It has been a couple of crazy weeks in the market.  My team and I were day trading the e-mini futures and what a WILD ride – literally a market filled with whipsaw action volatility.  The worldwide events, particularly in the Middle East and North Africa have been a shock to the market.  Is this emotional rollercoaster over?  Hard to say…..many have asked if this is a buying opportunity or time to short the market….our answer is manage your risk and make that your top priority.  As much as we would like to take this opportunity to buy hand-over-fist, our approach is managing the risk.  We exited many of our long positions last week into the relief rally we received last Thursday.  

We are only holding a few positions such as POT and JOYG – and have sold calls against those long positions as a bit of a hedge.  Our proprietary indicators are telling us that this pull back is not quite over. Everyone has to make their own decisions when it comes to investing and be accountable for their own accounts.  Heck, we might miss a bit of the upside run if the market bounces from here, but we would rather miss a bit of the run by waiting for a clear signal than having unnecessary exposure trying to catch a falling knife.  The signals are just not clear – and definitely not screaming to jump in just yet.

The next few days should provide us a clearer path if this is going to turn into a wide panic selling frenzy or if we get some stability and legs under the market.  If the market continues to sell off and the panic spreads due to the recent global events, the next stop in the market (SPX) could easily be down to the 1175 area.  YIKES – that’s another 100-point drop in the SPX. 

Just keep your eye on the charts and watch some of the major sectors.  Do not be blind and ignore the signals.  Currently, most of the major indices have broken their bullish trend and are showing characteristics of a bear.  Just be careful.  This should be a revealing week for the markets.

My team and I will be holding a special webinar this week to discuss some of the major signals to watch for in the market.  This webinar will be about 45 minutes and provide some key insight if this market is going to continue to fall or stabilize and position for a great buying opportunity.

Many students have asked our team for such a webinar that will outline clear signals in the market.  This webinar will help place you in the driver’s seat ahead of the next big move.  You do not want to be caught like a deer in headlights and not know what to do.  So here is an outline of what we will cover for those of you interested in protecting your wealth and an opportunity to capitalize on the next BIG move.

1.     A landscape of current market conditions

2.     What we mean by “examining the market internals” and how learning this technique can protect and help make you money

3.     A complete list of the market internals and the symbols that the Centerji uses to make good decisions regarding market direction

4.     Ways to hedge your portfolio and current positions – we will explain how to execute these hedging techniques

5.     We will examine the top 5 stocks from students’ request

This possibly could be the single most important webinar for you to watch.  If you are invested in the market in any shape or form, you do not want to miss this opportunity to learn how to protect your account and capitalize on the next big move.

For those of you interested in attending this webinar, please send an e-mail to workshop@centerji.com on or before Wednesday, March 23, 2011.  Be sure to put in the subject line “Special Market Webinar”.

We will send you information and details on attending this webinar.

Trade Well,

Dinger

The political unrest in the Middle East has certainly had an affect on the markets.  However, the markets have held strong above the 1300 support level.  This is a positive sign for the bulls. The problems in the Middle East and how far the ripple effects travel and what the eventual political and oil-price ramifications will be are unknown.  Just keep your ears on the news and eyes on the charts.

As it relates to higher gas and oil prices, a rule of thumb is that a 10-cent increase in gasoline prices takes away about $15 billion from disposable household income in the United States…YIKES!  Sustained high oil prices will be a drag on U.S. economic growth. And while this is a major concern, the overall economy is showing strength into a recovery.

Although the stock market certainly expressed rising concern with the CBOE Volatility Index (VIX) jumping 37% from low to high last week, we see many of the fears have begun to dissipate.  This was noted in the last couple of trading sessions with the market moving higher with bullish conviction.

Our proprietary indicators show that this recent pull back was a buying opportunity for many of the stocks that we have been tracking.  Many of our favorites pulled back to their 200-day moving average and appear to be ready for a bounce to the upside.

U.S. consumers appear to have shaken off the fears caused by the events in the Middle East. The Fed Michigan Consumer Sentiment was up 77.5% versus expectations of 75.3%. This was the strongest Michigan consumer sentiment number in more than three years.

Earnings season wrapped up last week and 75% of the S&P 500 beat their earnings projections, and 65% beat on the top-line as well. The fourth-quarter top-line beat rate of 65% was up nicely from the 57% beat rate in the third quarter. The S&P 500 is inexpensive relative to its 2012 earnings projection of $110.

So what stocks do we favor going forward?  Here are a few from our selection – so do your own homework and if you agree – enjoy!

·      JDSU – JDS Uniphase

·      BZH – Beazer Homes

·      CVA – Covanta Holding

·      NTAP – NetApp

·      AKAM – Akamai Technologies

·      POT - Potash

Trade Well,

Dinger

We expected the pull back to 1300 and had a wonderful ride to this level; however, now we need to see if 1300 holds strong or snaps. This pull back and test to 1300 could be the best buying opportunity in a long time OR it could be the early sign of more bearish times to come….

Rather than place our own thoughts on what the market will or will not do; let’s have a pre-determined line in the sand and act accordingly. Let’s wait until the last half hour of the market to make decisions. If the market is above 1300, we will hold steady, if it is below 1300 - it is all cash with the exception of Citigroup (C).

A couple of our favorites as we enter the 2^nd week of February are as follows:

·      Visa (V) – solid company with a lot of potential for further growth.  We are taking advantage of the recent pull back.

·      McDonald (MCD) – we have been waiting for a pull back on MCD – and now we received it.  This should be an opportunity to get on board for a longer-term position back to the upside.

·      Kohl’s (KSS) – this company is cash-rich and in our opinion, has lots of upside opportunity.

Trade Well,

Dinger

This will be an interesting week ahead.  We saw the market come a bit unglued last week after unrest in Egypt.  Some were focused on 1300 on the SPX – and when it didn’t hold, more profits were taken off the table.  So is this a buying opportunity?  Or will the markets fall further?  It is hard to say at this point.

Technically speaking, the markets appear to be bearish with more downside potential.  If you are considering going long the markets, it is best to reduce your position size on the stocks that have very solid fundamentals and only leg into your favorite picks provided your stocks stay above their respective support areas.

We deployed such a strategy last week with Apache (APA).  As the stock dropped towards its gap of 108, we began buying LEAPS.  So far, this has proven to be a solid strategy for picking up CALL contracts as the premium was being sucked out – making our purchase very attractive.  Now if we get a pop to the upside, we will consider selling front-month CALL options to help reduce our exposure.

Our team is also considering purchasing LEAPS on both Directv (DTV) and Cummins (CMI).  We will wait to see if we get a pull back on DTV near 37 before making any such purchase – and we are looking for a pull back near 87.50 on CMI.  We believe that if we get a further pull back in the markets, some solid opportunities will be presented to savvy investors – these are 2 (two) such opportunities.

Additionally, we are looking to hedge our current long positions with a short.  We are considering a number of stocks and indexes for this protection against further deterioration of the markets.  One such stock that we are looking to enter a short for this protection is GOOG. 

GOOG is sitting just above 600 with a gap to be filled near the 545-level.  Keep in mind; we are considering entering such a position as a mere hedge for our long positions.

Stay nimble this week and follow your own trading plan.

Trade Well,

Dinger

Market seems to be showing some signs of fatigue.  If you have any long positions on, make sure you have those stops in place or some other form of protection.  We will be selling some front month call options against some of our positions as a hedge against an anticipated pull back. 

Updates:  last week we closed out our bullish ISRG trade after the stock made a gap up over $43 dollars in a day!  Nice trade.

This week we are looking at GOOG as a short – meaning we are looking to go bearish with a target near 550.  Let’s see what we get out of this trade….it will also serve as a nice hedge against the overall bullish positions we have in place.

Trade Well,

Dinger

The market continues to rally and hit higher highs.  It is hard to fight the trend.  Many of the stocks seem undervalued as the bulls continue to move forward.  This upcoming week will be an interesting one as many of the high-profile companies are set to release earnings.  We will be closely watching stocks like Apple (AAPL); if they falter, this could send the market lower on a pull back.  However, if they report stellar earnings, this market could soar to new heights.  Stayed tuned…

A stock worth considering and currently on our radar is Citigroup (C).  Typically, Citigroup takes a bit of a pullback after their earnings release.  If history repeats itself, we will wait for the pull back and then look to go bullish on Citigroup with a focus on the JAN 2012 5 CALL options.

Trade Well,

Dinger

Three companies listed here are very solid with strong potential for further growth.  They should serve us well over the next several months.  All three appear to be sitting near support and beginning to make a move back up.

Joy Global (JOYG) – currently at 86.19.  Consider buying the stock or the following option trade:

BTO (buy-to-open) JAN 2012 90 Call (11.55 X 11.80) and STO (sell-to-open) FEB 95 Call (1.25 X 1.30).

Baidu (BIDU) – currently at 106.95.  Consider buying the stock or the following option trade:

BTO JAN 2012 110 Call (19.35 X 19.70) and STO FEB 130 Call (.71 X .75)

Salesforce.com (CRM) – currently at 142.22.  Consider buying the stock or the following option trade:

BTO JAN 2012 145 Call (24.45 X 25.00) and STO FEB 170 Call (.97 X 1.06)

Do your own due diligence, and see if you agree.

Trade Well,

Dinger

Trade of the Week:

Saturday, 12.04.2010:

NUE has recently shown some solid strength and it appears the ascending triangle will soon play out with a target between 44 – 45.  The Centerji Stability charts and our confirmation charts are both bullish with recent breakouts to the upside. 

Support area:

There is strong recent support at 39.83.

Secondary support at 39.61

Implied Volatility is still very low sitting at the 15^th%ile.  This makes the options very reasonably priced.

Trade risk:  we will limit our potential loss to $?????. (You need to decide the total investment you are willing to lose – this is solely your decision and responsibility – if you are not willing to lose, then do NOT invest).  So many traders only think about the profits.  You need to discipline yourself to think about managing the RISK.

Once you decide what your investment will be on this trade, here are the following stop losses on the trade:

·      50% loss on our position – if you lose 50% on the trade, close it out immediately

·      A break and close below 39.61

·      December 31, 2010 before the closing bell

·      As option gains 50% or greater ROI, we will follow up with a stop limit loss on option of 10 cents below bid as trigger and 13 cents below bid as limit

The Trade:

On Monday, 12.06.2010:

BTO (buy-to-open) JAN 2011 40 CALL option currently trading at 1.41 X 1.44

Trade Well,

Dinger

The market closed the Thanksgiving week just under the 1190 threshold on the S&P.  It appears the market will attempt a final push upward into the final month of the year.  Watch the key areas that were outlined in last week’s report and let’s see if the market can break through to the upside for a final Santa Claus rally.

On another note:  A longer-term trade that has been beaten up, but has potential upside is Brocade (BRCD).  We like it at the current level of $5.05. 

Trade Well,

Dinger