MERRY CHRISTMAS AND A HAPPY NEW YEAR

I want to wish everyone a very Merry Christmas, Happy Holiday, and a very happy and prosperous New Year. I look forward to working with you in 2012. I think it is going to be a great year for trading.

We are making some changes to the blog which should start in January sometime. These changes may affect your ability to access the blog...especially if I don't know who you are. Before these changes take affect, I'd like to create a list of all the students that are currently following the blog. If you want to be included on this list, please send an email to myoptionmagic@yahoo.com. In the email, please include the following: Name (first and last), email address, brief background information about yourself (this is not mandatory, but I'd like to get to know some of you a bit better), and some brief feedback on the blog (what you like and dislike). Make sure you send the emails to myoptionmagic@yahoo.com. I don't want these emails to get mixed into my regular email account. I'm really excited about some of the changes that are going to take place. I look forward to working with you this next year and I hope it becomes your best year ever. Thank you for taking the time to send me this important information. As a reward for your time, I will set up a free webinar this January for all those that send me their information.

NO VIX CONFIRMATION

You can now see why I wanted that VIX confirmation before becoming too aggressive. With the VIX now down near 21, the market looks like it will rally or chop sideways through the end of the year. I'm going to take the last two weeks off, but I will try to update the blog if there is any major move. We won't look to turn bearish again unless the S&P 500 drops below Monday's low...and the VIX starts to spike up near 30. The volume in the market should start to lessen as we get nearer to Christmas. I don't usually trade the last two weeks of the year. Most professionals take this time off. Usually the only ones trading during this period are the amateurs and the professionals that are trading against the amateurs. Because of this, you can sometimes see some weird moves in the market...and some swings back and forth. The short term trend of the market would suggest a bullish bias for at least a few days, but the longer term outlook is still bearish and the market can still turn at any time. The safest play is in cash right now. Enjoy your holiday season. Have a very Merry Christmas and a prosperous New Year!

BREAKING SUPPORT

The Dow became the last major index to close below its 50 day MA. This shows that the sellers are clearly getting control of this market. Everything seems to be in place for another big move down...except for confirmation from the VIX. I would still like to see the VIX spike up to around the $31 to $32 area. Until this happens, the market would likely move more sideways...or even rally a bit. There hasn't been any panic selling as the different market indexes have dropped below their key support areas. Until the panic kicks in, I don't see the sellers getting too aggressive with their short positions. Last week I said that the selling should start if the Dow closes below its 50 day MA. That would mean that a bigger move down should start tomorrow. If the Dow rallies back above that moving average tomorrow, we might have to wait until it drops below it again before the sellers get more confident.

Here are some bearish patterns that could be nice put option trades. Use February options since they are now available: GLD, SLV, CF, BIDU, WYNN, LVS, MS, JBLU (with a stop above today's high), BAC, JPM, CVX, DD, IBM, MSFT, and PFE (both with a stop above today's high). I don't expect you to trade all of these patterns. I don't want you to get overly aggressive on your bearish trades...at least not yet. You can look at some of these potential trades and apply what you have learned in the course. Set up stop loss and profit targets, calculate your reward to risk, and set up a money management plan. Keep in mind that the last two weeks of the year tend to be flat to slightly bullish. This could allow for the markets to have a short term bounce before heading lower. That said...since so many traders out there are expecting the markets to fall after the end of the year, we might just get that drop a week early. For those that want to be more cautious, you could wait a few more days if the markets start to rally a bit. You might even be able to get a better entry price.

Some call option trades that would take advantage of a bearish move in the market would include FAZ, TZA, and TLT.

CRITICAL AREA

The Dow closed the day just above its 200 day MA. The S&P 500 closed just above its 50 day MA. The Russell 2000 closed just above its 50 day MA. The Dow Transports closed just above its 50 day MA. The VIX closed right at its 200 day MA. Almost every stock that I follow closed near a support or resistance area. The only index that broke support was the Nasdaq which clearly broke its 50 day MA...and also formed a nice bearish engulfing candlestick pattern. It's been a while since I've seen such a critical area. If we break all of this support in the other indexes (the Nasdaq has already broken it), we could really start to see the selling pressure pick up. The problem lately has been the dropping VIX. That might have reversed today. The candlestick pattern on the VIX does show a possible reversal. Watch for a spike in the VIX if we drop below these key support levels. I'd like to see the VIX spike up at or above 32 before I get too aggressive again with puts. I've been burned a bit (like some of you) on the whipsaws over the last few weeks. AMZN has moved down nicely since the recommendation....as has BIDU, WYNN, CF, and SLV. I bought QQQ puts and TZA calls at the close today. I will look to add SPY and DIA puts if we break support...and possibly FAZ calls. If we rally tomorrow off these support levels, I will continue to wait.

I am planning on taking my annual end of year two weeks off. I try to use this time to get away from the market and recharge my battery. I recommend that you do the same. Most of the professionals take this time off and it's one of the only times of the year when the professional are off in unison. If the market starts making a bigger move down...and if the volume is higher than normal for the last two weeks of December, I might stay active and take the time off later. If I do decide to take the time off, I will likely not have many blog postings unless something significant happens. I will still answer a few emails, but I can't promise that they will be answered immediately. I will likely have one or two more blog posting this week before I take my break.

SUCCESS STORY

Jerry;

As the year nears a close, I decided to take a hard look at my activity and the resulting successes/failures related to my trades. It was a bit difficult to track, but I'm certain that I came very close, operating out of three accounts. First let me state, that after having completed all three courses over the past 14 months, I can say without doubt, that I am more knowledgeable, more confident, and much more careful about how I trade. Although Trade Management was new to me, and well taught by you, Money Management has been a part of my life's work. Money Management takes on somewhat of a different meaning when you are coupling it with Trade Management. I've become a consummate student of both tools. Now for the good stuff. I began my classes last September 2010.

I didn't do much trading the first few months, and also didn't use the Virtual Site as much as I should have. It is an invaluable tool. I use it regularly now, along with my real trades. During the past roughly 12 months, I planned and made a total of 83 real money trades (many of which were disasters for the first 4 trading months). I've since turned that bad habit around. Bottom line; 32 trades hit target. 9 trades were unwound at a profit, just because I wanted to "feel good" that I didn't lose money. 4 Spreads were unwound prior to Expiration, all of which were profitable, yet all of my spread trades yielded less than a 2/1 profit ratio. 37 trades, 16 of which were naked trades lost money, with 21 trades stopped out at 50% -30% loss (and in several cases when markets had wild days, the loss was even greater than 50%. The preceding sentence illustrates that I used tighter stops on a number of trades, or perhaps adjusted my stops in mid stream.

I did some simple math beginning with my initial deposit to the real money accounts, added a few deposits during the year, took an "average" account(s) balance for the 12 months and then subtracted that amount from my current balance(s).

I'm proud to share with Jerry and my fellow students that slightly over 54% of my total trades were profitable. My current account balance, (based on my "average" account balance), is up over 78%. If you were able to follow the sequence of my comments above, you will note that I did not earn on average 2/1 or greater on my total trades, which is what we all strive for. But, on the other hand, if I am able to grow this account in a similar percentage amount for the next 5-10 years?????, well, we all know how super that would be! Additionally, what I did accomplish was not easy, in fact, I worked harder than I have worked in years.

Without Jerry McCann's invaluable help, coupled with my hard work, this would never have happened. I'm proud to have shared this information, and I have one last comment. I don't know if there are better courses out there. I do know that from my perspective, Jerry McCann is one of the best Teacher/Mentor's I have ever had. Jerry, your the best.

Michael

SUCCESS STORY

Hi Jerry, I thought it about time I gave you some feedback since tomorrow is my last lesson. I must tell you that I have had several traders who teach helping me but you are the first teacher who trades and that is why you are far ahead of all others. It has been a pleasure to be part of your class.  I also enjoy your website and know you enjoy success stories. On October 19, Rockwell Automation (ROK) popped out of MTS with a buy signal, backtested well and I liked the chart in spite of the 44 Rank. We were in the middle of stair-step, ABC pattern, etc. On the 24th I bought a call for $800 (cough). Today I sold it for $1265, a $461 profit. This is fun!! Thank you Jerry.

Frank H. 

P.S. See you tomorrow.

IS THE GRINCH GOING TO STEAL THE SANTA CLAUS RALLY?

Today was a significant drop. The VIX has started to move up again. The Dow Transports were down 2.5% compared to 1.6% for the Dow. The Russell 2000 was down over 3%. These can be a signals that a larger drop is underway. Though the Dow closed barely below 12,000, it is an important psychological blow to the bulls. Combine the technical indicators with the bad news coming out of Europe and you have a recipe for a decent drop. This doesn't mean that I'm recommending an all out rush to put options. We'd still like to see some follow through to today's move down. You could enter into some put positions on the DIA, SPY, or QQQ...with a stop above today's high (or even Wednesday's high). I entered into some FAZ and TZA call contracts at the close. I got burned on this trade last week when the Dow rallied 500 points. I'll play the probabilities and assume that rare event won't happen twice in one week. MAKE SURE YOU USE AT LEAST JANUARY OPTIONS FOR ANY NEW OPTION TRADES. I could see a scenario where we drop for a few days, then move a bit sideways through the end of the year. Most professional traders take the last two weeks of the year off...or at least the last week. Usually the only ones trading during the last two weeks are the amateurs and the professionals that are trying to trade against the amateurs. I told you a few weeks ago that I've never seen a market crash in December. This doesn't mean that it can't sell off a bit. It would be surprising to see a massive drop during the normal "vacation" period. This hasn't been a "normal" year though, so I'll be prepared either way. I still like BIDU, CF, and AMZN as bearish trades. If you have had a big draw down in your account over the last couple of months, you might want to be careful and wait for a bit more confirmation.

STILL IN LIMBO

The markets have moved up a bit since the last posting, but they aren't yet at the resistance areas that I talked about in last Thursday's posting. Even if we do hit them soon, I still think the markets will move more sideways until the end of the year. We did see the first divergence today in the Dow Transports and the Russell 2000. Both indexes were down while the Dow posted a 52 point gain. This doesn't mean that the market will plunge tomorrow, but it could be an early sign that the strength of the rally is starting to dissipate. I will watch that divergence closely tomorrow to see if it is gaining any momentum. I still recommend being in a mostly cash position. I know it's hard to be patient, but it is the right thing to do right now. Some stocks are starting to look very bearish including AMZN, CF, NFLX, WYNN, and BIDU. A continued market rally could hold these stocks up a bit...but when the selling starts, these stocks will likely be the first to drop. IBM and CAT look good for bullish trades if the market does move higher, but be careful not to over commit to bullish trades right now. I think the larger downside potential is greater than the smaller short term bullish potential.

SANTA CLAUS IS COMING TO TOWN!

For those that were waiting for a Santa Claus rally, you got a Santa Claus rally. Today was a painful day for those of us that were short the market. It happens...but you have to put things in perspective. Today's 490 point rally likely ranks in the top 15 Dow rallies of all time (I'm assuming this...I haven't verified if that's true). This means that it is a rare event. You can't change your entire trading system after a rare event. I don't believe that today's rally is kick starting a new bull market...but that doesn't mean that we won't move up a bit more. The key resistance levels to watch are 12,284 on the Dow (the October high) and about 1280 on the S&P 500. There is another resistance area around 12,500 on the Dow and about 1295 on the S&P 500. We closed today at the highs of the day and the volume was higher than normal. This usually means that we will go up a bit higher. Keep in mind that the first resistance area on the Dow is only about 240 points away. If we rally higher, keep an eye out for any divergences that could signal that the rally is losing strength.

I'm going to keep a neutral stance for now. I'm still bearish in the longer term, but I realize that we could move up a bit higher in the short term. I exited most of my FAZ and TZA options today. Options don't always recover very well when they've lost most of their value...leveraged options are even worse. We could get a 500 point drop tomorrow and they would still show a loss. I'm mostly in cash right now...except for a few spreads. I like it when I'm mostly out of the market because it allows me to look at things more objectively. The market looked like it completed a corrective rally on October 27th. The "pre Thanksgiving" drop looked like the start of a bigger move down. The rally on Monday and Tuesday looked like a correction within that bigger move down. That expectation turned out to be inaccurate. Like many of you, I had stops in place in case that outlook was incorrect. Like many of you, today's move blew through many of those stops causing a larger loss than was anticipated. Luckily my money management prevented that rally from destroying my account.

I know it's hard, but you can't focus on the past. Today's move is now behind us and the market could care less what happened to us today...good or bad. We now need to look at what new patterns are showing up. It now looks like the October high was the end of a wave A (of a bearish ABC pattern). Wave B looks like it ended last Friday (November 25th). This move up looks like a possible wave C that should complete that bearish ABC pattern and lead to that bigger move down. This is why we will watch those resistance areas as possible ending points. I haven't dismissed the possibility that there could be a prolonged rally off of today's move. History shows that governments (and central banks) can sometimes prop things up a bit longer before the ultimate collapse takes place. QE1 and QE2 managed to prop up our markets for an additional year. This is why I will be watching carefully for divergences or clues that could signal the end of the rally. I'll let you know if I see them...or if I feel the need to turn more bullish. Be careful not to make dumb decisions if you are dealing with a draw down. There is a natural tendency to want to get the money back right away. This often leads to impulsive trades or attempts to "bet everything" on a particular move. If this next move down is a big as I think it could be, it could bail just about anyone out of their draw down. The trick is to not go bust before you get that opportunity. For those who haven't suffered any major draw down, you could look at some short term trades on the DIA or SPY...call options. If you are down in your account, don't do anything right now. You will be in really bad shape if you load up on calls and we drop 500 points.

SNAP BACK RALLY

Today's rally was exactly what I was talking about in the last few postings. It is common to get sharp counter trend rallies within downtrends. It is possible that we could rally up a bit more, but we are likely setting up for another move down. This doesn't mean that a downward move is guaranteed. In trading we deal in probabilities, not absolutes. Since we broke through those support levels last week, it increased the probability of a down trending move. When the trend turns down, the rallies become opportunities to buy puts. Buying puts on the rallies often give the trades higher reward to risk capabilities. If the market starts to break back above the 1218-1220 resistance area, we might need to re-evaluate the outlook. Until then, I'm recommending puts on the SPY, DIA, and QQQ...or calls on the FAZ or TZA. If you get into any of these trades, be aware that we could go up a bit further before dropping. You might need to be patient...as well as use good money and trade management. Many of the Elliott Wave counts are pointing to some further selling once this rally is complete. We'll see if those counts are correct.

SUCCESS STORY

Hey Jerry,

Here is my success story. It was nice first before of the good new teachings of the Elliot Wave count and second because it paid off pretty good. Shorted Bidu at 132.06 and covered it back at 121.10. I got on the good impulsive Wave 3 of Y, and now will hope for a good impulsive wave 5 so lets see what happens. It was very nice because it went just like a drew it. I hope I am right again. Thanks Jerry, great class so far. It is helping a lot and giving new perspective on things. It will take a while to master it but it is a great start.

Thank you again for being a great teacher !!!

Brgds

Roman

HAPPY THANKSGIVING!

I hope you had a happy and safe Thanksgiving. Just a reminder that the markets will only be open for a half day tomorrow. I normally don't trade on the Friday after Thanksgiving since everyone is usually on vacation...but I will possibly make a few trades if the market manages to rally tomorrow. With the markets breaking support last week, I think that any rally presents an opportunity to buy puts. This market looks like it wants to go lower. If we get a "Santa Clause" rally this year, it might just be a short one...a rally within the downtrend. Make sure that you buy some time with any put option trade you make...at least January expiration. This doesn't mean that you need to go out to April, but you need to give yourself some time in case the market does rally up a bit. Usually this time of year is fairly bullish, so it is possible that we rally up a bit or move sideways for a few days or even weeks. If the market does manage to tread water through the holiday season, it would likely start to collapse early in January....thus the reason for the January expiration. Buying the extra time does not mean that we ignore money and trade management decisions. We aren't going to bet everything on a world economic collapse. However, the conditions have turned considerably bearish. If you have been patient over the last few weeks, your patience will likely be rewarded. The market is very oversold after last week's drop. We'd love to see a snap back rally here. If we get it, look to buy puts on SPY, DIA, and QQQ...or calls on FAZ or TZA. If we drop more on Friday or Monday, you could buy some puts...but only buy a small position. We'd like to get more aggressive on the rallies, not the drops. Gold and silver also look like they could continue to drop. You could look to buy puts on the GLD or SLV.

SUPPORT BROKEN

The S&P 500 and Nasdaq have broken below their 50 day MA's. This is a sign that the sellers have taken control of the market. The Dow and Dow Transportation Index are lagging a bit, but they should break below their 50 day MA's soon. Look to start buying puts on the DIA, SPY, QQQ....especially on the market rallies. You can also look to buy calls on the FAZ and TZA. The market won't likely drop straight down so be patient with your trades. This doesn't mean that you don't set up stops, it just means that you might not get the move down as soon as you get into the trade. Make sure to buy enough time on your options. Don't use the "weekly" options. They are too risky.

A RALLY IN THE FUTURE?

The sideways movement in the market over the last few weeks has created a near perfect symmetrical triangle pattern on the S&P 500 and the Dow. Today's move down hit the lower rising support line of the triangle. If this support line holds, the market should start to rally and break out of the upper resistance of the triangle. If we rally up, the Dow could reach 12,400 before any significant drop takes place. If we break the support line of the triangle, we will likely start a larger move down. As a natural contrarian, I wonder if the triangle pattern will break out to the upside. So many people are seeing this near perfect bullish triangle pattern. Usually when most of the market is expecting a certain move, the opposite move ends up taking place. The week before Thanksgiving is usually a bearish week with the traditional "Santa Clause" rally usually taking place after Thanksgiving. In my 14 years of trading, I've never seen a significant market drop from Thanksgiving through New Years. Even in the financial collapse of 2008, we had a "Santa Clause" rally. A contrarian would view this as the perfect year for an end of the year stock market drop since so many people are expecting the market to rise. In terms of probabilities, I'd have to say that the odds are greater for another "Santa Clause" rally. If the market starts to rally tomorrow, I'll look to buy calls on the SPY, DIA, and QQQ. COST would still look good as a bullish trade and IBM would be a great bullish trade if it can break out above $190. PCLN might also break out within the next few weeks. If it breaks that support line, you might see me get bearish again very fast.

RANGE BOUND

The selling didn't continue after last Wednesday's drop and we didn't drop below those key levels. The market has been moving within a tight range over the last few weeks. I mentioned this possibility last month. The bulls aren't confident enough to push the market higher and the bears aren't confident enough to push it lower. So we will continue this sideways trend until one of these groups wins out. The volume has been low on both the up days and down days, so there really hasn't been any strong clues as to which side is winning. You can lose a lot of money when you get too aggressive in uncertain markets, so I will continue to recommend that we sit tight and wait. I can see a scenario where we have one more move up and I can see a scenario were we start a big move down. I'm not ready to flip a coin for my trades. The only trades I have on right now are Iron Condors, Credit and Debit Spreads, and Calendar Spreads. These trades are designed to work well in choppy or sideways markets. I cover these strategies in Course 2.

BIGGER MOVE DOWN COULD BE UNDERWAY

Today's move increased the probability that we are starting another move down. I'd still like to see the Dow break below about 11650 and the S&P 500 to move below 1220 before I really turn bearish. This doesn't mean that you can't start to enter some call option positions in TZA or FAZ...or put options on DIA, SPY, or QQQ. If this selling continues, there are many stocks that could really drop including AAPL, AMZN, BIDU, CRM, LVS, WYNN, and just about any bank stock. We had a huge spike in the VIX today. This usually leads to more selling...especially since we haven't seen any "panic" selling yet. The volume today was modest, but not huge. I'd like to see those levels broken on the Dow and S&P 500 and the volume surge to some higher levels. Keep in mind that today's move could have just been a "C" wave of a bullish ABC pattern that might have started at the end of October. If this is the case, we could end up rallying up above the October 27th high. If we have a strong move up tomorrow on higher volume, I'd look to buy calls on the SPY, DIA, and QQQ. If we are flat or down tomorrow, we are likely headed lower. We'll see what happens.

UPDATE

There hasn't been much to add in the last few days. We have rallied up on light volume. I don't see any major weakness, but I still don't trust the rally due to the light volume. If the market can break above the 10/27/11 highs on higher volume, I might start to turn more bullish. I've been mostly neutral for the last week and I'll probably remain neutral until I see some stronger signals...bullish or bearish.

SUCCESS STORY

Hi Jerry

It feels good to write a success story after a month of waiting , but no complains the stock market on October was very tricky and i was patient enough, but last Wednesday i bought some bearish trades and lost 50% of there value on Thursday them i added some more on Thursday and sold everything today Tuesday I approximately broke even in all trades but the shinning trade of 100 calls faz that i paid $2 for them and sold for $ 6.70 was great, made me $47,000

thanks,

Naseem

BEARS BE READY

I apologize for the lack of posts this week. I have been a bit sick. As you may know by now, I have a very weak immune system and I seem to catch every virus that goes around. The drastic change in weather didn't help either. We had a high of about 65 degrees on Monday, but it dropped down into the 40's since then. I'm not ready for winter. The market staged a rally today, but it was on lighter volume. The move down on Monday and Tuesday looks very impulsive. This could mean that today's move up was just a correction of the new downtrend. With the Dow and S&P 500 still above their 50 day MA's, I'm hesitant to call for a new downtrend. However...I think that if we close below Tuesday's lows, it will significantly increase the probability that we will move lower...much lower. With the debt agreement in Greece falling apart (I told you so...at least those students in my recent classes), this next move down could resume as early as tomorrow. There is a possibility that the market will try to move a bit higher, but that would have to happen very soon. A close below Tuesday's lows would likely decrease the probability for another move up. You could start to look at buying FAZ and TZA calls, but be careful. Look at the December options rather than November. If we do try to rally up a bit further, you could get stung pretty bad with November options. Also, try to limit your purchase. I'd look to buy a small amount and be willing to risk that entire amount in the trade...in other words, don't set a stop. The way this market is swinging back and forth, you would likely get stopped out on any stop that was set. This means that you better be willing to lose the money you are putting into the trade. You could also look at puts on the DIA, SPY, or QQQ. This is still not an area to get too aggressive...but we could be getting close. I'm still looking for a bit more confirmation. I'd really like to see the Dow Transports and Russell 2000 have a bigger percentage move down than the Dow and S&P 500. I'm still bearish on gold and silver and bullish on the dollar. I like calls on the TLT. If the market does end up rallying much higher, I like COST as a bullish trade. I'd like to see it break above about $86.50 first...as confirmation.

HAPPY HALLOWEEN

Due to Halloween tomorrow, I won't have a Monday night posting. The move up last Thursday was big, but most of the move took place on the gap up at the open. I warned not to chase that gap because I felt that it was an exhaustion gap. This means that I think that the rally is nearing its end. I can't predict the future, so there is always the chance that the market move up a bit further...but it looks like it is ready to correct. This October rally has turned many people bullish. This is what often happens in Bear Market rallies. Just as you believe the market is going to start going up further, it reverses and moves to lower lows. I'm not predicting a panic sell off...yet. I don't see any strong signals yet that the market is reversing, but pay attention and start looking for them. This is a prime area for a reversal to take place. I received several emails asking my opinion on silver (SLV). I'm still bearish short term and I feel that silver will make another move down before staging a possible rally. I feel the same way about gold (GLD). The recent pattern on both of those stocks looks bearish to me...like a bearish ABC pattern. I also expect the dollar to rally soon which would also put pressure on gold and silver to go down. We'll see what happens this week. Hopefully we will get some good signals this week and jump back in the market. If you see some strong weakness tomorrow, you can always buy puts on the SPY, DIA, or QQQ...until I can get some more specific trades listed on the blog. Don't build any large positions until we get some clearer signals. Use good money management.

DON'T BUY INTO THIS RALLY

The S&P 500 futures are up big right now as a result of the "debt agreement" for Greece. I've told many of you in my classes this week that we were obviously going to get an agreement that would appear to be good news for the markets. The brief research that I've done tonight on the agreement tells me that this deal is not even close to what is needed to prop up Greece right now. Not to mention the fact that Italy, Spain, Portugal, and Ireland will soon be lining up for their deal. Don't be surprised if we gap up big at the open tomorrow, then immediately start selling off...particularly the banks. We could move a bit higher, but it seems to me that a gap up would likely end up being an exhaustion gap. I'm not ready to short this market, but I'm definitely not looking to buy into it right now. There are a lot of mixed signals which is why I would recommend that most of you sit on the sidelines for a bit longer. For those that still want to trade, keep your risk small...and try to use option spreads if you know how to use them and adjust them. Sorry that I don't have any new recommendations, but I figured that a warning might be as good as a recommendation.

MARKET IS CONTINUING THE STRONG RALLY

The markets have continued the strong rally that they have been in over the last few weeks. I haven't seen any strong sign of weakness, but we are nearing some very important resistance areas. Many of you have asked if this is the start of a new bull market. I don't see any strong evidence of that...aside from a month long rally. In context this still looks like a correction within the downtrend. Even if I change from being longer term bearish to longer term bullish, I would still want to see a retracement in the market before I made any aggressive bullish trades. I have a couple of small bullish trades on the SPY and DIA made last week when I noticed an inverse head and shoulders chart pattern on the DIA. Other than that, I am mostly in cash right now...aside from a couple of option spread trades on GOOG and WYNN. I'm content to sit on the sidelines until I see some good trading opportunities. I don't like to trade earning announcements. They are too much of a gamble. I might trade them using a Straddle or Strangle, but I haven't seen many set ups that I really like. I've had a few emails on the FAZ. I don't recommend getting into the FAZ until the market starts to show more weakness. After taking a hit on FAZ last week, I'll be looking for more confirmation on the next entry.

MONDAY OUTLOOK

We should be nearing the end of the rally. We could move up a bit further, but I wouldn't try to trade that move. Although I think the markets will eventually make another big move down, I think the shorter term movement of the market could be choppy or sideways. This will be fine as long as we keep moving sideways within this big range that we've been in over the last few months. The tighter choppy moves are harder to make money on...unless you use some of the option spreads. Tech stocks have been under performing in the market over the last few sessions. We could see a scenario where the Nasdaq starts to drop more dramatically than the S&P 500 or the Dow. Keep an eye on the Dow Transportation Index and the VIX. If we see the transports drop faster than the market and the VIX start spiking up, we could have another decent drop in the market. Keep an eye on 1250 and 1258 on the S&P 500. These are the next big resistance levels. The financial stocks look like they are completing their corrective rallies. This could set up for a nice trade on FAZ this week. I'd like to see how the financial stocks trade tomorrow before I make another recommendation on FAZ. I got burned a bit from it last week.

BUTT KICKING

I couldn't think of a better title for today's activity. Actually that is the censored title. If you trade long enough, you will sometimes get days like today. Yesterday looked like we were certain to get a market decline. It even looked that way at the market open....but then things reversed. I'd love to blame it on market manipulators or the High Frequency Traders (HFT's), but sometimes you get beat in the market and you just have to take it like a man. I hate it when people blame the refs for their favorite sports team's loss, or give other lame excuses when things don't work out in their favor. I got beat in the market today....mostly on the FAZ. When the news out of Europe hit this morning, the financials stocks started to rally hard. When stocks are that oversold, it creates a snowball effect as thousands of short sellers start covering their positions. That action creates an even bigger move up which in turn causes more people to cover their short positions. I'd like to blame the entire rally today on short covering, but some of the volume numbers were high enough to believe that there was some true buying going on.

I was stopped out of my FAZ position. I didn't get stopped out of TZA, but I came really close. The big question that is on everyone's mind is what is going to happen next? Before I get into my opinion on that, I need to again emphasize the importance of money and trade management. I was down about 11% in one account and about 13% in another. Those are pretty big one day losses...but they didn't wipe me out. Despite my confidence last night that we were going to move lower, I didn't violate my money management plan. This would have prevented me from making tons more money had I been right...but it also prevented me from wiping out my account if I was wrong. I've learned over the years that the market can always throw you a curve...especially when you think you can't miss. Remember something that I've told you in your money management classes. If you are overly upset with your loss (or losses), you probably risked too much on that trade (or those trades). We are never going to like having a loss, but there is a difference between being mildly irritated and uncontrollably angry. I would characterize my mindset on the losses today as moderately irritated (I'm not perfect).

As for the rest of the week....I am still bearish on this market. I don't think the problems in Europe will be solved quickly and we aren't seeing great news coming out of these earnings reports. Apple will likely drop big at the open tomorrow (at least I got something right on last night's blog). Intel is very near a lot of resistance (around $24.50). I don't know if it can break though right now. Having said all that, the higher volume on this rally today does make me more cautious. We might have a few more back and forth swings over the next few days. I warned of this possibility last week. The clues of a reversal showed up early today. The Dow Transports were up almost twice the percentage of the market, the VIX had dropped almost as much as it rose the day before, and the volume increased.

For those that are less experienced, you might want to sit out of this market for a day or two. I don't see many patterns out there that give me a lot of confidence. Many of the patterns I listed last night are still tradable patterns, but you will need to place those stops above the most recent high...and make sure you follow your plan.

HAS THE NEXT DOWNWARD MOVE STARTED?

Much of what I talked about last night happened today. The Dow Transportation Index moved down at a greater percentage than the market. The VIX spiked up. The volume increased a bit today. The next question is how far will we drop? If this is just a retracement of the recent upward move, I would expect the market to pull back to around the 1150-1170 area...and do so on average to lighter volume. If this is a bigger move down, I would expect to move back down to the 1120 area. If this is a bigger move down, we should see more of what we saw today...the Dow Transports dropping at a larger percentage than the market, the VIX spiking higher, and the volume picking up on those down days. We don't necessarily need more selling tomorrow, but the market should be moving down quite a bit by the end of the week. IBM is down in after hours trading despite a decent earnings report. We've seen what has happened to Google after their big gap up. If Apple's earnings can't rally the market on Wednesday (Apple reports after the bell on tomorrow), I don't see anything else out there that will. I think that the professionals are looking to sell their Apple stock into the earnings report (just like they did with Google). I wouldn't be long this market right now....but I also wouldn't be heavily short either. Earnings releases can cause weird things to happen in the market. I still really like calls on FAZ and TZA. GMCR had a big move down today on high volume. It is likely going lower...at least to $73. CRM looks like it could move back down to $110. CMG is also looking more bearish with a possible move down to $285...or even $272. You may want to wait for CMG to move back below its 50 day MA for more confirmation. PCLN is also looking weak. As long as NFLX doesn't move above Friday's high, I like it as a put option trade. It held up pretty good today on a big down day in the market, but the volume was very light. It still looks like it is going lower. Here are some less expensive put option picks from the Dow 30: AA, AXP, BA, CAT (bearish engulfing pattern on higher volume. This gets five stars ***** as a great bearish trade. Put your stop above today's high), GE (put a stop above Friday's high. Great reward to risk. Target $15), HPQ, etc. I could go on and on. After just looking at all those Dow 30 stocks, I feel very confident that we are starting a bigger move down. Many of those are good looking bearish trades.

SILVER UPDATE

This post is from Chaz...a commodities trader that writes a monthly newsletter on the precious metals market. He has given me permission to post it on my blog. As a disclaimer...I (and Option Magic/Market Trend Signal) are not responsible for the content or recommendations in this newsletter. Also...a lot of this information relates to trading the actual commodities. There may be some terms or strategies that you don't recognize. This update is meant to be an information guide for those of you that are trading gold and silver...or just the gold and silver ETF's like the GLD or the SLV. This commentary is opinion and analysis. You must still use good money management and trade management principles. You must also read the charts. No one...I'll repeat...no one knows the exact future of any event on Wall Street. You must still do your due diligence. I have been a bit disturbed lately to hear of students that are risking everything on these recommendations. That is not what I have taught you. I teach trading...not gambling. If you are going to ignore my teachings, you better be willing to take responsibility for your decisions. If you have not had my coaching classes, please do not trade any of the recommendations in this blog. You need to know what you are doing first. Trading is more than just stock picks. That said, I always appreciate Chaz's opinions and commentary. Thank you Chaz!


Good Evening Traders. It seems we have some interesting changes to deal with. I've spent the last few days checking with other analysts and I can't seem to find even one credible analyst who accurately predicted this recent take down in silver. There are NO ifs, ands, or buts about it. This was the most criminal act I've ever witnessed in the commodity markets. And NO ONE is being charged or even investigated for wrongdoing. Our government is clearly assisting the major bank shorts to clear their short positions. We know that more than 16 THOUSAND positions were covered in this take down. That's unbelievable. We clearly have a new paradigm to deal with. Again, I do not have the luxury of going into great detail of what is happening but my current thoughts are this..... The silver price has been much too slow to rise over the last week. This dashes any chance of a rapid recovery in the next few days. I believe that the silver price will stay in the $32 range until after Oct 26th, which is the November contract expiration date. There is very little open interest in the Novembers but December is HUGE. I normally like to sell my options about 30 to 40 days before expiration in order to avoid time value erosion but I plan on keeping my December 40 calls because I have reason to believe that silver will rise dramatically after the November expiration. Even if it doesn't, WHEN it does, it will be VERY volatile and dramatic. I will not be surprised to see some volatility over the next two weeks but I'm not planning on trading it. I am well positioned for December and March and I have no concerns about WHEN the move occurs. I've seen this too many times . It WILL occur. If it doesn't happen by December, I will start adding on May positions. ....For Jerry's students, those of you holding the January SLV 40 calls, I strongly suggest you HOLD. The December commodity options may not pay off but I believe the Jan SLV will. If you have Jan SLV calls, you might want to consider exiting them by Dec 20th at the latest. Most major traders leave for Christmas vacation on the 20th and don't come back until the 2nd week of January. It's NOT a good idea to be trading over the holidays............. There is one other little thing. The weakness in the silver market indicates that there is a slight chance that the shorts may try to take silver down even further. If they do, it will likely occur this week. Maybe in the morning. IF this happens, try to buy as many far out options as you can. A further take down will only last a couple of days at best. It will be a Heaven sent gift. If another take down occurs, the recoil will be ferocious. For the record , I did buy some December puts just in case there is another take down. I do NOT recommend you do the same ( play both sides of the market ) unless you have experience with this type of trading. Remember this, silver is a manipulated market and the manipulators are losing control of it. They rule it now but they won't for much longer. One last thing. NEVER trade more than you are willing to lose. There are NO guarantees in this business. What looks like a good trade today can look like a stupid idea in the morning. For the umpteenth time, I do NOT predict markets. I offer my opinion of what I think is the MOST likely scenario to occur. Thats it. Good luck and happy trades...... Chaz ....Sunday ..Oct 16th

BIG WEEK AHEAD

Earnings season will start to heat up with some of the big boys reporting this week. Don't base your opinion of the economy on Google's earnings report. They are still growing rapidly and are one of the few companies that can put up those types of numbers in a down economy. Even with those numbers, the stock sold off after gapping up big at the open on Friday. The volume was huge. This tells me that there were many professionals that were selling their positions on that news. If Google can move above that gap open (about $600), it might be able to push a bit higher. Look at a longer term chart of Google (GOOG). There is a ton of resistance at $630. This is why I don't think it is going higher right now...not in this economic environment.

I think this latest market rally is starting to exhaust itself. We could still move a bit higher, but we should see some selling this week. Whether you're bullish or bearish, you should be expecting some selling. Earnings season creates a bit of a wildcard situation. Some of these reports can cause whole markets to move higher than the analysis expects them to move (and visa versa). This is why I don't like making predictions during earnings season. That said, I still think we pull back soon. Look for some of the signals. Look for the Dow Transportation Average to sell off in a higher percentage than the market averages. Look for volume to pick up on a down day in the market. Look for the VIX to start spiking up a bit higher than normal. We'll see what happens tomorrow. C and WFC report earnings tomorrow. BAC and GS on Tuesday. With the numbers we saw out of JP Morgan, it is a good time to look at calls on the FAZ. AAPL reports after the bell on Tuesday. Don't expect a Google like move for Apple. Apple is already near an all time high. I don't see it gapping up that much. In fact, we could see it sell off. Google is stealing some market share from Apple. This might show up in their report. I'm still bearish in the short term on silver. I've included an update from Chaz and he seems to agree. He feels there could be a possible short term sell off that could be followed by a big move up. Make sure you use good money and trade management.

TOP OF THE RANGE

The rally today did surprise me a bit. I was looking for more of a corrective move upward over this last week. The sharpness of this rally makes it look more like a wave C (end of the correction) rather than a wave A (beginning of the correction). If it is a wave C, it will mark the end of the sideways correction that started back in early August. It would also mean that we could see a triple digit S&P 500 index by the end of the year. The price action and volume today suggest that the market could reverse in the next day or two. There are some really good reward to risk bearish trades setting up. SLV, GLD, WYNN, GMCR, SINA, AAPL, LULU, SOHU, CF, PCLN, and FOSL. I also love the reward to risk right here on FAZ and TZA for call option trades. JPM reports earnings before the open tomorrow. We'll see what affect it has on the market movement. The VIX is sitting at a key support level around $31. I'd like to see the VIX start to spike up and the Dow Transports start to sell off. This would confirm a bearish trend.

UPDATE

Just a quick update. The market did rally strong today, but on very light volume. This type of price action is usually very bearish. With the market now up quite a bit from the October 4th low, we might get a pull back in the next day or two. This possible pull back should be a "B" wave in a bearish ABC pattern. I wouldn't try to trade that move down unless there is big volume behind it. If there is big volume behind it, it wouldn't be a "B" wave....but rather the possible start of a bigger move down. If we sell off on average volume within the next few days, we should then make another push for that 1227 to 1228 area on the S&P 500. Keep in mind that we could drop 60 points on the S&P 500 (600 points on the Dow) and still only retrace this latest move up by 50%. We could see some wild swings over the next few days or weeks. I'd stay mostly in cash until a clearer trading environment emerges. If the market starts to chop back and forth, you can end up losing a lot of the money you made over the last few weeks...especially if you are on the wrong side of those swings. I don't like the price movement in silver over the last week. We had a big rally in the market and silver didn't move up much. It is beginning to look like it will make another move down soon. The longer it takes to make a significant move up, the higher the probability that it will move lower.

NOT SO FAST BEARS

The market sold off at a key resistance level on Friday. I added to some of my bearish positions. As of the time of this posting, the S&P 500 futures are up over 13 points. If this holds through the night, it would mean that the Dow would open up by about 130 points. That would not be the sign of a bearish move. In fact...if we close above Friday's high tomorrow, I'm anticipating that the market will move up and test the September 1st high...around 1227 to 1229. If we gap higher tomorrow, I will likely stop out of those bearish positions. This possible rally was anticipated a few days ago. I felt that we would drop down to 1040 before starting that rally. If we close above Friday's high tomorrow, we would likely be in that expected rally. If somehow the market drops at the open, I will stay in my bearish positions and look to see if the selling intensifies. If you are short this market, stop out if it rallies higher! Don't try to wait it out. This potential rally could last a few weeks. I might even look at some bullish trades if we close higher tomorrow. I'll post something on the blog if I see anything that I like.

ELLIOTT WAVE

I have a morning and evening Elliott Wave course coming up in a week. They will likely be the last ones I do this year...meaning 2011. If you are interested in taking that course, please email me at jerry@myoptionmagic.com by next Friday. I might be able to get you an end of the year holiday discount. I use a lot of Elliott Wave when analyzing potential market reversal points and when looking at the psychology of group behaviors in the market. Hope to see you there.

NOT YET

The market rallied for the third day in a row. I exited most of my positions yesterday so I missed today's move up. That's okay. My plan was to just get in an out quickly on this rally. I don't want to miss the next move down. I was looking to get in near the close today, but I still think we could move up a bit more. Volume was lighter today, but some of the market leaders showed some strength. BIDU, PCLN, AMZN, and WYNN (just to name a few) all advanced on equal or heavier volume. I don't need to build a big bearish position yet. That said, I did buy a few calls on FAZ and TZA. I would still like them to pull back a bit more before increasing the position. We are in the resistance area on the S&P 500 that I mentioned earlier in the week. What I'm looking for now is some signs of weakness. If we move higher tomorrow on lighter volume, that would be a nice bearish sign. I'd also like to see some weakness in the Dow Transports (IYT). A small move down on the VIX (or even a little spike) would also be a good sign. You can look at that 5 day rally back in early September as an example. The VIX dropped pretty big during the first few up days. As the rally started to stall, the VIX moved down in smaller amounts. On this latest rally, each move down in the VIX has gotten smaller. If we get a very small move down tomorrow in the VIX(and the market rallies higher on lighter volume), I will likely be ready to load up again on my puts. If we move higher tomorrow (or even Monday) on heavier volume, this rally might move up much further. Be patient though. If it does look like the rally could go up further, we would still be looking for a pull back before getting into any new bullish positions.

I want to thank all of you that have sent me success stories over the last few months. It has been great to see your success. It is the motivation I need to keep coaching. It should also serve as motivation for those of you trying to create your own success stories. Use these stories as motivation...not jealousy. For those that are still a bit scared to enter the market, try using your simulated trades. Buy some FAZ, TZA, and SLV calls in your virtual account and see how those trades work out. Those simulated trades will help you build the confidence to make real trades.

REVERSAL?

That was a pretty amazing reversal during the last hour of the market. There were a couple of signals that showed up about an hour before the close that predicted the possible turn around. First, the Dow Transportation Index was up 1% (about 60 points) when the Dow Index was still down 150 points. The Dow Transportation Average is often a leading indicator of the market...especially when it diverges (positively or negatively). Second, I checked the VIX and the VIX was down about a $1 with the market still down big. When the VIX is moving in the same direction as the market...pay attention. Volume was pretty strong. I don't think this is the start of a major rally, but we could get a short term bounce off of this day. The sharpness of the late day rally looks to be the result of "short covering". This can last a few days as the short sellers take profits from this recent move down. Trading the rallies within downtrends is a very dangerous game. I've seen traders give back all of their profits trying to time short term rallies. If you didn't get into any short term bullish trades at the close, be patient. Wait for a rally and buy more puts for the next move down. The market was extremely oversold so this reversal was somewhat expected. The big question is how high can we rally. A lot will depend on how we trade tomorrow. I'd look at the 1150 to 1172 area. If the European markets stabilize...and if we move above 1172, it is possible that we could move back up to that 1220 area. If the rally fails tomorrow, we will likely move down and test that 1040 support area. I still feel that we need to test 1040 before the markets can mount any significant rally...but today's reversal was impressive. If you are in any bullish trades, take the bulk of the profits off the table on any significant move up. Keep stops fairly tight. You could use the 1100 area on the S&P 500 as a stop loss point. TZA and FAZ are pulling back. This is good news if you are looking for another trade. Wait for them to drop a bit further. I hope you took my advice, after last night's posting, and took profits on TZA and FAZ. If not, you likely gave back a lot of profit today....and hopefully learned a good lesson from getting too greedy. LVS looks like a good short term bullish trade if you use the $36 support area as a stop. I'll emphasize short term bullish trade.

SUCCESS STORY

Jerry,

What a great day and 5 months since taking your classes. I closed out most of my trades late Monday afternoon in my trading account and my wife’s account. Between the two accounts Monday was a culmination of an $80,000 gain since taking course 1 and 2. My wife said to me when I showed her where we stand in our two accounts “ you would never have been able to do that if you would not have taken the two courses from Jerry”. She went on to say “ I was skeptical when you wanted to spend all that money for those courses, I am no longer skeptical”. I closed out 8 trades in my account yesterday for a gain of $20,000 and my wife’s account had 12 trades of $30,000 gain.

Here are the trades closed Monday from my trading account:

10 PACAR puts buy @ 2.25 sold @ 3.40 for a gain of 1050

10 FAZ puts buy @ 10.70 sold @ 21.20 for a gain of 10,500

10 SPY puts buy @ 4.07 sold @8.20 for a gain of 4130

10 SPY puts buy @ 5.27 sold @ 6.90 for a gain of 1630

10 DIA puts buy @ 4.90 sold @ 5.70 for a gain of 800

10 SPY puts buy @5.57 sold @ 12.00 for a gain of 6430

10 DIA puts buy @ 3.21 sold @ 6.55 for a gain of 3340

10 DIA puts buy @ 3.85 sold @ 7.25 for a gains of 3400

Thanks for your classes and the BLOG

Dan

SUCCESS STORY

Good Morning Jerry, You were absolutely right about FAZ and TZA calls and I sold both at the last 10 min of the market yesterday.   FAZ - 100% return sold at 25.40 TZA - 100% return sold at 20.65  These trades alone meant a profit of nearly $7k in 1 day! I had to excuse myself from a meeting to make a "personal" call before 3pm. Man, was it worth it!!! my first 2 100% return trades. I'm a believer.   I managed to have a lot of patience these last few days and watched my trades get progressively profitable over the last 4 days. I was sticking to my plan and my targets and they were completely shattered with that drop on the market.   My account has grown 35% in the last 4 weeks. I'm very excited and grateful for your teachings and look forward to more everyday.   -Andy  

SUCCESS STORY

Jerry, you and your OptionMagic course Rock! I just finished course #1 and feel like a light has been turned on.

A new trader, I muddled around for a year and lost all confidence last Spring. I was vectorless … inexperienced and searching for a strategy that would work in any market. Since starting your course, I believe I’ve found such a strategy with a means to leverage other’s experience… and regained my confidence.

I am very pleased to report a Success Story! Over the last 6 weeks, I’ve recouped all my losses (over the last year). I’ve doubled my liquid trading account value and banked some profits, covering half of the cost of the three OptionMagic courses, to date. I’m batting .900 for winning trades over the last 6 weeks, and have had effective stops/exits throughout. (So far I’ve had success on these markets: FAX, TZA, GE, WFC, JPM, XOM, DOG, SDS.)

I’m currently re-running the course 1 videos while waiting for course #3 to start in a few weeks. My trading path forward seems very bright now.

I HIGHLY recommend your course to anyone. Thank you for the outstanding instruction coupled with real-time sage wisdom … a killer combination and recipe for continued growth. That’s the edge that makes for effective learning.

Respectfully,

Steve

SUCCESS STORY

Good morning Jerry! Here is another success story to post. I bought FAZ,TZA, and LVS last Wednesday, set the target for LVS at 37 like you suggested. On Monday morning, LVS triggered and I made a pretty penny. Then I watched the market throughout the day, sold FAZ and TZA around two o clock, when I thought the market was at it's lowest- I almost doubled my money in 4 trading days ! Wow! Thanks !

Jennifer R.

SUCCESS STORY

Dear Jerry;

I obviously read the :BlogSpot" each time there is a posting. Lately I have paid close attention to the success stories. I do not write this out of any jealousy nor envy, and want you to know that I actually enjoy seeing the successes, even though I have not personally achieved anywhere near the levels of success that I read about in the "Blog".

In my past life/career I was undoubtedly a "quick study", and gained a respectable degree of success., yet it occurred over a 35 + year period of time. I have completed all three courses at this time, and continue to participate in the learning process each and everyday.

Although I can't boast of success (at least applying my definition of that word), I want to express certain things to you as stated simply below;

You are amongst the best teachers I have ever had, during a lifetime of learning. You are patient, understanding, highly competent, and as thorough as any Teacher/Mentor with whom I have ever been associated. I have worked with many high level educators. You are in a very small class of the "top of the top". I'm proud to be your student.

I have been under your tutelage since mid-September of 2010, and through all my frustrations over winning/losing trades, I have enjoyed every minute of the process.

Now for the good part. I feel as though I am coming into my own. I was negative quite a bit of money, and my win/loss ratio was too embarrassing to describe. During the past two months, I have become more relaxed, significantly more confident, and feel as though a momentum has kicked in that in my opinion would not have happened if it were not for my very hard work coupled with your guidance. I attribute 50% to each.

You will be happy to know that almost every trade during past eight weeks has been successful. You are aware that I am holding quite a few SLV contracts, but admittedly, not acquired through technical skills. I'm looking at those as "Crap Shoot" dollars, and I have developed in my mind little or no concern over them.

The fact of the matter is that I have momentum and I feel the skill kicking in more and more each day, and, most importantly, my daily or weekly trading decisions are well planned, my trade management practices are in full sinc, and my money management skills, are merely a continuation of past practices, which were successful, but fell through the cracks for a short period of time.

For my fellow students, should Jerry decide to publish this: I know the meaning of hard work. To some of you, making money as a Trader will come easier than for others. For many of us, it will not be as easy, and may take longer to become successful. But whatever the case may be, I have no doubt that if you are amongst the privileged students whom have learned under the teachings of Jerry McCann, and you use that knowledge carefully and professionally, you will succeed and most likely in a grander, more meaningful and successful way than you may ever have dreamed possible.

Jerry, your the best of the best!! What else could one say except thank you.

Sincerely,

Michael / Arizona

SUCCESS STORY

Hello Jerry

its been great and i hope stays like this , you made another brilliant call last week that's what you wrote in your blog (there is always a possibility that we go back to 1220 but i feel too many traders are expecting that so i think we rally up just a bid more) and that's what happened exactly . AMAZING that's really magic

these are my last week trades

53 lvs puts at 1.22 sold at 5.40 profit $ 22,100

20 wynn puts at 4.80 sold at20.75 profit $35,000

20 aapl puts at 6.58 sold at 8.70 profit$ 4,200

13 faz calls at 8.80 sold at 11.50 profit $$3,500

20 faz calls at 6.85 sold at 12.95 profit $ 12,200

20 tza calls at 6.15 sold 9.90 profit $ 7.300

20 crm puts at 5 sold at 9.70 profit $9,400

11 cmg puts at 10 sold at 14.8 profit $5,200

15 gmcr puts at 8.35 sold at 14 profit $8,400

20 aapl puts at 7.65 sold at 9.70 profit $ 4.400

20 amzn puts at 5.40 sold 7.80 profit $4,800

that's total of $116,500 thanks Jerry

SUCCESS STORY

Hey Jerry,

here are some more success trades which I did. I traded the quick few days rally while getting ready for the downside.

BIDU buy 124.77 / sold 129.22

CF buy 147.08 / sold 156

BGU buy 49 / sold 55

TNA buy 35.81 / sold 41.20

so far the downside position which I took look pretty good so we will see the final results next week. I also got some SLV which I have acquired on several lots. it is not looking pretty right now for SLV position, but the green light on the XAU yesterday may be is showing that the tide is turning. the proof in the pudding in the eating after all.

thanks again for everything Jerry

brgds

Roman

SUCCESS STORY

Jerry,
another great week of trading.

I sold my LVS PUT at 61.5% return ($2000) - my largest single trade return so far. My target was 40 and sold at around 38.
Still holding on to AMZN put, FAZ and TZA calls for a profit of $3500 and dec SLV call.
I could have done CMG as well, but i invested about 1/3 of my account this week.

I do have 2 puts that are not profitable yet, SRCL and JPM, but only losing $250. The beauty of small losses and big wins.

Looks like a lot of stocks are hitting some new lows closing below 50 and 10day. most trends are down, but they are sliding pretty far from MAs. Not sure if these are good trades, since we never know how low can they go. Certainly if the market takes another hit, and moves to the bottom of that channel, you mentioned the possibility of going down to 1040. i might have to wait to enter new trades, because it can go either way. looking forward to your blog post this weekend.

thank you again,
Andy

MIXED SIGNALS

The market had another strong drop today as the S&P 500 closed below the 1120 support. The Russell 2000 shattered it's support with over a 5% drop today. Although this break of support likely signals an eventual move down to 1040, it also puts the market in an extremely oversold condition. We could rally a bit tomorrow. We could also have a panic sell off with the Dow down over 400 points. I don't like to place a lot of trades when the market could go either way. I'd like to buy more puts if we get some kind of snap back rally. We'll see if we can get one tomorrow. If you made a lot of money with this last drop in the market, you need to start taking some of those profits off of the table. They can disappear quick if the market gets into some sort of choppy rally. Those that traded the FAZ and TZA recommendations made a lot of money today. I'll expect some of those success stories.

SUCCESS STORY

Jerry,

Thank you, thank you, thank you.

WOW what a month of trading. I just can't believe this, I had my biggest day EVER in over three years of very active trading. My entire account gained 14% in ONE day (9/30/11).

For the month of September, I am up 38%.

My account is up 21% overall in 2 1/2 months of trading your system.

And astute math nerds will notice the disparity between September and the totals. That was due to me jumping in the first month having taken no classes yet, and losing money in the beginning. Let this be a warning to newbies, play it safe for a while with paper trading till you gain confidence and learn the proper skills Jerry teaches. (I am still learning myself).

None the less, ALL of this success is because of your excellent training and outstanding insight in your blog. I wish I had found you 3 years ago. While I sold some of my puts tonight at the close, I still am riding this downtrend.

Mr. Ed

SUCCESS STORY

Jerry - I also want to thank for all helpful feedback you have given me. I feel that I have received the best instruction and training available anywhere. Your recorded lectures and classes are the best -- bar none. I had no experience in trading options prior to your course. I am very excited about what I have learned and very anxious to apply all of your teachings. I certainly would recommend your OPTION MAGIC course to anyone who is serious about learning to trade options. I found your course to be very motivating, interesting and challenging.

THANK YOU

LARRY W.

SUCCESS STORY

Jerry,

You have to love those Fibonacci ratios! After your Fibonacci class yesterday, I charted your recommendation on LVS. I entered the trade as the price had moved below the 50 day MA and the 10 day EMA. I decided on an aggressive entry on a put just above the 61.8 and set my PT / Limit at the 38.2. Within the first half hour of the market opening this morning, my OCO order was triggered and I was up 240 bucks! After the trade had been completed, I saw the price bounce off of the support at the 38.2 level and retreat back up. By setting my limit at the 38.2, I really maximized my profit on this trade.

First of all, thanks for your recommendations. While I'm only half way through your first course, I have been doing some limited trading and I am up about 1200 over the past week. Of course, all of the paper trading has really helped, but applying the lessons in real time with real money has been the best reinforcement for me.

Chris P.

SUCCESS STORY

Jerry,

Thanks so much for your education, it is slowly coming together. Below are my most recent trades:

• XLF put 71% gain 9/23
• GE put 56% gain
• CVX put 46% gain
• TZA call 51% gain

The market started to turn up 9/23 so I sold out of these positions to keep my profit.

Mr. Ed

300

We just reached 300 followers of this blog! I just wanted to recognize this milestone and thank each of you for following. I hope that you are seeing success and enjoying your trading.

ALMOST THERE

Today's reversal could signal the beginning of the next move down. There is still a chance we could rally up to that 1220 area again, but many of the individual charts look like they are ready to drop right now. The financials look very bearish again so start looking at those FAZ calls. If the market gaps up at the open, it would really set up some nice reward to risk trades on FAZ and TZA. AMZN and CMG both had bearish engulfing patterns today. They don't have to drop immediately, but it should happen very soon. We still have to respect the 1120 support area, but I don't think it is going to hold this time. LVS is another put option trade. It should move down to around $37 (or lower) on this next move down. The SLV may drop a bit more if the market moves down to 1040, but I still think it is at or near its bottom...at least that is my opinion right now.

SNAP BACK RALLY

I think this was the snap back rally that we were waiting for. With the strength of the reversal today, we could move up a bit further tomorrow. I don't think that we will go much higher on this rally. There is always the possibility that we can go back up to 1220 again, but I feel that too many traders out there are expecting that. I think we might rally up just a bit more, then drop down to 1040. Silver made a big reversal today. Gold wasn't too bad, but silver was much better. If you are entering a new trade on the SLV, I'd put a stop below today's low (about $27.41). There is a good chance that the SLV could spike up pretty good within the next 30 days. If you already have an SLV position, you should see a recovery very soon...and hopefully a nice profit after that. If we get a decent move up in the market tomorrow, start looking at the FAZ and TZA calls again. I'd like both of those to get closer to their 50 day MA so that the reward to risk for the trade is better.

SUCCESS STORY

Hi Jerry

As i promised posting my great success thanks to you

I bought sold profit

20 gmcr puts at $7 $12 $10,000

35 LVS puts at $1.20 $3.5 $8,000

50 vix calls at $1.30 $ 2.4 $5,500

20 fosl puts at $6.90 $12.5 $11,900

40 tza calls at $ 6.55 $ 15.8 $37,000

20 sina puts at $8.7 $ 20.2 $23.000

20 tza calls at $ 4,35 $ 8.5 $8,300

20 cmg puts $16.6 $20 $6,800

15 vmw puts at $ 5 $ 10.20 $7,800

20 crm puts at $7.80 $16.8 $18,000

30 tza calls at $ 6.50 $ 14.10 $ 22,800

30 bidu puts at $ 3.2 $10.2 $24,900

20 puts wynn at $ 2.85 $7.85 $9,200 total $ 193,400 profit

now the bad news . i am down $90,000 in slv but i am still in the trade and i hope slv will go back up , my down side risk is small because the value of my options are down big but i still have hope to see slv up. luckily most of my calls are long term.
thanks,

Naseem

SUCCESS STORY

Hi Jerry,

I have another success story! I'm going to have to start calling you the "Oracle of Utah". You were perfect in your reading of the market last week! For those out there reading this...know that Jerry is an amazing teacher and his technical analysis is uncanny. Since I started trading about 4 months ago (I'm completely new to trading), I've had ups and downs, but I was continually learning and tried to limit my losses on bad trades as Jerry teaches. In the last four months, thanks to Jerry, I've turned my original 11K investment into over 25K. That's over 100+% return in just 4 months!!! Anyway, here is the latest success thanks to Jerry:

Bought 5 contracts of TAZ Oct 45 calls at various times on 9/14 for an average price of $7.34

Sold on 9/22 3 contracts at $12.30, and 2 contracts at $13 for a total profit of $2577.37

Bought 5 contracts of FAZ Oct 60 Calls on 9/14 at different times with average contract price of $8.664

Sold 2 on 9/22 2 contracts at $12, 2 contracts at $16.65 and 1C at $17 for total profit of $3013.34 !!

Bought on 9/14 and 9/15, 10 contracts of QQQ Oct 58 Puts (note: not on Jerry blog but to me it had same chart pattern as the other two recommendations above) at average price of $3.34

Sold on 9/22, 5 contracts at $4.51 and 5 contracts at $5.2 for at total profit of $1456.90

Thanks so much Jerry!!!! Your students really appreciate your knowledge and skill! -Mike from Colorado

SUCCESS STORY

Hi Jerry,

Thank you for the recent recommendations and guidance with respect to market activity. The FAZ recommendations proved to be particularly helpful as follows:

8/30: Bought FAZ Oct call at $8.20; sold 9/6 at $17.63; a $937 gain

9/19: Bought FAZ Oct call at $8.20; sold 9/22 at $18.70; a $1044 gain

Both trades exceeded 110% ROI! As a new trader (finished course 1 back in June), who has struggled with the way the market has chopped sideways in the 1st few months I have been trading, I needed to hit a couple out of the park! I am very grateful for your blog and all the help the course provided. Thank you.

Take Care,

Bob S.

SUCCESS STORY

Jerry,

9/20 bought FAZ - 2 contracts @ 11.34

9/22 sold FAZ - 2 contracts @ 22.55

We just started using money to trade about 1 month ago.

Thanks to your classes/blogs!

Jim & Jane

JERRY'S SILVER UPDATE

Many of you have been following Chaz's recommendations for a period of time now. He knows the silver business. I, on the other hand, don't know much about anything....but I do know how to read charts. This doesn't mean that I'm always right. Many of you have emailed me over the weekend seeking an update from Chaz on the silver situation since silver has been in a free fall lately. Chaz did send me an update which I just posted. There are a couple of points that I want to make. First, there is a difference between fundamental analysis or indicators and technical analysis or indicators (charts). Many times these indicators are compatible, but there are times when they differ. Chaz is an expert when it comes to the fundamental analysis of the silver market. He has been in the business for over 30 years. I trust his opinion. The fundamental situation in silver...and gold...shows that demand should increase as the uncertainty of world and national events take hold of the market over the next year...or two. History shows that when there is extreme uncertainty in the market, the first move is usually into U.S. Treasuries. As the investors sit in this safe but lowly profitable instrument, the pressure starts to build. The pressure of deciding how long to stay there. No financial firm's clients want to hear that they didn't make any return on their money for the year because they were in Treasuries...especially after they are charged a 3% management fee. There is pressure on these firms to find another "safe" investment with a better return. This is when those firms turn to gold and, more recently, silver. You can look at the recent rise in Treasuries by looking at the TLT. You can see how Treasuries have started a nearly parabolic move. This has coincided with the dramatic drop in silver and gold...and the overall market. We should start to see these trends reverse. The question on everyone's mind is when?

It is often said that the fundamentals tell you what to buy and the technicals tell you when to buy them. In other words, the charts can help you with the timing. One of the things that has bothered me over the last few months, on the gold and silver charts, is that we appeared to have a wave A down (the May move in silver and the August move in gold) which was followed by a wave B up. It felt like we needed to get one more move down (wave C) before we could get the next big rally that we were all expecting. This was one of the reasons why I recommended puts on the GLD a few weeks ago. The silver chart was harder to read since the "B" wave back up was somewhat erratic. I could see a scenario back in July where silver could have completed it's ABC pattern and was possibly on the next move higher. I entered a trade on the SLV in case the rally was underway. Some of these early bullish trades worked out okay, but I was also stopped out of a few. We (Chaz and I) were expecting the possibility that silver could drop before making that next move up. On September 19th, the SLV made it's first solid close below its 50 day MA. The trend was still up, but the chart was saying that the sellers were gaining control. This doesn't mean that a downtrend will follow, but it usually tells me not to add any new bullish positions....and to make sure I have stops in place for my current positions (if it was in your plan to use a stop. In a call option trade, you might have been willing to risk the entire amount in the trade). As the selling increased, it became apparent that we could be in the "C" wave of a larger bullish ABC pattern. If you look at the longer term chart (weekly chart) of the SLV and GLD, you can see this possible bullish ABC pattern more clearly. The next question would be, "How much further can we fall?". One thing I pointed out in an earlier posting was that there were too many people out there saying to buy gold on this drop. When I see a lot of people recommending to buy something after a big drop, it usually means that it isn't done dropping. Stocks, in particular, tend to bottom out when no one wants to buy them. I think that gold and silver will continue to drop (in the short term) until people are afraid to buy them. Based on a Fibonacci projection measurement of that possible bullish ABC pattern, the SLV could still drop to around the $22 to $26 range. My theory is that the market will continue to drop to the 1040 area on the S&P 500 and that silver (and gold) could also continue to drop (although gold and silver could stop dropping before the market stops dropping). At that point, I could see the market start to rally. If the market starts to rally, I can easily see money managers out there getting out of Treasuries and moving into gold and silver. This is where I could see the big rally taking place in silver and gold. It would also likely move just as fast to the upside and it did to the downside. That would keep Chaz's end of the year target on track.

This finally leads me to my second point. No one knows the absolute future movement of a stock (or commodity). We can give a probabilistic outlook (which will often be right), but we can't give an absolute outlook. You can never keep betting your entire account on one probabilistic outcome. It may work many times in a row, but eventually it isn't going to work. It's like betting it all on black at the roulette table. You could be right 10 times in a row, but eventually it is going to land on red. When that happens, you could end up losing everything. Money management is the most important part of trading. Trade management is second. If you used good money and trade management techniques with Chaz's latest recommendations, you would still have a large portion of your trading account ready to capitalize on a future rally. You might still have a draw down, but it would likely be in a more acceptable range (15% to 25%). If you didn't use good money and trade management, you could be stuck with a 60% to 80% draw down in your account....hoping for a rally to bail you out. I think that a rally will likely come to bail you out, but what if it doesn't? If you survive this drop, I hope you take your money and trade management more seriously....because you might not get bailed out the next time. That's assuming that you get bailed out this time. Chaz is no more a market psychic than I am....but he is good. I'll let you know what the charts are telling me as I watch this trade over the next few months. We will also continue to welcome any updates from Chaz on any fundamental changes to the silver trade.

SILVER UPDATE

This post is from Chaz...a commodities trader that writes a monthly newsletter on the precious metals market. He has given me permission to post it on my blog. As a disclaimer...I (and Option Magic/Market Trend Signal) are not responsible for the content or recommendations in this newsletter. Also...a lot of this information relates to trading the actual commodities. There may be some terms or strategies that you don't recognize. This update is meant to be an information guide for those of you that are trading gold and silver...or just the gold and silver ETF's like the GLD or the SLV. This commentary is opinion and analysis. You must still use good money management and trade management principles. You must also read the charts. No one...I'll repeat...no one knows the exact future of any event on Wall Street. You must still do your due diligence.

Hello again traders. This is the first time I have ever made commentary so close to prior commentary. So many questions in my email. Where to begin?......Throughout today, I saw many news blurbs and heard many comments on the Internet and CNBS...oops, I meant CNBC..... that said traders were dumping gold and silver in favor of cash. One talking head said the COMEX pits were filled with panicked sellers. Another said the Hedge Funds were abandoning the metals. NONE of this is true. We are watching a computer rigged High Frequency take down program designed to trigger a black box cascade of the Hedge Funds computerized pre-programmed asset and capital protection liquidation program. I guess I should explain this....Hedge Funds have computer trading programs that are designed to automatically buy or sell when certain price levels are hit. These predetermined price levels are known as "Black Boxes". The banksters, who sell massive quantities of contracts and options have created computer programs that trade with each other at high frequency on even a fraction of a penny's movement in price. These programs can trade thousands of trades per second. I cannot prove it but I do believe these programs can recognise the buy and sell orders from other computers which tell it which computers it is authorized to trade with and which ones it's not. I believe these programs are allowed to make a paltry token amount of trades with "unauthorized" computers so that a few small orders are filled so as to make it appear that the trading is fair. To prove my point, consider this..... Why are these computers able to make thousands of trades at the theoretic value of an option yet when you or I place a trade order, we have to make offers well above theoretic value if we want to get filled? You see the point now?.....These programs are designed to trade at such high speeds as to negate and ignore real trades placed by traders. As the price drops lower and lower, a black box trigger is hit causing many positions to be liquidated. The computers recognise this and begin to trade faster until the next black box it hit. This is repeated again and again causing a cascade of black box sell offs until the predetermined desired price level is reached at which point trading slows down and is stabilized and "contained". Interestingly enough, this phenomenon only seems to occur a few days to a week before option expiration. The Hedge Funds did not willingly sell their positions. They were tricked out of them. ........... I've said several times now that this retracement will be VERY short lived. Here is the proof. It was announced today that MARGINS on metals are being RAISED again ! ! ! I've lost count of how many times margins have been raised in the last 12 months buy I think its about 8 times now. Anyway , gold margin was $9450 per contract and is now $11,475 and silver was $21,600 and is now raised to $24,975. Now let me ask you a question. If we lose 20% of the value of a commodity in two days, why is a rise in margin levels necessary? And why did this raise come out of the blue without any prior hints or suggestion that it even might be raised? Not interesting enough for you? How about this? A number of central banks were happily buying large quantities of gold in the 1750 to 1850 range in the last few months. Gold is now on sale below 1675. If you were running a central bank and wanted out of dollars ,would you stop buying and wait for the price to get above 1750 before you start buying again? I'm just asking. .....One other little thing, I've been watching and trading gold and silver for 32 years now and I can tell you that this take down is the most brazen and criminal act I have ever seen in commodity trading. It is also the most aggressive and vicious I've ever seen. There is NOTHING to compare it to. ....Back to the margins. Because margins are being raised, it is likely that many traders will be forced to liquidate positions to raise capital to cover the new margin levels on Monday. Just before expiration. What convenient timing for the banksters. We may well see silver drop even more. Perhaps to $27. The story will likely be told Sunday night about 7pm in the Hong Kong market. .....I am very happy to say that I was filled on ALL of my outstanding orders this morning and I am prepared to buy more on Sunday night in the international market. Make no mistake here, this market will not stay suppressed. It will snap back very quickly and probably exceed its recent highs by a wide margin in as little as 30 days. This kind of market can make you rich very quickly or drive you into poverty just as fast if you don't know what you are doing. For the umpteenth time, PLEASE do NOT trade more than you are willing to lose. This is a rigged market. We have become very adept at guessing what is most likely to happen but the last few days have reminded us that we can not PREDICT exactly what a market will do. It seems my recent statement about volitile price swings coming sooner than anyone was prepared for was dead on. I think it's only going to get worse from here on out. But after the 27th it will be in both directions. This is an excellant market to play both sides but this should only be attemped by seasoned traders with deep pockets. If you are new to trading, don't even think about it. IF you can get filled, the Dec 30 and 35 calls are outstanding buys as are the March 40's. It's late, thats it, I'm tired, I'm done. Good luck and happy trades.....Chaz....Sept 24, 2011