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