$20k in 20 Minutes update...

Today is options expiration day so it's time to make sure all our positions are safe. We placed 11 trades in our $20k in 20 minutes class where we showed students how to bring in a solid 20% over about 3 weeks of time. So far all 11 of our trades are profitable with just about 4 hours left to expiration. I will analyze each trade in a later blog post. But there are 2 trades in particular that I want to mention during market hours because they could be "in trouble" and I want you to see how to play this and insure you don't mess up the trade.

AMZN -
We actually placed an "Iron Condor" on Amazon, which is nothing more than two credit spreads stacked on top of each other. The top position is a Bear Call Spread, while the bottom position is a Bull Put Spread. This trade is placed on a stock that is "stuck" in a trading range and doesn't look to be going anywhere. Basically it's a double dip with the same strategy.

Everything has gone fine with the Bullish position which we placed by selling a put with a $60 strike price, and buying a put with a $55 strike price to cover our position. We will clear a full $3360 on that position.

Our Bear Call position however has reached the danger point and that's why I'm writing about this during market hours. We opened the Bear Call position by selling the a call with a $70 strike price, and buying a call with a $75 strike price to cover our position. Our maximum profit on this trade would be $2420. However Amazon has traded up over $70 and that puts us at risk of being "called out" and forced to sell AMZN for $70/share. We don't want this much exposure and AMZN has not moved high enough to use our $75 call for profit. So what do we do?

1) We're only in danger if AMZN closes above the $70 price point. So in the next 3 hours watch this position to make sure it closes below $70. At the time I'm writing this AMZN is trading just barely in the safety zone at $69.75. But it has been over $70 for much of the day.
2) If the day closes below $70 we're fine. Just let the position expire worthless.
3) However, if we're at $70 or higher the risk of getting called out is greater and you don't want that. So we need to BUY BACK the $70 call position we opened. The good news is time value has worked in our favor and we will still make a profit, even if we buy the position back.

Notice the $70 call position. We sold it for $1.21/share and brought in $2420, but now we could buy it back for only .43/share. We would clear a full $1560 still on this trade. So even though we are in the "danger" zone, we can still make money as long as we close the position before we get caught with it. To close the position simply click the "trade" button and follow the order form.



GOOG -

Our google position is an identical situation. We opened it by selling a $330 call and buying a $340 call to cover our selves. We have moved in to the danger zone because Google is toying with the $330 price point. Currently we have a few pennies to play with but we need to be cautious. Once again, to close this position with no liability simply buy back the $330 call. If we buy it back right now we will still close that position with $4200 in the bank.

This is a quick intra-day update for any of you following along at home. I'll put together a full analysis of all the trades after the market closes and we have all the trades complete.

Happy trading.

Mid-week Spice - Not for the Faint of Heart...

I generally reserve these market updates to weekends but I can't help and post my comments after this absolutely crazy, dare I say ridiculous week...I've received countless emails asking me if we have finally busted out and started our bullish move. So once and for all let's all sing together... a loud resounding "NO!" No we have not broken out into a bull market. This is a 100% predictable retracement pattern which is part of a natural bear market. In Dow Theory the last week 1/2 is what we would call a "short term" wave. Look at this chart...


The light blue lines haven't budged. They're the same lines I drew months ago live in class and the same lines we've been watching in class. No I have no power over the market. This is the legitimate predictability of the market. Is it a wonder we traded straight up to both the roughly 45º down trend AND the 7500 horizontal resistance line? No. Simply put: this is what should be expected.


So why do I sound so ticked? In a word... GOVERNMENT! I should stop my rant here... but.... oooooo... they can't stop me.......

Friends - DO NOT BE DECEIVED... Congress is going nuts over AIG execs getting huge retainer payout... $165Million + To be exact! No chump change to be for sure, but there are two BIGGER stories that are happening that congress is managing to hide with this AIG story. In fact, when you consider the other stories developing the $165 Million paid out to AIG execs is just straight up chump change. $.10 on the dollar compared to cover up #1:

Cover Up #1
As a trader I care about the value of the dollar... After all most of my profits are made in dollars (at least up til now they have been). But yesterday's Fed announcement is potentially devastating to the value of the dollar. Literally printing over $1 Trillion! The $165 million scandal at AIG is chump change at best, if even worthy of being called chump! Following Big Ben's announcement yesterday the dollar has been falling quickly against other currencies, and of course Gold is beginning to take off soon to break highs from last year. This story is 10x bigger than the AIG story, and congress knows they are to blame. Without such massive government the economy wouldn't be in such trouble. Basic capitalism would have corrected the impending doom and we would likely already be on the road to recovery. But with government growing on an exponential scale almost daily, what could have been a recession, is quickly turning into a depression. And what could be a mere depression could turn into complete economic destruction.

Cover up #2
The second cover up which is getting a small amount of media coverage though not nearly enough, is the fact that the US House passed a bill today to enact a RETROACTIVE TAX on the AIG officials who recieved bonus' as part of the bailouts.

Now don't get me wrong, a bonus for failure is downright stupid, and it's a worthless use of anybody's money - especially tax payer money! But the US House wrote a bill today that is in direct violation to the US Constitution. Article 1 Section 9, Para 3 United States Constitution: "3. No bill of attainder or ex post facto law shall be passed." This means the government can't go after something after it's happened! And yet not only is congress going after it, they're going after it in an attempt to clean up their own mess!

Congress gives the money - Americans hate it. Congress writes provisions for the bonus' - Americans hate it. Now rather than just standing up and saying "we are too big and have no clue how to be capitalists," congress is continuing to meddle in the economic world by trying to create laws that are a direct violation of the US Constitution. And not only that, just like every other bailout/stimulus/ waste of tax money they have passed over the last 6 months they rushed this through without even a hair's breath chance to read the bill. And I promise you when all this news starts to trickle out into the capital markets over night tonight, and into tomorrow, America is going to hate it! And the Dow? Well if the mere fact it was hitting resistance isn't enough reason to drive it lower, this news will pound it back down to 6600 probably before the end of next week.

Friends this is JUNK. I try to keep my politics to a minimum but it's time to stand up because everyone who trades the market, everyone who believes in free enterprise, everyone who believes in the American dream - the chance to over come adversity and be more than your family generation before. The opportunity to excell through the power of humanity, not through the power of government. Everyone who believes in a brighter tomorrow... should be ticked. The governement is trying hard to steal your opportunity.

So what can you do? First write your congressmen, senators, and president. Democrat, Republican, Independent. Tell them if they vote for these measures you're firing them. Then follow through. This is not a partisan statement I'm making - this is an issue of governement of the people, by the people, gone amuk. Governement is here to serve us, not the people serve the government.

Second - CNBC's Rick Santelli started the idea and now across America citizens are planning tea parties in protest. Join the April 15th tea parties that are being organized around the country. Protest taxation. History tends to repeat itself, in both the stock charts and political history. The last tea party was in 1773 in Boston against the Brits... The next Tea party is across America, against the US Governement.

Thirdly - Educate yourself and learn to trade the market effectively. In response to recent governement actions we are taking steps at The Financial Puzzle to expand our training beyond simply the US markets to include both Foreign Exchange and Foreign Markets. In the mean time all of the technical analysis taught in our Foundations of Stocks and Options class will transfer to any market. Learn the basics and then apply it to the next market you choose to trade.

For those who are not prepared, adversity can sink your boat. But for those who are properly trained and prepared adversity can present the opportunity of a life time. Right now is one of those opportunities! Don't waste this chance to make great US Dollar profits while the market falls, and then transfer those profits into foreign markets as inflation kicks in. Retire smart, not desparate.

Last Chance To Take Free Foundations Class...

A Quick reminder today is your last chance to SIGN UP for the "Foundations of Stocks and Options" class for FREE. The west coast class starts tonight at 8:00 Pacific, 11:00 PM EST.

After this month's class this opportunity may be gone forever! So click below to sign up now.
http://www.thefinancialpuzzle.com/foundations.html

Have We Hit The Bottom And Made The Turn?

This week has generated a lot of news about the Dow's sudden bullish move, ending the week up over 700 points following last week's slide into level's not seen since the 1990s. Weekend TV magazines have pushed stories touting "the end of the fall is here, the bottom has arrived". Sadly these reports are really nothing more than optimistic words from reports who have been told to "try to not make it sound so bad". From a strict technical position there is little reason to believe the current bullish move is anything more than what Charles Dow would have called a "short term trend".

Dow theory breaks market trends into three phases:
1) Long term trend (lasting over a year)
2) Intermediate trend (lasting 3-6 months)
3) Short Term trend (lasting 3 days to 3 weeks)

Each of the trend cycles flow within the context of the larger trend. At the moment the Dow has been in a solid down trend since it's peak in October 2007. One can look at the chart below and also see a few intermediate trends, with several short term trend moves. The current move is most likely a short term trend because of where it's occurring on the chart.

Notice the secondary fan line which is coming into play as a downward resistance. At the same time much more of a rise and the Dow will be running into resistance back at the 7500 level. Couple that with the fact the 50 day moving average is quickly approaching the same region and there's a triple threat reason why the Dow will maybe have 1-2 more positive days this week before continuing in a downward spiral.

The exception to this move would be the reality that the Dow is currently sitting at the 20 day Exponential Moving Average. This alone could provide all the resistance needed to cause the market to stop it's climb and return to falling Monday Morning.

The next target of course is back at 6600. If that support holds we might can start writing some news stories about the bottom starting to form. If it doesn't..... 5500 here we come...

Foundations Class Offered Just for The West Coast!!

Hey Guys - we had an enormous.... that's like A LOT... amount of people sign up for last month's Foundations of Stocks and Options class that were unable to make it due to the fact they live on the west coast. So this month we're offering a Foundations class just for you west coasters. It meets:

Monday's and Wednesday's
AT: 8:00 PST - That's 11:00PM EST!

The class will go for 4 weeks.

AND

For a limited time we're going to let you take this first level of classes FOR FREE!!

So you have no excuse to not sign up.
Here's what William said after taking last month's class:
“ I LEARNED MORE about OPTIONS and TRADING…CHARTING….in your 1st SESSION. Then I did the 16 months I was with PAINE-WEBBER…. ( You can print THAT!!!! With my NAME ON IT!!! )”

Oh yea, I think I forgot to mention he use to be a stock broker with Paine-Webber. Go figure. Even the brokers are begging to learn this knowledge.

Show go ahead and sign up and see what the buzz is about since this MAY BE YOUR LAST CHANCE TO EVER TAKE THIS CLASS FOR FREE!!!!


Go Here To Sign Up

OH YEA - if you act fast enough and get signed up before the class is full we'll even let you BRING A FRIEND!!

"Hey JW - What's Your Outlook On The Market?"

Today I received this email from a student who took our class last month. I thought some others might enjoy the response:

from student:
"whats your outlook on the market? will we continue to rally? sell-off tomorrow?"

john


Response:
I think this is a short term retracement. How long it will last? According to dow theory 3 days to 3 weeks. Today would actually be considered day 3 because it started on Tuesday.
I expect to see a retracement to the 20 day EMA. Look at the behavior on 1-28,29 and again on 2-6 thru 2-10. It's typical retracement patterns.


One thing that may be added here is MACD is crossing over indicating a bullish move is impending. However there are a few things that could easily stand in the way of a major bullish move.

1) We're running into the 20 Day EMA. That often will act as resistance. Also note this is very close price wise to the 20 day SMA used in the Bollinger Bands.

2) A brief check of the ADX trend indicator shows this is a weak trend if a trend at all.

3) If tomorrow we do continue a rally the resistance coming up at 7500 will likely be a pretty strong resistance.


All that to say. We COULD be entering a bullish move but it's a bit unlikely. The mostly likely next move is either a retracement tomorrow (Friday), or a run up to 7500 before it turns and continues a bearish move.

Add to this basic technical analysis the choppy geo-political environment and I do believe it's a bit pre-mature to call this a bullish set up. Let's give it a couple more days and see if any new signs show up. If so I'll update this post. Until then - Trade any bullish trades with caution.

Happy trading.

J-Dub

9 Money Making Stocks for 2009 and 41 Bonus Picks (and some dessert)

It's here....
The long awaited 2009 stock pick list... (enter heavenly choirs singing)

As promised here are the stock picks for 2009. I've titled these, appropriately, 9 Money Making Stocks for 2009 and 41 Bonus Picks. For those of you who may still have some math trouble that's a really fancy way of saying 50 stocks!

Before I reveal the list I need to lay a few ground rules and give an overview of the post.

First of all this is simply the list. The full report will be out sometime next week ready for download. In the report I will offer a complete analysis of the top 9 picks (this is insanely valuable - we can't even put a price on it really). The remaining 41 picks have some analysis and information but not a complete analysis.

Dessert picks. The "dessert picks" are stocks that don't even come close to making our criteria for 2009 picks. However due to the unique market circumstances of 2008 we have a plethora of great stocks that are so undervalued you can't help but buy these guys. Of course I never suggest buying a stock without some sort of clear profit strategy so all of these dessert picks are potential stock purchases that also allow some good cash flow from writing covered calls. In the full report I give analysis as well as the "Dollar-Cost-Zero" point (that's the point at which you've recouped all of your investment and this stock could fall to zero and you'd still be making money).

Criteria: There are 6 key factors that went in to making these picks. Unlike what many of you consider "traditional stock picks" my picks are a bit different. I really don't care if they're going to go up over the next 6 months. I really don't care if they're going to go down. All I care about is that we can trade them and make great money. So here's the criteria. In the full report (again available next week) I detail more why each of these top 9 picks meet the following criteria:
1) Must have Good Volume (at least 1M average) and good Open Interest (on the options)
2) Must be Optionable
3) Must have a history of Predictable Trading Patterns
4) Must have a Good Immediate Trading Range (at least $10)
5) Must be in a Sector With Some Excitement
6) Must have "Room To Bust A Move"

Bonus factors:
- Important News
- Important Product Releases Upcoming
- Important 3rd party Factors

These are the criteria. The Top 9 have been selected because they meet or exceed these criteria the best. It's only fair to add there is probably a slight personal bias to some of these picks as well seeing as many of the additional 41 picks could have been a top 9 pick (but there was only 9 slots). (these top 9 will absolutely be looked at in great detail in our Foundations of Stocks and Options Class as we will track them as a class)

As for the 41... These guys meet the majority of the criteria. However in most cases each of these picks has at least one factor that prevents it from meeting all 6 criteria on a consistent basis. The most common factor is usually Volume or Open Interest related. That's not to say these picks are not great picks, you just have to be more aware when trading them and check all of your important liquidity factors.



Our Goals: And finally I should re-iterate our goals with these picks. We are not looking for stocks that will move higher. We are looking for stocks that will MOVE. And more specifically we are looking for stocks that will move a lot, often, and in a predictable pattern. So with no further adieu I present...


Top 9 Money Making Stocks for 2009

1. AAPL - Apple Computer
   
2. AZO - Auto Zone
   
3. BIDU - Baidu
   
4. GOOG - Google
   
5. PBR - Petro Brasil
   
6. RIMM - Research in Motion
   
7. SLB - Schlumberger
   
8. SHLD - Sears Holdings (this one is kind of unlikely and special - I detail it in the report)
   
9. MA - Master Card
   

And the 41 Bonus Picks:

1. ADM - Archer, Daniels, Midland
   
2. AMZN - Amazon
   
3. ALK - Alaska Airlines
   
4. AVB - Avalon Bay
   
5. AXP - American Express
   
6. BA - Boeing
   
7. BBY - Best Buy
   
8. BBBY - Bed, Bath and Beyond
   
9. BTU - Peabody
   
10. CAT - Caterpillar
    
11. CME - Chicago Mercantile Exchange
    
12. CMG - Chipotle Mexican Grill
    
13. CVX - Chevron Texaco
    
14. DE - Deere & Co
    
15. DECK - Deckers Outdoor
    
16. EQT - Equitable Resources
    
17. FCX - Freeport McMoRan Copper & Gold
    
18. FDX - Federal Express
    
19. FSLR - First Solar
    
20. FWLT - Foster Wheeler
    
21. GILD - Gilead Sciences
    
22. GRMN - Garmin
    
23. GS - Goldman Sachs
    
24. HAL - Halliburton
    
25. HANS - Hansen Natural
    
26. HES - Amerada Hess
    
27. IBM - International Business Machines
    
28. ISRG - Intuitive Surgical
    
29. JNJ - Johnson & Johnson
    
30. MMM - 3M
    
31. NOV - National-Oilwell
    
32. OXY - Occidental
    
33. POT - Potash
    
34. RIG - Transocean
    
35. SNDK - Sandisk
    
36. SUN - Sunoco
    
37. TXN - Texas Instruments
    
38. VLO - Valero
    
39. VMW - VM Ware
    
40. WYNN - Wynn Resorts
    
41. XOM - Exxon Mobile
    

And Dessert: (These picks are good candidates to buy and use for writing covered calls if you like that strategy)

• AIG - American International Group
  
• BAC - Bank of America
  
• C - Citigroup
  
• DRYS - Dryships
  
• GE - General Electric
  
• LAMR - Lamar Advertising
  
• MOT - Moterola
  
• RMBS - Rambus
  
• SNDK - Sandisk (also on our 41 bonus list)
  
• WFMI - Whole Foods Market
  

And there you have it. A total of 60 potential trades for you to enjoy during 2009. As I mentioned the full report will be out sometime next week and you can dig further into some of my analysis.

If you take a look at this list and don't feel excited I encourage you to look at the charts. If you look at the charts and don't feel excited, well then I'm going to encourage you to take my class. In fact I'm offering the first section of my Foundations of Stocks and Options class for free during February. This is a $400 class and not only will we be looking at these stocks but by the time you get done with my class I guarantee you will be excited about this list.

To sign up for the free report sign up here:
http://www.thefinancialpuzzle.com/report09.html
(it will be emailed to you next week sometime)

To sign up for the free class visit this link here:
http://www.thefinancialpuzzle.com/free/foso4.html

Until next time as always, Happy Trading.

J-Dub