New Era Trader - Futures and OEX Option Trading, Parlaying and Hedging, Great Indicator

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Hi. This is my blog where I document my recommendations, market comments and more.

Apr 09

2012

I Hope This Finds All of You Well and Enjoying Easter

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - April 8, 2012

Dear Friends and Fellow Traders,

Friday morning shows us "Rhythm" and "New Era Trading" at its possible best. I've been preaching hedging and parlaying trading techniques for over seven years now. It's the reason I un-retired in late 2005. Because the market is very overbought and vulnerable we find we must hedge now more than ever. I love the combination of long puts and long E-minis when the market is in rally mode because the unwanted puts are a bit cheaper.

However, when markets sell-off as they did last week we go long calls and short E-minis. Thursday morning we could have bought calls, the 140s as low as $0.07. Before expiring worthless the calls traded as high as $0.36 for a possible 5 Bagger in a few hours plus hedged profits as well.

Since Friday was a holiday there was no trading of options going into Friday's job numbers release. So unless you were long the April 14 140s ATM expiring calls near $0.80 you missed a great hedged trade.

I just wanted to impress upon you just how great this S&P really is. GS just raised the Friday jobs # Thursday morning from 175,000 to 200,000 setting up the market for a negative number surprise because a good number was now already in the market anywhere over 1390-95. Normally with a Friday trade we could have been long ATM 140 calls say $0.25-.30 not $0.07 a still perfectly good throwaway trade. We would have been short E-minis in the early Friday morning session anywhere over 1390 scaling in more higher where they were trading in front of the 8:30 number.

Surprise, the # disappoints! You lose $3,000 on 100 calls but you make between $20,000 and $30,000 on the E-mini hedge of 20-30 contracts per 100 options. (Scale for your account size.) That's what we do every week. Just looking for this trade and believe me we get it often enough. See a few earlier trading/training videos I made. By the way those 100 calls were more than already paid for with the many Wednesday/Thursday hedges.

This is what NET can become for you. It's a money machine if you just position yourself in front of market moving news enough of the time. I setup all these trades in the Chat Room as well as with Alert Emails ahead of time.

The markets will open much lower Monday but hopefully we can now start to look forward to QE3 once more. We're still selling rallies, getting long puts and long E-minis then on pronounced weakness and in large support areas we'll go long calls and short E-minis.

Here's some more great information about BioTime. Enjoy!! I just received this today. I will be at BioTime offices in San Francisco Mon/Tues, 4/16 and 4/17:

Dear Technology Profits Reader,

I enjoyed this week's trip to the Personalized Life Extension Conference in San Francisco. Part of the pleasure was meeting some of you, my readers. One thing I noticed was how extraordinarily well-informed Agora subscribers are compared with the “general population.” It truly is a privilege serving you. Thanks for attending the event and for the great conversation.

I think Patrick Cox's Saturday presentation on new life-extension technologies pretty much brought the house down. Patrick had only half an hour to condense and present the latest breakthroughs to the audience - and a fast-paced half hour it was. It mirrored the rapid acceleration in life-extension technology happening right now.

Another outstanding presentation was given by Sierra Sciences' president and CEO William H. Andrews, Ph.D. Andrews' specialty is telomeres - those “tips” that sit on the ends of our DNA strands. As we get older, the average length of our telomeres shortens, leading to aging and age-related disease. Andrews' company specializes in researching and developing ways to reverse that process. His motto is “cure aging or die trying.”

On Sunday, John Mauldin of Millennium Wave Investments regaled the audience with the latest news in stem cell technology and cancer therapies. He talked about the first available fruits being harvested from stem cell research by International Stem Cell Corp and BioTime Inc.

Speaking of BioTime, Patrick and I personally toured its labs on Monday. BioTime is just across San Francisco Bay from the convention center. The San Francisco Bay Area is simply amazing in terms of the sheer number of biotechnology companies headquartered there. Here is a picture of a map of the area I took while there. It reads like a “who's who” of biotech:

While there, I was just an observer, but Patrick was a lab rat! BioTime received some of Patrick's cells in order to demonstrate how it can transform them into stem cells used to rejuvenate the cardiovascular system.

Agora Financial had a film crew on the scene. Our executive publisher, Addison Wiggin, is putting together a documentary on America's comeback. Breakthrough medical technology will be a huge part of that.

The technology is astonishing to witness firsthand. When it goes live, all that will be necessary to get the process started from a patient's perspective is a few minutes at a dermatologist's office. We visited a dermatologist near BioTime's headquarters, where a small bit of Patrick's skin was removed from under his arm. The physician gingerly placed it into a flask and packed it into a Styrofoam cooler for transport to BioTime's lab:

Skin cells in hand, we drove to BioTime, located just a few minutes away. BioTime's CEO, Dr. Michael West, explained that skin cells are more durable and ready to propagate in culture than other cell types. This makes them easier to work with. As the head of one of the world's leading regenerative medicine companies, Dr. West is immersed in the science of stem cells.

When we arrived at the lab, Dr. West donned a white lab coat to prepare to work some magic on Patrick's cells. He teased out cells from between the collagen fibers that form part of skin's structure and bathed them in a growth medium prior to placement inside of an incubator.

“Begun, the clone wars have,” Patrick joked.

“I think one Patrick Cox is plenty,” I shot back:

Once enough new cells have grown in culture, Dr. West's labs can transform them into stem cells. BioTime has pioneered in the discovery of how to flip the genetic switches needed to perform the conversion. Dr. West has also developed the technology to lengthen the telomeres in adult cells. Not only will these cells be able to turn into any type of tissue in the body, they will also be biologically young.

This, as I mentioned, includes the cells of the cardiovascular system. Cardiovascular disease is the No. 1 killer in developed nations like the U.S. What will the world be like when we can reboot aging hearts and arteries, restoring them to youthful health? An interesting question, isn't it?

The implications of this question really hit me in a personal way on the way back from San Francisco. As I drove home from the airport on Tuesday, my father called me to inform me that my grandfather had suffered a heart attack. I drove across the state yesterday to spend some time with him at the hospital.

Grandfather is 82 now, and it is difficult to look at the strong, healthy man I remember from my childhood sitting in a hospital bed crisscrossed with tubes and wires. The doctor said he was lucky. The heart attack wasn't severe enough to cause real damage and hospital tests revealed the true extent of the disease. He'll be undergoing a quadruple bypass surgery early next week.

I look forward to the day when these kinds of events -- caused by aging cardiovascular systems -- will be things of the past. As biotechnology investors, not only can we profit, but we can help hasten the day.

Ad lucrum per scientia (toward wealth through science),

Ray Blanco

Remember I'm here to help you make all the dollars you desire.

Continue to enjoy your high Holy days.

Good trading,

Stan Moore
702.685.7325

Apr 01

2012

It's All About the Setups and News - Buy & Hold is Not What We're About

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - April 1, 2012

Dear Friends and Fellow Traders,

We just finished the best quarterly trade performance since 1998. Yet the small investor continues to take money out of his mutual funds. Still no body had any real reason to sell. There was generally a lack of really bad news. Corporate earnings grew and jobs came back. It looks like another 200,000 jobs were created last month. Full steam ahead? We'll see.

You can see why I become less moved by the big picture and find myself focused on the trade type below. However, my Thursday Alert Email comments on China's coming economic numbers this week would setup a great Thursday/Friday hedge trade setup for us. I noted it best when I said it's a heads you win and tails you win situation. I also noted that after 12:00 Thursday the market would rally hence the SPY call buy alert Thursday. The market certainly cooperated nicely. See trade action taken below.

Trade of the Week in Review

I noted Monday in an Alert Email that it would be nice to be long puts and long E-minis in a hedge but not yet. The Alert Email came early Tuesday to finally buy the 142 SPY puts. The low was $0.79. There were numerous E-mini hedge buys along the way to more than pay for the calls. The bottom line was to take half profits into Wednesday weakness and the puts could have been sold for $2.39. There was a nice rally later Wednesday to re-hedge the Es much higher.

The market sold off early Thursday morning nearly 14 points in a straight line, tripling the return on the hedges. I Alert Emailed to sell the puts. The 142 puts hit a high of $2.90. Later I Alert Emailed to buy the 139 SPY calls near $0.70. The low was $0.74, close enough for government work. These calls hit $1.98 early Friday on a nice gap-up into resistance where I recommended selling 50%. There was a great hedged trade for those so inclined. The market dropped almost 10 points after.

I waited before Alert Emailing another higher strike call buy. One of the Chat Room traders went long the 140 SPY calls shortly before the Alert Email near $0.36. The low was $0.34 a great throwaway expiration trade. These calls were Alert Emailed to sell on a scale starting near $0.90. The calls closed near the high of $1.03. The remaining 139s hit a high at $2.03! See attached 30-minute Friday "D" chart, NET Weekly Money Chart 2012-03-30, for all the trade.

Again I note with trading opportunities like this week after week we don't need no stinking mutual funds. Take charge and become more proactive with your monies. I welcome more of you to join me in the Chat Room as well.

And, I'm releasing a new video dated 3-23-2012 and titled Hedging Parlaying Multiple Timeframes.

Good trading,

Stan Moore

702.685.7325

Mar 25

2012

Did GS Ring the Death Knell to Equities or Not?

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - March 23, 2012

DDear Friends & Fellow Traders,

GS sends out a 40 page report this week telling Investors it's the best time to own stocks in a generation. So is it all aboard the train or did we hear a bell ringing? I'm not sure but Europe's not going down the tubes just yet. However, growth there is very tepid at best and China's economy is slowing from an on-fire economy growing 12% or more to a cool 7.5%. What's an investor to do? Yipes! I'd settle for half that rate here.

Then there is over $2.5 trillion of capital moving around the world now looking for a home courtesy of our central banks. BB tells us rates will remain low for at least 2 more years. You can see why large investors are piling into equities and not bonds.

One of the more interesting comments I've read this week comes from Barron's. As March 31 approaches, the equity market is set to substantially outperform the bond market—by more than 10 percentage points - for the second quarter in a row. In the nine previous similar episodes, equities have risen 4.6% on average in the following quarter, almost 90% of the time, according to Bespoke Investment Group. Bonds averaged a decline of 0.5%. "Bond funds could be in store for some nasty outflows over the next three months," the Bespoke report notes.

That might already be happening. A look at money flows for the week ended March 23 done by EPFR Global shows that there was a huge outflow from U.S. long term government bond funds, $1.01 billion and the biggest on record. US equity funds also saw outflows in general but U.S. large cap and small cap growth funds saw inflows.

For the immediate term, anyway, China is the new Greece and investors are favoring growth stocks over value. Could GS be right? I wouldn't fight the tape. Give our central banks some credit for awhile longer.

What we worry? Just look at our hedged trade performances for the past week below. We seemed to have died and went to trader heaven.

Trades of the Week in Review
The market was certainly in a corrective mode last week. The market topped out near 1408 resistance. The news coming out didn't help either. Our daily chart signaled Osc Jammed telling us to button-up some profits. The 30 minute chart put in a nice head and shoulders top formation with a 1380 target.

Tuesday morning after a hard gap down opening I Alert Emailed to buy the 139 Weekly SPY calls and hedge your brains out into rallies over 2 days. The calls opened near $1.19 and rallied to near $1.90 by Wednesday giving us many wonderful hedging trades that more than paid for the calls.

There was a great hedged short in the early Thursday overnight session that saw an opportunity to make over 10 points of hedged profits when the E-minis gapped down almost 13 points. We now had the money to load-up on calls in a scale down mode from $0.74 on the opening to a low of $0.48 shortly thereafter. The low came in near $0.36. The market rewarded us with a sideway day for much more hedging and a nice rally back to the day's high for more hedging shorts.

Thursday night we got another great hedging opportunity on the overnight rally back to the 1394-95 resistance level. We were able to short another overnight rally back to the 1394-95 resistance down trend line on the 30 minute chart. In my Friday pre-opening Alert Email I suggested if the market could not hold 1385 we'd test the Thursday low and may get to the multi-month break out 1377-78 buy level. The S&Ps dropped almost 13 points by mid-morning, a great hedged short with the trend. Here’s the Alert Email I sent:

NET Alert Email
Sent 3/23/2012 @ 9:11 AM

From: EASYRYHTHM@aol.com
To: Support@NewEraTrader.com
Sent: 3/23/2012 9:11:21 A.M. Eastern Daylight Time
Subj: Alert note

Fellow Friends,

Hedged trading succeeds where most others fail. We really don't care where or what levels the markets trade. When the market reaches highs, lows or other support/resistance level we enter a counter trade with the hedge in the opposite direction. In trends we let the oscillator set the trades with the trend.

Yesterday we were range bound but if you study the 30" chart you'll notice a nice double bottom setup that tells us we should take out the prior low or high. In this case it's the high.

Overnight Traders did manage to test the 1393.25-1394.25 area (our primary focus of interest from Thursday's session). This becomes another counter trend hedged short from 1393 & higher. My interest for Friday's session is 1388-1385.50. I expect volatile and choppy trading within this 2.5 point zone, with continued buying from above 1388 targeting 1393.25-1394.25 (where initial failure is expected), and selling from beneath 1385.50 encouraging traders to look through yesterday's low and toward 1377.

Again hedge your brains out.

Good trading,
Stan

We were already long 3 traunchs of 139 calls with an average price near $0.50 now profitable 4-5Xs over. I suggested in the Chat Room and noted on the "A" chart to load the boat and buy more calls near the low of $0.16-.17 as the best throwaway trade of the week with a marginal low just in front of the large breakout support. In addition, the 30 minute Oscillator had leading divergence which works over 85% of the time! Believe it or not our 139 calls were only $0.50 OTM. This brought our average price near $0.30. Of course there were more hedging opportunities. I send an Alert Email to scale out into strength over $0.60. The 139 Weeklys closed at $0.91 for a 4X return at Friday’s low and over a 2+ X return on our average cost! We also could have earned over 10X on the hedges as well. See attached Friday’s C chart, NET Weekly Money Chart 2012-03-23.

With this type of hedged trading every month do we really care what GS says? I know I don't.

Keep those cards & letters coming. I read every one.

Good Trading,

Stan Moore
Ph 702-685-3725

Mar 11

2012

Well the "Can" Has Been Kicked Further Down the Road for Now

Posted by Stan Moore in Untagged

Dear Friends and Fellow Traders,

I thought Barron's editor Tom Dolan said it best this week with regard to the Greek financial tragedy. They call it a "restructuring." They call it a "debt swap." They even call it "voluntary." But the latest attempt to save Greece from the Greeks is none of these. It is unarmed robbery. Holders of Greek debt were offered a choice between receiving no money ever and being allowed to hope that they will receive some money years from now. More than 90% of them took the coward's way out and chose hope.

The markets needed hope and they got it but Greece can't and won't ever pay its debt back. The markets also liked the jobs numbers but the rally was muted given the 9% we've advanced so far this year.

NASD has been a star performer up, I believe, over 12% this year but the recent chase for beta has been arrested Friday with Google (GOOG), Wynn (WYNN), Amazon (AMZN), Priceline (PCLN) and Apple (AAPL) on their lows. However, small stocks unlike last week outperformed all markets.

My two favorites BTX and CIGX continue to get good reviews. BTX presents at another drug conference Tuesday. The stock may be resting now but we can expect much good news before the end of this year. I still expect a pharma deal. CIGX is getting great press regarding Anatabloc. I expect we'll hear some good news about any tobacco settlements this summer.

Overall I believe, the markets have pretty much seen the bulk of the gains for now but should give us great opportunities to make nice trading profits in the upcoming months, much like they did this week.

Trade of the Week in Review
The markets this week, as I expected, proved more volatile than any time this year. Tuesday's sharp selloff scared many traders/investors than any we've seen in some time. However, there was no follow through to the down side. We still await a more serious decline.

We had another great buy setup on the Tuesday daily chart. We've been trading for months above the 20 DMA and from Oscillator jammed to 44 buy on the daily Oscillator. Tuesday's break below the 20 DMA did spook many traders. However, the Oscillator retreated to 44 with a 30" crossover at a 1.4 Uni Band. This is a very good tell that we could now rally back to an upper Uni band as taken right out of my "Option Magic" book.

I send an early Tuesday morning Alert Email to buy the SPY 135 calls under $0.90. They were trading near $0.80 at the time. The low was later hit near $0.70. I also stated the bulk of the returns would come from hedging with short E-minis. I was right and wrong at the same time. There were over 20 hedged trade possibilities through Thursday. I noted on Friday's "C" chart the number could have earned over $3,000 profit per hedge. That's over $30,000 if you shorted a minimum of 10 E-minis against say 40 calls. The 40 calls should have cost you about $3,000. Call me if this doesn’t make sense.

I wrote in a later Tuesday Alert Email how the first 2 hedges more than paid for the calls. The other 18 hedges were pure profit. I was wrong in that the market rallied straight up to the 0.89 Uni band. The calls could have earned more than a 3X return rallying from a low of near $0.70 Tuesday to a high of $2.90 Friday morning! There was a late Thursday Alert Email suggesting scaling out some calls into strength but the “C” chart noted to hold some calls for further hedging into the Jobs numbers. We hope profits like this happen on all our recommended setups. See attached Friday "D" chart, NET Weekly Money Chart 2012-03-09.

There is a marked improvement in trading options with the new NET Bible versus our original "Option Magic" book. In the beginning I wrote we would take option trades at extreme Uni bands setups. At that level there was expected divergence and a crossover. We sold 50% of our options at the 30-minute mid Uni and hopefully the rest were sold at the upper Uni.

We usually left a large profit on the table to protect the investment by selling half early. With New Era Trader we can now hedge to pay for the options and try to maximize our profits by scaling out the bulk of our holdings into strength or weakness as the case may be. Once your dollars risk from the option trade is gone it's a brand new game and we can become aggressive as our nature lets us. Now that NET trading!

Keep those cards and letters coming. I read every one of them.

Good trading,

Stan Moore
702 6857325

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Feb 05

2012

The Market Continues to Power Ahead But Will It Continue?

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - February 5, 2012

Dear Traders and Fellow Friends,

The higher the market goes the more defensive I want to get. At the same time it's hard to get very bearish. Most investor classes have massively de-risked. Today's dominant investor classes -- individual investors, hedge funds and pension funds -- have de-risked and are relatively uncommitted to equities. The same applies to almost all foreign money managers as well.

A re-allocation into stocks (out of bonds) represents an underappreciated and potentially massive (and latent) demand that could easily be the catalyst for a move to all-time highs in the S&P 500 in 2012 witness the job's number stock rally on Friday and the sharp selloff in bonds. However, I believe this year will deliver just enough economic and corporate profit growth to satisfy risk assets (U.S. stocks) but not too much to alter policy from a market-friendly Federal Reserve. Therefore, continue to trade your brains out.

Trades of the Week in Review
Thursday morning I sent an Alert Email to SPY buy puts near 1326 and calls near 1316. As a result NET traders bought the 133 puts near $0.50. The S&P rallied near 1326. After a few hours these puts traded near $1.00. There were a few good hedges thrown in. Then near 1:00 Thursday the S&Ps fell to the 1317 level. Here I noted on the charts that the 133 calls were a great spec trade between $0.20 and $0.30.Here too were a few good hedges as well.

As usual I noted on the final charts to hold all options overnight for hedging opportunities given the unusually wide range outlook for Friday's jobs numbers. We'd buy S&P dips if long puts and short any S&P rallies into a good number Friday morning before markets opened to lock in our long call profits.

The jobs numbers were exceptionally good when reported 8:30 Friday morning. The overnight low for the S&P was 1320. At this level put buyers could have gone long a few E-minis. The call buyers stood pat waiting since all their options were fully paid for. Within minutes of the report the S&P was breaking out through the 1332-5 resistance and up over 16 points from the low. That's nearly an $800 profit potential per E-mini long hedgers. 10 puts cost only $500 and were already more than paid for.

I Alert Emailed right after the release for all call buyers to sell E-minis to lock in their gains. At the breakout levels the calls would trade between $1.10-1.30 for a 4-6X return! The market opened sharply higher then fell back giving the calls holders a chance to cover their shorts profitably.

After 10:00 I Alert Emailed the calls were trading at $1.39 and suggested scaling out. I believe the calls traded near $1.70 later Friday. That's anywhere from a 4 to 8X return depending where one bought the calls! See Friday’s "A" Chart, NET Weekly Money Chart 2012-02-03.

I want you to note all the best trading comes in the overnight sessions now. Trading cheap expo options for multi day swing trades is the way to go, especially when trading in front of market moving news events.

I will be moving residences early next week. There will be no charts for at least the first 3 days. The Chat Room will be open Mon, Tues and Wed but I will not be in. With luck and an Internet I could be up and running Thursday.

Good trading,

Stan Moore
702.558-1814

Jan 30

2012

The Beat Goes On & Our Trade & Stock Ideas Continue to Shine

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - January 29, 2012

Dear Traders and Fellow Friends,

The market continues its drift higher. The world and investors overall are seriously under invested in the US stock market. There are no large sellers out there and the Lehman disaster has been taken off the table. Even a Greek default now won't kill us. Our high dividend S&P stocks should continue to do well. BB tells us rates will stay low for 2 more years. He is telling us to take some risk. I'm back during these last few weeks selling more puts on the GDXJ Junior Gold Miners.

We're getting closer every month to the time when both BTX and CIGX pay off handsomely. I expect that BTX can start earning serious money mid next year way earlier than I ever thought possible even just 2 months ago. Less than 2 weeks ago I put out an Alert Email to do more bull spreads on CIGX. We could buy the Jan 2013 $2.50 calls at $0.70 and under and sell the $5 strike Jan 2013 calls as high as $0.50 but mostly $0.45. There was a huge buyer I noted for the $5.00 calls. I'm guessing he bought over 5,000 of them. Remember I told you I sold him 2,000.

He knew something. Somebody always knows. This was the most liquid leap option out there. I helped him along because I was long a pot of Jan $2.50 and $3.00 strike calls. I told you I expect that CIGX would sell over $5 providing a 9X return! Now we know part of what he knew. It's huge. The stock will go much higher. Now we get the best part of CIGX with their Anatabine medical business as a free bonus. The CIGX spread is $0.65 today and not $0.25. However,it's still a great trade. I even sold stock over $3.00 and replaced the CIGX stock $0.50+ and selling ATM puts 1 month out. This game continues and only gets better over time. Thank goodness there are very few that teach this and even fewer that set theses trades up for you.

Stock Trading Summary
I can best summarize what we do as very aggressive trading but hedged to keep risk at a minimum & taking whatever the market gives us. We're working at the edges. We're using options exactly as they were primarily meant to be used. Some of our stocks are now moving up and down short term 30%-70%, sometimes intraday. For example, CIGX was trading one day last week at $2.14 with the overnight high of $3.44. We again trade the shares but mostly we look to use options to nail profits. These stocks are not going to the moon in straight lines.

Reminder - BTX went from $2.00 to nearly $10.00 in 18 months but the stock traded like everything I ever remember about my first ride on the Coney Island Roller Coaster over 50 years ago. It was really scary! As the stock approached $9.00 I couldn't it sell fast enough and buy calls. Yes we lost money on the calls but most of us are back in below $5.00.

Trades of the Week in Review
In an early pre-market Alert Email Thursday, I identified 1332 as significant resistance. I gave a few interesting strategies to consider. The easiest was to do a simultaneous hedge.

With the market expected to open higher the OTM SPY calls could be considered while selling the E-minis. It really didn't matter long puts or calls. The hedge was going to work one way or another. You don't care what happens next as long as the market moves. So far this month the market had only one 1% intra day move. From near the 1330 level we were due for a bigger move.

If you did my simultaneous hedged trade, long calls, short E-minis, working in multiples of 10 long options and 2-4 E-mini hedges you lost your $500 long call money but you could have made between $700 and $1,000 per E-mini hedge.

A straight SPY put purchase Thursday morning near 1330 while trying to scale-in went from a low of $0.34 to $1.77 early Friday morning. The multiple hedge trades added another $1,000 profit per E-mini. See Thursday's Attached C chart, NET Weekly Money Chart 2012-01-27.

Friday before the market opened I again Alert Emailed, this time to sell the remaining puts and to buy calls. The 133 SPY calls opened at $0.57 on a RT/F (retest failure) of Thursday's low. There were eight great hedges that could have returned over $1,500 per hedge. After 2:00 I send another Alert Email to sell the calls into the expected rally up to 1313-15. That target was the 40% sell retracement from Thursday's high. The calls hit a high of $1.06 near the close before the expected sell-off per the "Trading Bible". See attached Friday C chart, 2012-01-27.

I could go on. There were a few not so great ideas last year but overall we'll come out with a lot more money trading my stock ideas coupled with my weekly option trades versus buy and hold. Remember this is the "New Era of Trading".

Good trading,

Stan Moore
702.558.1814

Dear Traders and Fellow Friends,

The market continues its drift higher. The world and investors overall are seriously under invested in the US stock market. There are no large sellers out there and the Lehman disaster has been taken off the table. Even a Greek default now won't kill us. Our high dividend S&P stocks should continue to do well. BB tells us rates will stay low for 2 more years. He is telling us to take some risk. I'm back during these last few weeks selling more puts on the GDXJ Junior Gold Miners.

We're getting closer every month to the time when both BTX and CIGX pay off handsomely. I expect that BTX can start earning serious money mid next year way earlier than I ever thought possible even just 2 months ago. Less than 2 weeks ago I put out an Alert Email to do more bull spreads on CIGX. We could buy the Jan 2013 $2.50 calls at $0.70 and under and sell the $5 strike Jan 2013 calls as high as $0.50 but mostly $0.45. There was a huge buyer I noted for the $5.00 calls. I'm guessing he bought over 5,000 of them. Remember I told you I sold him 2,000.

He knew something. Somebody always knows. This was the most liquid leap option out there. I helped him along because I was long a pot of Jan $2.50 and $3.00 strike calls. I told you I expect that CIGX would sell over $5 providing a 9X return! Now we know part of what he knew. It's huge. The stock will go much higher. Now we get the best part of CIGX with their Anatabine medical business as a free bonus. The CIGX spread is $0.65 today and not $0.25. However,it's still a great trade. I even sold stock over $3.00 and replaced the CIGX stock $0.50+ and selling ATM puts 1 month out. This game continues and only gets better over time. Thank goodness there are very few that teach this and even fewer that set theses trades up for you.

Stock Trading Summary
I can best summarize what we do as very aggressive trading but hedged to keep risk at a minimum & taking whatever the market gives us. We're working at the edges. We're using options exactly as they were primarily meant to be used. Some of our stocks are now moving up and down short term 30%-70%, sometimes intraday. For example, CIGX was trading one day last week at $2.14 with the overnight high of $3.44. We again trade the shares but mostly we look to use options to nail profits. These stocks are not going to the moon in straight lines.

Reminder - BTX went from $2.00 to nearly $10.00 in 18 months but the stock traded like everything I ever remember about my first ride on the Coney Island Roller Coaster over 50 years ago. It was really scary! As the stock approached $9.00 I couldn't it sell fast enough and buy calls. Yes we lost money on the calls but most of us are back in below $5.00.

Trades of the Week in Review
In an early pre-market Alert Email Thursday, I identified 1332 as significant resistance. I gave a few interesting strategies to consider. The easiest was to do a simultaneous hedge.

With the market expected to open higher the OTM SPY calls could be considered while selling the E-minis. It really didn't matter long puts or calls. The hedge was going to work one way or another. You don't care what happens next as long as the market moves. So far this month the market had only one 1% intra day move. From near the 1330 level we were due for a bigger move.

If you did my simultaneous hedged trade, long calls, short E-minis, working in multiples of 10 long options and 2-4 E-mini hedges you lost your $500 long call money but you could have made between $700 and $1,000 per E-mini hedge.

A straight SPY put purchase Thursday morning near 1330 while trying to scale-in went from a low of $0.34 to $1.77 early Friday morning. The multiple hedge trades added another $1,000 profit per E-mini. See Thursday's Attached C chart, NET Weekly Money Chart 2012-01-27.

Friday before the market opened I again Alert Emailed, this time to sell the remaining puts and to buy calls. The 133 SPY calls opened at $0.57 on a RT/F (retest failure) of Thursday's low. There were eight great hedges that could have returned over $1,500 per hedge. After 2:00 I send another Alert Email to sell the calls into the expected rally up to 1313-15. That target was the 40% sell retracement from Thursday's high. The calls hit a high of $1.06 near the close before the expected sell-off per the "Trading Bible". See attached Friday C chart, 2012-01-27.

I could go on. There were a few not so great ideas last year but overall we'll come out with a lot more money trading my stock ideas coupled with my weekly option trades versus buy and hold. Remember this is the "New Era of Trading".

Good trading,

Stan Moore
702.558.1814

Jan 16

2012

Fun is Buying $0.25 Calls and Selling Them for Over $0.90 in a Few Hours

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - January 16, 2012

Dear Friends and Fellow Traders,

Where's the volatility? We've had 1 out of 8 days with a 1% move this year. Last year we had 54 or 55 days with the market having a 90% bias up or down with 25-40 S&P point moves intra-day. Where is the love?

I remember times when the markets used to look ahead 6 months to a year. Today we're lucky if the market looks ahead more than a week. Right now we are re-discounting old news. This gives us great opportunities for profits. Take Friday for instance. Rumors of Euroland downgrades swirled through the markets early. Overnight the S&P hit resistance at 1295 only to fall over 20 points lower to 1272.75 by early Friday morning then the market promptly rallied back almost 15 S&P points.

We've been hearing downgrade rumors for months. Friday morning broadcasts over French TV stations reporting a French downgrade will happen. I jump on my keyboard and popped out a quick buy Email Alert then I watched the 128 SPY W recommended calls under $0.40 hit a low of $0.25 well after the Email Alert reached you. The 128 calls hit $1.19 near the close.

There were even move profits from hedging but who's counting. We don't need no stinking long term investing. These trades have been happening most weeks since October 2005 when Weekly options started to trade. More on this week’s Weekly trade below.

BTX one of our favorite stocks has got on Mr. Toad's wild ride this last month. It's back to coining $s for us again if you trade any stock as I recommend on the edges against a core holding. Nothing wrong with using options either.

A month or so ago I wrote an Email Alert telling you that BTX's short position went up over 500,000 shares last month or the report for November so get ready to buy the short push down that was certainly coming. BTX was cut from $4.40 to $3.55 in a very short time only to rally back to $6.35 early this week when presenting at the JP Morgan's health care conference last week. Recent long purchases gave us a great profit-taking and an even better time to just sell calls against our core holding.

The stock's not going straight up with the shorts as big as they are. They haven't learned yet. They're still posting great doubts out their on the Yahoo message boards.

Sure enough, the expected profit-taking bout from this run-up occurred Friday and BTX dropped $0.40 to $5.60. The new December short interest shows that the shorts added over 1 million total new shorts these last 2 months to over 5 million shares. There are slightly over 20 million shares in public hands. That's big! Insiders still own over 50% of the outstanding shares.

Fasten your seat belt it's going to get quite bumpy out there in BTX land. Just remember none of my stock recommendations are Buy and Hold. We've too opportunistic for that. Just trade and learn to take what this market gives us.

Trade of the Week in Review
Early Thursday morning I sent an Email Alert buy for the purchase of the 129 W calls under $0.45 and as usual E-mini hedge. We got long as calls hit $0.40. There were numerous hedging opportunities to make nice profits. The calls closed near $0.85 for a double but we wanted the possible hedged E-mini short into resistance that night. It happened in the overnight session which made a higher intraday high but failed just under the previous 1297 high reaching only 1295.

Sell those E-minis. I've been noting for months to expect negative news into large resistance areas. (See Euroland rumors about downgrades above). We normally sell between 2-4 E-minis per 10 calls. When the rumors started the E-minis were down over 22 points by 10:30 Friday morning. That's a $2,000 to $4,000 potential profit trade against 10 calls that cost only $450! Now that’s hedging NET style!

I sent another Email Alert before 10:30 to sell the 129 calls because they were too far OTM and buy the 128s as noted above. These calls were mostly sold above a $0.90 average when scaling out into strength as I suggested in my final Email Alert. See attached 5" C chart for Friday, NET Weekly Money Chart 2012-01-13.

For those in the NET Chat Room, I plan to be out next Monday, Tuesday and Wednesday. The room should be open on Monday but may be closed on Tuesday then back open on Wednesday. The final schedule has not been completed so just be aware of some flux and plan accordingly.

No Stan’s Blog or NET Charts thru next Wednesday due to my absence.

I hope all of you had a great Holiday weekend.

Good trading,

Stan Moore
702.558.1814

Dec 04

2011

Could This Week's EU Summit Meeting Produce a Euro-saving Plan?

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - December 04, 2011

Dear Friends and Fellow Traders,

That's the $64,000 question everyone's asking this coming week. This week's meeting on Thursday-Friday will be the last opportunity of this year for action that will begin to address the crisis. The perception is that the time to act has come even at this late stage.

As I have noted many times that this will take anywhere from 18-24 months to get a true workable solution. So a clean, clear, achievable or even sustainable fix is unlikely. Yes, certainly a positive move forward but will it be enough for the market after last week's 7% rally? I believe the investor sentiment has improved but the crisis tensions won't easily go away. I'm guessing not but I'm hopeful.

The world markets last week were jolted into action by 6 central banks in a coordinated move to ease liquidity. Anytime the market makes an outsized move in any one direction, I've seen continuing moves of upward of another 10%. This is why it was so easy to setup trading NET Alert Emails that were going to help you ton money. I've seen hundreds of these moves over my 45+ trading years and it works over 90% of the time. I trust you personally profited from my Alerts.

Given the news, the expected up-coming meeting and last week’s 400 DOW point rally we could expect some consolidation or even a small selloff last week. This happened exactly and for now the bulls have scored a victory.

I aggressively recommended in an Alert Email buying puts into that 400 point up move late Wednesday but hedge aggressively. I also notated on a chart the expected coming price movement - “Up Sharply, Sideways and Up Sharply again”. The same applies to big down moves but in reverse. The puts also protect against any negative surprises for very little money given the low cost of weekly options.

I also like using puts into resistance and after a huge up move because the market will now mark time and the puts are cheaper while our Oscillator (indicator) is much better at signaling buys and sells in a trend strength-up consolidation. Furthermore, the hedged buy profits tend to be larger than the hedged sells so the overall hedged profits are bigger. I also like the fact that, on balance, weakness will be limited. So, I'm even more comfortable adding more buy hedges into further weakness than selling higher highs that are expected and price can blowout to the upside at any time. Long calls and short E-minis can limit our profits if the up move reasserts itself too early. This action hedge then only served to lock in a profit once the up move reasserts itself. In rising markets I look for the low risk and opened-ended long side trade. Hence the long put (small defined risk) and unlimited up of the long E-minis.

For the coming week it's all about Europe. So stay alert early. Who knows what can happen over there before the meetings starts.

Trade of the Week in Review
There was a rather large rally into Wednesday’s close worth over $350 hedged long profits alone that more than paid for the puts. The markets continue to consolidate higher into Thursday as well. The hedging profits on the E-mini longs were rather large. I Alert Emailed on Thursday that we would load the boat with puts near the 1260 or 200 DMA level given that a good jobs number could be expected and after the ADP number that came out. Besides the market would be up over 1000 DOW points for the week making the market vulnerable to selling as traders moved to lock-in these enormous profits.

I also Alert Emailed Thursday afternoon and on the Chart that we should hold all puts over night and buy any weakness then, before the jobs release at 8:30 Friday morning, sell the long E-minis into the expected rally. The overnight markets given the good number only came in a few points to strong support. After the jobs number was released I send another Alert Email to sell all hedges as the S&Ps rallied nearly 20 points or a $1,000 profit per hedge! Who says this isn't fun and you could long E-minis in size because you owned fully paid for puts and then some. If you weren't long puts would any of you really buy and hold long E-minis while asleep? Not many would I assume. As for me I sleep like a baby. I wake up every hour and cry. I've been doing just that for years. However, they are tears of joy!

In that same Friday pre-market Alert Email I suggested we closeout all our long 125 SPY puts and buy the 126s. I always want to be in ATM options on the option’s last day. We usually can roll for only $0.30 additional premium. I'm more than willing to pay that extra premium especially today because the 125s went out worthless while the 126s closed at $0.92.

The 126s were originally bought near $0.45 to start. I lost about $0.30 when I sold my 125s near $0.15. I like these trades, lose pennies make thousands of $$$s on hedges. We further scaled into the 126 puts into the rally high near the 200DMA as outlined in previous Alert Emails which traded as low as $0.18. I send another Alert Email later in the day while the puts were trading near $0.80 to start selling them. The 126s hit a high of $1.24 before selling off to close at $0.92. Assuming an average price of near $0.30 that's a possible 3-4X return plus $1,000s more on additional hedges per $300 (assuming 10 puts)! See attached Friday's final "C" chart, NET Weekly Money Chart 2011-12-02.

I will be announcing a few special Holiday Deals on a few of my services that I've never done before. So look for a few extra emails as a way I thanking each and every one of you for your support these many years.

Good trading,

Stan Moore
702.558.1814

Nov 20

2011

We Bounce Between Euphoria and Panic Nearly Every Day Now

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - November 20, 2011

Dear Friends & Fellow Traders,

"This is where it gets serious," writes Peter Zeihan, VP of analysis at Stratford, a geopolitical research center, "This is not purely economics. This is about Germany's position in Europe and whether they control the institutions or not."

The financial stability of Europe has come down to one institution, the European Central Bank and its one mandate and who controls it. Germany knows what hyper-inflation is all about and has resisted letting the ECB take-up the role of lender of last resort as our Fed has. Yet, only the ECB has the firepower to save Europe. I'm betting Germany wins but realizes the ECB will have to print money.

Stocks fell on fears on a combination of new possible downgrades tied to European debt and a new found fear of our do nothing Congress. No one expects Congress to do anything. Yet they may surprise us. We'll see soon. Absolutely no attention was paid to this past week’s good economic news.

People are beginning to realize that many well-intentioned people come to Washington looking to fix government only to get caught up in the game. These newbies realize they can become rich beyond their dreams or have so much power they spend every waking hour doing and saying anything to continue in power. They are constantly running for office. Just look at Obama. He's not governing or leading our nation, he's been running for a second term since January. He'll leave office a whole lot richer than he came in.

I have one fear out there right now. I see funds being pulled out of many European Banks. I see European bonds being dumped by the billions. Trillions of worthless assets have to be dumped on the markets over the next 2-5 years at distressed prices to raise needed capital. The good news is that many of our own financial institutions are flush with funds looking to buy this truly depressed paper.

I therefore see the ECB coming in, maybe with the help of the IMF buying unlimited amounts of Euro debt and printing money until the cows come home to save Euroland. There will be an awful price to pay down the road. The one thing I know this crisis has taught me these last many months is that paper money will be worth less (maybe worthless) in the not too distant future.

Paulson, a very large hedge fund manager, has made this bet big time perhaps too early maybe since he has liquidated as much as 1/3 of his GLD positions to meet margin calls and redemptions. However, all his personal dollars remain in gold and has not be sold. I too may have been early as I was looking at January 2013 options. Remember, he was early with the Mortgage Crisis but netted billions later on. I truly believe his huge selling has hurt the gold markets short term. I recently read that worldwide Central Banks were large buyers of gold this past year.

Overall given the news day-to-day we live with maybe further margin selling the markets can trade lower in the short term to retest those October lows. On the other hand, there is so much cash out there looking for returns and investors are so bearish I find it very difficult for the market to breakdown very far. I'm a buyer.

Trade of the Week in Review
The markets pretty broke good support on Wednesday. That was one ugly day. Thursday morning before the markets opened I Alert Emailed subscribers to buy the 124 SPY puts under $1.00 and hedge as usual. The puts opened at $1.15 and we missed them in the Chat Room. So I sent another Alert Email suggesting we start near $1.05. Shortly the puts fell to $0.90. Everyone should have been long by then.

The S&Ps broke even larger support at 1225 shortly thereafter falling as low as the 40% buy of 10/4 low and then held just above the 50 DMA near 1204.The SPY puts hit a high of $2.93. That's a 3X return in a matter of hours! I send another Alert Email suggesting that if the S&Ps were not making lower lows by 3:30 to exit most of the puts but hold a few to go long any overnight weakness.

Thursday’s hedging was nothing to sneeze at either. You could have added another $4,000 to $5,000 more in profit per 10 option contracts to potentially the triple earned with the long puts!

The market rallied back more than 13 points into the close. We got lucky overnight as some news out of Euroland caused the S&Ps to sell off to 1209, near Thursday’s lows. We could have gotten long E-minis again to lock-in our short gains. Our markets promptly rallied back on some good economic reports close to the 1240 break down level where I Alert Emailed before the market opened to sell any long E-minis and hold the puts. That's almost another $2,000 hedged profit! The last of your puts could have been sold near $2.40.

So you made another $2,000 potential profit holding some puts overnight but on the other hand you could have lost $500-1,000 selling your puts Friday morning versus Thursday. See attached Thursday "C" chart, NET Weekly Money Chart 2011-11-18.

I will be out all next week for the holidays. The Chat Room will be open but there will be no notated charts and no Stan’s Blog next week either.

Have a great holiday because we have much to be thankful for.

My best goes out to each and every one of you. Have a Happy Thanksgiving. I will be back the following week.

Good trading,

Stan Moore
702.558.1814

Nov 13

2011

Traders are Uncertain about Uncertainty

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - November 13, 2011

Dear Friends & Fellow Traders,

October was the best, going-long, trading month in 25 years for the markets! It seems from reading a number of investment letters and reports I received most investors missed this rally. Traders are uncertain about uncertainty. The markets fall apart one day only to rally sharply the next. It's a traders dream but an investor’s nightmare.

Today bears are as loud as ever and increasingly confident. Why shouldn't they be? Doug Kass writes, "We've been in post-Lehman holding pattern for 3 years now." Europe can implode any day. We all know the bear case by now. Maybe they will be right down the road.

Today I believe the bear case is already be priced in the markets. Recent political and financial developments in Euroland may have already reduced the likelihood of a severe downdraft over there. Our economy is moving along reducing the threat of a double dip. China, the world's economic driver may be poised to grow again. Rates are coming down across the globe.

Right now I believe money is moving out of bonds and into equities and may accelerate next year if the GOP can get its act together and take its show on the road. PMs (portfolio managers) will be chasing performance into year’s end as most PMs are generally at maximum levels of defensiveness. So between now and yearend could prove more bullish than the bearish crowd believes.

Trades of the Week in Review
Primarily when it comes to trading for a living NET traders don't care whether the markets go up or down short term. Of course, over the longer term this time we much prefer an up market given our current open long positions in our favorite stocks.

Last week saw the market opened higher, declined some 50 S&P points only to rally back 40 points to end the week. Recently I noticed there was and interesting trading pattern developing the last 6-7 trading days. The markets mostly opened, traded lower but finished higher. Could this be PMs buying dips to create some performance and be playing catch up? Seems likely enough for me.

Tuesday morning after the market sold off I Alert Emailed to buy the 127 SPY calls under $0.80 with hedging as usual. The market rallied right to major resistance at the 1275 level or the 200 DMA. Calls could have been sold as high as $1.70. However, I was expecting good news from China after 8:00PM EST so I suggested we hold some calls overnight looking to hedge the "good news" similar to the "Buy the Rumor, Sell the News", a favorite NET trade. The news was as good, as was expected, but the markets didn't respond. So, it’s time to hedge one’s position. I then sold some E-minis short only to wake-up and find these contracts down over 30 points. I recommend taking profits.

That Wednesday morning before the markets opened I Alert Emailed and recommending taking the $1,500 profit per hedge and selling the calls which opened at $0.40. There were other smaller hedges during the day but you get the picture. We lost $400 per 10 calls but earned over $4,000 by hedging just 2 E-minis! Traders could have sold as many as 4 E-minis short for an $8,000 profit. Great work if you can get it. The market sold-off even harder some 20 more points, later in the day. We left a lot of money on the table that day.

The next morning the market gapped over 20 points higher on the opening I Alert Emailed to buy puts near the opening per trading rules taken right from the Trading Bible. The 125 SPY puts hit $1.08. Less than 90 minutes later the S&P price retested the previous day's low and most profits could have been taken near $2.36. Both option trades doubled over a short time frame but there was some great hedged profits taken as well. See Friday's "D" chart, NET Weekly Money Chart 2011-11-11.

I thought of recommending a call trade Thursday which tripled by early Friday morning but then hedged my remaining puts instead. At least you see the trading potential offered every week to earn a good living. I'm not perfect just good enough and earn a few dollars nearly every week.

Good trading,

Stan Moore
702.558.1814

Nov 06

2011

Again It's Buy the Rumor & Sell the News

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - November 06, 2011

Dear Friends & Fellow Traders,

The G-20 talks fail to ease the crisis but the shaky Greek bailout plan appears back on track. It's alive! Our economy is still muddling through. Germany's manufacturing numbers fell off the page so the new ECB head cut rates. Every little bit helps. The market will continue to trade news to news with an outside chance we have a new and higher trading range from say 1195-1300. We can handle that.

All I can add to this lunacy is to quote David Letterman referring to Obama giving Europe advice on its debt crisis."That's like J.Lo getting marriage advice from Kim Kardashian." I can't top that one.

The real winners in the crisis appear to be Russia and China. While we were out there pissing away billions of dollars on two wars or what have you. Meanwhile both Russia and China were picking off prime assets, like energy supplies across the global or building new friends in faraway places.

China was loaning money across the globe for whatever project another country needed thus creating IOUs to be called in later I'm sure. I was also thinking that if the Chinese helped Europe, especially France, we might find the Mona Lisa, the Notre Dame Cathedral or even the Eiffel Tower moved to China. You get the idea. Just remember what happened to Japan back in the late 1980s. That didn't end well for them either.

So what's the trade? Greece should be handled. That leaves Italy.

If Italy continues to screw up and the "Big Gun" Hank Paulson, our former Treasury Secretary, talked about during our crisis is not available from the European financial institutions then down the road Europe could break up into north and south unions. However, the mostly likely choice will be a massive ECB bond purchase program. Duh! Europe will choose the later. So that makes selling the Euro against the dollar and gold a great buy in my opinion.

Trade of the Week in Review
Trading options has now come full circle and I love it. When I wrote Option Magic nearly 20 years ago our trading life was rather simple. I used simple fixed (steady parallels) moving average envelopes because unlike Bollinger Bands which expand and contract and tell me little. I knew moving averages worked because price never went straight up or down for extended periods of time. Price always reverted to a mean or returned to some midpoint after moving away from its midpoint.

Then the question became how far is far? After considerable testing I found that 3 large Fibonacci numbers worked better over time. They were 1.4, 2.3 and lastly 3.7. I started with lower numbers and had limited success. After 1987 I found there were a few occasions that price reached the 6.0 Fib limit. Overall price hit the outer 6.0 bands happened 11 times down with the majority of times in October but only 2 times up and, right now, I don’t recall the upper hits.

I noted two definite high-probability strategies: 1) the 3.7 bands contained price over 99.9% of the time since 1987 and 2) I needed price to retest the lows on the bands with some sort oscillator divergence needed as well. Later I found that price at extremes near the 6.0 bands with extreme tick divergence and a VIX reading over 45 pretty much nailed major bottoms until March of 2009 when the VIX reached over 80!

Today we have even more help finding the turning points along the bands. I refined the Oscillator to give us a new divergence called “leading divergence" as opposed to any simple divergence in the past. These setups give us trades with over 80% probability of success on a 30 minute chart.

In the past this price-at-extreme-band strategy setup gave us 3-5 good trades a month using monthly option expirations. We bought the extreme bands and set a 50% option loss stop. If the option moved up at least $2.00 we moved the stop to breakeven. We took 50% profits at the mid-Uni band and expected to sell the rest at the same number band in the opposite direction. Averages winners were over 3X over 70% of the time. Losers were less than $1.00 per option. There are a substantial number of these trades from the Historical Charts available in the New Era Trader web site.

It didn't take long to revert back to band trading once I turned to trading the weekly SPY options. Before, volume was only sufficient to trade the weekly OEX options on Thursday and Fridays. Now we can trade the SPY weekly any day, any time. These ATM weekly options trade over 40,000 early in the week and near 100,000 on Thursday and Friday.

In addition, the profits are now much larger with smaller risk given the lower prices. We no longer sell half the options at the mid-Uni anymore and leave sometimes half again as much profit on the table like before. Furthermore, we can ton money like never before with E-mini or SPY index hedges. There were at least 20 hedge trades possible the next 4 days after the Alert Email to buy calls Tuesday morning was issued at the 3.7 Uni bands and the daily chart 20 DMA. Also note the Oscillator’s "Leading Divergence" too.

The hedges could have earned as much as $5,000-10,000 for every 10 SPY $0.83 calls, an $830 investment. The calls themselves were scaled-out per Thursday’s Alert Email into strength before Friday’s jobs number. I wrote on the 3:45 Thursday C chart to hold a small position overnight. We started selling the calls over $2.20 and as high as $2.68 for a 3X return! I continued to hedge Friday before selling the last calls near $1.70. These same 124 calls hit $0.57 at the Friday morning lows. That's another possible triple! Sorry, that good I'm not. See attached Friday Final "D" chart, NET Weekly Money Chart 2011-11-04, for band trading and leading divergence too.

Keep those cards and letters coming.

Good trading,

Stan Moore
702.558.1814

Again It's Buy the Rumor & Sell the News

Dear Friends & Fellow Traders,

The G-20 talks fail to ease the crisis but the shaky Greek bailout plan appears back on track. It's alive! Our economy is still muddling through. Germany's manufacturing numbers fell off the page so the new ECB head cut rates. Every little bit helps. The market will continue to trade news to news with an outside chance we have a new and higher trading range from say 1195-1300. We can handle that.

All I can add to this lunacy is to quote David Letterman referring to Obama giving Europe advice on its debt crisis."That's like J.Lo getting marriage advice from Kim Kardashian." I can't top that one.

The real winners in the crisis appear to be Russia and China. While we were out there pissing away billions of dollars on two wars or what have you. Meanwhile both Russia and China were picking off prime assets, like energy supplies across the global or building new friends in faraway places.

China was loaning money across the globe for whatever project another country needed thus creating IOUs to be called in later I'm sure. I was also thinking that if the Chinese helped Europe, especially France, we might find the Mona Lisa, the Notre Dame Cathedral or even the Eiffel Tower moved to China. You get the idea. Just remember what happened to Japan back in the late 1980s. That didn't end well for them either.

So what's the trade? Greece should be handled. That leaves Italy.

If Italy continues to screw up and the "Big Gun" Hank Paulson, our former Treasury Secretary, talked about during our crisis is not available from the European financial institutions then down the road Europe could break up into north and south unions. However, the mostly likely choice will be a massive ECB bond purchase program. Duh! Europe will choose the later. So that makes selling the Euro against the dollar and gold a great buy in my opinion.

Trade of the Week in Review

Trading options has now come full circle and I love it. When I wrote Option Magic nearly 20 years ago our trading life was rather simple. I used simple fixed (steady parallels) moving average envelopes because unlike Bollinger Bands which expand and contract and tell me little. I knew moving averages worked because price never went straight up or down for extended periods of time. Price always reverted to a mean or returned to some midpoint after moving away from its midpoint.

Then the question became how far is far? After considerable testing I found that 3 large Fibonacci numbers worked better over time. They were 1.4, 2.3 and lastly 3.7. I started with lower numbers and had limited success. After 1987 I found there were a few occasions that price reached the 6.0 Fib limit. Overall price hit the outer 6.0 bands happened 11 times down with the majority of times in October but only 2 times up and, right now, I don’t recall the upper hits.

I noted two definite high-probability strategies: 1) the 3.7 bands contained price over 99.9% of the time since 1987 and 2) I needed price to retest the lows on the bands with some sort oscillator divergence needed as well. Later I found that price at extremes near the 6.0 bands with extreme tick divergence and a VIX reading over 45 pretty much nailed major bottoms until March of 2009 when the VIX reached over 80!

Today we have even more help finding the turning points along the bands. I refined the Oscillator to give us a new divergence called “leading divergence" as opposed to any simple divergence in the past. These setups give us trades with over 80% probability of success on a 30 minute chart.

In the past this price-at-extreme-band strategy setup gave us 3-5 good trades a month using monthly option expirations. We bought the extreme bands and set a 50% option loss stop. If the option moved up at least $2.00 we moved the stop to breakeven. We took 50% profits at the mid-Uni band and expected to sell the rest at the same number band in the opposite direction. Averages winners were over 3X over 70% of the time. Losers were less than $1.00 per option. There are a substantial number of these trades from the historical charts available in the New Era Trader web site.

It didn't take long to revert back to band trading once I turned to trading the weekly SPY options. Before, volume was only sufficient to trade the weekly OEX options on Thursday and Fridays. Now we can trade the SPY weekly any day, any time. These ATM weekly options trade over 40,000 early in the week and near 100,000 on Thursday and Friday.

In addition, the profits are now much larger with smaller risk given the lower prices. We no longer sell half the options at the mid-Uni anymore and leave sometimes half again as much profit on the table like before. Furthermore, we can ton money like never before with E-mini or SPY index hedges. There were at least 20 hedge trades possible the next 4 days after the Alert Email to buy calls Tuesday morning was issued at the 3.7 Uni bands and the daily chart 20 DMA. Also note the Oscillator’s "Leading Divergence" too.

The hedges could have earned as much as $5,000-10,000 for every 10 SPY $0.83 calls, an $830 investment. The calls themselves were scaled-out per Thursday’s Alert Email into strength before Friday’s jobs number. I wrote on the 3:45 Thursday C chart to hold a small position overnight. We started selling the calls over $2.20 and as high as $2.68 for a 3X return! I continued to hedge Friday before selling the last calls near $1.70. These same 124 calls hit $0.57 at the Friday morning lows. That's another possible triple! Sorry, that good I'm not. See attached Friday Final "D" chart, NET Weekly Money Chart 2011-11-04, for band trading and leading divergence too.

Keep those cards and letters coming.

Good Trading,

Stan Moore

702.558.1814

Oct 30

2011

Best October Month in History, Best Month in 25 Years, More to Come?

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - October 31, 2011

Dear Friends & Fellow Traders,

I was surprised to read in Barron's this week that there was surprising confidence among market pros, especially since their survey was conducted late September near the market bottom. If their survey is right we could see a possible target near 1343 for the S&P.

The market didn't rally because Europe solved all their problems. Mainly stocks just got too cheap with all that double dip talk and earnings estimates falling to $75 next year. I wrote that was all crap – see my recent blog entries. I even noted awhile back that the economic numbers we started to see predicted a 2% 3rd quarter GDP. I was too low. GDP in the quarter so far grew 2.5%. It may be a soft number but it's better than the first 6 month’s 0.8% growth.

All that’s really happened is now stocks are getting the benefit of good domestic economic and earnings news coupled with a very skeptical investor class that continued to sell stocks and buy bonds. Besides stocks are only slightly higher for the year while corporate profits have been quite strong and the global economy is still growing.

Still most professionals are predicting slow growth. So what? What wrong with slow growth? Portfolio Manager (PM) Meryl Witmer writes in Barron's, "It could be Nirvana for the stock market because companies are growing and generating free cash, and they don't have to invest much in capital spending or inventory. They can pay their cash out to shareholders or buy in their shares. A slow-growing economy creates a lot of opportunities for smart capital allocation. In the course of my career, corporate managers have gotten a lot more logical about what they do with the company's money. In fact, the capital-allocation ability of the CEO is probably our No. 1 investment criterion." I know much of the market moves are highly correlated but I believe that may change next year as investors move more to specific ideas and not indexes or EFTs.

There may be more upside for the stock market than I previously thought. Stocks are attractive because most alternatives are so bad. Furthermore, good news from a Barron's survey has 90% of PMs saying they expect to be net buyers of stocks over the next 6-12 months. Conversely, allocations to bonds and cash are set to fall. JP Morgan notes that 40% of the PMs are lagging their bench marks by more than 2.5%, the second-worst showing since 1998. I read that HFs (hedge funds) may even be further behind. I can smell performance chasing into the 4th quarter should this rally get legs from here.

Still this rally doesn't lack for non-believers. With almost 95% of stocks over their 50DMA the market is momentarily really extended. So a pause shouldn't surprise anyone. It's difficult not to be cautious. I now spend most of my trading hedging puts. I only trade my equity portfolio small around the edges lately. If I'm right and the market sells off I setup a no cost way to buy protection. If I'm wrong I can ton money on the long E-mini hedges. See the ES charts below. As always, I'll let the market tell me what to do.

This coming week’s trading attention should move to our markets with headlines from a 2-day Fed meeting, a BB press conference and the ISM number. Finally, the all important jobs number on Friday morning.

Trades of the Week in Review
I've been talking all last week about buying puts in front of the Euro ministers meeting expecting the expected minor whatever news to sell the market off later in the week. So, we get our Monday rally into resistance. Later that same day I sent an Alert Email to buy puts into Tuesday morning. Why not then into the Monday's highs? I don't know but every day that passes erodes option premium. The put should be cheaper the next morning - all things being equal. Sure enough, the ministers can't agree. Tuesday morning their meeting is postponed. Expect the expected - stocks sell off the next 2 days. I don't own the puts. My ATM 128W put recommendation doubles going from $3.00 to $6.00 by Wednesday morning. The OTM puts almost triple. Cie la vie. See Wed D chart, NET Weekly Money Chart 2011-10-28.

Pre-market Thursday morning we get a surprisingly good Euro announcement. Europe is saved for a few more months. The ministers kicked the can further down the road. I send a pre-market Alert Email to buy the 128W ATM puts under $1.00 and hedge.

We get lucky the puts open at $0.57. We're in, shorting the 200DMA retest. We start hedging long E-minis down about 8 points make a few $s on a shallow rally then we approach the mid-Uni down 10-11 points from the opening high. The Oscillator hit Jammed and returns to 44 telling us we're looking at a possible trend-up day. Besides the A/Ds are 10-1 positive. Of course, it's also written in the "Trading Bible" that when price gaps a great distance from the mid-Uni we should buy or sell the 1st time back. This trade works over an 80% of the time. Hedge big. Non-hedgers might want to exit here. The put hits $1.66.That's nice work if you can get it. See Thursday C chart, Chart 2011-10-27.

If a NET trader sold the puts, he/she could have repurchased them for as little as $0.72 11 to 12 hours later. The rest of the day played out as expected. The S&Ps made higher highs and lows until 3:30. There were another 4 long hedges possible at the mid-Uni with the oscillator pulling back to 44. We rallied back to the Aug 2 highs at 3:30 for a possible EOD (end of day) trade setup where longs generally look to close their day trades out. We get lucky. We buy more puts under $0.35. We even get an 8 point rally back from a 50% selloff from the highs. Another possible $400 hedged profit per E-mini!

The hedged trades continued throughout Friday. I sent another Alert Email Friday before the market opened that I expected the market to rest after yesterday's huge rally. I noted a range for the day between 1273-74 and 1282-84. I nailed that one and you could have added another 5-9 possible hedged trades in that range. Any remaining puts could have been sold as high as $0.62 in the 1st hour Friday. I finally sold mine for $0.05. See Friday C chart, Chart 2011-10-28.

All in all it was a hedged traders dream 2 days! I put some possible returns based on long 10 puts on Thursday’s C chart but here's what I want you to really focus on. Think some day you can be trading 50-100 E-minis for 3-4 points a try with nearly full protection all day long against 200-300 long puts that costs less than $0.50. Each 1 E-mini hedge could be $3,000-5,000 profit per trade. Think 2-4 hedges a day. You won't trade this many contracts ever for this type of profit potential.

Keep those cards and letters coming. I read every one.

Good trading,

Stan Moore
702.558.1814

Oct 23

2011

Don't expect any Eurozone Statements Sunday, maybe not even Wednesday

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - October 23, 2011

Dear Friends & Fellow Traders,

I believe anyone who thinks there will be a simple and defining answer to Europe's sovereign-debt problems these next few weeks will surely be disappointed for months if not years. I believe, at best, Germany and France will buy a little time and kick the can further down the road. However, for now, at least the risk trade may be back. Bond yields have risen from near record lows of 1.70% to 2.22% while US equity markets have broken through the top a 3-month trading range.

Presently, we have an absence of bad news and at least 64% of S&P 500 companies reporting have beaten EPS and sales expectations. The earnings numbers are the best of the last 3 quarters. Even the CPI inflation is slowing giving the Fed some breathing room but it's not all good as European GDP numbers continued to get lowered looking ahead into 2012.

There are two other events out there that have me worried just a bit. First, we have the "Super Committee" expecting to cut $1.5T out of the deficit. If that fails for any reason we may have to think another rating cut or two for the good old USA may be forth coming. Next, in case no one noticed the Chinese equity markets last week hit a new low since March 2009. Their economic growth has slowed materially but is still better than most in the world. There are a number of analysts telling us that a credit bubble is about to burst over there. We can assume none of that is good news for our markets or anyone else's for that matter. I'd hate to think what that would mean for commodities especially our gold trade.

Trades of the Week in Review
Right now the market is in a trading sweet spot having just broken out the top of a three-month trading range. European finance officials have let it be known there will be no ultimate crisis solution this weekend or by Wednesday. However, a deal could come in time for the Nov 3-4 Group Summit of 20 in Cannes. Talk about kicking the can a little further down the road. Markets will now continue to trade news release to news release.

Zero Hedge writes Sunday "European Finance Ministers Driven to Despair as Reality Returns." It sounds ugly and it is. I'll quote the final thoughts from editor Tyler Durden, "For those expecting any solution that is more than a simple kick-the-can hold-your-breath for the final solution, we suggest hedges ASAP on Sunday night as it is crystal clear that nothing of substance will be created soon and furthermore, we wonder whether this is some elaborate global game to force the Fed to rescue everyone by flooding it with greenbacks." I'm wondering the same thing. Just suck us in too.

With the above understood, I Personally, I've been a greedy coward lately. I been buying and recommending puts aggressively in case people like Durden are right and traders stop drinking the "Kool Aide" and then buying the E-minis to get long. My strategy has turned out to be just right - I get to have my cake and eat it too.

Tuesday the 18th on the 3:45 "C" chart I recommended buying the 123 ATM SPY W puts near $1.00 at the largest resistance near 1229-30 level. The market sold off a little but rallied back to that level near 4:00. The puts hit a low of $0.98. I send an Alert Email confirming this further Wednesday before the opening. I reminded everyone to hedge aggressively in case I was wrong. We got lucky Thursday morning when Sarkozy mentioned that nothing would get done this weekend. I Alert Emailed to close out the puts. The 123s hit $3.27 for a possible 3X return plus huge hedging profits! See Thursday 4:00 "D" chart, NET Weekly Chart 2011-10-20D.

I also wrote after the correction we may get a rally into the weekend in hopes of a deal. I never really felt comfortable recommending calls. I'm biased that trying to get 17 countries to come to some deal would take many years and votes to conclude so expect a number of fits and starts to this process. My strategy was simple: favor puts with the market near tops of the trading ranges and calls near 1100 or the bottom of the range and hedge your brains out.

I have to say if you have even part of a working brain and can understand what's happening just a little bit then fade the news with the hedging techniques I teach. You can make a small fortune in this market and you don't have to start with a big fortune either.

This week most professionals believed as I did and got short. They too thought no deal this weekend. This strategy worked early but if one didn't hedge or take profits all was for nothing. Europe pulled a rabbit out of the hat and put the deal off and the shorts were forced to cover. Hence the nice breakout rally we got Friday morning after I sent an early pre-opening Alert Email to get long puts and to buy the E-minis. See attached Friday 4:00 C Chart, NET Chart 2011-10-21C.

This trade had at least 7 potential hedges and a possible double in the puts themselves. If you bought say 70 123 SPY puts and you bought 10 options on the opening near $0.50 after my pre-opening buy put Alert Email. Then you bought another 20 at $0.35 then a final 40 at $0.20. The low was $0.13. You're now long 70 puts for $2,000 or less with a $0.30 average cost. Hedging started right after the second put purchase.

The trade gave you hedging profits of more than $3,500 with only 3 long E-minis (4 max) per 10 puts purchased for only $300. The 70 puts expired worthless could have earned over $22,000 on a total risk of only $2,000. That's a 10 bagger in my book. However, I Alert Emailed to sell the puts into weakness. These could have sold for a high of $0.53 adding to your overall profits. Go NET trading!

Please keep all your cards and letters coming.

Good trading,

Stan Moore
702.558.1814

Oct 16

2011

Real Rally or Just a Short Squeeze Up on Air?

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - October 16, 2011

Fellow Friends and Traders,

The US stock market has withstood a massive dose of bad news to stay even this year while most other world markets are still down well over 10% for the year. The S&Ps are up some 150 points since the 10/3 lows. Ten weeks ago the S&P was near 1200, now it’s around 1220. There was a lot of trading excitement in between for NET traders.

Most traders are very skeptical of the latest rally given it came on very low volume with massive short covering and with minimal positive economic news. I see the glass as half full. The market quit pricing-in a Lehman-type disaster and a system meltdown. We will muddle through is my best guess.

I noted earlier in the Chat Room and on my Intraday Charts that if the jobs numbers were better than expected the rally could just be extended with good earnings. AAPL's record iPhone 4S pre-sales set a record. GOOG's blowout sales and EPS numbers gave the market further hope as well.

While most of the world is still focused on Europe the US economic data coming out was mildly surprising. Somehow a zero growth number for the 3rd quarter has morphed now to a 2% positive. Right now recession talk is off the table.

However, we're closer to the top of the trading range. To get much higher than 1230-50 will require really good economic news and fresh money and not just the absence of sellers and bad news. Furthermore, the G20 has three weeks to solve the Eurozone debt crisis. The countdown to the November 3 Cannes Summit begins this weekend. Don't expect any real news this weekend as the Eurozone ministers meet next weekend. I really see a long series of meetings and many member votes before anything meaningful happens. Just as long as a Lehman-type event is off the table and with TARP-like talks to bail out the European banks the world markets should continue to trade news event to news event and we love the volatility.

I've been looking for a massive asset allocation out of bonds and into equities to really pop the market over 1300 for awhile now. Rates have risen from 1.75% on the 10 year to 2.25% but the re-allocation hasn't happened yet. I'm guessing corporations are sitting on their hands waiting to see if the GOP can get their act together before opening the floor gates with a much better economic and regulatory outlook ahead. Patience ahead and trade!

Trade of the Week Review
As I promised last week here's a trading video of last week’s great hedging and parlaying trade dated 2011-10-07. Learn and enjoy the profit-making opportunity this video presents.

There was more of the same again this week so I won't spend a whole lot of time on the trade. Since we've been using the SPY weekly options I find the trading with these particular options give us a 5-day versus 2-day opportunity to make real money every week.

This 150-point rally over the last 9 days was a thing of beauty to watch. Check out a 30-minute chart to see the up sharply, sideways and up sharply again. We identified support, found a resistance level and bought puts to get long the E-mini hedge. The market obliged and rallied to resistance went sideways where we hedged our brains out to more than pay for the puts then as the market continued higher we rolled up to a higher put to continue the game or traded the E-minis.

Wednesday I alert emailed our subscribers to buy the 121 W puts and to hedge. We started buying under $1.00 and added to our holding into the low $0.60 area. Thursday I alert emailed to close the put trade out early. The 121 puts got as high as $2.05 making it possible to earn nearly a 3X return overnight plus substantial hedged profits! See the Thursday "A" Chart, NET Weekly Money Chart 2011-10-14.

Keep those cards and letters coming. I read them all.

Good trading,

Stan Moore
702 558.1814

Oct 09

2011

It just may be the Time to Buy Further Weakness

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - October 9, 2011

Dear Friends and Fellow Traders,

So far the October low sets up a perfect seasonal tendency to rally strongly into the 4th quarter after maybe a few fits and starts. If we clear our current "red zone" resistance between 1175 and 1195 we can rally back toward 1260 or the top of my earlier trading range.

Heading into 3rd quarter earnings investors are faced with a lot of contradictions. Most corporate executives I read are downright bullish compared with the market gloom out there. Insiders have started to buy on balance however we don't have an all clear signal just yet. Analysts on the other hand are busy knocking numbers down rather hard for the balance of 2011 and next year. Friday's jobs numbers doesn't support such bearishness. Any good quarterly earnings surprises or favorable outlooks could be just the spark needed to take the markets higher.

Until then I expect our trader’s dream market will continue. We have reasonably valued stock prices against a backdrop of a European banking crisis. It's no longer just a Greek problem. This puts the global economy at some risk. Merkozys are meeting Sunday to discuss efforts to prevent a Greek default. It would seem the news is getting some positive traction now. Besides our banks are in great financial shape to carry on not like 2008 at all.

Trades of the Week in Review
Last week the market retested the August 8th overnight lows with lots of divergences, especially no increase in the number of new lows over the last time. I started Thursday early with an Alert Email to buy puts but you must hedge given the upward bias. I just love the defined risk of the put against the opened-ended up move of the long indexes. We began to buy the 115W strike puts near $0.85. I averaged down double the number of puts every $0.13-.14 into the close near $0.40 – for example: 5, 10, 20 and 40. We had 5-7 hedged trades after the morning Alert Email. If a NET trader just did 2 long E-minis trades per 10 long puts they made over $6,000 profit per $550 average put cost!

The best was yet to come. I noted on Thursday’s "B" chart emailed at 2:00 that the "whisper" jobs number was being raised throughout the day. GS started to lower the number Monday during the sell-off to below 50,000. By Thursday afternoon I heard numbers nearing 100,000. That meant a positive surprise. I send another Alert Email telling all to hold all your puts overnight and hedge with long E-minis into any overnight weakness. See attached Thursday’s C chart, NET Chart 2011-09-06 C.

I thought there was extremely low risk down. We had put protection but to get long for the possible upside surprise. Near 7:30 Friday morning we had a retest of the overnight low of 1152.50. This was a perfect place to get long. We owned the 115 puts which were now ATM. We could have bought between 3-4 E-minis with this setup not the usual 2. There was also strong support at Thursday’s upside breakout from the 1146-8 area so we were only risking about $75-100 per E-mini long contract if I was wrong.

On the upside, I expected a 10-20 point rally from 1152. If I was right that's as much as $3,000-4,000 profit per $130 worth of long puts. We hold 2.5 puts for each E-mini long. (I hope to have an educational trading video on Thursday and Thu-Fri overnight trade). At 8:30 Friday the jobs number showed non-government jobs grew 103,000. The S&P's popped immediately to 1173.75 right into the bottom of our Red Zone Resistance (per an earlier Alert Email Thursday afternoon). I immediately sent an Alert Email a few minutes later to sell all hedges and close the puts out into expected profit taking. I was gone at $0.15. Later in the day I believe these puts hit $0.47.

Friday morning the market never reached the overnight highs where I had hoped to recommend buying puts. After the market was open for awhile I sent another Alert Email that I was going long the 117 puts. These hit a low of $0.42 shortly afterwards. I did mention I thought the range might be too narrow but we could hedge again. I was wrong on a low-priced call recommendation for non-hedgers there. These calls expired worthless.

I did send another Alert Email confirming the strong support near 1146-48. I was looking to sell puts but just maybe we could look at the 116 calls under $0.50. I started scaling out of the puts over $1.75. These hit a high awhile later at $1.93. The market bottomed out just under our 1146-48 support area. The 116 calls hit $0.08 but I never bought them. The calls on a late rally back to the day's highs reached a high near $1.00 before falling back. The calls expired worthless on the more than 10 point closing decline. See attached Friday’s C chart, NET Weekly Money Chart 2011-10-07.

Keep those cards and letters coming. I read them all.

Good trading,

Stan Moore
702 5581814

Oct 05

2011

Market Updates on My Favorite Stocks

Posted by Stan Moore in Untagged

Dear Friends,

Update – Oct 4 aftermarket. Wow! What can I say after today's action in our stocks. I wanted to get this out to you after the market opened this morning (Oct 4) but I couldn't get it out fast enough. My apology. I added a bit of new data.

We are sitting on the 200 MMA and the 40% buy for the entire up move off the March '09 lows. The market had broken temporarily below today and then tested the August 8th overnight low. See attached monthly chart.

As much as I love my ideas and add to them on weakness the shorts and sellers are simply overwhelming the small buyers. The world is in crisis. The analysts that follow these companies downgrade them or walk away. I saw this happen in HUN back in 12/08. I watched HUN drop from $24 in 1207 to $3 on a busted take over deal. Every analyst said their debt was too great to survive, the economy was weak, the stock was worth no more than $2-3 and they expected the dividend to go away. For 5 months the stock never traded more than $3+ as the S&P's dropped another 600 points to the market lows. 18-20 months or so later HUN was $21 and still paying its $0.40 dividend. They all should be this good.

Every idea I've had in this market these last 7-10 months, I know it seems forever had huge short positions from 20-60% of their floats plus much larger illegal shorts. The shorts were getting crushed while we were waiting for that "special event". Some came and didn't help like SIGA/PIP, some didn't like YHOO but maybe finally here. Then some plainly failed such as the CIGX tobacco lawsuit appeal. The market balloon broke and any small, medium or large cap stock with little or no earnings for the next 12-18 months was attacked as fresh meat thrown to lions. In this market no one can stand up to this onslaught.

I still love BTX. Sometime in the next 6 months or so I believe they will announce a good-sized Pharma deal. CEO Dr. West recently bought more stock at $4.40. Insiders are buyers over 90% of the time. So when BTX sells off to $4 or so like today I sell a few more ITM puts and on rallies toward $5 I sell ATM calls I'm now using Mar 2012 strikes. Today BTX announces they hired ex Amgen/DNDN CFO, a great add.

A SIGA analyst sees $300M sales potential company over the next 2-4 years now tells us that the stock's only worth $3.00 down from an earlier $17 target. Sounds like HUN. Go figure. SIGA also has a great future drug pipeline but no real earnings over the next 18 months. I love SIGA. I'm selling ITM puts under $3 and selling OTM calls on rallies. Our real risk is that Ron Perelman, the company’s 30% shareholder, tries to steal the company for $5. He's done this a few times in the past. I'll take $7.00 right now. I'll only lose $2.00.

PIP won big time but what's the good news going forward? They won't get a dime for almost 2 years at best. PIP has a good product pipeline but to enjoy their court win they may have to sell stock into a depressed equity market to provide funding. The stock is dirt cheap. I'm selling ITM puts and I'm under water now but in 2 weeks every call is worthless.

NWCI - what can I say? The stock was $0.75-.80 earlier this year and looking to raise private capital. The company’s patents were voted best new products for 2010 in the hot medical tech area. I’m looking for a quick 50-100% gain in a few months. Don’t forget to check-out the CEO – he’s a loser! He couldn't make up his mind on the best deal. Markets then turned ugly. Now two of the largest equity holders most likely will blow him out then they may try to screw us with lousy deal. I want to add to it if we all come in on same terms they do. Right now the world must think they are going "Banko". If that comes off the table, as I suspect it may soon, we have a $0.40-.50 stock at which time I will sell out.

What can I say about my short term favorite trading stock CIGX. No tobacco suit against RJR to go forward. The stock got crushed. I never loaded the boat until after the announcement then I sold calls OTM for the Jan 2013 strike into the $3 rally. I'm barely holding my own down here with the stock at $2.00 but I own a ton. I'm taking the product now. I will keep you posted. I'm looking for $10 over next 2 years. I hope you all saw the last 2 Alert Emails I just sent out. CIGX up 20% today given the new COX comments. There may be as many as 200 products off this new Anatabine line? This can win in so many ways. Cox loves it and so do I.

I love gold but overall I'm only even after 1 year of trading the GDXJ Indexes given the latest sell off in gold and SA. Friday I sold all lower strike long puts for Jan 2012. I've been selling the ITM strike puts into weakness but rather than close them out into rallies I'd buy lower strike long puts then let the market would tell me what to do. This time I sold the long puts. You know my thoughts where gold will be in the next 2-3 years - much higher!

Selling market rallies worked again today (Monday, Oct 3). We lose a few more dollars on our positions but make food money trading thank God. I'm thinking we test the overnight lows from a few weeks ago(we did today) then with some good news we get a whopper of a short rally to buy more puts when it’s over again. I'm still a better buyer down nearer the lows but an aggressive seller at 1200 and above.

While October's mutual fund selling to square away their tax situation, could make for a hard down this month even if September weren't down so much already. Remember after any October market slide we then head into the seasonally strongest market time from November to April. I'll just continue to trade and try to keep you posted as to the levels.

Please keep those cards and letters coming.

Good Trading,

Stan
702.558.1814

Sep 14

2011

Thoughts on Europe and New Video Released

Posted by Stan Moore in Untagged

Dear Friends & Fellow Traders,

Every week for the last few months I come to trade thinking that the agreements between France and Germany solved the "crisis" and every week this sovereign-debt crisis just won't go away. Investors fear the end of the European Union.

Barron's says it best this week, "Investors realized last week that a resolution to Europe's financial crisis may be far more important to the future of the U.S. financial markets than just about anything President Obama can say or the Federal Reserve can do.

“A rumor appeared Friday morning that Greece would default on its debt over the Sep 11 weekend sent U.S. and European shares into a tailspin despite the Greek government's strong denial of such talk.

“Contributing to the dour mood was the resignation of Jürgen Stark, Germany's top representative on the European Central Bank's executive board. His departure reinforced the impression that the ECB, like the U.S. Federal Reserve, suffers from internal disagreements about how to help the economy. The discord raises questions about the effectiveness of these institutions and, more immediately, whether Germany will support the funding of future euro-zone bailouts."

It certainly is very profitable to trade every week but it wears on our emotions. We make money trading but our overall portfolio balances decline or go nowhere at best. I'm more tired than ever. I'm glad I'm getting away for a few weeks very soon.

Next I read from Kass there’s more distressing news about investors leaving the markets in near record redemptions. These issues are looming large so take heed.

In the past week Doug Kass has remarked how negative individual investors have become over the last few years. He writes, "In June nearly $21 billion was redeemed from domestic equity funds. Last month, almost $29 billion was redeemed and, in August, it has been estimated that more than $35 billion poured out.

“The $85 billion of outflows from June to August will likely approach the previous three-month record of $88 billion which came out of domestic equity funds between September and November of 2008!

“Thus far in 2011, individual investors have sold about $75 billion of domestic equity funds, only $10 billion less than last year's total outflows.

“Astonishingly, since the beginning of 2007, domestic equity mutual funds have had net outflows of more than $400 billion (in the same period, $835 billion of fixed-income funds have been purchased! (Hat tip Steve).That spread between stock outflows and bond inflows - $1.235 trillion - is unprecedented in the annals of financial history."

Kass continues, "Recent data suggest that hedge funds have also become noticeably bearish. According to ISI's Hedge Fund Survey (released last night), hedge fund net long exposure (falling to 45.7% from 47.0%) is now at the lowest level since summer 2009.

“There are two ways of looking at the hedge fund community's loss of confidence in the equity markets. Either it's bullish that hedge funds are so bearish, or there are some very good reasons why hedge funds (and retail investors) are bearish."

Kass concludes, "While the bearishness on the part of both retail and institutional investors has normally been associated more with market bottoms than market tops (and thus seen as bullish), four critical factors suggest that both investor groups might stay on the sidelines until they are somehow resolved:

The market’s continued volatility and instability is scaring investors, who have not yet gotten over the economic/market experience of 2008-09.
The growing sovereign debt contagion in Europe and the failure of leaders/central bankers to respond intelligently remains a wild card.
Continuing political partisanship and the failure of our leaders to properly confront our fiscal imbalances and to promote pro-growth policy threatens business and consumer confidence.
An inability to gauge whether the erosion in the August sentiment measures -- influenced by the chaos in the U.S. stock market and domestic/overseas economic uncertainties -- will translate into weakness in hard domestic economic data."

Therefore we may conclude that until these issues are resolved, investors should proceed cautiously -- even in the face of so much negativity. I'm looking at all of the above from Kass as limiting the upside for some time to say 1250-1275 while at the same time I continue to see a limited downside not much below 1100 unless Europe blows up. We can continue to trade our brains out for quite some time to come.

Some Thoughts on our Favorite Companies
I recommend we continue to sell puts on the GDXJ on any weakness into the 32-34 level. If you read the linked article I posted in last week’s Stan’s Blog you'll note that we have the biggest buyer (China) of gold on our side looking for gold to go much higher from here.

I love SIGA down under $5 and still can't believe this price. SIGA has a $440 million contract to supply product with a great pipeline of others to come. Yes PIP's suit is a problem but a monetary award with make that go away. I've sent so much out already on CIGX I can't say anymore under $2.50. Own it big.

I’ve been trading and investing now going on 47 years. Early in my career I was a drug analyst. These companies were money machines or as I would say "growth companies". This is to separate them from plain growth stocks. These drug companies grow and prosper with economic growth however, they faultier with a softer GDP. Year in and year out regardless of the economic outlook these companies boomed.

Today, there are very few that come to mind. The premier growth company in the world today by far is AAPL. I would add AMZN and IBM to that list. There are others you get the idea. I have the next big winner in BTX. Years from now, say 3-4 years, BTX will dominate the stem cell area or whatever you want to call it like no other company can. This week’s deal with a major university is just more icing on the cake. BTX products will become the gold standard. Everyone will do business with them. The best part – the company has only 40 million shares outstanding with almost half held by insiders. BTX will be a huge winner in my life time.

Trades of the Week in Review
Again hoping for good news from Europe and combined with China’s slowing growth the market rallied into a high Thursday morning. Gold and bonds are higher and that's not good for stocks. Also Obama was to present his Jobs plan Thursday night. I can't remember the market rallying much into or after one of his addresses. I send an Alert Email to buy the SPY 120 OTM puts under $1.00. I went long under $0.90 and added some more near $0.80. As always we hedge our brains out in the sideways action.

That afternoon, Thursday, the EURO broke support, the 200DMA, near 140 and dropped sharply. The puts hit $1.72. I noted to hold the puts overnight and look to hedge anytime after the speech near the 1167-69 area. The overnight low was 1171. That's close enough for government work.

The next morning, Friday, with the market trading near 1173-4 pre-market I sent an Alert Email to buy the E-minis to hedge if one has not hedged. I noted there was good support near 1163. I send another Alert Email to add a few more hedges near 1163 after the market opened. At that same time I recommended we sell the 120 puts and buy twice as many of the 117 OTM SPY puts. This way we lock-in substantial profits but use some of the remaining profits to continue to push the downside trade for even more substantial gains.

With all the volatility I got a bit crazy about that time the market dropped lower. The Advance/Declines were over 1 to 10, an extreme to say the least. The ES hedges were hurting us but the puts could have been sold between $2.75 and $3.00. I'm assuming most of the 117s could have been purchased like I did near $0.50. I expected the E-minis to rally and they reached 1169.50. At worst we gave back some of our earlier hedged profits but the 3X return on the options greatly increased the overall returns.

Above I mentioned some of the news that happened out of Europe. Obama was a total non-event given what was occurring in Europe. This greatly enhanced the profits on the down side. The brief rally that occurred from the 1160 low to the 1169 gave a few in the Chat Room the ability to buy the 117s even lower. By 11:20 they were trading at only $0.17.

I send a few move Alert Emails after the 117s hit $1.60 to scale-out. By $1.76 we were down to tag ends. My first hedge paid for all my $0.50 puts. Again we tonned money with the hedges as the markets provided plenty of nice up and down moves. If anyone was lucky enough to buy more 117s near $0.17 with the increased size one should be mighty pleased this weekend with almost a 10X return.

The original trade recommendation traded and could have been bought as low as $0.57 shortly after I recommended the 120s. If anyone held onto the 120s these puts did trade over $4.00 but the switch to twice as many 117 puts was a traders dream come true. See attached Friday 30-minute chart, NET Weekly Money Chart 2011-09-09-D.

New NET Trading Video
I created a new trading/training video for last week’s trading, Aug 29 to Sep 2.

Please note that I will be on vacation from 9/19-10/3. The will be no charts, blog posts or alert emails until I return. You can reach me by email. However, there will be a Friday Chat Room both “vacation” Fridays.

I hope we all took time to reflect and pray for our nation and families as we remember 9/11 and those who selflessly gave of themselves to help others in distress. May God always bless America and each of you.

Keep those cards and letters coming I read everyone.

Good trading,

Stan Moore
702.558.1814

Sep 06

2011

Trading Really Doesn't Get Any Better Than This & Future Thoughts

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - September 5, 2011

Dear Friends and Fellow Traders,

Last Minute Market Update, Labor Day 2011, Monday, September 5, 2011
As of this writing, Monday, it is unclear what just spooked the markets. It appears the ECB just announced that it had monetized a whopping E13.3 billion in bonds in the past week, nearly double expectations, and a total of E134 billion since the SMP program's (a European bailout plan) inception, the market took one quick look at just how effective this program has been, shuddered and plunged. Investors realized that neither ECB intervention nor the shorting halt is doing anything at all.

As a result, S&P is now down 23 point, the EURUSD just dropped below 1.41 and the rolling halt of Italian bank stock has started with Intessa, Mediaset and Impreglio - all trading has halted. We expect UniCredit, another Italian bank, to follow suit as usual. To me it looks as though the negative market sentiment is unlikely to change for the better in Europe any time soon. Fasten your seat belts please.

I thought I'd start with reasons to help you understand a little better why I believe there will be no recession this year or next. Many of the experts, some of whom I greatly admire have given their reasons for a recession. The TV news and papers are full of the reasons.

Here is the problem that is perplexing investors today. I have chosen to list the reasons Doug Kass from Real Money Pro has given because I have been around long enough to find most of what Doug says to be quite informative. Per Doug,

“The typical conditions that precede a recession are not in place:

large private payroll drops in excess of 175k a month (adjusting for non-recurrings, they are still averaging about 100k growth over last four months);
an inverted yield curve (it is not inverted);
acceleration in inflation (inflation is contained and so are its expectations);
an increase in real interest rates (anything but!);
bloated inventories (low inventories to sales in place now);
retreating retail sales (sales are expanding);
negative year-over-year leading economic indicators (they’re advancing now);
a drop in factory orders (also advancing) and;
outsized durable spending relative to GDP (housing and autos remain in the crapper).

“As it relates to job growth, initial jobs claims, corporate profit growth and capital spending all point to improving and better payroll growth than we saw Friday. But what is happening is that the negative feedback loop that I have been writing about is taking a turn for the worse and we don't yet know its impact on business and consumer spending. When we figure out the disconnect between data and sentiment we'll have a lot more clarity on what the markets will do.”
I could not have summed it up better myself. Thank you Dougie.

We will only know for sure in the fullness of time. Right now my biggest concern is Greece. As reported in both the WSJ and Reuters Friday it seems that things in Europe have fallen off the cliff. The European markets were down sharply Friday, well over 3%+. One senior IMF official was quoted, "I expect a hard default (Greece) definitely before March, maybe this year." Greece and now Italy are softening their austerity packages. Germans don't want to bailout anyone anymore. I'm concerned. I haven't a clue as to how all this really plays out and how it really will hit the US stock market. We've been hearing about this for some time now and markets after an initial shock may do what they were doing in the first place.

Stocks, especially growth stocks, have been out of favor for the last 10 or more years. Growth is cheap. Morningstar-tracked mutual funds have seen equities as an asset class go from 60% holding to 40% at the end of 2010. I can't remember equity sentiment this low. Bonds and commodities have exploded for the last 5-6 years. Many high-quality growth companies sitting on tons of cash are selling only slightly over a 10 multiple when cash per share is backed out. I am looking forward, at some point down the road, to doing massive bull calls spreads in stocks like AAPL that I once tried to buy not too long ago near the AAPL lows. Add Qualcomm to that list. They are a huge beneficiary of AAPL's product cycle. I love QCOM under $50 better if it ever drops to $45-47. I can see the stock over $70 within 18 months.

Corporate fundamentals remain strong and may even get better as costs remain low in this economic environment while selling their products to the faster growing overseas markets. These companies are seeing huge benefits from internet technology.

I like stocks heading into year end. Right now 47% of all equity managers according to JPMorgan strategist Tom Lee are lagging their benchmarks. That's a lot of possible performance chasers coming to our market ups. Combine this with further asset allocation sales of bonds and buying stock, I'm pretty excited about stocks this year into any weakness back to the 1125-50 area.

There is very little in the way of news. I'm expecting the German Supreme Court to help support the German investments into the PIIGS countries then on to the BB speech Thursday. I'm not expecting a possible Greek implosion for at least the next 10 days.

I saved the best idea for last: China can kill two birds with one stone with much higher gold prices. This article is a must read and an added bonus for considering owning gold and gold stocks big time. I told you what I'm doing with SA and the GDXJ Index.

Trades of the Week in Review
When I finished writing my last book, The Definitive Trading Bible, I never thought "The Bible" could explain trading successes by just helping traders better understand what makes markets behave the way it does and when to expect the market to do its thing. Of key note is my detailed discussion of asset allocation and EOM (End of Month) markups/markdowns, AKA portfolio manager sheninagings. Informed NET traders have the perfect trading vehicle, expiration week option trading, that limit risk while maximizing profits.

Given the current volatility, a few weeks ago I started to trade and recommend the SPY weekly options. They cost more to trade but they do offer size regardless of the day of the week. This was the first week I traded them every day given the strong fundamental reasons to trade options every day this week. See attached Friday 30-minute chart here, NET Weekly Money Chart 2011-09-01-D 1 of 3.

In last week’s Stan’s Blog I mentioned the lousy economic fundamentals coming out. We would have plenty of volatility to trade. I even mentioned I might leg into a bearish SPY put spread later. NET traders also know all about EOM, EOQ and EOY market ups or downs as the case may be. Since August was down almost 14% coming into the EOM period NET was looking for a good rally attempt into Wednesday morning. There is usually an afternoon sell off that day when the buyers step aside from this illegal markup. No one really tries to get in the way. Even the shorts know they can wait their turn. Let the bulls mark the market up and then they can sell it short higher.

There are many ways to trade the markup in this case. We can go long futures (S&P E-minis) but margin requirements have most traders selling out by the end of day (EOD) then the trick is to get back in the next day. Hopefully the market hasn’t gapped away from you. Optionally, we can buy calls and hang on. This works but if you don't hedge or are wrong traders can lose most or all of their money. On Friday the market had a massive melt-up then gapped-up through resistance. This made calls even more expensive.

When I'm looking to get long the market for a markup rally I'm looking to buy cheaper puts as the demand isn't as great as the calls at that moment. I like the fact that my risk is clearly defined as the cost of the put. I then go long the E-minis. If I’m right my upside is unlimited. I can create a simultaneous entry or, restated, go long puts and long E-minis at the same time. However, I prefer the leg-in trade. I get long the puts into a clear resistance area then wait for the appropriate retracement then I go long with E-minis. The market rallies back to resistance and I sell some E-minis but not all and repeat this strategy until a breakout comes. In the previous week the market repeatedly made higher highs and higher lows. As prices moved higher we sold all the futures in a leg-out fashion and on weakness sold the puts and continued this into strength. Then we bought the next strike put.

In this week’s example we started buying the SPY 118 OTM puts on Monday. We made a few $s on these puts but made over $3500 on the E-minis using 10 options and 2 E-minis for hedging. We continued on Tuesday with the SPY OTM 120 puts and had basically the same results. Wednesday, I sent out Alert Emails to buy the SPY 122 NTM puts under $1.00. We were long averaging around $0.88. We were long puts at massive resistance as the market retraced 50% of the entire down move by 1:00 PM. That afternoon the market fell over 20 S&P points. Thursday morning we were hedged long with the E-minis in front of the PMI 10:00 number. The number was a surprise. The markets rallied back to the Wed highs where the 122 SPY puts could have been purchased for as little as $0.57. Hedged profits were taken on that last rally. GS came out and lowered the Friday Jobs Number from 50K to 25K.The markets sold off hard the rest of the day. I alert emailed and noted on the charts I would stay long puts and hedge to make more money while we waited for the Friday numbers. See attached Thursday "C", 9/01Chart, NET Weekly Money Chart 2011-09-02-C Thu 2 of 3.

Friday morning Europe was weak with our E-minis down over 10 points before the Jobs Number. I sent an Alert Email before 8:30 to put on a small hedge. The number came out and was pretty ugly. I sent another Alert Email saying to buy more E-minis now down another 10 points. Start selling some puts when market broke 1179-80. I mentioned that I thought the low would be made early as the news was pretty much in the decline. I did write to start selling the puts below 1179-80. The low was 1178ish. Puts could have been sold for as much as $3.93. This was over 5 times our average entry price. I must have sent out at least 5 Alert Emails before 11:00 AM. I mentioned to sell half of one’s E-minis holding (or 10) that were trading 1184-5. The rest were sold lower later. The remaining puts could have been sold for as much as $4.40 or nearly a 7X return from Thursday low purchase near $0.60. See attached Friday "C" Chart, NET Weekly Money Chart 2011-09-02-C 3 of 3.

In summary, there was at least $3,500 a day made on the first 3 days with the E-mini hedges coupled with small profits coming on the actual put trade during our End of Month (EOM) market. GS told us early Monday that an asset allocation out of $153 billion in bonds was taking place. Stocks must have gotten their fair share plus short covering jammed the market into resistance where substantial $s could have been made betting smartly on the weak economic numbers coming out late in the week after the markup. Here the hedging profits were much bigger given the many huge short term swings. Even after giving back a $1,000 on the earliest Alert Email hedge from Friday morning. The put profit was icing on the cake.

If you have no idea of what information is coming or don’t know how to use it you are just playing at trading with both hands tied behind your back. If you don’t know or don’t understand that the market was just artificially marked-up over 100 points in front of major negative news (Employment and a weak PMI numbers) how were you to ever going to buy puts for the (NET) expected decline. Read my "The Bible" and profit. Call me if you need to. I know it’s a lot of data.

Keep those cards and letters coming. I read them all.

Good trading,

Stan Moore
702.558.1814

Aug 30

2011

Expanded SPY Trading thoughts & Outlook Ahead

Posted by Stan Moore in Untagged

Dear Friends & Fellow Traders,

The economic news was generally poor as expected all week but the markets took that in stride after the huge sell-off retest failure of the previous week’s lows. We generally do not care about the news; we only care about the market's reaction to the news.

There is a lot more data coming out that should drive markets this week too. Again most of it will not be any good from reading the early guesstimates of our leading Wall Street economists. Remember most of these “great” thinkers in the past have predicted 9 of the past 5 recessions. We got no help from Jackson Hole and like BB, Trichet and Lagarde gave us little help with their speeches either. No one provided any immediate stimulus. Government interventions at all levels around the world have shown to be ineffective so far. Even the Greek bailout is back in the news with some new warts.

Still the markets rallied nearly 5% after last week as our stock markets absorbed quite a bit of selling these past few months. If there's one thing I've learned in all my years it's not to try to beat but to tag along with “They”, AKA the Trading Gods. Reminder these Gods will always do what they have to, to screw most of the traders most of the time.

So, what do I recommend for a trade last week? Place a SPY weekly put spread. The Gods read that and immediately rally the markets. However, we got lucky because our spread executed at a $0.85 debit and not $1.20+. That joy last all of a day because the markets retest the lows and then goes sharply higher. However, these Gods forget because NET traders can hedge. I will go into these trades a bit later below. Suffice it to say if you did nothing last week you lost $0.85 on the puts. However, Friday morning when the market sold off after BB's speech. The SPY 111 puts could have been sold for as much as $0.40 greatly mitigating the loss. Up until Friday afternoon, all our stocks were having a great week in the rally. CIGX was a shocker to say the least.

Trades of the Week in Review
There was a gap opening Monday letting us open the recommended put spread trade for a $0.85 debit. If the market decline continued lower to 1050 throughout the week we were risking $850 to make $5,150 for 10 spreads. Nevertheless, if you did nothing you lost $850 by Friday's expiration.

Given the current market volatility I'm exploring new trading opportunities with the SPY (500 Spiders). I've attached the Friday 30-minute chart, NET Weekly Money Chart 2011-08-26-D, for our study. NET traders have learned there are more ways to trade options as a cat has lives. We can enter hedges simultaneously. That's what the opening trade assumed above. We can leg-in. For example, Monday morning we can buy the 111 strike SPY puts at $0.85. Then later in the day and 20+ points lower we could have sold the 105 Strike OTM puts for as much as $0.61 or only a $0.24 debit. Better yet we could have sold the 111 puts for $2.00 a few hours later.

Let's run through a few more choices we have. For a better part of Monday we spent most of the time at the outer 2.3 Uni bands. These bands contain 98% of the price action. Still how do we know that price will reverse off the bands. We will never know for sure but NET traders know that when we had Leading Divergence on the 30-minute chart (we had 2 that Monday). There is an 85% chance the lows are in. If we already have the put spread on we can hedge by going long 2 S&P E-mini futures contracts. The contracts rally 6 points into the close for a $600 profits. We're almost home. If margin isn't a problem stay long. The puts are your protection. If margin is a problem go long 2 more in the overnight session. The market is up over 20 E-mini points by 12:00 and we're at resistance. Sell them and put $2,000 in the bank. Let's assume we don't re-enter the long again until 12:00 the next day (see Wed’s hedge comment) we get long for another 20 points into the close. Put another $2,000 in the bank.

Let's see, made $4,600. Now look to sell the long puts into weakness or add some new puts into strength. By now our put trade is too far OTM to use for hedging protection. Behold!! The market Thursday morning gaps right into a Tenet # 3 sell .area, the 20DMA and an 80% sell retracement. We can now buy some 117 OTM puts for as little as $0.53. Friday morning, if not hedged or if one hadn’t sold as I did Thursday afternoon then the puts could have been sold for as much as $3.20 Friday morning.

There is another cheaper margin requirement option instead of adding E-minis into the mix. This idea of buying offsetting options I like even better because my risk is fixed to the price I pay, in this case, the call option. The SPY OTM 115 strike is only $1.00. Buy 10 for $1,000. These SPY option trade like water versus the OEX weeklys which hardly trade. To make a long story short we could have sold the 115s for as little as $3.00 Wednesday or as much as $4.50 Thursday morning. Either trade worked well.

Friday morning on weakness we could have bought the OTM 117 SPYs at $0.53. These calls traded as high as $3.50. Just an aside, right at the top we shorted the market in the Chat Room at the 20DMA again. One bright participant doubled his money on an OTM put purchase at the same time. It was just another day at the ranch.

I don't know of anyone who did all these trades but they were there and identified mostly as E-mini trades in the Chat Room. I’ve looked at both these SPY and OEX trades for a few weeks now and I’ve come away with a few thoughts:

If the volatility remains high, the VIX is over 35, start using more SPY trades.
Conversely, trade the OEX. In both cases the returns are identical.

In conclusion Regarding Trading Options
If I use OEX options I will only trade long options against E-minis. However, I'm inclined, given the cheapness (price only) of the SPY, to leg into spread trades once the trade goes in my direction and even place an option trade on in the opposite direction as well. This strategy can work better earlier in the week. This opens up hedging and parlaying to any size account out there now. Still, one needs least $10,000 to start. Believe it or not I'm looking at another put spread this week. I may try to leg-in on this one to lower our costs.

All traders need to become more proactive than ever before if we're to make a great living and build real wealth in today's markets. See further thoughts on this matter below with CIGX. As for me, I truly believe that this economy is still growing and we are not going into a recession. The Fed has plenty of ways to help Obama even if he can't get his act together. I also believe that oil prices for the foreseeable future will moderate and hold inflation down giving the Fed more room to act more aggressively.

On being more Proactive in our Trading
I have a bit more work to do on CIGX regarding the 'Tobacco lottery' ticket and who they can or cannot sue. That's still out there. It's still huge but more time will have to pass. The good news is that I expect product sales will start sooner than later and there should be a minimum of share dilution to fund any of their future products.

I love trading stocks under $2.00 for a living. I've found 2 great one's in "my golden" years. BTX took 4 years before the stock went from $0.30 to nearly $10. I was the BTX specialist for 2 years before anyone paid any attention, even Cox. HUN, Huntsman, took only 2 years to go from $2+ to $21 but there were tens of $1,000s in trading profits per trade before the case was settled. We just bought $0.20-.30 dips and sold rallies for months on end. I still sell puts on weakness here. Checkout my old blog entries for the specifics.

CIGX can now become a money machine like any other I've ever traded. Unless CIGX and Cox are total frauds CIGX someday soon will have exploding sales of so many different products I don't know where to begin so I won't. We can now trade a $1.60 stock, sell calls on strength and sell puts on weakness. I just sold 115 calls the other week I previously mentioned out to Jan 2013 with a $4.00 strike for $1.25. They're now $0.40 bid. To balance that off I sold 100 puts Jan 2013 $3 strike for $2.07 Friday on the current weakness. I'll own CIGX under $1.00 and so on and so on.

Yes I'm hurting here at this lower market level. I have a large number of $4 and $5 strike calls. I just wanted premium in case. Well, that in case happened. These calls will expire worthless unless we get a miracle. I will now buy stock down and sell OTM calls into strength. If I'm exercised who cares. I made money. If the stock trades near $1.50 or lower I'll sell all the $2.00 and $3.00 ITM puts they want and use the money to buy more common and sell more calls into strength. I can see this happening for the next 6 months.

Keep those cards and letters coming. Even call me with any questions.

Good trading,

Stan Moore
702.558.1814

Jul 24

2011

EU Kicks Can Down the Road. Can We?

Posted by Stan Moore in Untagged

NewEraTrader

NEWSLETTERS & RECOMMENDATIONS - July 24, 2011

Dear Friends & Fellow Traders,

The EU and IMF just kicked the can so far down the road that our Greek friends won't have to go to the bond markets until 2016 or 2017. Investors and traders can now exhale. Now if only our leaders can punt as well as the Germans. We don't need any short-term fixes that only prolongs the agony. If Washington gets its act together soon our market can breakout through the top of my expected trading range and just maybe challenge 1400 for the S&P.

Normally we'd expect some seasonal weakness into Sep/Oct but this time it won't be so deep. I'm assuming the "Boys" can get their act together this week.

I thought you'd enjoy the comments below from someone who was one of the best bears out there for a long time before coming over from the dark side a few years ago. He feels the marketplace has almost become a random walk.

As an example, Bill Fleckenstein succinctly describes "the overriding game theory at present relating to the Washington, D.C., circus":

Debt ceiling debate matters and is resolved one way or another: It gets raised, stocks knee-jerk rally, bonds tank as the slosh ebbs and flows. Or maybe the reverse happens.
Debt ceiling does not get raised on time, stocks tank, bonds rally, dollar goes nuts in some fashion, or maybe everything tanks.
While all the debt ceiling hype churns around, jerking players back and forth, Europe implodes and various parts of the "circus" go nuts in assorted directions.

Not quite my thoughts but you get the idea just how hard it has become for investors out there.

Surprisingly good earnings have helped lift the markets back to near the yearly highs. I can remember analysts falling all over themselves lowering expectations just weeks ago. So far so good but there is always another wall of worry to climb. I'm happy to say the worst things get economically the longer interest rates stay down and the Fed will have to implement QE3. Say hello to $1,800 gold and higher stock prices.

A Quick Review of YHOO, BTX and CIGX
First Yahoo got crushed and is now trading back near $13.50 where I recommended selling the deep in the money puts and out of the money calls. The premiums have greatly eroded and the idea is still profitable but barely. However, the more screwed-up the company gets the more likely someone will put this sucker out of its misery. The bad news is that I no longer think the price will be over $22, more like $18. I will get out a new strategy shortly along the same lines.

BTX will present at the Agora Conference this week. Again the stock rallied back to the $5.75 where I took some profits. Someone didn't like the price that high and in the last 10 minutes of Friday's trading closed the stock near $5.20ish. I think you know my thoughts.

And, CIGX is the lead stock recommendation from the Agora Conference.

Trade of the Week in Review
We have an early buy put Alert Email to own the OEX 600Ws under $0.75. We purchased them as low as $0.60 yet they hit $1.90 in less than an hour on news that there was no debt agreement. This was not the surprise I was looking for. I really wanted to be long E-minis for what I thought was going to be an up day. The market refused to follow through on the downside. I exited all my puts. However, the long E-mini hedge, if puts were held could have earned almost $250 with a 75% hedge nearly a 300% return on this 1 trade alone.

I quickly sent another Alert Email to buy the 600W calls under $1.40. These calls traded down to $1.15. The calls hit a high of $3.20 by 1:30 and closed at $2.60. The market traded in a 2-point range pretty much the last 3 hours limiting E-mini hedging profits. Overall it was another Good Friday expiration day. See Friday's 5 Minute C chart, NET Weekly Money Chart 2011-07-22.

Keep all those cards and letters coming.

Good trading,

Stan Moore
702.558.1814

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Traders are Uncertain about Uncertainty

Again It's Buy the Rumor & Sell the News

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It just may be the Time to Buy Further Weakness

Market Updates on My Favorite Stocks

Thoughts on Europe and New Video Released

Trading Really Doesn't Get Any Better Than This & Future Thoughts

Expanded SPY Trading thoughts & Outlook Ahead

EU Kicks Can Down the Road. Can We?