even 5 minutes! So a sell off didn't surprise me, but the 1000 point drop did. If you witnessed the sell off, you learned some important psychological information about the market. You could feel the fear rising in the market as the Dow dropped and the VIX spiked up over 40. It felt like a rubber band that was being stretched to its limit. As the Dow hit 999 points down, the buyers rushed in and the market snapped back as quickly as it dropped. The problem with today's move is that it doesn't give us a clear picture for tomorrow. Since the drop is being blamed on a possible glitch in the system, it's hard to tell how severe the sell off really was. If the market gaps down at the open, you might see buyers that come in and rally the market by the end of the day. If the market gaps up, you could look to set up some put positions. If you made a lot of money on today's move, I hope you took some profits. If you happened to get out near that 999 low, I want to hear your success story. For those that are late to the party, this is not a good entry area for a new trade...for a call or a put. The best entry for a put option trade would be after the market rallies up a bit. I still think the S&P could end up below 1000, but it probably won't get down there on one move (wait...didn't I say that yesterday as well?). It will probably "stair step". I've been talking about a major market drop for over two months now. You were able to see just how fast things can drop. Many of you are glad you went to cash a few weeks ago. If for some reason you had a draw down today, be careful to avoid the temptation to try to get it back immediately. I've already explained how this is not a great area to enter too many new trades. You could end up increasing the draw down if you're not careful.

A RALLY TOMORROW?

Today's price action was a bit bullish. The buyers came in at the lows and were able to push the market positive for the middle part of the day. We got near the 1150 area on the S&P 500. This is a VERY critical support area. If we break this support, we could possibly end up below 1000 on the S&P by the time the sell off is done. If we hold this support and move back above the 10 day MA, we might expect a small rally that we can take advantage of. The key is to be patient and to wait for confirmation.

CHOPPY MARKETS

The market continued its volatile swings today. This could be the price action over the next few days. In fact, the S&P 500 looks to be in a "B" wave of a bullish ABC corrective pattern. The DOW and Nasdaq have similar patterns, but not as distinct. If this is the case (completing a "B" wave), the S&P should have another move down (wave C) in the next few days. It might not be done with wave "B", so the market could rally a bit tomorrow as well...but it shouldn't yet go to a new high if this pattern is correct.

VOLATILITY

The volatility in the market is likely to continue over the next few days. We could end up seeing some strong moves up and down as the bulls and bears battle for the next market direction. The rally on Thursday made the sharp correction down less likely as it showed that the bulls weren't just going to lie down and let the market fall without a fight. If the market decides to move back and forth over the next few days, that will become the correction. The numbers being thrown out right now to help Greece are just that...numbers. There could be a lot more to the actual implementation of that aide...especially when you consider that Portugal, Spain, Italy, and possibly Ireland and others will be standing in line with their hands out expecting the same type of bailout. They can't bail them all out without having some sort of consequence. Look for that to be the bad news that comes out after this so called good news. This is the pattern you might expect over the next few days. What appears to be good news that is then followed by bad news....and so forth.