Playing "The Matrix"

The Legends. The behind the curtain players. These are not typically in the media discussing their plays (they control most media). The Legends know that they do not ever disclose their real intentions, unless it benefits them. They do not write books (maybe for posterity), they do not sell trading programs, they do not disclose their real secrets (although you can ascertain hints). I figure, they influence or control north of 7 trillion dollars in market money-Forex included. I call them- The Matrix. They are the "Elephants", the "Huge Stacks", the "Whales". Exceptional players. No reason to name names-the "smart money" knows them. Their very size and power is also their weakness. It takes a long time to turn "the positions" around and change direction. I compare it to doing a 180- degree turn in an aircraft carrier. You want to always be aware of what they are thinking. Even if you are right;until they change direction, they can wipe you out -ride with them, accumulate small against them, and press when they make their move. ...think of their next move..I found that they are logical and have been playing the same way for a hundred years plus. They are very smart and clandestine...think like them...move faster..catch their wake for a nice "Rush".....more to come

That's a wrap

I'm outta here. Have a great weekend everybody! Continue to hold the FAZ. The question is: Do we buy more?.........let's prepare for the next move-like chess..stay a few steps ahead. Elvis has left the building!..."Poof"

Word on The Street

CASH. We made some good moves and got lucky too during this correction. The only thing we are holding now is a short (FAZ). Not a huge position-you don't need much if a major move comes. We had a great 1st month of the year. No reason to pat ourselves on the back, we have to stay focused. Let's sit back and watch our last position play out. Stay in cash and wait. Foggy markets rip both the bulls and bears. So we wait................I prefer to play poker during these times-keeps you sharp.

"XYZ" closed at .87

"XYZ" was SIRI. We sold today for a 24% gain. We will be back.

Question: Why do you use "ABC", "XYZ", etc,,

I use them because some viewers are paying clients and it would not be fair if other viewers received free advice. Once the trade is "released" , I publish the results. If you would like to know what the mystery trades are, send me an email-we will talk. Thanks.

Correction Numbers--personal opinion

We have not totally broken down;however, many have asked me where we would settle if a breakdown is confirmed-the numbers are not pretty. The first targets would be Dow 9500 (DIA 95) and S&P500 980 (SPY 98). That is about another 6% from here on Dow or about 12% from high on Jan 19. The S&P500 would be another 9% from here or about 15% from high on Jan 19th. These would probally be intra-day numbers. Not exact-approximates. This would be an ordinary and expected movement given the run-up in the markets since the March 09 lows. No biggie-but scary.I put the probability at >60%. We have accumulated some shorts- (FAZ) and are looking to close out the last long position (even though it is extremely strong)-we can replay it. I prefer not to play long in markets like this. Either step aside or short (if you are brave)...The market is still on my "RED ALERT" status.

Trade Update: Final Hour

Emails sent. TXT closed out at 19.85. Just not acting right...should have taken the open..oh well..small loss: -4%. Holding other positions. Other long position up 9.5% "XYZ"..continue to hold. The Hedge (FAZ) is still on...stay tuned...

Noon update

The word is volatile! Our positions are doing well considering the market is down 150 points! "XYZ" is up 7%, TXT is down 7%, and FAZ is up 4.5%. today. Lets see how it plays out...stay tuned..emails sent

Trade Updates

"ABC" company was TXT. The earnings were good;however, they had some special charges. A little disappointed by not getting the "run" today. It is still pretty strong considering. We are still going to hold it for now. Bought at 20.73. "XYZ" company is still going Strong- we are up 8.5% so far in a down market and it continues to look great. The "Hedge" FAZ (Triple short financials) is keeping us in the game. We are going to continue to hold it for insurance. ..stay tuned for updates...market moving fast. Check you emails!

I couldn't help it...

I decided to buy a hedge at the close. The chance at a break down in financials seems fairly decent.Lets roll the dice. Picked up FAZ (Triple short the XLF basically). Not a big position-bought at 19.18. We have two long positions that are positive, and figured I would protect some with The President's speech tonight. I got a 23 target on it with fairly tight stops.

Trade Update ABC and XYZ

Although the market is on red alert, we are going to continue to hold our long positions in these two. They are acting very well and we will see the earnings report before the bell tommorrow for one. Boeing's report should bode well. The markets are not a confirmed break-down. We will continue to play out our remaining positions for now.

How to play a "Red Alert"

I have received some emails asking how to play a "Red Alert". There are many different ways. I prefer to play ETF's and Leveraged ETF's because I don't have to be company specific. Some of my favorites are: FAZ (Triple-short the financials), DXD (Double-short the DJIA), SDS (Double-short the S&P500). These instruments should be used for short-term trading and not long-term positions because they move differently than expected. We can discuss later....btw- I am not shorting..just stepping aside.

RED ALERT

The stock market is at a precipice. It is very dangerous to initiate new long positions here. The market is now running on almost 60% volume (by some estimates) by algorithmic trading. These black boxes are computer decisions to buy/sell in large quantities based upon defined formulas for buying or selling. We are approaching and flat-lining at huge technical supports, the politics out of Washington are now headwinds, the markets feel surprisingly "dead", investors are piling into short-term t-bills, and good earnings news is hit with slack price movement. 1040 on S&P500 looks more likely than not. .....I am concerned about computer selling. Stay tuned.....

CNO Closed..Market update

Closed out at 4.80 for a 4% loss. Not a biggie-the position was very small.Why? Things are getting increasingly murky and CNO hit our stop. I saw today that the 1-month T-Bill rate hit negative for the first time since March 26, 2009. That means people would rather get a negative return and seek safety than invest in other options. Not good. Houston we have a problem. It is more important to protect your "stack" than it is to try to advance during foggy periods. The markets are flirting with huge support and a break down would cause severe problems. Going to play-out the other positions with a keen eye and tight stops...and continue to build cash in case we get a massive sell-off. The market is on "Red Alert".

Position Updates

Our positions are holding up well. "XYZ" is strong today and looks to be breaking out soon. CNO is still cautious-but looking ok. The new trade "ABC" reports this Thursday and I have been waiting for this price for two weeks. Word is they are going to be good numbers. Emails and updates have been sent.

Trade of the Week

We may have a runner here. I was going to sit out and hold current positions;however, there is a company reporting this week that should post good numbers and I expect the stock to get a pop. They report this Thurs. 28th. Emails have been sent.

The Word on the street is.....

Cash. Market is murky at best here. It seems the buying excitement has faded and there is a sense of helplessness. Not much happening, which makes it vulnerable to a sell-off. Not good idea to short either. Cash is the word. Going to hold current positions;however, keeping 70% in cash. Do you hear the crickets?

Got shaken out...back in

Wow...the volatility has really increased! Looks like I sold FITB early today. I thought the 12 price was good..it went to 12.60 plus. A profit is a profit. I should be happy. After re-thinking..I decided to go back into CNO at 5. We are going to try to play the huge support here and see if we cant get a bounce against the tide...It is a fearful trade;however, I am going to use that fear...turn off the news and play with what my computer program is telling me...ignore emotion...We will see what happens.

FITB Closed

Closed position at 12. The market facing strong resistance. Figured our 7% gain was good here. There are market problems. Hold the cash from FITB and wait for new advisory.

Houston: Do we have a problem?

The answer may be yes. The financials did not act well at all. Sometimes unexpected events come into the market. This time it was a President. Right or wrong, the effect was that the financial institutions and investors responded by voting "No" with the selling of stock. It may be just that the VIX was getting down too low and most are cautious after a huge run. We are not going to sell at the open because our positions are strong and not a good idea to sell on a continuation with the lemmings. Going to keep a keen eye though...The head winds are strong and even the best boats go down with the tide. Stay tuned....

Today's Action: FITB and others.

The events unfolding are great for our positions. Expect upgrades to the regional banks. The FITB new targets have been sent. Check emails. Company "XYZ" can be bought aggressively today. Holding well-word is their numbers are going to be great. Continue to avoid the big banks. There are going to be lots of opportunities out there in different sectors as money is rotated. Continue to hold off on the casinos for now. Avoid the media mumble jumble and opinions-we stay with our indicators...will get more "word on the street"...will advise.

FITB Update6: Earnings were great

Continue to hold. Target 1 should be hit this morning. I am going to go through the numbers-will advise. Email updates have been sent. Look for new info.

Swap complete

CNO cash swapped into "XYZ". Will advise updates on new trade as they occur. Check emails for details.

CNO Closed

Closed CNO today for 6% gain. No danger-just too many other opportunities. Will deploy cash elsewhere. Will advise.

FITB Update5

Updates and emails have been sent. Stay posted for further advisory.

FITB Update4

The consensus is (.31). The high is (.15). The low is (.50). First call average recommendation of 25 analysts is "HOLD". Highest price target is 17 by Keefe Bruyette. Slight negative bias to options-i think more for a hedge. FITB is inconsistent on their last few reports-some miss/some exceed. Technicals still good. I heard they have been doing more hiring lately. Earnings can be a flip of the coin- Continue to hold. Believe there is still a good shot at upside.

A thought ahead...

Investor Intelligence most recent report indicated 53.4% of all advisors are bullish, 30.7% of advisors are bullish long-term,but believe a short-term correction is likeley.

American Association of Individual Investors (AAII) are keeping 18% of their money in cash. This is lowest since 4/2000.

The VIX is approaching levels not seen since about 3/2008.

What does this mean? Investors are getting more and more complacent. It is something to keep in the back of our mind as we approach our S&P500 and Dow targets. Like chess- it is a good idea to start planning the next moves in advance of market action. Stay tuned and keep a close eye on the levels and supports.

What Happened Friday?

Many of you wondered- what happened? The answer is nothing. INTC and JPM crushed the numbers. Sure there were some critics hitting them early;however, that's just volatility. Some Baird "cooler" came out and down-graded FITB because it ran up too much...love that one. I love it when the "price police"come out and down grade a stock because they think its too high-too fast. I have found it to be an excellent opportunity to buy more. I didn't;however, it increased my confidence we are going higher with FITB. Sometime you just step away on a non-event day and let it ride out. That was Friday. Numbers were good and the critics were left in the office before a 3-day weekend. Options expiration made it even more plausible. Next week is a huge financials week-HUGE. The only concern is the VIX. It is getting very complacent out there..not in the media, in the markets. We gotta let it run; however, watch the 11 handle closer on FITB. If we hit it again, we bail. MGM was a good sell at the 12.80. Wait for the next entry point. Looking for a nice financial run next week...if it does not act normal-Houston, we have a problem.

CNO update2

Private emails have been sent. Check for details.

Wait to re-enter MGM

I trust most of you got the 12.80 (or close to it) sell today. Let it consolidate as we look to re-enter at a different price. Not bad. 10-12.80 from 1/4 to 1/14 (+28%). The long-term holders can continue to hold. I will update. Tracking new stock...look in emails for details.

DJIA and S&P Target 1

The Dow is showing high probability of hitting 10,900 short term. The S&p500 is seeking 1185. Stay long for now...we may have a bit more to go.

Financial Firm Levy- Word on the street

Word is they are looking to charge about 15 basis points on assets-FDIC assets are exempt to avoid double charge. What does this mean? Well, Jamie Diamond hinted yesterday that these fees tend to be passed on to customers. It was not a hint. It will happen. More spin city to calm the anger over bonuses. In my opinion, this is a non-event. The fees will be passed on to consumers as usual. Continue to hold financials into earnings.

FITB Update3

Continue to hold-expect some push and pull at the 12 handle.

MGM Update3

Private updates have been sent-check your emails

FITB Update

It pays to have fundamental understanding along with your trading rules. This morning when FITB broke the 10.90 stop, it came down to: does this make sense? Were my stops too tight? I went back to previous notes and determined that my stops were too tight and the stock should recover by the end of the session, as soon as the traders wiped out the technicals. Having a belief in the fundamentals gave me conviction to stand strong- even as the stock dipped under 10.70. The game of poker is a great teacher...In the end, the stock recovered and hit a high of 11.69. The bullish trend is still intact and should continue to be held with a short-term target of 12.25. The lesson learned is-sometimes you have to trust your gut, review your notes, and let it move. I would not recommend breaking your rules often; however, if you get a strong gut feeling...go for it! Caveat: don't stand too strong. Set one more stance and if broken, fold and move on.

Technology Update

You can begin accumulation strategies today on select companies. Supports held and markets are acting normal.

Trading Strategy: "The Cooler"

A 2003 movie call The Cooler is about Bernie Lootz,he is a down-at-heels loser who has made a career out of spreading his virulent bad luck on the floor of Las Vegas' aging Shangri-La casino.

What does this have to do with trading? Well, we all know someone like this ,who just can't pick stocks and is almost always on the wrong side of the markets. This is the person that you dread they just got into the same trade or investment you did. Invariably, you end up losing money.

Do not shun this person. I have found it can be an extremely profitable strategy. "The Cooler" in the markets is typically the average retail investor who listens to all the media hype and believes everything he reads from the pundits. Wall Street thrives on them. I always ask one of these people what they think. This will give you insight into the markets. You will want to trade against them most times. Never let them know you are on the opposite side of the trade and agree with them often. You want to keep them "pure" and not influenced by your ideas. I have found "The Cooler" can be highly paid Wall Street pundits or analysts. Use them-it will increase you probabilities and profits!

Financial Crisis Inquiry Commission.

The 10-member commission has six members appointed by congressional Democrats and four by Republicans.

This should be interesting. We can only hope this commission understands considerably more about finance and markets then previous panels. What is painfully obvious is how ignorant congress and the house are when it comes to these topics. Tax-payers would be better served if the members were accompanied by former investment experts without a stake in the game. To be fair-not all are painfully ignorant.

As mentioned before- The timing of this is impeccable. Just when bonuses are coming out and public anger is swelling. Spin City. Let's see how it plays out.

more to come.......

FITB Update

That's that. The stop was hit today at 10.90 (29 cent loss). I may be making my first mistake of the year by breaking one of the trading rules. I did not sell. I have a feeling it was a false shake-out and believe it will close above 10.95 today. This would be bullish. I am going to let it play out a little longer. Call it a poker instinct....Not a good idea to break your rules;however, sometimes you have to go with your gut. let's see how it plays out.

What about Technology?

The crowded trade has been thinning out the last couple weeks. AAPL, AMZN, GOOG, RIMM, and others have faded on the bid side lately. I would wait a little bit longer here before initiating positions. I would not short. Many are at or near short-term support. Most speculators are playing financials the next 10 days before the shift back to technology. Wait and watch for now...we may be getting close.

What happened to financials today?

Jan. 12 (Bloomberg) -- President Barack Obama plans to raise as much as $120 billion over several years through a fee on financial institutions to help recoup losses from the Troubled Asset Relief Program and reduce the federal deficit, according to an administration official.

and then...

Deputy White House press secretary Bill Burton today refused to confirm any administration plans for a bank fee, saying “that’s one idea that’s out there.”

What's going on? More rumors and positioning. Jan options expire this Friday. The Volatility Index (VIX) hit a low of 17 yesterday and rose to 18.74 today. Increased the "vig" on outstanding bets.

The huge bonuses being paid to Wall Street executives is causing anger on "Main Street". Many believe that "they" caused the recession and are now being rewarded. I think this is causing some huge political maneuvering and most the political "hard-lining" has little teeth. Act like you're mad; but don't really do anything.

The technicals on financials are at or approaching huge support. In my opinion, they should hold. JPM earnings on Friday should be a good indicator of where we are heading. Hold positions for now and keep a keen eye on the "red zones".

CNO update

Continue to hold CNO. The Hartford (HIG) upped their estimates this morning and I continue to think the insurers should benefit from the stabilizing of the MBS market. The inital target of 6 still looks good.

MGM Update

Continue to hold MGM. Goldman is the latest to upgrade the stock. They moved it to "buy" from "nuetral". The first target 12 is getting close with the 14 handle looking to be achievable. The concerns about the debt burden and City Center seem to be fading.

Gold ETF's taxed different?

Yes-because gold etf's are considered "collectibles" by the IRS, they are taxed at a 28% rate vs. the 15% rate for long-term capital gains( in taxable accounts). But wait there is more...if traded less than a year, it is taxed as ordinary income! Of course consult your bean counter for further deatils.!

What's the word today stock?

The word for the next couple weeks is (no not plastics)...Financials. The next couple weeks will have some very interesting earnings reports from some major players and regionals. The sector has had a pretty good run since XLF touched support at the 14 handle and looks to increase volatility. The reporting season begins with JPM on Friday and by next Friday we will see the numbers from the likes of C,BAC,GS,MS,WFC,FITB,USB,STT,NTRS, RJF, USB, and others. Some are heading into resistence and some are poised to run. Given the size of the bonuses, the "word" is going to be good. Although there are many, I'm gonna give a shot at FITB-looks ready to run..breaking resistence through the low 11 handle...comming off a multi-month base, doing some expanded hiring, asset mgnt biz at their backs....I see 14. Looking for quick jump to 12....I did a 1/3 bet at 11.19 today near close with "red-zone alert" at 10.90...That's 30 cents down for about 3 bucks up...love it ... 10 to 1...print it!