NEWSLETTERS & RECOMMENDATIONS - November 12, 2010

Dear Friends and Fellow Traders,

This week we had the largest weekly decline in equity prices in months. Commodities were rocked hard after hitting, in some cases like gold, cotton and copper, all time highs. So, is this the beginning of the pause that refreshes or the start of something bigger?

Possible Bear Case:
As I write this the world economy seems to have taken a turn for the worst. Obama's and Bernanke’s economic views were soundly rejected on the world stage in Korea. We have rising inflation in China coupled with the threat of higher interest rates, Germany's growth is slowing and the European debt crisis intensified. There is a concern for the "PIIGS" countries. The ITraxx SovX Western Europe Index, an unweighted average of the credit default swap (CDS) spreads of 15 Western European governments, Friday moved to new highs since its launch in September. The CDS spreads for Ireland, Portugal and Spain all hit record highs. The Euro fell back hard and needs to come down versus the USD. Can a rising USD be good for stocks?

There is a sense of "toppiness" coupled with this risk on/risk off market. The really bad news begins for the hedge funds tomorrow. That's the last day investors can call for redemption of their funds by year end. I'm sure there are more than a few large withdrawals pending in hedge fund hands already. Can someone say sell here? While investors have pretty much ignored the negative fundamental news, they still seem to believe in the technicals. Believe it or not the S&Ps last week returned to retest the April 2010 highs at the Fib 62% sell retracement of the October 5th 2007 highs near 1229-30 cash market. Can we say double top anyone?

Back in the old days when I worked on Wall Street some 25 years ago, there was one particular portfolio manager (PM), Ken Heebner (KH) who became known as the "Mad Bomber" for his willingness to blowout his rather large concentrated long positions at the market regardless of price. I remember once getting caught in a sector he blew out and it costs my associates millions. Well, on Friday KH sold 1M AAPL shares driving the price down over $9.00 a share. He still owns 100,000 AAPL shares I’m are told. KH was one of the more bullish PMs out there this year. Has he turned bearish or bearish on tech only? Inquiring minds want to know because KH is one of the best long-only equity PMs I've ever known.

Possible Bull Case:
The best bullish case for rising equity prices has been made in the option pits. The collective wisdom of the smartest traders in the world is very often more right than not on the movement of stocks. These traders believe QE2 is like a massive "Put" option supporting equity prices. Remember last week’s note renaming B.B. to "Super Put"? In this week’s Barron's "The Striking Price" article writes, "The Federal Reserve has greatly reduced, and perhaps even eliminated the risk of owning stocks during the next six to nine months." The article further states,"Prior to November 3, OTM puts on the S&P 500 that expire in 2 months were about 9% more expensive than similarly situated calls. Now, the 2 month SPX skew is 5.8%. These percentages, though seemingly small, represent a big change in how investors view risk." Furthermore, "The new pricing dynamic indicates that investors now are overlooking economic problems obsessed about since before Lehman collapsed. The new focus is on making money as quickly as possible by trading stocks."

To better illustrate my point, B.B. (AKA the Fed) as the single largest buyer of bonds begins to crowd out the normal T Bond buyers. These buyers get forced into corporate debt and the corporate buyer is pushed into preferreds or equities and so on and so on. Hell, $1T has to go somewhere and equities are as good as any. If this works great if not look for QE3-4 and even 5.

My personal, favorite reason the market can go higher is simply that low interest rates will increase the likely hood that the current corporate earnings stream will get a higher multiple in the private market causing large increases in going private deals and a major shrink in outstanding shares of all sizes of companies. Corporations can now borrow at obscenely low rates, reduce their outstanding shares, increase earning or dividends and even make cash acquisitions accretive to earnings immediately. Stocks can go higher which in turn holds up the S&Ps and limits the downside. Furthermore, speculators will bid up many of the shares of companies that seem ripe for takeovers and don't forget corporations have almost $2T in cash on their balance sheets. Lower taxes will bring a large portion home sometime next year after the GOP takes the House over.

In summary, I can see the market going lower, even next week for that matter. I believe the downside risk is small, maybe 2-3%. Then, I believe investors will want to be long going into year end and early next year. Fundamentals only tell us so much. Looking ahead based on a $90 S&P 2011 earnings outlook the market can be considered fully priced at 1225-1250. However, I believe oil projected energy earnings are too low. I expect to see continued gains in all companies selling goods into emerging markets especially industrials and materials. All that money we're printing has to go somewhere. My primary long tell is Freeport (FCX). As long as FCX trades above $90 all's well with China and the world.

Finally, I believe Obama has given in on extending all tax cuts, this coupled with my belief that the US's desire to grow the economy by printing money will be greater than China's appetite to tighten their momentary policy. This means higher stock prices ahead. Therefore, with little bit of luck, I believe the S&Ps can trade over 1300 sometime in the next 3 months.

Biotime Update (Now BTX):
Long live the 3.5 million share short position in BTX. NET Traders who own BTX got lucky this week. Geron, the largest stem cell company in the universe, released two papers that popped all stem cell companies. (I sent paid subscribers the release on Thursday during market hours.) We couldn't sell BTX shares fast enough or high enough as the shorts scrambled to cover. I even sent an Alert Email Thursday afternoon suggested selling some BTX and replacing some with the $7.50 strike Mar-Jun options. The shorts will be back to try to knock the price down - don't you forget that.

The more good news we get each time about possible stem cell benefits, we know the BTX risk gets smaller and the rewards grow bigger. In the future, we’ll get more good news and higher prices and so on and so on.

My current thinking is simple: as before, we sell rips and buy dips. Just a few months ago when BTX joined the Russell 3000 I suggested selling BTX into that strength near $7.00. Yes, we started buying back too soon as the shorts came after BTX rather hard and forced the stock into the low to mid $4s but I wrote that I don't get sore I buy more. At the mid-4s I loaded the cart with naked puts, long calls and more common.

I'm now recommending buying 7.50 calls for Mar and Jun 2011 to replace about 40% of the common we sold. If BTX continues to rally I'm selling the 10 strike above. For example, I bought some June 7.50 strikes for $0.90 Thursday. On Friday I started to scale-in sell the June 10 strike for $0.60 and I’m selling more in higher. I now have $0.30 at risk with a $2.20 possible profit over $10. These are the trades I'd do every day and twice on Sunday if they’d let me. If BTX comes back I'll buy more calls lower and repeat sales of the 10s again on rallies. If the stock drops under $5.75 I'll look at the 5.00 strike and/or common again. Go BTX! Remember 2011 starts the BTX era per Dr. West.

Trade of the Week in Review:
Early Friday morning as the S&Ps rallied into the 1210 resistance, I sent an Alert Email before 10:00 AM EST to buy the 545W puts near $1.25. The puts reached $1.10 and could have been sold as high as $7.50 when the S&Ps settled in near the 20 DMA on the Daily chart. The S&P E-mini hedging was nice for even more profits but the puts more than did the work for us. This is truly great work if you can get it. See the Friday C Chart, NET Weekly Money Chart 2010-11-12.

After 11:00 I sent an Alert Email call buy on the 540W calls near 1193 but noted that you must hedge. The hedges again tonned $s while the call closed worth only $0.25.

These option trades continue to be very profitable but to take full advantage you must hedge. The first hedge (of many) nearly pays for the option giving you the $s to buy more options and hedge again for increased profits while the trading range continues. A number of times after we close the last hedge the option then trades in the direction expected and make even more money.

Congrats! I hear quite a few NET traders made some great $s this past week. As always keep those cards and letters coming I read them all. If I select one, it gets posted on the site and that Net Trader will get another free month in the Chat Room.

Good trading,

Stan Moore
702.558.1814

NEWSLETTERS & RECOMMENDATIONS - November 7, 2010

Dear Friends and Fellow Traders,

Just think with the wave of a magic wand Ben B. committed to creating $75 billion a month out of thin air. Combine this coupled with other Fed programs and we're talking nearly $900B over nine months. Don't fight the Fed is our new mantra. Yet, the greatest risk I feel was and is now being too cautious on stocks during the next three to six months. Don't over think the Fed message but remain careful. There are many out there that believe the Fed's actions might not work. However, I believe it will be very clear long before the markets falls apart. I saw the top in August 2007 and the bottoms in Sep/Oct 2008 and the final bottom early 2009 so my economic and market experience is often pretty good.

QE1 saw strong equity and bond markets before QE1 ended earlier this year. QE2 mentioned over two months ago and started Wednesday has opened a door that has juiced risk trades like copper, gold, silver, junk bonds, foreign currencies, equities - whatever. People may even start believing in the former Greenspan "Plunge Protection Team" that bought the S&P futures to rally the markets. GS thinks QE2 will ultimately reach over $2B with no exit until 2015.

Exactly what is the Fed trying to accomplish. I believe number one is to the break the currency links many Asian countries have to the dollar. This will cause our exports to explode, our economy to grow and with nice rallies coming in those S&P 500 companies that sell overseas. Over 90 million Americans with equity ownership will feel better and spend. Just maybe we can reverse the massive exits from stocks into bonds these last two years on the part of Joe Public. Thursday's stock market rally alone added over $300 billion to the pockets of investors. Investors must believe that stocks and not bonds are a hedge against inflation that must eventually follow the Fed's actions.

I believe our stock market is currently one of the cheapest in the world and, if Ben is correct and Asian currencies realign, investing in low cost U.S. plants just may prove the best investment foreigners can make down the road. China will no longer be a cheap source of goods. Furthermore, Ben B. feels that a robust U.S. Economy will support the $ not sink it. Strong economic countries experience strong currencies.

There is no help coming from fiscal stimulus in the near future. Over 1.5M unemployed people start coming off 99 weeks of extended jobless benefits this month and well into 2011. Couple this with state and city workers being laid off next year approaching 2M you begin to glimpse just how bad it can get out there. Good bye Obama in 2012. Hello QE3 and 4 and maybe even 5.

In conclusion Ben B. is setting the stage for events, short and long term that will impact just about everything we do with our money. Short term the economy seems headed in the right direction. I'm guessing upcoming holiday retail sales should be the best in some time. So trade the sea of greenbacks, ignore the data as I'm sure many will until you can no longer then hold your nose and trade some more. It's just a matter of time before we succeed or plain blow-up our bond and currency markets. Who said we don't live in exciting times?

Some Good News on the Political Front:
I have never seen a more secret, arrogant party abusing power as the Democrats did. Team Obama, Reid and Pelosi shattered the bond of trust between the people and their elected leaders. Obama promised so much and delivered only to his friends. Was it worth it? Team Obama believes so. Pelosi has no regrets. The message was loud and clear. My answer was No! The Dems lost 61 seats in the House, 6 in the Senate over 7 governorships and best of all over 500 state legislators. Eleven states completely flipped to the GOP. Even Alabama went Republican for the first time since 1868.

The best of the election gives the GOP control of the House and by threatening to block funding on key Obama programs could put pressure on the President to work with them to lower business taxes and pursue many other pro-growth policies. There are many state and federal road blocks that can be replaced with less cumbersome licensing and review process to jump start growth in currently weak economic states.

Lastly, 10 of the 23 Democratic senators up for re-election in 2012 are from states the GOP blew-out the Dems. The country is awash in a sea of red. The GOP has some leverage this time. I hope they don't drop the ball. It took the Republicans time to break from the negativism of the Bush era. Don't go back to earmarks.

There were no great option trades this week but if you can hedge the rewards were returns of over 3-4X on 2 separate occasions late in the week.

Keep those cards and letters coming as I love hearing from you even if we've been out of touch for over 5 years. I always love to hear for any of you. I'm still working with students now friends for over 20 years. I will be in NYC visiting with some of you early December.

Good trading,

Stan Moore
702.558.1814

NEWSLETTERS & RECOMMENDATIONS - October 31, 2010

Dear Friends and Fellow Traders,

This week will at least clear up some of the uncertainties over hanging the market these last few weeks but may lead to a new period of heightened volatility in terms of potential market setting events. Furthermore, we have a ton of economic numbers out this week starting with Monday’s ISM Manufacturing, Wednesday’s ADP payroll followed by Friday’s Jobs Numbers. These last 2-3 weeks we were just marking time.

The good news, even if it's just buying the rumor and selling the news, is that any decline should be contained over 1100. September was the best month in 75 years while October was for the last 7 years. Past markets tell us when both September and October are this bodes well for a good year end rally.

The market is ripe for a trade able move in either direction over the short term. The bears tell us all the good news is in the market yet buyers are still lurking below current levels. Even a stronger USD should not derail the market very much.

The Fed’s “QE2” won't help create jobs and it just might create some further asset bubbles but it will help most everything at the margin. I've never known too much liquidity is a bad thing for assets or markets.

BTIM (BTX) Update
Reminder - Biotime switches symbols Monday to BTX. All I know is the more I read the greater my confidence grows that BTX is the real deal and the stock should be much higher next year. I'm personally looking at sales and profits for the first time in the company's history, more Pharma deals and, with any luck, a brokerage sponsor and their recommendation. Go BTX!

Trade of the Week in Review:
These last few weeks have taught us just how lucky we have been trading Expo Week options. Even when the market pauses there are great profit making opportunities with options using E-mini hedging in these narrow ranges. Thursday, I noted on the 12:00 A chart a call option trade with the 535Ws at $1.25 scale-in lower. I further noted you must hedge. By 12:30 the calls were trading at $0.95. The 2 or more hedging opportunities more than paid for the calls and late in the day you could have sold your free or parlayed calls as high as $1.95. That’s 3X return in hours! NET Weekly Chart 2010-10-29.

I pretty much tried the call trade recommendation with the 530s this time on Friday's A chart but the target price was too low. We never get mad if we can't own the calls at lows because we can buy the puts at highs and go long E-minis on the dips. Besides the puts were much cheaper and ITM.

So, on the Friday’s 2:00 B chart I recommended we buy the 530 puts in the 1183-84 area priced near $1.10 and scale in but must hedge. The market only retested the day’s high of 1182.50 so the puts only reached $1.20 which is close enough for government work. Had the market rallied to 1184 we would have been able to buy some additional puts near $0.75-.80. I covered discussed the trade rather well in the Chat room for any that went long. I was $1.10 scaling and missed the put trade.

I suggested a 100% long E-mini hedge position and started to scale-in at 1180.25 down to a full long position at the 60% Fib buy retracement in the 1178.50 level. I even suggested that some 30-40% of the puts could be sold into strength at that level over $2.00. The puts hit $2.30. About 25 minutes later the E-minis rallied to 1182.50 again. Scaling out into the sell zone netted about $150 per long put and more than paid for all the puts. At that point we can sell the remaining puts into weakness. The 530 puts closed near $2.00. A good NET trader tripled his/her money in less than 1 hour in a 4+ point range. Again, nice work if you can get it. The time span was too short to follow on with the 3-4 Alert Emails. I hardly had the time to get all this across in the Chat Room. Try the Chat Room – you’ll like it. See Friday's C chart.

Fasten your seat belt we're in for a wild ride.

For my customer’s who receive the newsletter early – Happy Halloween!

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

Good Trading,

Stan Moore
702.267.0396

NEWSLETTERS & RECOMMENDATIONS - October 24, 2010

Dear Friends and Fellow Traders,

The S&P 500 Index has gained almost 12% since late August when Bernanke said to the FED, "will do all it can," to sustain the economic rebound. Since then the GDP appears to be growing slightly more than the 2nd quarters at 1.7%. However, this pace of growth will do little for the over 14 million unemployed hence the reason the FED must act - hello "QE2"!

Investor Sentiment is running 2 to 1 in favor of the bulls and coupled with high investor complacency represents extreme optimism. Overbought markets and pressure on China to raise their currency while the U.S. is pressured to stop debasing our currency can create some heady volatility. I thought we'd see some mutual fund tax Loss selling but that has not happened yet.

The coming week precedes the election and the November 2-3 FOMC meeting. I'm guessing we may see sell the news activity leading up to these two events. We may even see a response to statements coming from the G20 meeting this weekend in South Korea regarding stabilization of world exchange markets.

I believe we still may have 50 S&P points up with 75 down sometime this year. I for one has replaced all my trading longs with calls especially BTIM into the current rally. I will use any serious weakness to sell option puts and buy calls again on selected favorites. Any declines should be moderated as large corporations continue to issue huge amounts of debt to buy shares. Right now investors, traders, whom ever want to own stocks. Fasten your seat belts.

Most economic reports this week will focus on housing with an early GDP and Consumer Sentiment read. Key for the investors is still "legislative gridlock" and any deviation from this could be a market mover.

BTIM Update:
BTIM continues to impress me technically. Almost every day the stock opens higher, drifts lower then closes near or at the highs. Friday BTIM opened at $6.32 traded down to $6.16 and looked like lit would close $6.31-.32 when a trade of over 8,000 shares closed BTIM at $6.36. Somebody knows something. Here’s the latest Biotime release.

BioTime, Inc. (NYSE Amex: BTIM) announced that the Company's CEO Dr. Michael West will present data today relating to 12 new cell lines, differentiation kits, and cell culture media at the GTCbio 4th Advances in Stem Cell Discovery and Development Conference in San Francisco, California. Dr. West's presentation titled: 'Fate Space Screening of Clonal Human ES-derived Embryonic Progenitor Cell Lines' will include a discussion of the Company's proprietary bank of more than 140 diverse human cell types made from human embryonic stem cells, the company's screening technology for discovering means of manufacturing human cell types, and the potential use of these cells for diverse new therapeutics and drug discovery. During his lecture, Dr. West will describe the 12 new lines: B28, EN23, Z3, EN5, RASMO19, EN27, T42, SK47, SM2, SK46, T44, and SK44 that will be launched beginning November 1, 2010. He also will disclose new data on the cell lines: SK17 that have the potential to differentiate into cells that express renin and smooth muscle cell-related genes characteristic of the juxtaglomerular apparatus of the kidney, Z2 that when differentiated using a proprietary protocol expresses relatively high levels of the bone growth factor genes BMP2 and BMP7 (also known as osteogenic protein-1 (OP-1), and J16 that expresses preadipocyte markers of interest to researchers in cosmetic dermatology and type II diabetes. In addition, Dr. West will disclose for the first time the Company's PureStemTM technology, with which the Company plans to expand its product offerings in calendar year 2011. The PureStemTM technology utilizes the expression of exogenous transcriptional regulators to control the differentiation of human embryonic stem cells and induced plutipotent stem cells, and may potentially provide many new human cell types needed in regenerative medicine. BioTime is seeking patent protection for the PureStemTM technology. Additional information about these new products will be found at www.embryome.com beginning on November 1, 2010. Dr. West's presentation is available on BioTime's website at www.biotimeinc.com. The annual GTCbio Stem Cell Research & Therapeutics Conference provides information regarding cutting-edge developments in all areas of stem cell research including the biology, medicine, applications, regulations, and business of stem cells. This year's conference will address recent developments in pre-clinical and clinical trials of stem cell therapy, regenerative medicine and tissue engineering, cancer stem cells, stem cell reprogramming, FDA and NIH policies regarding funding for stem cell research, and private funding from the pharmaceutical industry.

Friday’s Trading:
There were a few good hedging and parlaying long call trades but the only money made was on the hedge side as the calls expired worthless. We can do this the easy way (where options make the $s) or we can do it the hard way (where multiple hedged S&P E-mini trades make the $s). I’m not ashamed; I'll take my profits any way I can get them. The choice is yours. (No NET Weekly Money Chart this week.)

Have a great week. Keep those cards and letters coming. I read them all.

Good Trading,
Stan Moore
702.267.0396

P.S. I'm seeing more than a few bumper stickers on Nevada cars saying, “Can you seen my Hairy Reid?" Here's link to the TV interview where Harry tells us without him we'd be in a worldwide depression now. Our local cartoonist poked fun at his comment in the Sunday paper. Harry must be getting desperate. Harry must think he’s Al Gore, the inventor of the Internet?

NEWSLETTERS & RECOMMENDATIONS - October 17, 2010

Dear Friends and Fellow Traders,

As I expected in my last note the market reached the 1175 target and traded as high as 1181 before retreating. Even though QE2 won't officially start until November 3rd, I believe the expectations for QE2 and the elections are mostly responsible for the Sep/Oct rally. The market should consolidate for awhile and focus on the rest of 3QTR earnings and comments.

Tech is off to a good start with an earnings beat from GOOG and a nice $60 up move. Growth is once again the key take away from the GOOG's conference call. AAPL is up over $20 with great numbers expected Monday. Just how far can even good numbers take the market when U.S. banks slid for the fourth day is a good question. Currently, there are more unknowns than knowns. Investors won't tolerate this for long before taking negative actions.

What we have here as mortgage damage spreads is a clash between modern finance and the legal system rooted in all that required paperwork trail. I know one thing for sure - lawyers will have jobs as far as the eyes can see into the future and I always thought 3,000 lawyers at the bottom of the ocean was a good thing.

"If we are talking three to four weeks, it will be a blip in the housing market", says Dimon, JPM's Chairman, told investors. He continues, "If it went on for a long period of time, it will have lots of consequences, most of which will be adverse on everybody." I noted JPM repurchased over $500 million mortgages in this last quarter. $500M is not chump change. If Foreclosuregate encourages substantial principal reductions we could be looking at huge multi-hundred billions in loses for the banks. At best, I'm thinking a $5-$7 billion hit to the banks profit and loss statement. At worst, the taxpayers take these  hundreds of billions more in losses as FRE and FNM are not able to put back bad securitized loans they purchased from the banks. In any case, I cannot see owning the shares of a single financial institutional now. This is not good for the stock market as they are a major component of the indexes.

I'll close my opening thoughts with a bit of good news for markets. Bill Gross, one of the smartest and best Bond Managers on the Planet, telegraphs a QE2 green light and tells us he is buying Mortgage Backed Securities (MBS) on margin. PIMCO, has just increased its MBS holdings to the highest July 2009 levels, when Gross started dumping MBS holdings on the tail end of QE1.

I'll summarize by saying this, barring a big unknown out there the market should remain in an up mode through year end. I would think with any luck we have a shot at 1250.

Review of Previous Recommendations:
I'll start with BTIM (and its options) will soon to become BTX on November 2. Watching BTIM's price action these last two weeks told me the stock was poised to breakout up soon. You didn't need inside information to know that. But there is always someone somewhere that knows the deal. We can only learn by reading price action, something I've learned to do well over the years. We all know the news by now that BTIM has inked the first Big Pharma deal in the stem cell space. Congrats BTIM!

Monday right at the opening, BTIM popped into the $5.40 area on nice volume, pulled back to $5.11 and never saw that level again. There were, I'm sure, a few short squeezes into this rally and especially into Friday as BTIM hit $6.41 at the opening only to drift lower to a $5.70.close. I did say there would be a quick $0.40-$.50 in the trade.

What I want my students to take away from this rally is we must always sell into these announcements and book some profits. I was selling the next higher BTIM strike calls against my long options. I even covered some shorts puts into strength. Hell, I'd have been much more aggressive if I thought I could buy BTIM back $0.40 or more lower that same day. Anyway, there's always tomorrow with another deal. I expect we'll see many more deals with Big Pharma over the next 2 years now that the first one has been done. Go BTX.

My second favorite stock has been Huntsman (HUN). About 6 months ago I recommended buying say 1000 shares near $8.00+. HUN pays a $0.40 dividend which gives us a nearly 5% return. Next, I recommended selling the Jan 2012 15 strike calls for $0.75 and at the same time selling an equal number of Jan 2012 12.50 strike puts near $5.00. If held until Jan 2012 an investor would have collected 7 $0.10 dividends or $0.70. I wrote that I believed the stock would be sold near $20 sometime before or after early 2012. I still believe that. In addition I have been selling naked 10 strike puts these last 6 months but that's over for now as the stock has recently moved up 25%.

There have been a number of attempted other naked put sale recommendations but that ship has sailed given an under 20 VIX. The risk/reward is not there in today's market.

This last recommendation, about 6 months old and still on the books, is Yahoo (YHOO). I recommended selling an ITM put with an OTM call. I mentioned that we sell the 25 strike Jan 2012 put for $11.50 and sell the $22.50 strike calls for $1.75. I thought the stock with about $8.00 of miscellaneous assets was a very cheap takeover in the next 16 months at $20.00. The shareholders were pissed when management turned down a $31 buyout offer from MSFT. There is new management there now with buyers sniffing around again. Yahoo hit $18.00 last week. I love doing buy-writes using options were the owner puts up no $s just assets in the account yet receives almost $13 a share in cash into his/her account. Buying stocks at $14.00 and selling nearly a 2-year call for $1.75 is not a big enough return for me. But if the above strategy works and YHOO is bought for $20 the put is worth only $5.00, we earn $6.50 plus the $1.75 call expires worthless. Nice work if you don't put up any money. The call is currently trading near $0.75 while the put trades near $9.00. I'm recommending exit the trade if Yahoo trades near $18-$19.

Trade of the Week in Review:
There was an Alert Email early Thursday morning to buy the 530 calls $2.00 and scale-in. They hit a low of $1.50. There were numerous very profitable hedging trades that more than paid for the calls and included a nice overall profit. The market seemed range bound so I recommended in a 1:30 Alert Email to sell any calls into the rally. The calls hit $2.00 - I was gone. Needless to say during a selloff into the lows at 3:00 could have allowed us to reenter the same 530 calls near $1.00. The market rallied sharply into the close in front of a great GOOG beat. The calls opened Friday morning near $5.00 where profits were taken.

After an early hard selloff given the harsh financial stocks beat down the market drifted into a small trading range. After 2:00 I recommended in the Chat Room we try buying the same 530 calls now trading about $0.30. They hit a low of $0.20 shortly later. I recommended we do some hedging but to sell the calls into late strength. Later the 530s hit $1.00, we were gone and they closed at $0.80. Again nice work if you can get it and it's there almost every week. See NET Weekly Money Chart 2010-10-15, Friday C chart.

Again thank you for all those cards and letters. Keep up the good work. I'm happy to hear how well you are doing. Welcome we have 3 new students in the Chat Room.

Good trading all,

Stan Moore
702.267.0396

NEWSLETTERS & RECOMMENDATIONS - October 10, 2010

Dear Friends and Fellow Traders,

I predict the market will strive to reach 1175 and, after a brief pull back to say 1115, the 200-day moving average the market could approach the April highs over 1200 by year-end. The market jumped the gun a bit with QE2 and GOP landside expectations. However, after a return to reality given the expected tax loss selling by Mutual Funds this month the market should move higher as Portfolio managers (PMs) chase performance into the year-end seasonal strength.

Right now the market is starting to price in a $1 Trillion Fed QE package. Earlier in March of '09 the market went giddy with a $300 billion QE1 package. A GOP win is pretty much factored in but the market may start thinking Senate as well. Pollsters are saying a generic vote for the GOP over Dems is at an almost 18% spread. I personally cannot ever recall a spread that high ever for either party. Back in '94 the spread was only 7% and the GOP gained 51 House seats. I'm hearing gains in the house upwards of 70 now. Even Sharon Angel, a nobody candidate, is now 4% higher (at 50%) than Nevada’s Senate Majority Leader Harry Reid after trailing by over 5-7% after she won the nomination. Reid’s son Rory, who doesn't even use his last name, is trailing the GOP by 15% points for governor.

There is not a lot of news that could move the market big in either direction unless the USD starts a race up the chart. So sit back, trade and count the days to the GOP landslide on 11/2. Go Tea Party!

Biotime Update:
I still haven't seen or heard any good news from BTIM or Dr. West lately who recently lost a parent. If the stock can break through $5.20 should be another quick $0.40-.50 in the trade until the 200 DMA. Breaking the multi-month down trend line was a big event.

Trade of the Week in Review:
The market continues higher, consolidates for a few days and goes even higher. Before the market opened Friday morning an Alert Email went out to look for a trading range day between 1150-52 on the low side and 1158-61 on the high side. Before 10:30, I sent another Alert Email to buy the ITM 520 calls near $1.50. I never recommended the OTM 525s at $0.25 as a throwaway trade. I couldn't see enough upside. I was wrong. We never got long the 520s and they eventually hit $7.20! A few diehard NET traders bought the 530s anyway. The price was right. Those extra 3 points (hit a high of 1164) were a minor miracle as those OTM 525s hit $2.30 near the close.

We had another Alert Email after 11:15 suggesting buying the 525 puts at $0.60 and scaling in lower. The trade was a setup to make money on the hedges. The trade was a winner like last week from the first long E-mini hedge and only got better as the market made higher highs. Yes, the puts expired worthless. I did send an Alert Email to sell them into weakness but $0.30 was the highest the puts ever traded. See 5 minute C chart enclosed, NET Weekly Money Chart 2010-10-08.

Keep those cards and letters coming.

Good trading,
Stan Moore
702.267.0396

NEWSLETTERS & RECOMMENDATIONS - October 3, 2010

Dear Friends and Fellow Traders,

Last week I briefly noted that the Tea Party really took the GOP to task but the fun was just beginning for the Dems. I believe tensions between Obama and fellow Dems blew out last week. The Dems left town so fast they didn't bother to pack their bags or pass a budget resolution of any kind.

I can sense a war is brewing in the Democratic Party with the President losing control of his base. From early Congressional polling races in swing districts the Dems that didn't support Obama are leading big time while those who supported him are trailing badly.

I can see real problems for the U.S and stock markets big time down the road that neither party will or can fix. Looking ahead, who needs Greece when we have Ireland? Ireland is already in a depression and its new four year budget will only shrink the economy even more. Most are surprised. Ireland, unlike Greece or Spain, is taking this sitting down without a whimper. However, I believe Ireland and not Greece will be the first to see massive social unrest and default. These problems will play out over the next few years providing us with a glimpse of what's in store for the U.S. down the road.

Part of the real problem for Team Obama stemmed from the fact that his programs never worked for the economy and Biden et al keep telling us from day one that if they didn't act the economy would have fallen off a cliff and things would have gotten much worst. Obama focused on how many jobs were saved. Americans didn't buy into the story.

A WSJ article which compares total 2007 employment levels with those of the second quarter of 2010 in the United States, the United Kingdom, the 16 Euro zone countries, the G-7 countries and all OECD (Organization for Economic Cooperation and Development) countries.

There are 4.6% fewer people employed in the U.S. today than at the start of the recession. Euro zone countries have lost 1.7% of their jobs. Total employment in the U.K. is down 0.6%, G-7 average employment is down 2.4% and OECD employment has fallen 1.9%.

This simple comparison suggests two things. First, that American economic policy has been less effective in increasing employment than the policies of other developed nations. Second, that if there was a cliff out there, no country fell off. Those that suffered the most were the most shameless spenders, such as Greece, and their problems can't be blamed on the financial crisis. While the most recent quarterly growth figures are just a snapshot in time, it is hardly encouraging that economic growth in the U.S. (1.7%) is lower than in the Euro Zone (4%), U.K. (4.8%), G-7 (2.8%) and OECD (2%).

Americans didn't buy into the lie and now feels betrayed. Obama grew the government and favored his friends (unions et al).The voters are taking action this November. I've always argued take your medicine now, like Bush did in 1989-90 with the Junk Bond induced real estate crisis. If Obama acted in a manner that was best for jobs, he should have taken his medicine as recessions are meant to correct excesses and focused all his energies there we'd be well on our way out by 2012.  Then he'd be a two-term President. Instead Obama appears to become a lame duck some time in 2011.

Market Reviews and Thoughts:
The markets enjoyed their best September since 1939. Why? First the Fed tells us the" Helicopters are “Hovering." Most investors are jumping in front of the Feds possible purchases of government bonds come the election. Risk was back. With an expected flood of new liquidity, mergers are encouraged, commodities rally (ala gold, copper and oil). Stocks follow as earnings estimates rose a bit. I saw July/August numbers near $79.50. During September I saw the numbers rise to nearly $80.00. Today the new forecast is nearer $80.35. Companies start reporting Thursday with Aloca. We may see some projections downplayed for the fourth quarter so companies can beat the new lower expectations. The only real disappoints may come from tech.

The 2011 earnings estimates will be refined as their visibility increases. Today most analysts remain near $92.50 up slightly from near $92 in September. Over a month ago GS cut their forecast below $90. It is my belief most estimates will come down closer to $90 during the fourth quarter. Therefore, I only see a modest rally that could reach 1200 with a little luck but no big downside yet.

Today's Barron's tells us that 27% of funds are trailing their benchmark index by 5%. This is the highest number since 1998 and only 3% of the large-capitalization stock funds are beating their mark by 5%. In 1998 Barron’s noted that the S&P 500 rose 21% from Sept. 30 through year end, proving it's a good year for equities as managers played catch. Wouldn't that be nice.

However, if the Fed doesn't deliver in November as expected and the economy remains weak look for a lower market.

Looking Ahead This Week:
All eyes will be on Friday's Jobs numbers. The consensus forecast calls for an unchanged number after layoffs of 75,000 census workers. I can further see the jobless number will tick-up if more workers enter the work force. Either way I see continued weak job growth with possible revisions down for past months. If this is the case, the nail is in the coffin for the Dems. This will be the last number before the election. The markets will trade and NET traders will be there to take advantage.

BioTime:
I'm still trying to figure this stock out. On Thursday the stock drops $0.35 with no news then on Friday BTIM rallies $0.35. All I know is that technically BTIM has broken the 20 and 50 DMAs to the upside as well as the multi-month down trend line. Overhead is the $5.60-5.70 200 DMA. I continue to sell puts and use the proceeds to buy Dec/Mar 5 calls and sell a few shares in strength thus taking $s off the table without cutting position much overall.

I haven't seen any news yet but there seems to be 1-2 stem cells conferences every month somewhere in the world with Dr West speaking at every one of them. This coupled with multiple new product offerings should translate into higher stock price for BTIM in 2011.

I continue to see BTIM with two very important businesses. If I can use a California gold rush analogy, Levi Strauss become rich selling miner’s clothing supplies and miners became rich finding gold. BTIM sells supplies and has every prospect with over 200 product patents for striking gold. I never owned a company that offered it all now with a very small market cap and limited dilution before like BTIM.

Trade of the Week in Review:
Thursday before the opening I sent an Alert Email looking to buy puts in an expected false breakout through 1150. I couldn't follow-up fast enough because the rally lasted all of 15 minutes and we don't chase options up or down. NET traders are almost always buying options into extremes and scaling in or out at extremes as well. In this case, I was wrong because the OTM 515Ws went from $0.80 to $4.00 in a matter of hours.

Early Friday after the opening, I identified a narrow trading range day in an Alert Email where we could trade options. Before 10:40 I sent another Alert Email to buy the 515 calls under $1.50 and to scale-in lower if needed. Shortly thereafter the calls traded down to $1.10. The S&P E-mini hedging profits more than paid for the calls. After 12:30 I sent an Alert Email when the call his $2.35 and to scale out into strength. The calls hit $2.90 and closed at $2.25.

My personal favorite trade in the Chat Room and in an Alert Email was to buy the 515 puts under $0.50 and go long E-minis as big as possible. The puts hit $0.20 giving us say an average long position near $0.30. You mostly lost all your put money but made anywhere from $300-400 per contract on the long S&Ps. Just hedging 50% returned almost 5Xs and higher hedge ratios returned 6-7Xs. See Friday's 5" C chart, NET Weekly Money Chart 2010-010-01. It was a great day for trading OEX options hedged with S&P futures – NET style!

This continues to be nice work if you can get it and I'm the only place (or New Era Trader) you can get it.

Keep those cards and letters coming. I see we are picking-up few new students in the Chat Room. Welcome aboard.

Good Trading,
Stan Moore
702.267.0396

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NEWSLETTERS & RECOMMENDATIONS - September 26,  2010

Dear Friends and Fellow Traders,

Obama said bring it on betting the GOP would fold given the choice of no lower taxes for anyone. The GOP called his bluff. The votes weren't there to tax the rich only and there will be no vote on taxes before the election. The Dems enter the election with the threat that all the Bush tax cuts expire. I'm sure that most on the left are secretly hoping this happens. Taxing the middle class is where the money really is. If this takes place I wouldn't want to be a Dem come 2012. I'm betting on no real tax increases for anyone for at least the next 2 years. The market rallies into and after the election on the Democratic disarray and failure to pass anything harmful ahead.

The table is set for a GOP victory and a serious dent in the Obama plan. If the GOP wins the House there is no way Obama can fund most of his passed programs. Yes, the markets will look forward and love it.

Right now the market is looking ahead to the election and even though it's overbought there should only be a limited correction into October given the expected mutual fund tax loss selling into their fiscal year ending October 31.

When the peasants decide to revolt, it usually doesn't end well for the ruling elite of either party. Look at all those RINOs (Republicans In Name Only) Mike Castle, Charlie Crist, Rick Lazio, Bob Bennet and Lisa Murkowski. Good riddance. Next, let's get those two RINOs from Maine as well.

In the end I'm rooting for VETO, AKA Vote Everyone of Them Out. Remember November 2nd is take out the trash day: Republicans, Democrats, lawyers, lobbyist, union bosses, D.C. political insiders and incumbents. The Tea Party candidates have been successful because they have been singularly focused on the most important and pressing issues today. Those ideas should have been Obama's. The peasants have awoken from a long slumber.

As Thomas Jefferson once wrote "a little rebellion now and then is a good thing. It is the medicine for the sound health of government."

Earnings season starts in a few weeks. Most earnings should exceed the rather low bar set for the third quarter. The only exception may be the Tech Sector. Apple's iPad and other devices like it will put a serious dent into the demand for notebooks going forward. So techs a strong group leader now, may be softer in earnings season. Remember everything is perception going forward.

There will be no trade of the week chart this week. Friday, for NET traders will go down as one of the worst in the last two years. Yes, if you were perfect you made a few dollars with options, more if you hedged. Overall, the trade just wasn't there. We traded sideways in a 4-point range nearly the entire day. It was a great day to practice trading for 2 or less points which generally isn’t our style.

Keep those cards and letters coming.

Good Trading,

Stan Moore
702.267.0396

NEWSLETTERS & RECOMMENDATIONS - September 17, 2010

Dear Friends and Fellow Traders,

The Ugly:
The Current Population Survey (primarily by the Bureau of Census) just released shows that in 2009 the poverty rate climbed to 14.3% from 13.2% in 2008. The figure is 43.6 million Americans live below the poverty line and I'm sure the number will be much higher at least for the next 2-3 years. This number is the highest since 1994. This is truly ugly. It will get worst because Obama's economic policy can be summed up in two words - income equality. Obama feels he can spread the wealth more equally through government programs.

Obama's pre-occupation with income inequality causes the government to pursue economic policies and business regulations that restrict or inhibit growth. In doing so the Democrats punish business and the rich so much so that the growth isn't there and thereby punishing the middle class and poor. In fact, the more the government hurts business the greater the rise in the poverty level will be down the road. There is only way the cycle can stop - Obama has to be sent a message this November and he still may not get it but a number of Democratic senators and representatives may. Even if the Dems manage to control both houses it will never be the same for Team Obama, Reid or Pelosi again. Yea!

To date between the Fed's $2 billion increase in the size of its balance sheet and a nearly $3 trillion increase in the national debt we have only created 750,000 private sector jobs. See what I mean. You and I could have done a better job crisscrossing the country passing out the money to those individuals and businesses in need. We certainly could not have done any worst.

The Bad:
Barrons calls this the Trillion - Dollar Challenge in this week’s issue and says "Fear of taxation prevents U.S. companies from bringing in some of the $1 trillion-plus held overseas that could help fuel an economic rebound." Bush instituted a 5% tax and I believe $300-400 million came back. The U.S. has the second highest corporate tax rate in the world. Barrons further writes in their comments Chambers Cisco's CEO made a thinly veiled threat: if Washington doesn't change the rules, Cisco will have to invest the cash elsewhere. Earlier in the year the CEO of Intel told investors that it costs $1 billion more to build and staff a semi-conductor plant in the U.S. today versus building one overseas. Think of what $500 billion or more could do invested or spent here instead of overseas?

Just three weeks ago nearly everyone was in a panic as the market was going sharply lower. In fact, according to the American Association of Individual Investors (AAII) only 20.7% were bullish and almost 50% were bearish. Where have all the bears gone? In a surprise reversal this week we find almost 51% are bullish and 24.3% bearish. Remember back in April I used similar extreme bullish numbers to recommend a put trade that made a 900% return in only 3 weeks. Time to start taking some money off the table would be the prudent thing to do. I thought selling some naked calls might provide a return but the premiums are non-existent as the risk/reward is much too great now. I’m waiting to see if market fails or breaks out. Either way there's a good trade ahead.

The Good:
Unlike August's weak economic reports, there has been more consistently above consensus data during September. Before we get too excited, more good news will have to be forth coming. The election picture seems to becoming a bit clearer. The Tea Party kicked a few GOP butts that may cost 1-2 seats in the Senate but now it's time for this political tsunami to really kick some "Donkey Butt" and send Obama a message loud and clear. This could be just the wake-up call this administration needs to become more pro business and investor friendly.

More importantly most of the large funds and Hedgies have hidden out in cash, very safe equities or have moved to the side lines these last few months. If September breaks out up the monies are going to be forced into riskier assets, especially stocks in order to perform or lose the money and/or their jobs.

Lastly, the Leveraged Buyout Firms (LBOs) raised enormous funds about 5 years ago that has to be put to work by the end of next year or returned. I'm betting that won't be returned. In addition a number of the buyout firms have rather large new issue offerings filed giving them even more deal-making funds. I'm guessing the raised $s could be as high as $65 billion or the ability to buy over $450 billion worth of public or private companies. For the sellers that’s one hell of a chunk of money to put back in to the markets or spend.

Under ideal circumstances, I can see a strong September followed by a brief mutual fund tax selloff in October with a higher close into yearend all with a chastened new Obama. I can dream can't I?

Trade or the Week in Review:
Most of the week's rally occurred on Monday. The remainder of the week markets traded in a narrow range, sold off early and closed at the highs nearly every day except Friday when we needed it most. After trading as high as 1132.75 in the Thursday overnight session the market opened Friday 1125, rallied to 1126.50, rolled over and basically went to a big 2-day 60% buy coupled with a 30 minute 5-day 40% buy. No big up was expected. I even wrote on the "A" chart that the option trade wouldn't be there.

The 1126.50 high matched the June 21 high for a triple top and a Tenet #3 sell with 30-minute triple "D" (divergence). The 510 puts got as low as $.90 and were $2.60 less than an hour later where profits could be had. There were lots of hedged longs to be traded as well.

After 3:00 I sent an Alert Email to consider buying the 510 calls between $0.20-.25 for a throwaway trade. The calls trade as low as $0.15. I had a $2,700 long 150 call position after commissions. The market rallied about 3.5 S&P points but the calls never exceeded $0.25. I alerted the Chat Room I was shorting 50 E-minis as a hedge. By 3:50 it was apparent nothing was going to happen so I covered the shorts at breakeven and sold the calls for $0.10.

Had I waited about 15 minutes longer the E-minis dropped 2 points for a potential $5,000 profit versus $2,500 option loss and I would have made money versus losing nearly $1,200. Lesson learned. I've said this before only to forget it in the heat of battle -"They" work to pin the strike by pinning most large cap stocks to a strike price during monthly expirations. Both 510 puts and calls got pinned and lost significant premium. Therefore, in narrow ranges the Weekly’s work better. There is no pinning stock to strike price and "They" can do whatever they want. See Friday’s C Chart, NET Weekly Money Chart 2010-09-17.

Keep those cards and letters coming.

Good trading,

Stan Moore
702.267.0396

P.S. I hope you all have a sense of humor so here goes. I met a fairy today who offered to grant me one wish "I want to live forever," I said. "Sorry" said the fairy. "I'm not allowed to grant wishes like that!" "Fine," I said. "Then I don’t want to die until after the Democrats get their heads out of their asses!" "You sneaky bastard," said the fairy. Go Tea Party!

NEWSLETTERS & RECOMMENDATIONS - September 12, 2010

Fellow Friends and Traders,

The sell-off certainly seems that way. September is normally the worst month of the year unless the week after Labor Day is up nicely and the week was up nearly 6%. August was down 6-7%, I believe. As the market moves up and down week to week depending on the moment’s news announcements we still remain range bound between 1000 and 1150. So NET Traders continue to buy the dips and sell the rips. These trading range gyrations are shredding trading performance of most players and driving them to the side lines. However, these players are under performing and mostly likely will be forced back into the game playing catch up later in the year.

I believe that Jobs Growth or 175,000+ private sector hires a month is probably the only news that can take the market out through the 1150 top. That's not happening any time soon. The election ahead is key. However, there is a better tone coming from Obama and if the GOP doesn't snatch defeat from the jaws of victory the market can trade higher. Anything less than GOP control of the house will be spun as a plus for Obamanomics. Still there is some good news out there. I believe that Obama's entire Economic team and Chief of Staff will have been replaced after the election. We hope. It can't get any worst.

World Stage Look Ahead:
There will be quite an interesting conflict between the haves and have nots of the world over the next 5 years that is between those growing or emerging nations and the heavily indebted countries. I see this forcing most Western economies, especially Americans into a painfully long, game changing period of austerity and civil unrest. I know I've said this before. I believe we will see this first in Europe, most likely Greece sooner than later. Long term 30-year Greek debt is already selling near $0.50 on the dollar, say with 5% coupons. These and other long term Greek bonds will be restructured into new bonds with 50%-100% higher yields and still selling near $0.55-.60. Those suffering Greeks will just have to endure much more pain ahead. Just a taste of what lies ahead. So far these extreme debt positions are being played out in the currency markets and not in collapses of countries yet.

The trading/investing world over the next 5 years will be obsessed with income, quality growth and financial strength. Still leaves room for our Stem Cell companies that offer the most growth promise of any sector out there but with a speculative bent. Speaking of which BTIM and other Stem Cells companies were given a reprieve by the Appellate Court to continue as is until a decision is render. Dr. West will be addressing the StemCell USA Conference starting this week. Here’s the link to the conference page - speaker list.

Bears have been posting like crazy last week on the Yahoo BTIM message board. A 3.356M share short position as of 8/31 is still rising and over 30% of the public float. Over the last 3 weeks I have bought over 300 Dec and Mar 5.00 calls while still bidding for more. I sold additional 7.5 strike puts with more offered. I've been selling some common on rallies increasing cash to do more BTIM options.

Thoughts Ahead:
I will continue to sell puts on the OEX 100 Index and selected stocks (like HUN) toward the lower end of the aforementioned range and take profits and/or sell naked calls near the top end until something changes.

Trade of the Week:
The market rallied immediately on Tuesday after Labor Day and closed Friday just short of resistance at the 200 DMA. There were no option trade setups until 12:00 Friday. I sent an Alert Email before 12:00 to own the 500W Calls near $1.00. They hit $1.15 close enough for government work. There were numerous hedged trading profit opportunities as well. The calls hit a high of $2.40 where upon I then sent another Alert Email to scale out the calls into strength. The calls hit the day's high at $2.80 around 3:30 before closing at $2.26. See Friday’s 5 minute chart, NET Weekly Money Chart 2010-09-10.

It's always nice to get away and rest but even better to be home trading with my "Buds" in the Chat Room. Join us some time. Keep those cards and letters coming. Got one from a new student just blown away by the quality of the program he's seen so far from the books on down.

Good trading,

Stan Moore
702.267.0396

P.S. Always remember 9/11 and don't ever forget. I know I never will. I lost over 50 friends. I cried for a week and I was gone from Wall Street at that time over 9 years. Still brings tears to my eyes every year this time.

NEWSLETTERS & RECOMMENDATIONS - August 22, 2010

Dear Friends and Fellow Traders,

Most aggressive money managers missed the performance trade of the year (the buying of bonds) and some money managers are even closing their doors. According to Barron's this week, the PIMCO 25+ year Zero Coupon Treasury (ZROZ) is up 35% versus the Diamonds (DIA), an index which tracks the DOW, is down 6% over the last year. That's the bad news. The good news is that bonds have now become significantly less competition for stocks with Treasury yields reaching in some cases the lowest yields in recorded history.

Anyone buying and holding bonds today is guaranteed to lose money during the next 5 years even if it's just purchasing power and not capital. The only way this country can solve the current debt crisis is through hyper-inflation and that's coming down the road.

Right now the $64 Million question facing the economy is who's right? In most cases I'd say the bonds. These sharply lower yields are telling us we are in for one heck a recession. Obama bet on housing and employment getting better and pushed all his chips in with his $1 Trillion bet and lost. Yet all is not hopeless. Corporations are in the best financial shape I've seen in my 50 years of investing. Business spending has picked up significantly this year. Many S&P corporations should benefit greatly from overseas growth.

Market Summary:
Given all the plus and minuses, we aren't going to 900-950 with interest rates this low and we aren't going to 1200-1250 with earning multiple compression in stocks given the headwinds we face. I see a wide-swinging trading range that will chop both traders and investors to pieces. (It’s our kind of trading "Nirvana".) This will kill the Quants. But, the real good news is that business cannot meet their pension goals with yields here. Sooner or later bonds will be sold and once this terrible pessimism lifts, (i.e. Dems get beat in November, etc.) business will hire and investors will put money back into stocks. Stocks will, over the next 10 years, outperform bonds from here.

A great strategy for the next 12 months will be to sell any index, selective stocks or calls into strength and then sell their puts into weakness. I'm now looking at JNJ (Johnson and Johnson) and a slew of large tech caps. Buffet has just increased his sizable JNJ position 73% according to his latest filing. JNJ also yields 3.5% limiting the downside.

The last trade I noted in the past week's post had us selling OEX calls and doing a OEX put spread. As expected, the calls, written near highs, expired worthless. However, the put spread broke even with the 490s closing at $4.50. Had we just sold the 470 puts naked priced at over $4.75. The trade would have earned over $10 per trade or doubling our profits.

Biotime:
There is very little I can add here except that I've sold over 300 puts naked and I'm looking to add another 300 more under $5.00.  I will also be looking to increase my call position with new December '10 and March '11 call buys into any weakness below $5.00. Then again I’ll look to sell common on any rally over $6.00. I know that BTIM does not fit the description of a great defensive stock play that most investors look for in today's market. All I can say is that we’ll never get rich in the stock market playing defense. Think Alpha!

Trade of the Week in Summary:
Friday we got lucky again. I suggested in an early Alert Email and on my intraday chart another long OEX call trade scaling into long 485 calls from 1065 down to 1062 level. The low was 1061. We started buying calls small at $0.90. They hit a low of $0.65. We had even more calls to buy in the Chat Room down to $0.40 but we didn't get lucky here.

Friday’s 2:00 PM "B" Chart noted no more hedges and that I expected OEX calls to reach $2.00-3.00. Our upside target was 1071-74. However, the 30" Oscillator hit 62 from a jammed telling us to sell at the first target 1071 or $2.00. The market retested the day's high for the last hour giving traders plenty of time to exit the trade between $1.80 and $2.00. In addition, with proper hedges a Net Trader could have earned another $250-$400 per long call with S&P E-mini shorts. Nice work if you call get it. See Friday’s EOD "C" chart, NET Weekly Money Chart 2010-08-20.

One of the newest NET students in the Chat Room noted he had his most profitable week ever and has made steady progress every week since he started 2-3 months ago. Congrats!

Due to California vacation during the end of August though September 6th I can only be reached by email. I will be in the NET Chat Room September 2nd and 4th (Thursday and Friday). There will be no newsletter for the weekend of August 29 and September 5, 2010.

Keep those cards and letters coming I read every one.

Good trading,

Stan Moore
702.267.0396

NEWSLETTERS & RECOMMENDATIONS - August 6, 2010

Dear Friends and Fellow Traders,

According to a Barron's editorial this week, "There's a problem with the prescription for Marcoeconomic Stimulus". The Barron’s editor feels the government and Fed should no longer stimulate the economy. Most of our problems stem from relentless stimulation dating back decades. Greenspan pushed the "wealth effect" for years. When consumer’s assets rose they felt better and spent. They borrowed against their assets. The economy grew on a mountain of debt that could not be sustained. It's all come home to roost now.

Now, evidence also mounts daily that current government spending (i.e. transfer type and union-saving jobs spending) cannot create net new jobs either. Instead over 1 million workers have dropped out of the labor force since April. Obama and his economic team bet big time that government spending and politically tax-directed monies such as the Clunker Program, coupled with zero interest rates from the FED could force feed private and corporate investment into the economy. Hopefully, Obama has learned that you cannot have a jobs recovery without business confidence and investment.

It's time to try a new economic plan to jump start the economy. Obama could start by extending the Bush tax cuts for all the next 2 years. Then concentrate to build an economy that's sustainable. Barron's editor mentions Richard Florida, an urban planner who wrote the book The Great Reset, that this new sustainable economy is going to be built around new technology, more skill development, a highly-educated population and more human capital. In addition, Americans must save more, invest more and consume less. The generational shift could take over 30 years says Florida. So let's get started.

Can we imagine where the economy and the Democratic election chances would be today if Obama announced the tax cuts were going to be extended for 2 more years six or more months ago? I'd hate to be running as a Democrat come this November if the party leaders don't pledge to extend the cuts before the elections.

I hesitate to say I told you so but it looks like the trading range is alive and well. It's still Mr. Double Dip versus Mr. Softee. Weeks ago the market was looking ahead to a double dip and sold off to 1000 or so in the S&P. When the market rallied rather sharply animal spirits began to run amuck. Higher stock prices brought the bulls out in force and fore told better economic times were ahead. Wrong! Somehow traders believe that higher prices forecast better economic numbers ahead. Some people will never learn. It's not buy high and hope to sell still higher. Today that's a fool’s game. It's still buy the dips and sell the rips.

Given the latest economic numbers the strategists will be all out lowering their own economic forecasts the next few weeks then just maybe we can retest the lows. Remember we will be heading into the worst 2 months of the year, September and October, shortly. If we don't retest the lows we may be getting a new message from Mr. Market that we should all heed.

GS last Friday has reduced 2011 GDP growth from 2.5% to 1.9%. We can now officially throw out the 2011 S&P record EPS estimate of $93.00. I guess we will have to wait at least another year for the S&P earnings to hit a new record. The market already knew this but stock analysts are the last ones to lower their company estimates. Remember the market anticipates as it looks into the future and not the past. Now the market doesn't look as cheap as it once did for these again frustrated bulls.

I just finished reading Peggy Noonan's insightful WSJ piece - America is at Risk of Boiling Over. And our out-of-touch leaders don't see the need to cool things off. Read It! She writes, "You will know that things have reached a bad pass when Newsweek and Time, if they still exist 15 years from now, do cover stories on a surprising and disturbing trend: aging baby boomers leaving America, taking what saving they have to live the rest of their lives in places like Africa and Ireland." She further notes. "I thought of this again when Drudge headlined increasing lines in London this week for Americans trading in their passports over tax issues and the sale of Newsweek for $1.

Here's a few more thoughts. She continues, “Do our political leaders have any sense of what people are feeling deep down? They don't act as if they do. I think their detachment from how normal people think is more dangerous and disturbing than it has been in the past." I feel that since Obama is not on the ballot this November the easiest way to send him a message would be to vote against every Democrat.

Peggy finishes with, "When adults of a great nation feel long-term pessimism, it only makes matters worse when those in authority take actions that reveal their detachment from the concerns--even from the essential nature--of their fellow citizens. And it makes those citizens feel powerless. Inner pessimism and powerlessness: That's a dangerous combination.”

I could not have said it any better. Normally I could care less which political party is in power. Somehow, I've managed to make money and live well regardless of which party was in power. But yes, I've done much better in a Republican administration. However, this time I'm so concerned as to where we're going as a nation that I too am looking to live outside this great country. I'm a pre-baby boomer so I'm looking now, not in 10-15 years. I'm also looking forward to the day when I can get all new body parts from BTIM stem cells and live to a ripe old age into my 100s. Hell, it only took me 20 years to finally crack, understand and write about trading the markets. (See my book The Definitive Trading Bible.) I don't want to die just yet - go BTIM!

Where is our leader's comment like the one I believe came from Bill Clinton, "I feel your pain," when we need it? For all of Obama's smarts he appears very dumb. Still it's hard I believe either of our current or past leaders can really feel our pain when signing books deals valued at upwards of $10 million plus attracting million dollar speaking engagements after leaving office.

Trade of the Week in Review:
Given the disappointing jobs data Friday it was easy to see the market would open lower and right into a T#3 buy level. I sent an Alert Email before the opening to buy calls into the 1110-12 buy zone. The OTM 510Ws traded as low as $0.60. The calls doubled to $1.30 by 10:00 at which time a good sell S&P E-mini hedge could have been entered. If held with only partial profits taken at the retest of the lows could have earned $400-500 per long call. Click here to see the NET Money Chart for 2010-08-06.

I send another Alert Email suggesting that between $0.60-.80 the OTM 510W now an ATM calls would be a great hedge trading option the rest of the day. I thought trading range. Unknown to most of us were a couple of subtle bearish news bits put out. I didn't like the price action at the time near 10:30 so I put out another Alert Email saying I was no longer scaling into the 510 calls.

The market broke lower shortly thereafter. Price settled in to a much bigger, better buy area a 5-day 60% buy level, a large 30" shelf and a new daily chart up-trend line. I sent another Alert Email suggesting buying the 505W calls under $1.00. Shortly, the calls traded down to $0.65 where the hedging and parlaying commenced.

There were two small short S&P E-mini hedges that more than paid for the calls or allowed a NET trade to substantially increase one’s long call position. The market did as NET trades expected, by not going lower, the market was poised to rally. After 3:00, a NET Squeeze Time trade started. I immediately sent an Alert Email to start scaling out into strength. The 505W calls closed worth over $4.40! This is nice work if you can get it. Alas, the original Alert Email 510 calls only rallied to $0.20 and closed worthless.

Vacation Update/Correction. I will now be at the 4 Seasons in Carlsbad CA from Sunday, August 29th until Sunday, September 5th.

Again as always keep those cards and letters coming I read every one.

Good Trading,

Stan Moore
702.267.0396

P.S. I found these rather disturbing real estate mortgage figures that tell us we are nowhere close to the end of this recession, not by a long shot. But its effect won't be hitting us anytime soon. An Excel spreadsheet released from a recent briefing by Mark Zandi and Robert Shiller is making the rounds within the blogosphere. It provides a useful compilation of the underwater equity statistics in the country. In a nutshell here are the observations:

• 19% or 14.748 million of the 77.570 million US households are in negative equity

• 30.6% of the 48.243 million of homeowners with first mortgages are in negative equity

• 21.8% of the 67.578 million in owner-occupied single family homes are in negative equity

• 4.133 million of the 14.748 million of underwater homeowners are underwater by 50%+ meaning the owe more than 50% more than their homes are worth

• Of the 50%+ underwater category, the worst states are California (672K), Florida (423K) and Texas (344K)

• Total Negative Equity in the US is currently estimated at $771.1 billion

• California mortgages have $234 billion in negative equity, Florida mortgages have $79 billion in negative equity and Texas mortgages have $48 billion in negative equity

• $2.4 trillion in total mortgage debt is impaired due to negative equity.

How Mark Zandi, who prepared this spreadsheet according to the meta data, could look at this data and come up with his recent paper in collaboration with Blinder, claiming that the recession is over, is, in my opinion, simply beyond rationalization.

NEWSLETTERS & RECOMMENDATIONS - August 1, 2010

Dear Friends and Fellow Traders,

Ben Bernanke says America's economic outlook is "Unusually uncertain". This comes on the heels of the FED nearly tripling the size of its balance sheet with zero interest rates while Obama's increased the size of the deficit nearly $3 Trillion over the last 18 months.

We had a 4th quarter GDP near 6% with the 1st quarter dipping to 3.7%. The recently released 2nd quarter growth slowed to 2.4%. More forward looking economic statistics are pointing to a further slowdown in the 2nd half. I'm reading by the 4th quarter GDP growth could be as low as 0.8% or as high as 2.8%. We know generally from past economic weakness the economy was flying at this same time. I know it's different this time. Sure!

I won't bore you with the details but just say corporate America have never been stronger than now and are sitting on $1.7 Trillion in cash. The CEO Survey, a very important leading indicator, says 70% of CEOs expect profit growth over the next 12 months. Still, jobs may not recover to pre-recession numbers for nearly five years. Why the disconnect? Small business stinks, period. I could write a book answering that. Let me try to give you a simple answer.

When I look back in history I find our founding fathers did a magnificent job setting up our nation. The gave us a Constitution, a Bill of Rights and a Declaration of Independence, all spelled out in six pages that have stood the test of time and pretty much created this great country. Today, we have new bills that run thousands of pages that I'm sure no one fully understands the future consequences and add to this many similar executive (Presidential-type) orders still to come. This is "Uncertainty squared" or to the 10th power if you're into math. Big business is much better equipped to handle the new regulations. However, this scares small businesses and individuals who don't understand the costs and how it will impact them hence the tale of two economies.

I’ve read thousands of editorials and opinion pieces, mostly economic and finance related from countless sources including overseas over the course of any year. I've attached two of the most recent editorials from Forbes and Investor’s Business Daily. I have read Forbes for over 45 years and even spent one day on Malcolm Forbes yacht. I skim through IBD nearly every day. I have a great deal of respect for these publications. The information below is the stuff that keeps me awake nights. I could care less where stocks trade as NET traders can make money in all types of markets.


Furthermore, our old friend Marc Faber, better known as Dr. Doom, closed the Agora Financial Symposium last week with a speech that pretty much reaffirmed that there will surely be tremendous dislocations to the existing world socio-political and economic landscape and are expected to take place with some very dire consequences for the US too.

I have read Marc's stuff for the last 5 years. He's both a micro and macro prognosticator and he's one of the best pundits out there. He's not negative. He's what I call a realist. Over the last few years he has made significant dollar gains with his picks, if not he’s the most profitable member of the Barron's Roundtable.

I'm concerned enough about the current leadership of the US and where we are headed that I've started early this year to look for another place to live other than the good old USA. I'll let you know if I find one.

Looking ahead to this week:
This will be a most interesting week ahead. Sunday night, China will release a significant piece of economic data much like our "ISM" number which has been getting softer for the last 3 months. Much lower, markets could sell-off hard over night. Then on Monday traders await our own "ISM" number at 10:00 AM. GS put out a report on Friday speculating that the number may even come in under 50. The market’s not prepared for this case. Lower yes but not under 50. Wednesday’s ADP reports their jobs numbers. Friday's jobs top line should be lower with government cuts but should show a small increase in private employment. All these numbers are potentially market moving events. My Alert Email subscribers may want to pay special attention this week.

Until one or more of any economic numbers moves us out of our trading range (between 1000 and 1150), we must continue to buy the dips below 1030-40 and sell the rips over 1125-50. Since the 4/26 highs the market started a move down with lower highs and lows. However, the market has formed the aforementioned trading range since mid-June. Investors/traders will be looking for a breakout above the 6/21 highs of approximately 1128 that will start in many minds a series of higher highs and lows. However, don't chase strength. Trade!

Also, after FED governor Bullard's comments, "The US is closer to a Japanese-style outcome today than at any time in recent history." There are rumors that the FED is considering new measures to prevent the possibility of a double dip. There are a lot of balls in the air at the present time so be alert but all re-enforce the limited downside so continue to buy the market dips.

Review of BTIM:
BTIM is one great trading stock for sure. After trading up to $7.02, BTIM dropped below $4.50 in less than 3 weeks only to rally back to $6.50 last week. My suggested strategy to buy calls on any break under $5.00 and then to sell stock out into strength was right on the money. Buying $5 strike calls under $1.00 was possible as was selling BTIM above $5.50 even as high as $6.50. This strategy would have kept one long while freeing up substantial dollars to buy more BTIM on dips like now. For me, missing this one trade alone made for one very expensive vacation.

To tell the truth I was disappointed with how fast BTIM corrected after hitting $6.50. Maybe the selling was brought on by comments on Yahoo that BTIM may sell stock to raise cash to fund their research. These comments are totally off base given BTIM offered a warrant exchange that will alone generate over $19 million in cash between Aug 31st and Oct 31st 2010.  

Regarding Geron, there was significant FDA-generated Geron news that popped the stock and hurt the shorts rather big time. I'm not sure what this means for BTIM.

Unless the market goes to hell in a hand basket such as war breaking out in the Middle East, I believed we have seen the lows for BTIM this year. I recommend NET traders to buy the dips and sell the rips – the same applies here too.

Trade of the Week in Review:
July was one of the best months in recent years rallying almost 7%. Looking at this number one would think we would not have had an EOM markup but a protect profit trade on. No, that was not the case. Remember how often I told you that most everyone is looking for a larger correction and when it didn't happen the majority of PMs were caught off guard and severely under performed. The only PMs performing were those closet indexers who want to mimic the S&Ps.

Only last week Bloomberg noted the extremely high cash positions that hedge funds were holding and even those HFs that had substantially outperformed their peers over the last 3 years with positive high returns. These same HFs are playing very small, trading less and also holding larger than normal cash. This is another support for trading ranges to continue. No one is really trading aggressively this summer.

On Friday, the market opened below the previous day’s low and just in front of the up turning the 20 and 50DMAs between 1080 and 1085. I was trying to buy the 495W ATMs for $2.00. These never traded below $2.50. C’est la vie again. One of our newest students bought the OTMs and nearly tripled his money and ran. Congrats! See Friday 5 min "C" chart, NET Money Chart 2010-07-30.

After 12:30 there was a good put trade Alert Email to buy the 500Ws near $1.00. Shortly thereafter, these puts went from $1.00 to $3.00 in less than 90 minutes. Later another $0.85 put trade became the best hedge trade in sometime. Once the market held the 60% buy level after 2:00 the markup boys went to work and drove the market straight up into new intraday highs resulting in nearly a $300+ long E-mini profit per put versus losing say $0.90 on the long put. Both put trades could have returned almost 3X in very short order.

In Conclusion:
Remember the market does what it can to screw most of traders most of the time. The market broke the previous day's low to stop out the longs and let more shorts in. The A/Ds were 1-7 negative and bonds were up sharply yielding 2.96%. A Goldman report tells us Monday's ISM number may come in lower than expected. Looking at a really weak market right? So what does the market do next? To screw the most traders, the market rallies to new intraday highs with bonds also at or near the day’s highs. If you are an average trader go figure it out. Most are lost. NET traders know what to expect but we know exactly what happened and I'm sure most traders were badly burned in the confusion.

There is one closing note I will not enjoy imparting to all of you. Our clueless President and his highly qualified non-business political hacks may have just cost US tax payers almost $10 billion to help clean-up the Gulf oil spill. BP said it plans to claim $9.9B in U.S. tax credits based on the $32B charge it reported related to costs for the Gulf clean-up. This will put even more heat on BP. However, it's all legal as current IRS regulations are written. Shakespeare in Hamlet called this "hoisted by your own petard.” I can't wait to see how this plays out.

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

Good trading,

Stan Moore
702.267.0396

NEWSLETTERS & RECOMMENDATIONS - July 23, 2010

Dear Friends and Fellow Traders,

It's great to be back from a week of tramping through 3rd world jungles, visiting Mayan ruins, eaten by mosquitoes, swimming with the sharks and stingrays trying to rest and get away from the real world sharks of Wall Street and Obamanomics. The rest of my vacations will be spent lying on a beach somewhere, drinking and licking any wounds. Yes, wounds! Unless you sold all your BTIM like my brother did near $7.00. He truly was relaxed and enjoyed the time we spent in Belize. As for me I sent an Alert Email at 3:00 AM MDT with instructions of what to do when not if BTIM broke $5.00. I must say my email’s strategy worked fine if you were not as cautious as I was out of touch every day while the markets were open.

Remember it was just last March when I noted to all of you to sell everything except BTIM. I fully expected the S&Ps to correct at least down to the 200DMA or 10%. The retreat slightly exceeded that target but stopped just above 1000 for a 15% correction. It's only called a correction until the market drops 20%. (There is no hard and fast definition of the term "market correction", but most will agree that it usually a 15-20% (max) drop in the markets in the midst of an overall uptrend.) Beyond that we call the decline a bear market. At that time the investment world turned very bearish, 980 and lower was just around the corner.

Instead as I noted on my Intraday Charts and a number of times in the Chat Room, I had a reverse head and shoulder target of 1100 on the S&P 30-minute chart. The market rallied over 7% from the July lows and is about flat on the year. During past recoveries markets have rallied sharply with PEs averaging 15 with very low rates and no inflation like exists today where PEs have traded near 17X. Is it any wonder than why those brilliant Wall Street strategists were so bullish so long and were so wrong. Depending on next year’s earnings projection the market is currently trading between 12-13X or very cheap by historical standards. If the S&P goes lower than 1000 the markets will great value. Above 1150, there are strong economic headwinds. Some of these may be lifting and I'll explain why.

So why am I so happy? The Democrats are in disarray. Not only are they attacking one another they are attacking their party leaders. Remember, to pass Obamacare Obama had to promise to personally campaign for those who didn't vote for passage. The bill passed and many now feel that some Democrats have been thrown under the bus by leadership.

Maybe Obama secretly wants the Republicans to win in November so he can blame the Bush agenda again for his failure when he runs in 2012. All kidding aside there is a new wind swirling thought Washington D.C. these days. Cap and Trade is dead. Gentle Ben (or BB), two Democratic senators and other house members have spoken out for retaining the Bush tax cuts. Speaker Pelosi responded that it’ll be over dead body but the Bush tax cuts may be extended for a year or two. The only real question - will the cuts be extended for all tax payers? This is a huge win for equity markets. Just the tax comments by two Democratic senators rallied the market over 300 Dow points Thursday and Friday. Sharply higher taxes was one of the principal reasons I turned cautious looking out into 2010's second half.

Furthermore, B.B. stated the policy should be to not raise taxes but continue spending to further stimulate the economy. And, and another piece of this situation has the Dems caught between a rock and a hard place. There is nothing Obama can do between now and November to get the employment rate down much below 10%. No one in D.C. is in any mood to spend any more money for stimulus. The Dems blew their chances. Even Europe is now in a sweet spot with their short-term issues handled. Traders have 6 months to a year before the chickens come home to roost. It only matters when it matters.

I've saved the best news for last. Recently the FED had been telling us that the markets were growing nicely although slowly. Markets have been screaming for months that the economy was not recovering but getting weaker. Finally, B.B. told us Wednesday the markets were "unusually uncertain." He never understood the situation, the real financial (securitization) situation, like Sub Prime would not affect the economy. The problem was too small. Besides B.B. and the Fed has not even drawn up double-dip contingency plans.  However, for such an event but he would take appropriate steps.

My key point is that he's got it finally but the markets have already corrected and are on a road to healing with or without Fed help. The market is always better with the Fed on the market’s side. Somehow we will muddle through over the next 3-5 months with no serious damage until we see what the election brings. Think trading range for the next six months of, say, 1000-1150 and prosper MOORE.

Additional Thoughts on BTIM
That was one of my most expensive vacations ever as BTIM dropped from $7.02 a few weeks ago down to $4.44 on Monday. Don't get sore buy more. This was nothing more than a bear raid. I've lived through many during my trading years on Wall Street. BTIM's short position increased 72% from 1.9M to 3.3M shares. That’s one heck of a lot of selling to absorb with no up ticks needed. Don't forget there is also an 8M warrant arbitrage going on at the same time that may have resulted in additional sales of BTIM common on the unexpected weakness.

My strategy was to sell as many puts as I could on a break of $5.00 given expected margin selling and buy as many calls as I could. Then I would sell as many shares as I bought calls on the expected Agora Conference rally after Dr West's presentation. I'd hoped to increase my net longs by buying more calls and selling puts but taking substantial $s off the table by selling shares well over $5.00. This way I create additional buying power should the need arise in the future.

I'm enclosing more of Patrick Cox's (an Agora Financial Analyst) comments in addition to the ones already sent this week, given while introducing Dr. West at the conference. Cox notes, "People always think the current state is permanent. They're wrong. The world goes through cycles. We're in the middle of a terrible downturn right now and that means the opportunity out there is amazing. Nylon, television, radio, neoprene and home refrigerators all took off in the Great Depression. Transformational technologies are taking off again, right now in 2010 but no one's talking about them. This is your chance. BTIM reversed the aging of a normal human cell." Cox continues, "BTIM is the most important company in the world." (Emphasis added.) He mentioned five other companies but that's for another time. At this time I'm only interested in Biotime. He did say and, I noted in an earlier Alert Email, that he thought BTIM could be up 500X over the next 10-15 years.

Today, BTIM is a very different company then the one I started accumulating over the last 3 years. BTIM should have close to $30M in cash at year end or almost a $1 a share with no debt. Biotime has over 200 patents and growing and they’re worth over $200M. They own their own manufacturing facility in Singapore, have a great Chinese joint venture and have 2-3 other joint ventures in companies with highly promising outlooks. I could go on. Suffice it to say BTIM's total market cap is only $160M. Cox thinks it could be worth north of $5-8B. Go BTIM!

So, if you still own BTIM, keep your shares and return to my recommended stock selling into technical strength at resistance points and buying dips into support areas. Stocks go up and down. The worst that can happen after you sell a portion is that the stock goes substantially higher and you cry all way to the bank.

Trade of the Week Reviewed
I'll be brief. I sent another Alert Email suggesting another trading range day bound by 1081-83 on the low side and would look at calls there. We would look at puts between 1095 and 1098. The market opened lowered with the 495W puts hitting a low of $1.40 and could have been sold on a scale up between $3.50 and $5.20.

Later in the afternoon we started to nibble on the 500W puts small near $2.00 and scaling in as low as $1. These puts traded as low as $0.60 before hitting a high of $2.50. Here given the market strength more money was made on the hedges while a small amount was lost on the actual puts. See Friday "C" chart, NET Money Chart 2010-07-23.

Keep the faith. I have a few new ideas I’m looking at. HUN is doing great. YHOO has great value and shouldn't be a public company much longer. Someone should really take a buyout crack at them again. Stay tuned.

Good trading,

Stan Moore
702.267.0396

P.S. I will be traveling to Carlsbad, California and staying at the Four Seasons between August 23-31 where I look for to meeting old and new friends. Please contact me so we can setup a mutually agreeable time if you wish to meet.

NEWSLETTERS & RECOMMENDATIONS - July 5, 2010

Dear Friends and Fellow Traders,

It seemed just a few months ago we couldn't get enough of the talking heads on CNBC reminding us how they bought during the '09 lows and were fully invested looking forward to a self-sustaining recovery and a much higher S&P. They were so sure. Now we hear these same talking heads telling us they're just as sure were going into a recession.  Don't trust anyone who is absolutely sure that he or she knows what the market will do.

I have a reasonably good idea of when we reach that point of maximum risk because I've studied fear and greed up close and personal going on 50 years now. Besides, I'm risking my own money, not others. I've learned when it's too good to be true and it's time to take my money off the table and when it's time to get back in. Even then I'm always early by a few months. This isn't an exact science. Reference this fear and greed chart (source unknown).

Back during March/April the market got a bit crazy - momentum reigned while risk was increasing substantially Europe. That's when you become fearful. You just know the crap will hit the fan. The easy money was gone. Right now I'm guessing we're between desperation and panic. My friend capitulation is just around the corner. We could get it very soon if the market crashes through a 1000 in the next few weeks. I would hazard to guess we'll have a new trading range then between 950 and 1040. We can still ton money here trading and looking to own a few of my current favorites.

We must always be looking ahead and not what's in front of us. Now that everything I thought would happen has it's time to look further ahead than our nose and see what could be good news out there. There have been only 3 double dip recessions in the last 150 years. I like the odds the country will muddle through for now.

This week's Barron's cover has a great lead story - a standoff on the Hill. Their call has the Democrats keeping control of Congress this fall but barely. Barron's believe a strengthen GOP could reshape crucial issues. The lead: Get ready for the end of big government. They even suspect Democrats will have to compromise on a raft of tax increases expected next year. Furthermore, if Obama's smart enough he may even move to the center like Clinton and away from his super liberal base. Just when does the market start thinking about this shift. This is the million dollar question but I guess much sooner than later. This is super bullish for the market unless he wants to go down as Carter did after one term. The Democratic states are set to lose a large number of electoral seats after this next census and before the 1012 election. Go Red States!

There is something even more interesting going on right in front of our noses. We now have three carrier battle groups as of last week in the Gulf area. If Obama's intention is peaceful we only need one. Obama would shock the world if he attacked Iran and wrapped himself in the flag as a wartime President. I think this would be a swift strike and could cripple Iran's leadership at a very vulnerable time with great internal unrest. This could be a new beginning for Obama. If nothing else the world would look at Obama in a new light. Yes, the market would drop at first but I'm guessing rally big time shortly thereafter. I believe, a few grateful Gulf oil countries led by Saudi Arabia would gift the US over $200 billion to pay for our effort. Did you know Obama recently visited the King of Saudi Arabia? Now Obama tacks right and all's well with the country going forward. Democrats hold back to GOP and govern from the center. I can dream can't I?

The story of Margaret Thatcher, ex-British prime minister. Thatcher was elected with a mandate to smash the Unions, inflation and make the hard decisions to save the country. The first year her polls were a lowly 25% favorable. Meanwhile back in Argentina General Galtieri was in a similar bind. So to unite the county he declared war on the Falkland Islands never thinking Britain would go to war. The result was soaring popularity for the "Iron Lady" and the rest is history. Here’s the article link.

A Few Thoughts on BTIM's Rather Hard Down Last Week:
Personally, I believe buyers got really caught up in the BTIM entry into the Russell 3000. Last week I noted BTIM even traded over 200,000 more shares after the closing block trade of 1,200,000. This record volume coupled with the strong close may have trapped many newbie momentum buyers.

Furthermore, last week BTIM filed a registration for 1,300,000 new shares and 300,000 more warrants exercisable at $10. Given the shoot-first-ask-questions-later mentality the stock was sold down hard. However, BTIM was only registering the sellers of the Singapore company shares per their agreement. These shares cost $7.75 and will not be sold any time soon. I mentioned that on the Yahoo message board but too late, the damage was already done in a weak market.

I hope you all understand why I continue to preach becoming a more proactive investor/trader and sell a portion of BTIM or any other holdings into strength then looking to buy them back on weakness. I sold stock as high as $7.02 and bought back stock as low as $5.53. However, I wish I could say I sold all (or even most) of my position at the all the high and bought it back at the low. That never happens.

BTIM traders should read Dr. West's blog on the company site www.biotimeinc.com.

For those that have bought BTM on my multi-year stock purchase recommend should be reading this newsletter (and hopefully my Alert Email service) for when to sell and re-purchase.  BTIM buyers who only hold will, at times, find themselves underwater as the stock, as most stocks do, oscillates. Last week’s newsletter explained my proactive fringe trading strategy. As stated earlier, check my IRA transactions and you will find I’m consistently making money with Biotime. In any case, I have always encouraged NET traders (that’s you) to contact me if you have any questions.

Trades of the Week in Review:
The highly anticipated Jobs Number was nothing to write home about. Given the S&Ps were down 8 out of the last 9 trading days the number was not bad enough for the S&Ps to take out the largest 40% buy level at the Thursday low. Here’s the NET Money Chart 2010-07-02, Friday’s C chart.

Expiration option trading doesn't get any better even in front of what I thought might be a dull pre-holiday summer in the city trading day. Again. I sent out an early pre-market Alert Email outlining a trading range day. I had the day’s high bracketed between 1029 and 1032 and the low at 1017-8. Later, I expanded the downside to 1011-2.

I recommended the 470 weekly puts near $2.25. I missed these as they never traded below $3.00 since the market never got above 1028 and into the sell zone. The same 470s traded as high as $9.90. I never looked at the OTMs 465 Ws at a $1.00 which reached $4.60. A few of you caught this trade.

I also recommended before 11:00 buying the 465 weekly calls under $1.00. The calls traded as low as $0.55. However, the market broke the opening range (an ORBO) for a great hedged profit of nearly $375 which more than paid for the calls. Still I quickly alerted to sell these calls. The calls only rallied back to $0.70. I now believed these calls would be too far OTM to be used even as a hedge. I suggested buying the 460 weeklys for $1.50 (then trading near $3.00 at the time). These calls hit a $1.70 at the low or at the bottom of the new recommended trading range.

There was a further strong short-term Oscillator crossover with divergence buy confirmation on the 5" chart at this level. The market rallied just short of the break down level but barely retraced lower into the squeeze time with a nice reversal buy bar. I noted the down's over. An aside, the 465W calls hit $0.10. I did buy them back at $0.30 and told the Chat Room I would hold them. I chickened out plain and simple and related that to the Chat Room. I sold them for a small loss because I was concentrating on an E-mini upside break buy through the 1020 area. This was the shelf we broke down from. You know support becomes resistance and vice versa.

Once the market rallied through and retested the breakout of 1020 (confirmed by rising wedge) the "machines" took over and rallied the market straight up to the 80% sell level but not quite the day's high and the 30" mid Uni (resistance) at 1025+. After the breakout, I quickly send a sell all Alert Email to scale out of the calls into this rally (trading at $4.40 at that time). The 460s calls hit $6.60 but surprisingly the 465s calls hit $1.60. I was a little green but it’s still made nice money on the E-minis. Even more surprising was the 465 weekly puts hit $0.05 at the high and closed 15 minutes later at $1.15-1.20.

It seems given a 30-35 VIX daily range reading, there is never a dull moment in the market even with summer in the city. A few weeks ago I related in my newsletter that I believe these weekly expirations are much more exciting and profitable than the big monthly expo week where everyone is working to pin the market to a nearby strike. Here the machines have little or no interference. In fact, I noted on the early "A" chart and in the Chat Room to be especially alert given the thin staffs minding the store. Anyone with a mind to could move this market with ease. It seems they could and did both up and down with ease.

I hope these weekly reviews give you a bit more insight to these profitable trades especially when most of you are not able to join me in the Chat Room. You should try it. You may find the room entertaining, informative, instructive and profitable.

I’m leaving for vacation (out of the country) this coming Saturday so no newsletter next two weeks and no Alert Emails and Intraday Charts from July 12-19.  I’ll be back at my desk on July 20^th. I will have limited access to email.

Good trading,

Stan Moore,
702.267.0396

P.S. Rick Santelli’s Uncut (And Free) Comments, compliments from ZeroHedge.com.

“Having rapidly become the only person worth listening to on CNBC, Rick Santelli's insights on the economy are now far more valuable than any other guest's on the Jeff Immelt propaganda station. Which is why we were very happy to find that Eric King's latest interview was with none other than Mr. Santelli. The topics discussed are numerous, varied and very critical to our economy, covering such concepts as deflation, deficit spending, bailouts, government spending multipliers, Fed transparency, spending cuts, austerity, the folly of Keynesianism, strategic defaults, direct bidders and treasury auctions, and lastly, tea party dynamics, making this a must hear interview for anyone still on either side of the economic fence, and who enjoys listening to Rick for longer than the 45 second segments the CNBC producers will allow.”

I check the KingWorldNews web site every week as it has some very good info and insightful interviews on economic and financial subjects.

NEWSLETTERS & RECOMMENDATIONS - June 28, 2010

Dear Friends and Fellow Traders,

It's the spending countries versus the cutting countries. In the far corner is the US with new tax and spend programs and in the near corner is Germany et al with their new austerity programs. As long as the G20 doesn't break out in a fist fight both sides will declare victory and with expectations so low no one will be disappointed. That is now but the fight is just starting. Ed Yardeni a top strategist just back from Europe writes, "The La Dolce Vita era in Europe is coming to a close. The EU just can't afford it."

Unsustainable government intervention in economies has now reached its limits. The European crises are a symptom of Keynesian disease. Government backstops of private risk through bailouts and guarantees are ultimately tested by the markets. I believe history has proven the liquidation process is a better public policy than the eventual default of the US bond market. If the housing crisis was handled like the RTC S&L debacle of 1989-90 housing would be on the upswing by now. The pain would have been almost unbearable but it would be over. Instead we are looking at another $1 Trillion in losses at FRE and FNM alone and who knows what else is ahead in the housing market. After all housing is 20% of the economy.

Even today Obama still wants to pass another $130 Billion stimulus program. Currently, the votes aren't there. Politicians are running scared. Furthermore, according to ZeroHedge.com: “The sudden and unprecedented departure of Peter Orszag, the day prior to the US Budget's formalization (which incidentally never happened as now the US will likely not have a 2011 [corrected] budget at all, for fear of disclosing to most Americans just how broke the country is ahead of mid-terms) was due to Orszag's disagreement with the administration, particularly Larry Summer's inability to fathom that reckless spending is a recipe for bankruptcy.”

Larry Summers is the advisor who's championing increasing unemployment benefits to 99 weeks. As the Financial Times of London (FT) reports: "Peter Orszag, Barack Obama’s budget director, resigned this week partly in frustration over his lack of success in persuading the Obama administration to tackle the fiscal deficit more aggressively, according to sources inside and outside the White House." And so, as any remaining voices of reason realize they are dealing with a group of deranged Keynesians, soon there will be nobody left in the administration who dares to oppose the destructive course upon which this country has so resolutely embarked, which ends in one of two ways: debt repudiation, or war. Scary! No wonder I am looking at owning gold for the first time in 50 years.

Late last year I said 2010 would be the year of the stock picker. I was wrong. Everything went up early. Now everything is going down with very few exceptions. Most investors/traders are now more perplexed by the global macro environment than I've ever seen. Specific company fundamentals matter less than ever.

Cramer contends "everyone is selling stocks without reference to how the underlying companies are doing in reality. Sales, profits and cash positions are being ignored." I couldn't agree more. Most economic releases with the exception of housing suggest moderate growth not a double dip. I find the proximate cause for his adoption of "Malaise" is the loss of confidence in our leaders. The public has finally recognized that our leaders are inept and partisan.

In a world weighed down by debt and low nominal GDP growth with deflationary pressures mounting it's a no brainer that risk assets aren't likely to fare well. Fortunately, looking at corporate fundamentals I continue to see favorable results and good forward guidance. Good fundamentals coupled with low interest rates as far as the eye can see can support share prices here. The risk to this view comes if psychology becomes sufficiently negative to impact the consumer and corporate investment behavior.

There is one potential negative technical factor we all should be aware of. If the market fails to rally from here there could be an imminent "Black Cross" in the major averages? Helene Meisler from TheStreet.com notes the 50DMA is falling fast and the 200DMA may soon be rolling over. A penetration of the 200 by the downward slopping 50 will be taken a very bearish sign going forward versus a "Golden Cross" which is the opposite and considered bullish.

Black and Gold Cross Signals by Harry Schiller on RealMoney.com:
Harry explains in his article that over the past 56 years there have been 25 S&P Golden Crosses. A Golden Cross is defined as the 200 DMA being crossed up through by 50 DMA. If one were to take this trade long, the return averaged 33% over 15 month average holding periods. The last time the S&P Black Cross (defined as the penetration of the 200 DMA by 50 DMA coming down) occurred was back on Dec 21, 2007 when the S&P was at 1484. In less than 15 months the S&P dropped more 800 points to 666. In conclusion, long-term investors trade these crosses in favor of the bias.

BTIM (Biotime) Trading – NET Style:
First, there is BTIM and how NET traders can trade a portion of their stock position at the edges. I recommend trading no more than 20% of the total position at the edges. For example, if one has 10,000 shares trade this technique with no more than 2K shares. To do so you must learn to trade (versus just buy and hold) and become more proactive about your holding in you want to make better than average returns and retire in luxury. No matter how much one believes that a stock is going higher in the long term the move is never in a straight line. There are plenty and I mean plenty of ups and downs. Just look at those swings on the notated 2010-06-25 BTIM Daily Chart.

Now I trade BTIM every day for the most part and I make very good returns doing just that. My IRA account up over 10X in 15 months and the account’s only asset (other than cash) is BTIM stock. So, I practice and document what I’m teaching here but I’m going to give you a less frequent and still very profitable way to trade BTIM for your personal BTIM account.

As noted by [1] on the chart, in April there was my breakout Alert Email to buy BTIM. The stock hit new highs and ever since has been in a rough $2.00 trading range. BTIM appears to be in a triangle [see red and blue lines] posed to breakout to the up side assuming the market does not crash anytime soon. See the retest failures ([2]) at or near the $8 highs and the pull back to the 200 DMA ([3]) and the Oscillator is oversold ([4]) then a rally back to the 20 DMA ([5]) and the start of the trading triangle.

I’d like to focus on just a few trades from the May low ([2]) at a retest of the April breakout level and 200 DMA pullback. Here NET traders buy and, subsequently, the stock rallies in a week from $5.25 to $6.50-6.75 and runs smack into its 20 DMA ([5]). I recommended sell some or all of what you just bought. In less than a week BTIM sells off to an 80% buy ([6]). At this level I recommend re-buying back at the edge and keep the profit of the last sell trade to buy more stock if it goes any lower. Another week goes by and BTIM has now rallies to its 50 DMA ([7]). Sell a portion of one’s account using my tranche trading technique. When I say portion I mean trading about ½ of one’s edge-trading position but this is a judgment call.

Shortly thereafter BTIM announces that they will be added to the Russell 3000 on June 25^th. So, I recommend selling the edge position when BTIM hits the top of the down trend line ([8]). I got lucky and sold 1000 shares at the exact high of $7.49 as I was scaling out as BTIM move into the resistance.

Then on Wednesday, June 23, NET traders (who follow my advice) got lucky. A Washington Post article printed an old negative story. The shorts pound the stock down $1.40 in just 2 days to the uptrend support line at $6.09 ([9]). I’m love it in the sense that I sold a good portion of my shares sharply higher and I now have a more profitable opportunity buy back my shares much lower with the upcoming Russell 3000 news on Friday.

I scale into a much larger tranche than I sold. On Thursday I send out a few Alert Emails telling everyone that index equity funds will have to buy 1.1 Million shares come 4:00 PM on Friday! I even post this tip (a most profitable trade) on the Yahoo BTIM message board for the world to know as well. I suspect few really grasp the situation and use this data to their advantage. BTIM’s average daily volume is only 250,000 shares and the index purchase is equal to 10% of the publically held shares.

As expected the stock has goes higher. If it hadn’t been for the 2 days sell of BTIM would have closed Friday at a new high with a short squeeze possible Monday. Anyway, BTIM closes at $7.01 ([10]) on record volume of over 2 million shares! I recommended in the NET Chat Room to sell most of one’s edge position but hold some to see if there is a squeeze on Monday or an EOQ markup come Wednesday then sell the rest and look to buy any weakness. This can be done again and again and again. You get the idea I hope.

The outlook for higher Biotime prices for Monday looks good. The over-the-weekend bid-ask spread is $7.02-8.05. Typically, the normal overnight bid-ask spread has the closing price as the mid-point. This implies that BTIM will open higher Monday and hopefully continue still higher into the EOQ markup on Wednesday where any remaining edge-trading positions should be sold into strength. I may even sell into my core position. I don’t expect the euphoria to last very long. If you have questions, please contact me.

Long term, personally, I believe the stock will be over $20 sometime next year. Go BTIM!

Option Trade of the Week:
I did it – I hit the Trifecta of options trading last Friday. I made money hedging and on both the put and long call purchases. See the NET Weekly Money Chart dated 2010-06-26, Friday’s C chart. I recommended the purchase of both puts and call nearly in the 10:00 Alert Email saying that we’d be in a narrow 10 point or so trading range. Buy the 490W puts under $2.00 and the 485W calls under $2.00.

I missed the first put trade going from $2.55-5.70 but at the lows we filled our calls near $1.58 average (low of $1.35). I (Alert) emailed to scale out into strength starting over $3.50. The calls hit $5.00. After selling all the calls I again recommended via email the 490 puts under $1.50 with scale-in. The low was $0.90 Again I emailed to sell into weakness the puts closed at $3.50.

I was drained between trading BTIM and the options. I must have been in the Chat Room over 90% of the time talking. Was I ever in a great mood. It was great close for BTIM and the Weeklys. Thank goodness this is still one of the best kept secrets out there.

Keep those cards and letters coming,

Stan Moore
702.267.0396

NET Oscillator Release Announcement As of today, June 25, 2010, New Era Trader is releasing the NET Oscillator on NinjaTrader Questions? Contact Support@NewEraTrader.com

NEWSLETTERS & RECOMMENDATIONS - June 20, 2010

Dear Friends and Fellow Traders,

The Euro rallies and all's well with the world. Markets recover smartly. GS cut their Euro estimate from a $1.35 to $1.15 and I and many others raced to cover our shorts as fast as we could.  The CFTC COT (Commitment of Traders) showed that over 44% of Euro shorts were covered. I'm guessing the number is more like 75% today given the Euro rallied from 118 to 124 in the last 2 weeks. In essence the shorts may have rallied the market?

Recommendation: It's now time to short the Euro again into 125 with a 131 stop. This should be a multi-year trade. To survive and prosper most of Europe needs a sub-1 Euro value then we may wish to visit our friends across the sea once more.

I see France is doing its part to cut expenses and help the Euro. On Thursday, France announced they were raising the retirement age from 60 to 62 by 2018. What were they thinking? Greece went from 54 to 68 immediately. I can see more street riots coming from Greece and the PIGS sooner than later.

There is a silver lining in these European debt crises. Our own debt crisis have been pushed further into the future as investors rallied to the dollar in droves. This means our own rates should not rise until late 2011. I can even see a sub-3% yield on the 10 T Bonds. One Fed governor said the Fed will buy long-dated treasuries if needed to accommodate quantitative easing (QE). Our mortgage back securities will not be included in any Fed purchases.

These lower rates are what puts a floor under the markets looking out the next 6 months. So what takes the market higher? This depends on what companies tells us with their 2nd quarter earnings reports. Come July most companies should report excellent numbers. However, for the first time since the correction started analysts have not raised their estimates. Still they have not cut estimates either. Given the softer economic outlook out there we may get a taste a caution from corporations this time around. So we wait.

There is a $95 earnings estimate out there for 2011 and if investors really believed the estimate the market would already be higher. I'm guessing that estimates will come down. This is not good and means there will be no rising PEs so it's difficult to see a significant rally back to new highs. All predictions of higher market levels from strategist or gurus are based on better earnings coupled with higher earnings multiples. Hence creating a rally ceilings and we have a nice trading range for some time. So buy the dips and sell the rips.

Pimco, the largest bond manager on the planet, talks about a new normal for future growth much lower than previously thought. I want you to think of the new normal as greater and more dynamic instability. There are already more Black Swans out there these last 10 years than I ever saw in my first 40 years. I'm worried about the skewing of business and the thought of government with its foot on the throats of all businesses.

No wonder business today has more cash than ever before and just sits on it for fear of just what government might do next to them. All this makes it hard for me to envision a world like this with higher earnings multiples. Instead, I can see a world of continued contraction of multiples and that worries me. No wonder I love investments like BTIM so much. Here I only see bright skies ahead.

In advance of the G-20 meeting this week, China announced the dollar-yuan peg will end. Not quite sure what this means for western currencies yet. Since June, the Chinese 1 Month Repo Rate has exploded nearly tripling in the past 3 weeks from the 1.5% area it traded in for the last 3 years. Friday, this rate was trading at a 52-week and close to all time high of 3.8%. The Chinese market may rally on this announcement but in the long term the limited removal of the peg can't be good with the Shanghai Composite hitting a fresh 52 week low. At least someone is paying attention.

BTIM will be included in the Russell 3000 come Friday. This is a $63 Billion cap index. Think of this - the higher BTIM goes the more shares the funds have to buy. I'm amazed. I never saw this coming. Remember BTIM is setting the stage in 2010 for a great 2011. Patience will be rewarded. (The Russell 3000 Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market.)

Trade of the Week in Review:
The market rallies sharply early in the week but traded narrowly sideways for the last 2 days. So I did something a bit different Friday when I realized we had the making of a narrow trading range. In my alerts I recommended purchasing both a put near highs and a call near the lows.

As always hedging will ton money in this sort of day. I was going for a Trifecta, a winning put and call trade coupled with huge hedging profits. The hedging profits worked for over 3X returns on the bought options. I then noted to sell the puts first going into the 3:30 EOD weakness. The trade was nothing like past winners but a 50% profit never the less!

Next, I suggested piling into the slightly OTM $0.20 calls (originally recommended at $0.50) for a shot at a closing rally. Alas, the calls only hit $0.35 and we exited for a small lost. This trade was almost one for the books but we didn't make any history. I've come to realize that maybe the monthly expiration has many more cross currents that have a tendency toward Pinning equities to Strikes. At the monthly expiration many more traders are involved. NET traders have a much smaller game with the weeklys and this performance bears watching throughout the summer. Click here to see the NET Weekly Money Chart 2010-06-18 (no post-day special notation added) or Friday’s 5 minute chart.

Keep those cards and letters coming.

Good Trading,

Stan Moore
702.267.0396

NEWSLETTERS & RECOMMENDATIONS - June 13, 2010

Dear Friends & Fellow Traders,

I always tell it like it is. Even when it looked as though S&P 1040 would be a distant memory even after that BP wipeout Wednesday, I said, “Trading Range.” There is enough good news throughout the decline to hold the lower end say 1020-40 and a slew of bad news to cap the market somewhere north of 1107. Let the market and the news tell us when this trading range will end.

It has only taken me 15 years to Master the "Rhythm" of the S&P market. Thank goodness it only took about 6 months to understand and master the machinations of the "Machines" or HFT (high frequency trading). I know we love it with these cheap expiration week options. So fasten your seat belt and enjoy the ride.

The best news is this new casino trading mentality perfectly fits with the NET trading methodology. Most traders can't handle the fact that trading one day has nothing to do with the next. We thrive with our gap trading strategy, a technical trend trading Oscillator indicator. The market was down hard on Monday and closed on the lows then rallied on Tuesday and closed on the highs. On Wednesday the market sold off and again closed on the lows while reversing on Thursday and closing on the highs. That's eleven trading days I believe out of 14 we have done this. Getting the picture? The “trading machines” are in control.

To top off this mania a high-ranking SEC employee quit to join an HFT hedge fund on Friday. She knows where the money is and just what does this tell us about future SEC changes or her new employer’s ability to skirt or profit from them? I'm guessing there won't be any changes. My conclusion, like trends, is not to fight the "machines" but embrace them. I still am a great counter-trend trader who has come into the "light". Trends truly are your friend. Today's trends are bigger and come more often than I've ever seen before. "Machines" do not start or end most trends but tend to greatly exaggerate the ones once they begin in either direction. Think of these moves as just much larger buy and sell programs and don't fight them. Embrace the new force out there.

One way to know where the market is going in the next few weeks would be to pay attention to the pre-announcement comments coming from companies regarding their second quarter EPS forecasts. With the many world-wide negative cross currents buffeting our market companies may use these issues to hide management’s short coming. The more early negative pre-announcements the harder it will be for the market to break out of our multi-week trading range. So pay attention.

Our favorite stock BTIM had a very successful annual meeting and first Biotech presentation sponsored by a brokerage firm, Jefferies & Co. The story is getting out there. I would not be surprised to see Jefferies recommend BTIM sometime in the future. There was a lot of highlight information from these meetings sent to our Alert Email subscribers. On Sunday, BTIM announced this, more good news and the stock is up nicely this AM!

Trade of the week in review:
Market volatility is our friend. The weekly option lottery scores big time again. During the day I made numerous statements about the day’s action and I sent out 4 Alert Emails. This time I’d like to present Friday’s NET trading action in sequential format as shown via the NET charts, Alert Emails and the Chat Room:

1. Pre-market Chat Room Discussion. Early Friday the market appeared to be building a trading range. All the bad news was out.
2. Chat Room. As the day unfolded it became apparent that the lows, 1072-5, were going to hold.
3. Alert Email. Before 11:00, I alerted subscribers to start buying the 490 OTM weekly calls under $1.00 small and increase positions as the price declined. Since we were early in the day, S&P hedging would work rather well and permit significant multi-trade parlaying of contracts. The total hedging earned over $300 per call contract.
4. Chat Room and “A” Chart. After 3:00 the down was over and the short squeeze mentioned earlier on the “A” chart was about to take place into our EOD trade time. I let the Chat Room members know, in no uncertain terms, that the calls, selling at $0.45, and almost ITM were a steal buy and might fly.
5. Chat Room. By 4:00, the calls reached $3.50.
6. Alert Email. After 3:30 when the calls were selling over $2.50 I noted sell all calls into strength.
7. EOD Chart. NET Weekly Money Chart 2010-06-11.

A NET training video is underway that discussed the above in detail.  The day was another win for the HFT as the price was driven above the day’s highs in less than 30 minutes. So now I can truly write "How I've learned to love the machines and stop fighting them". A review of Friday’s 5-min S&P chart you can see how HFT helped push the market to new highs in rapid fashion.  This move smacks of being artificial with no real news. I now trust you can see this too.

Keep those kind words coming I appreciate all of them.

Good Trading,

Stan Moore
702.267.0396

NEWSLETTERS & RECOMMENDATIONS - June 6, 2010

Dear Friends and Fellow Traders,

The markets were expecting a blowout Jobs Number Friday morning. Obama and Biden were touting the NFP (Non-farm Payroll) number so aggressively you'd swear "they" had inside information. I used the number of 450-700,000 on my Thursday charts. Goldman raised their estimate to 600,000. Later in the day I was hearing upwards of 900,000 were being whispered. Anything over 600K would be market friendly.

As I’ve said before, there are about 30 or so major news announcements a month that can move markets but only 3-4 really work well for a NET trader. NET traders look for news announcements at price extremes. If the market is expecting good news and is up hard into resistance the prior night we look to buy puts before the news is released and vice versa for bad news with price at lows.

The trading results using this strategy have been outstanding over a total of 28 years but specifically during a five year stretch I noted these trades on my Intraday Chart postings to prove my teaching point. The results showed that if a trader did this trade he/she made money 85% of the time -the winners returned on average nearly 100% while the losers averaged a point lost.

We now look forward to these trades with cheap weekly options – every week. This strategy builds on one of my many trading pearls - buy the rumor then sell the news. We are expecting the news is already priced-in but should the news disappoint we ton money. Besides, there is almost always some profit-taking on the good or bad news as the case may be. We generally only lose money if the news is a blowout in the expected direction.

Thursday night the 495 weekly puts closed at $2.65 and they opened over $6.00 on the lousy jobs numbers but reached $13.00 Friday near the close. So I drank the Kool-Aid (I believed the pre-announcements) with everyone else and I missed a great put trade. The puts doubled overnight and turned into another 10 bagger, the eighth this year. This is a rather simple trade strategy that pays rather large returns.

Why the President touted this NFP number so aggressively is beyond me. I'm guessing his advisors are all truly incompetent and have no idea what the market perceives as good or bad news. It's always bad when the government creates 95% of the jobs.

If I told you over 15 months ago that Congress would spent nearly $1 trillion on stimulus and that 2.5 million more Americans would be without jobs would you have believed me? Never! Even Obama said unemployment would not exceed 8.4%.

What's with that great neo-Keynesian "multiplier" that states that for every $1 the government spends the economy expands 1.5 times in output. However, I believe this multiplier is a myth because this money has to come from somewhere in the private economy, either in higher taxes or borrowing. Taking money from private enterprise to be spent on transfer payments (jobless benefits (now up to 99 weeks), Medicaid expansions, welfare, illegal immigrants, etc.) does nothing to create incentives to invest, take risk or create jobs.

Let's get this through our brains once and for all:  Governments do not create or generate wealth, they can distribute it. The challenge for both parties is simply define how much distribution is "enough". There is no such thing as enough as far as Obama is concerned. Let's get the Government out of their "creating wealth" illusion and start asking how to get business to hire again. Only then will the economy start a real jobs recovery.

Until that shift in thinking occurs our stock markets will be mired in a casino like mentality. I keep saying we're on a "Mr. Toad's Wild Ride" with markets up and down triple digits from one day to the next. Into early last week, the market had a streak of seven days in which the S&P 500 reversed its prior-day direction and closed at its extreme high or low for the session. Traders should love this action but most step off feeling whiplashed. Personally, with my trading style, I find it most rewarding. The velocity of trading (AKA market volatility) has accelerated the ups and downs. In the past we used to take months if not years to correct. Now the market corrects in a month.

Friday's action was nothing more than catching everyone on the wrong side of the market and crushing them. Until analysts' profit forecasts fall a lot further and faster than they have yet the market is locked in a 100-125 point trading range. There is plenty of good news but it will take time to unfold. Commodity prices are settling back nicely. The bad news, for the most part, is in this market. Europe's fiscal crisis is not a new crisis but an aftershock of the global financial crisis. Yes, I'm a bit nervous that the Euro’s erosion could nudge the world back into a recession while European public services cuts could trigger unrest and radicalize the political climate. However, this is just what we need in the US to put us on the right track to correcting our own excesses in government and state budgets. Government seems to only act sensibly in a crisis.

I think I see a bright spot on the horizon. By the end of May investors took out $30 B from stock mutual funds. This one month flight from risk surpassed the $25 B withdrawn in Feb '09 and the $26 B pulled out in Mar '09. At that time in ’09 it wasn't the best time to be a seller of equities.

Trade of the Week in Review:
See this week’s NET Weekly Money Chart 2010-06-04 or Friday’s 5" C chart. Yes, the easy trade was to buy the 495 W puts anywhere in the first hour between $4.00 and $6.00. The puts hit $13. There's nothing wrong with a 2-3X return but forgive me I don't trade for doubles in what I thought was going to be a huge down day. The S&P was down 30 intraday S&P points. On a day like this we can make 5-7X if done correctly.

Personally, I could never buy already expensive OTM puts into weakness. This is not a NET trade methodology. No, we have to work much harder, doing more trades (5-7 versus 1) when buying much cheaper OTM calls near $1.25 and scaling in lower using our hedging profits to buy more calls.

Friday I put out two Alert Emails suggesting buying calls near a $1.00 average price and NET trader must hedge our brains out because there was no way this side of hell the market was going higher until much later in the day. The overall hedge results were posted on the chart. If handled well a Net trader could have earned over $800 net for each long call traded assuming the calls were sold for 80% of their purchase price. If the calls expired worthless knock off $50.

Once the downtrend was established rather early, a trader just sold all rallies back to the 20 expo (MA) middle line while the NET Oscillator traded between -8 and 62. In a downtrend a 62 high reading from a jammed 1/-8 reading at the lows tells us we can continue to short lower rally highs without fear. This strategy was further confirmed by a -1400+ negative Tick reading.

The S&P had a nice 7 point rally into the close but it came too late to help the calls which expired worthless.

I expect I will have a few more “get rich slowly” trades this week if the wheels don't fall off the train. Both YHOO and HUN are above last week’s recommended entry price and still very doable on any further stock weakness.

Keep those cards and letters coming. I enjoy hearing how well some of you are doing. My goal is to get all of you doing well as full-time traders should you wish to so.

Good trading,

Stan Moore
Ph 702.267.0396

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NEWSLETTERS & RECOMMENDATIONS - June 1, 2010