NEWSLETTERS & RECOMMENDATIONS - January 16, 2012

Dear Friends and Fellow Traders,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I hope all of you had a great Holiday weekend.

Good trading,

Stan Moore
702.558.1814