NEWSLETTERS & RECOMMENDATIONS - February 27, 2011

Dear Friends and Fellow Traders,

The markets continue to amaze and surprise traders. The Mideast is a powder keg. Brent crude hit $120 a barrel, WTI hit $103 and the S&P sold off 1.7% for the week. If world markets really thought that Saudi Arabia would also blow up, the indexes would have been down over 10%. Instead Saudi Arabia tells us they will fill any gaps. The Saudi citizens celebrate the return of their King by dancing in the streets. Of course a $36 billion stimulus bonus for the people didn't hurt either.

There is plenty of oil in the world. There are no shortages. However, the first reaction is to markup oil and gas products. Investors fear only uncertainty. Prices may stay high for awhile but this too shall pass. I remember only too well the European debt crises. Today, we don't really hear much about it anymore. Yes, the Greeks are rioting in the streets. The Irish just replaced the 60-year governing party. The Euro recovered and the world moved on. However, I'm sure this Euroland problem will come back to bite investor in the ass someday however that too will be handled.

Looking ahead to this week we get 2 "backward" looking numbers with ISM number on Tuesday. It should hit new 2 year highs. On Friday we get that all important Jobs number. I'm hearing numbers as high as 250,000 but 130,000 are from the snow delay in January. I say backward-looking because rising oil prices can and will depress economic numbers going forward. I'm paying $3.50 in Vegas already and I'm sure CA gas is much higher. Widely fluctuating oiI prices will further create even more uncertainty giving NET traders even greater opportunities to profit. I hated that 2 point-a-day profit drift-up. Give us some good old fashion wide swing days like last week.

BTX Update
The good news is that we’re back to trading a two-way market. Furthermore, volatility has picked up. This means larger intraday trading ranges for both stocks and indexes. Some of our favorites presented great trading opportunities. BTX hit almost $10 late last year and then I suggested selling stock over $9.00 and buying calls. Yes, the in- close options may expire worthless but BTX can be bought back nearly 35% lower hitting $6.08 in panic selling before closing at $7.01. Just last week I started to sell naked puts for the first time in months on BTX and added more March and June 7.5 strike calls.

HUN and SIGA Update
HUN reached new 2-year highs at $19.07 only to sell down to nearly $16 in a few days. This week I mentioned in the Chat Room to sell more puts. SIGA, my current favorite, expects a $500 million initial contact any time after March 1st. Follow-on orders from BARDA, a government purchasing agency, could add another $2.8 Billion more over time. Foreign governments could add billions more. There are two other proprietary drug products that could add billions more 2-3 years down the road. All this smells of big profits to come for this $500 million market cap stock. SIGA was $14 only a month ago and last week sold down to $10.40. I believe SIGA can trade between $30-50 the next 2-3 years. There stocks are others on my Subscriber’s list I won't go into now.

Trades of the Week
By Thursday morning the S&Ps dropped 50 points from the 1343 high to 1293. I missed the early put trade as I was bidding $1.25 and saw the puts go from $1.55 to $4.00 in a matter of hours plus large hedging profits were there for the taking. Near midday I send another Alert Email telling subscribers to use short E-mini profits to start buying OTM calls around $0.60. The calls hit a low of $0.40 then made a straight line move to $1.20. There I suggested selling. See Thursday's 5 minute S&P E-mini chart, NET Weekly Money Chart 2011-02-25.

On Friday that same OTM option opened at $1.20 and hit $3.00 late Friday for a potential 8-9 bagger overnight. I recommended selling calls the call the night before thinking Thursday that if the market failed to rally on the opening Friday the call options would be cut in half. Besides, I wanted to be simultaneously long puts and long S&Ps. Nevertheless, before the opening I expected a gap rally. I sent an Alert Email to buy ITM puts and go long E-minis stating that a simultaneous hedge would work best. The ITM options should have averaged about $1.20. Let’s say 100 puts were purchased and one went long with 60 E-minis [NET recommends a max of 75% hedges when ATM or ITM options are long] and closed the trade out near my late Alert Email after 3:15. The long E-minis could have made 6.0 points or $300 X 60 contracts = $18,000 profit. The puts would have expired worthless and lost 100% or $12,000 for a net profit of $6,000. I wrote in my last Alert Email it was a nice profit but nothing like the last week. During the day there were very limited additional hedging profits.

As always keep those cards and letter coming. Quite few of you viewed last week’s trading video and so far I’ve received a number of emails noted that this was one of my best training videos ever. The response brought a tear of joy to my right eye. I'm always happy to do anything to increase your trading knowledge. Remember I'm also available to take your calls any time.

Good trading,

Stan Moore
702.558.1814