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Articles: 1, 2, 3, 4, 5, 6, 7

Top in Commodities?
2008-03-19 17:47:00
The last of the commodity stocks are getting beaten down pretty hard today. All I am reading/hearing about is the possibility of a top...Check out the CRX, which tracks companies such as AA, ABX, ADM, APA, APC, BHI, BHP, CAG, DVN, FCX, GG, HES, IP, MRO, NEM, POT, SLB, TSN, WY, and X.Off the highs, yes. Absolutely. In fact, if you look at this as a short term double top, prices ought to fall about 50 points, right back to support. Keep in mind, the overall trend is still in tact here.See what I mean? The 5 yr shows you that a pull back is overdue. I'd plan for it.This move in GLD looks pretty bad. Remember the profit taking I warned you about once the metal topped $1000. Here it is, incase you didn't notice.DBA- As you can see soft commodities (sugar, coffee, OJ) have been done for awhile. It's over. Let it go.UNG- Natural Gas is at an action point. A lot of these stocks are overbought and could use a blow-off. But longer term, I don't think the trend is changing; yet.If you...
More About: Commodities

Stop & Reverse
2008-03-18 23:58:00
Just like the last time around, I think this rally might be here for a few days.Now that 1320 has been breached, I think the next logical target is 1375. However, it is foolish of me to think the market and the word logical belong in the same sentance.I made an emotional decision today and went short the ES into the announcement, but quickly stopped out and threw it into reverse as I saw the overall market "buy the dip." I find that stopping and reversing (which means to close out your trade and hop into the opposing trade), is one of the hardest trading mechanics there is. I hate doing it.I held onto many of my longs today, but got C-R-U-S-H-E-D in my shorts. I reduced a lot of my positions yesterday and today...but the remaining amounts still hurt. A few positions held up, but they were the minority, obviously (breadth 9:1 today). Many of these trades I have been in for awhile, which meant I lost a lot of good profits, but some of them were new additions.....
More About: Stop

Fade the Fed
2008-03-18 18:37:00
I can't recall a "Fed Day" where the market moved this much ahead of the announcement. Better than expected forecasts in GS and LEH?You've got to be kidding me. If I recall, I talked about this last quarter when the banks and brokers were taking these unbelievable write downs. If you take a bigger losses than you have, and play off the worst case scenarios, you are obviously building a case for a great quarter next time around. Despite all that, it looks like the market thinks that BSC might pull out of this mess at a higher price...Remember, the deal was inked at $2, and the stock is trading at $7. If you feel the deal will still go through, there is some arbitrage opportunity here via puts or a short position, but it comes at quite a risk. Especially if another buyer emerges and a bidding war ensues. If you feel that Bear is going to be bid higher, you could buy some calls, but plan on losing your investment. That way if it works out, you will be pleasantly surpri...
More About: Fade

Hmmm....Looks Familiar
2008-03-18 17:20:00
I'm a little preoccupied right now, so that is all I have for now. Sucks huh?Look back for a few trade ideas before the close.

Told You So... Part 7; Chapter 12; Paragraph 22
2008-03-17 18:40:00
http://www.optionaddict.net/blog/2008/2/2 0/sector-spotlight-short-the-exchanges.ht mlToday...CME- Down 13%ICE- Down 12%NMX- Down 16%NDAQ- Down 7% (watchlist)IBKR- Down 23% (watchlist)
More About: Part , Told , Chapter

Alert: March Madness Participation "Underwhelming"
2008-03-17 17:57:00
There must be some sort of mistake...I checked the number of people registered for the "OA Tournament Challenge" and almost laughed.Sign up.If you are unable to get in, send me an e-mail jkohler32@gmail.comOr you can click here to get the instructions.Note: If you have an objection, I will help you overcome it.
More About: March Madness , Participation , Alert , March , Madness

March Madness
2008-03-17 02:01:00
It's that time of the year and I am amped. On the left hand side of the blog you will notice a link that says "March Madness ." I will be hosting the first annual "Option Addict Tournament Challenge." Please click here for more details.

6'7" 250 lb. Guerilla
2008-03-14 21:57:00
Friday's closing bell has come and gone, and as a result... I weep.This has been the best week I have had in nearly two years. Had I not followed my rules and scaled out of most things Ag, steel and coal...It might have been the best 5 day stretch ever.Since I spent the majority of the week talking about my results, I won't be arrogant and taunt you about it a second time. I'll just give you the short version. Just know that healthcare stocks (UNH & HUM), financials (BSC, LM, PFG, XL, AIG) and a few others (OEH, BMRN, BYI, HOLX, FSLR, ALXN) helped to boost my negative delta this week.You should also know that my commodity plays (GLD and UNG), energy plays (XTO, DVN, ECA, CHK, RRC) remaining metals plays (AEM, AKS) and a few others (POT, NEU, BUCY, CALM, NFLX) helped to boost my positive delta this week.What catapulted my results was my slight increase in position size (1% to 2%) and the unreal returns in UNH (+800%), HUM (+2000%) and BSC (450%). Why did I incre...
More About: Guerilla

I Came...I Saw...
2008-03-14 16:17:00
"Don't act like you're not impressed."Last nights BSC alert was invaluable, but according to some wasn't enough. If you were one that felt I did you a disservice by not telling you exactly how to trade, then that worries me. Be able to read between the lines. Better yet, be able to analyze hand fed data and make decisions. I gave you the assist, all you had to do was push the button! The way it traded today, you had more than enough opportunity to get in. It's not like it gapped down at the open. Just realize for future reference, volume is the best indicator available. Volume tells you exactly what is going on and to what extent. In the case of BSC, the volume on these options and the rise in volatility indicated that institutional money knew that the company was in dire straits, despite their constant denial.You'll notice this time and time again. Ahead of big announcements and price swings, option volume will typically go off. Depending on whether the volume t...

Something Smells Fishy...
2008-03-14 04:07:00
Look at the OTM put volume in BSC options. Especially the 25's.They are 25 points out the money, and they are 8 days away from expiration.8 days!

Told You So...
2008-03-13 17:40:00
 You may be thinking..."Everyone knew Gold was going to $1000, Jeff."You are right, but not everyone knew it back when I did.I have the archives & podcasts to prove that one :)PS- Stop asking me what to do with your GLD trade. I will take responsibility for holding your hand through a 60% return in this trade, the least you can do is make a decision about whether or not you want get off the ride here, or keep going.Now if you'll excuse me, I have 100 e-mails to attend to asking me "what should I do with GLD?"
More About: Told

WWJD- Follow Up
2008-03-13 15:21:00
Thanks to everyone who participated in last nights interactive trade exercise. You can see the results were a landslide, and we had the most participation I have ever had via one of these activities. Here are the results...The overwhelming majority (60%) agreed that now as the time to take a short/put position.Coming in a distant second place (22%) are the traders that would not take a position; they would wait. Next are the folks that don't like the risk reward (7%). These people must have broken calculators or spectacles. The R/R is fantastic.Traders who would avoid taking the trade altogether (5%) mark the fourth spot. And interestingly enough, fif place goes to the people who have decided to give their hard earned money to the market and take a long position (4%). Want to know my vote? Let's look closer at the trade set-up...Based on the technical set-up, this is a great place to manage risk. If the stock penetrates resistance at $80, it would be easy to call it quits and...

WWJD?
2008-03-12 23:29:00
Someone had suggested the idea of an interactive trading game today. Had I not fallen asleep at the wheel today, I would have started this earlier. Below is the chart we are going to use for this exercise. If you know what stock it is, don't be the "know-it-all" and blurt it out there for everyone to see. Truthfully, it won't matter since I am adjusting the price levels we are going to use. Take a look...  This is more of a technical analysis/entry signal exercise than an option exercise. Looking at the chart above let's say that our blue line is at $80 per share. The January lows are at $70 and the December highs are at $90. The February highs (purple line) are at $85.There is a strong level of support/resistance at $80. This level acted as resistance a few times in Jan/Feb, and as support in Feb/Mar. This level was just recently broken to the downside yesterday, and prices have rallied right back to this level. I have purposely left volume out since this is ...

The 7 Habits of Highly Ineffective Traders
2008-03-12 17:24:00
As it is, the market isn't as arousing as I thought it would be today. Like I said yesterday, if you've been on the sidelines recently; stay there. Wait for this rally to die off. When it does, start by nibbling on a few overbought downtrending stocks to get your feet wet.Since I am holding ground today and not generating any commissions yet, I figured I would address a few things that might help to repair your trading inefficiencies. If you find yourself struggling in the market and can't figure out where the flaws are in your trading routine, here is something I have written just for you..."The 7 Habits of Highly Ineffective Traders "Ineffective traders fail to follow these steps, and as a result; they are not able to generate the returns they can potentially generate. Below are the 7 habits these people fail to follow; enjoy.Habit 1: No Trading PlanDo you know what the hell you are doing? Or better yet, do you think you know what you are doing, but the results fail to...

Uncle Ben and The FED are Technicians
2008-03-11 19:06:00
When discussing how to draw trendlines, or talking technical analysis in general, I often mention that I use closing prices when drawing support, resistance, and general trendlines.It is important to note that the FED uses highs and lows.What are you using?
More About: Uncle , Technicians

Home Run in Healthcare
2008-03-11 15:54:00
I effectively knocked the cover off the ball on this one, and I am going to make you read about it. Even if you don't want to.The truth is that I was 2 weeks ahead of this move, and it was a monster. Forget about today's catastrophe in these stocks for a minute and realize that each of these stocks were down no less than 10% ahead of today's news dating all the way back to the reco. Within 2-3 weeks, each of these stocks are down 35, 31, 25 and 18% respectively.I mentioned yesterday that I took a few profits on these stocks....25% of each position to be exact. Although I didn't feel this move today as much as I could have, it's not like I am going to sit here and complain about the returns I got. That would be ungrateful.CVH- No position here, but this one is getting crushed.HUM- My March 70's that I bought for $1.40 are worth $20.00 today (1328%)UNH- My March 50's that I bought for $1.25 hit $9.50 (660%)WLP- The culprit of todays blow up. As you can see, it is getting h...
More About: Healthcare , Home , Home Run

Alert: Non-Event
2008-03-07 17:09:00
I waited up for this?While I am getting things squared away...I updated this weeks poll. I am compiling data for some upcoming features and your participation is appreciated.I'll be back later...
More About: Event , Alert

Oh No...
2008-03-07 08:09:00
As you can see...trading is becoming a 24 hour gig.

Heavy Metal
2008-03-06 16:46:00
I'm surprised to see the market shave off this many points ahead of tomorrows jobs report. As always, financials are leading the declines, but I am left wondering how much lower they will go.I'm thinking that the XLF has to bottom at $24Looking across most stocks right now, I am finding it difficult to locate downtrending stocks that are overbought near a resistance level to buy puts on. Therefore I am forced to continue riding my existing positions down to their target prices, until I find more stuff to short. My puts in financials (LM, PFG, PRU, XL, AIG) and healthcare (HUM, CVH) are doing well, but the big dogs today are BYI, WBD, GVA, OEH, CMG, USM and CPHD.At the same time I am not trying to overload my stack of bullish positions, but as you feel the pulse of the market here, I find it hard not to. I will tell you this much, if you are shopping for bullish positions here, look no further than the metal stocks.PCU- Like the set-up.CLF- Deserves another look. There ar...
More About: Metal , Heavy metal , Heavy

Closing Bell- Behind Blue Eyes
2008-03-06 01:30:00
I found this video very fitting for today. Especially since I happened to stumble across a nickname that I have been given by folks out there in the Matrix. I don't see any resembelance, do you?
More About: Eyes , Blue , Bell , Blue Eyes

Deep Thoughts...
2008-03-05 19:18:00
While the rest of the market was busy concerning themselves over the nonsensical drama surrounding bond insurers, I spent the day in the trenches looking to capitalize on a market that wants to go higher. After taking profits yesterday on the majority of my bearish positions (while the market held support)I am left with a delta positive account...which is something I am trying to monitor closely heading into tomorrows trading. Thanks to some timely movements over the last few days/weeks...here are a few things on my mind... Should I take profits? What was that for? Are these stocks ever going down?Are these stocks ever going up?See you in the morning.
More About: Thoughts , Deep Thoughts , Deep

Relative Strength: Emerging Markets
2008-03-05 17:04:00
International markets are starting to look a lot better than the S&P 500. Take a look in the set-up in the Emerging Markets Fund below.EEM- Higher highs and higher lows...the early stages of an uptrend. Looks better than the S&P, doesn't it?Now ought to be a good time to keep a watchlist of stocks that track International Markets. If your "international mutual funds" continue to kick you in the ass, perhaps you expose yourself to whatever foreign markets you choose.That didn't sound right.Anyway, here is a list of mine you can borrow...FXI- ChinaRSX- RussiaIF- IndonesiaILF- Latin AmericaIFN- IndiaTKF- TurkeyEWZ- BrazilEWT- TaiwanEWH- Hong KongEWJ- JapanEWM- MalaysiaEWA- AustraliaEWS- SingaporeEWK- BelgiumEWL- SwitzerlandEWO- AustriaEWP- SpainEWQ- FranceEWG- GermanyEWI- ItalyEWN- NetherlandsEWD- SweedenEWU- United KingdomEWS- SingaporeEWY- South KoreaEZA- South AfricaECH- ChileEWC- CanadaEWW- MexicoIf I missed one, let me know. There are a lot of great set-ups her...

Looking Much Better...
2008-03-05 00:30:00
Like you read in my posts today, I didn't put much stock in the weakness this morning. I used the opportunity to get into a few bullish positions, and recommended you do the same (commodities/agriculture). Looking at the 30 day chart above, I think we might have found some support. More importantly, the DMI illustrates a pretty good looking signal.First off, if you need a tutorial on the DMI, click here.Next, start by analyzing the black line. This is the ADX, or Average Directional Index. Note where the peaks take place using this indicator, and what happens to the market after this indicator "peaks out."We rally.Second, note how the +DI and -DI are converging. The crossing of these ling have led to some decent price moves in the S&P. Especially when the +DI (green) crosses above the -DI (red).I'm thinking the market might have some legs here.In closing, if you have any questions for me...Google is covering for me while I step away from the office.www.google.com

Sector Spotlight: Agriculture
2008-03-04 16:58:00
Looking over these charts, this might be the last great opportunity to get into these names...CF- My fave and a great entry pointPOT- The leader of the pack and a nice dip in its trendMOS- Same thing... 
More About: Agriculture , Spotlight

Good Trade, Early Exit
2008-03-03 22:36:00
Ok. So the first exit write up wasn't good enough. Go figure.Readers want to know how to exit a trade, that has gone in your favor before reaching a price target.In other words, "How Do You (me) Take Profits."Answer: "With precision."Below is a recent trade I have been in and acknowledging for the month of February.CLF: The pattern was an astonishing $30 points wide and had a 3 month time target. However, since I am not into "options investing" I started off with buying Feb 110 calls on the day of the confirmation (Feb 8th). The problem is that I turned this into 2 trades. The Feb 110 calls that I paid $2.30 for on 2/8 were closed out prior to expiration day (Feb 15th) for $6.40. I then turned around and bought March 130's the following Monday (flag breakout) for $5.10. This was an OTM option, and as such I positioned myself for a 100% loss of premium.Before you get too distracted, the point here is exits. Try to envision one fluid trade.I s...
More About: Trade , Early , Good

Closing Bell: Today Was a Good Day
2008-03-03 21:25:00
With the ideas I have served lately, there should be no excuses...only smiling faces. Based on the number of stocks I have discussed here over the last few weeks, it is interesting how a high percentage of these stocks have moved as much as they have lately. Like I say, if you are going to be an option buyer, you better pick stocks that move.Today 's Top "OA" Upside MovesNEU- Up 5.60%MTL- Up 5%IGT- Up 3.63%AEM- Up 3.25%EDU- Up 2.25%ANR- Up 2%DBA- 2%Today's Top "OA" Downside MovesBIDU- Down 5%AMLN- Down 5%GVA- Down 4.75%CYMI- Down 4.5%OEH- Down 4.25%HOLX- Down 4%XL- Down 2.75%CMG- Down 2.5%LM- Down 2%PRU- Down 2%APH- Down 2%ALXN- Down 2%Today's "Top Dogg" MoversCPHD- Down 15%USM- Down 8.5%WBD- Down 7%WLT- Up 5.64%After all...it is not like the market moved a whole lot today. Not much in the way of volatility...Dow: -0.06%NASDAQ: -0.57%S&P: +0.05%VIX: +0.34%Note: Seeing as how I help you "nickel and dime" the market, could you please ...
More About: Bell , Good

Good Trade Gone Bad
2008-03-03 19:03:00
Last weeks trade anatomy got some pretty good feedback, and the most popular suggestion was to take a recent loss and show you how I closed out the trade.Whatever.I am going to show you a chart of GILD, but remember...the strategy and principles discussed are how I treat EVERY trade I take. This is a redundancy that I am forced to answer everyday, and hope it answers the questions for those that haven't been able to put this together quite yet.GILD was a price pattern I highlighted a few weeks back. Here is a copy of the chart...The triangle is outlined in red dotted lines. The pattern measured $5 points wide ($42-$47).  My target was $39 and based on the breakdown of the triangle, I planned on closing out the trade if it closed back above $45 (solid black line - or - signal line).On Feb 21st, about an hour before the close, it was apparent that GILD had broken support and would sustain this price move. I bought Mar 42.50 puts.Why? I expected the stock to move to $39. If that ...
More About: Trade , Good

The Weekly Highlight Reel
2008-02-29 23:13:00
For starters, I was here this week...which counts for something.The highlights this week were definitely the rally Ag stocks, commodity plays (DBA, GLD and UNG; again), and most of the individual plays on my bearish list this week...ADSK, BYI, SRCL, BHI, ENR, AIG, HUM, CVH, PRU, PFG and AXA.Not to mention the 4 stocks I bought puts on yesterday morning have performed fairly well...BYI- Down 9%AMLN- Down 5%XL- Down 9%ARTC- Down 4%At this point I find myself delta negative, curiously.Next, the top play of the week award has to go to my prediction of the dollar breakdown Sunday night. The anticipatory trade in the FXE was the big winner this week. Not based on the returns... but based on the execution.As the market started to rally higher early this week, I think most everyone noticed that the ol' NASDAQ wasn't participating with this move. Well, it finally broke down today....and I caught a few points in the NQ0803.Looks nasty, eh?Rising Oil prices are concerning...
More About: Reel , Weekly , Highlight

Thought I Bailed Out Early, Huh?
2008-02-29 22:42:00
Quite the contrary. More on that later.While you are waiting, take a look at what I delivered to the market not too long ago. Details forthcoming. I'll be back momentarily.  
More About: Thought , Early

Planning the Trade, Trading the Plan
2008-02-29 16:32:00
I had a suggestion to walk through a recent trade from start to finish. While this trade hasn't been fully closed out, it might be by days end. I will go through the process of why I chose to take the trade, which option I selected, and how I sold off a portion of my position as it reached my target price, and sold off more into strength. Keep in mind, this walk through will pretty much summarize how I handle every option trade I take. Take notes.I am going to use CNQ as the example. Here is a chart as of this morning...I highlighted this as a double bottom formation via my watchlist, and as with all the price patterns I trade, I waited for a confirmation of this pattern (a break above $67) which came on Feb 20th. I waited towards the close of the trading session and picked up a load of March 70 calls. Based on the price target, which was calculated by measuring the distance of the pattern ($66 - $60 = $6) one of my exit points was predetermined for $73 (green line). Had prices clo...
More About: Planning , Trading , Trade , Plan