Considering the dollar has given some more gains back, the USO ETF review today shows us that it’s likely to bounce higher from support. Per the chart it’s breakout from this trading range in mid-October and now has successfully retraced the breakout. Look for a small bounce here energy traders.
It’s back to normal I guess for the EUR/USD trading range. Noticeably the the dollar fell versus major rivals, allowing the euro to again fetch more than $1.50 as overall economic sentiment rebounded and the U.S. Federal Reserve showed no qualms about the U.S. unit’s decline.
In today’s big bond report: the TLT ETF is our focus as treasury prices rallied higher today – further pressuring yields or interest rates lower. The main catalyst was from the Federal Reserve’s last policy meeting showing that officials believe the recovery is going to expand at a slow rate while unemployment will continue to remain high – not good right.
Per the TLT chart, you can clearly see that it’s trading smoothly inside a major channel. The next move will likely continue higher as more investors rush to buy up bonds.
Bank stocks are not a good buy toady – at least for a couple weeks. Earlier this morning futures were down on concern that banks will be forced to raise more capital. In addition, the dollar and the yen strengthened as investors overseas sold higher- yielding assets. Take a look at BAC which is under a good resistance/support line and likely headed lower.
Now the USD/JPY which continues to form a very strong base.
Here’s an great chart of the S&P’s recent peaks and troughs from 2007 through today. On a percentage basis the recent rally from the bottom had been much faster and much stronger than the fall from the top -weird right? So what does this tell us. Well, we all know that the markets won’t continue in this state forever. Our continued assumption is that a major correction is in the works over the next 3-5 months.
Options trading on RIMM right now is tricky. Whether you choose a Call or Put option, the short-term outlook is higher while the long term trend yells sell. However, there is an opportunity to make a quick buck on some calls during the week back up to the resistance line in black below.
First Time Home Buyer Tax Credit Boosts Sales – US home sales jumped by 10.1% in October as buyers rushed to take advantage of tax credits, which have now been extended. Sales hit a seasonally adjusted annual rate of 6.1 million, up from a revised 5.54 million in September. Someone has to pay for all these tax credits, so is this really a good stimulus? You be the judge.
Pre market futures and crude oil are higher after last week trading in the opposite direction of the dollar in recent months. As the dollar weakens, it has pushed the value of everything basically higher because they become cheaper for foreign investors. Gold hit a new record high early this morning as well. Per the chart below, crude oil has traded between $76 and $82 for more than a month and is hitting a major Fibonacci level in blue. Likely it will start to head lower if the dollar every rebounds.
We will get plenty of economic data during the holiday-shortened week to sort through and determine if the stock market’s rally has outpaced any actual recovery in the economy. Multiple reports on the housing market and strength of the consumer as well as data on the nation’s total economic output in the third quarter will be released before the Thanksgiving holiday Thursday. More later folks!
The November portfolio was once again extremely profitable and marks the 10th consecutive month without ANY losing trades! Impressive right folks? Well, we are humbled to have this type of track record I can assure you. If you want to start seeing these returns in your own account, SIGN UP FOR OUR FREE 30 DAY TRIAL.
Compared to the October portfolio, we had a return that was slightly lower comparatively from 4.77% to 4.38%. Clearly we don’t really care if we increase or decrease our monthly returns as long as we hit our 3% profit goal – which we are beating nearly each month. In addition, we showed once again that even in the face of a major market moves, selling options with out P.O.T.S system still produced a profit.
To re-cap this month’s income, let’s look at what we made vs. our required investments (in margin). Here are the positions we had with corresponding PROFIT/INVESTMENT and RETURN:
DIA 108 CALL - $15/$183 = 8.18% Return
IWM 46 PUT – $22/$440 = 5.00% Return
DIA 78 PUT - $25/$827 = 3.02% Return
DIA 103 CALL – $16/$330 = 4.84% Return
As we said earlier, we did not have to close out any positions this month at a loss. This just goes to show everyone that by writing options, you are basically forcing the indexes to make dramatic moves in a very short time frame. And since we have positions on BOTH sides of the market (Puts and Calls), you are guaranteed to make money on at least one side of the trade every time – or both sides like we do every month.
With regard to TOTAL INCOME and RETURN, the October portfolio produced $78 of total income after investing just $1,780 in margin. That means we saw a total portfolio return of 4.38% this month. As we usually point out, our calculations assume that you enter just 1 (ONE) contract for each trading alert – i.e. a total of 4 contracts for the month. Those members with a higher capital base should be entering multiple contract positions each week.
Currently we have a fully invested December income portfolio and are in the middle of building the 2010 January portfolio. The outlook for both of these portfolios is extremely positive right now as we are still writing options far away from the market’s current price.
New Trading Alert is AVAILABLE NOW for our Members! If you would like to start seeing these same return in your portfolio, SIGN UP FOR A FREE 30 DAY TRAIL here.
Enjoy your profits!
This week, the market breadth indicators showed a huge bearish divergence after the market broke out to a new 2009 high. Shortly after the early trading this week, things fell apart for the bulls and the bears pushed use lower into the first (of many) failed breakout attempts. Notice that every other breakout was able to hold the highes except for this one.
We are expecting the market to continue lower next week until it reaches support. For now though, we are happy taking our profits on Call options above the market we entered last week.
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