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Conflicting News Reports Give Little Direction…

Today there was conflicting news on how the economy is doing. Growth is up. But, so are prices paid. The small caps led. Will the large caps catch up? Pass on entries that aren’t compelling. Click here to get today’s free options advice; have A.J. explain option trading to you in everyday language.

Hey trading team,

This is A.J. on Monday, October 3rd with your Trading Trainer web log. We are your home of market insights for the serious options trader. This web log will cover the events in the market from today as well as prepare you for watching the market tomorrow.

Today was down, but it was up. What does that mean? Well, the ISM manufacturing index jumped a record amount not seen since 1991. That excites people who like to hear about growth. Now the bad news, at the same time, the prices paid index has had the biggest two month rise since 1972. That scares people worried about inflation.

Construction spending came in a little less than expected. Semiconductor sales came in a little higher than expected. The auto makers saw their sales drop incredibly. And the long bond interest rates are up to a 7 week high.

From a technical’s perspective, we will start with the broad market… small caps led the way on a bullish rally while the large caps meandered behind with a flat to slightly down day – probably in part due to the automakers. Volume on the NASDAQ exchange ticked up a notch while the NYSE stayed at the same level of volume action that happened last Friday.

Now, looking at our watch list, for the most part our watch list had an up day. Our reactive, buffered and Chaikin templates are definitely tending bullish. The big thing we’d like to see right now with respect to the index charts we use to determine the broad market direction… what we’d like to see is the 7 day averages cross up above the 30 day averages. That would be the next milestone.

The bid price of my Autodesk November 45 Calls closed up at $3.50 per option. My return on invested capital is 84% after 6 days. The bid price of my Joy Global November 50 Calls closed up at $3.20 per option. My return on invested capital is 60% after 6 days.

Team; the question for the day is, will the large caps catch up with the small caps. Right now we are relying on the stock and its charts to determine if it has what it takes to make it on its own. With the broad market in a bullish funk, for lack of a better word, there is no extra push to our stocks so they for sure better make it on their own, yes? And, we need to be more realistic, without that underlying pump, we can’t expect always to double our money… it’s possible but our target could be closer to 50%. In fact, tomorrow, I’ll have trailing stop loss orders set on my Autodesk and Joy Global options. Trailing stops are what I use when a stock has passed my profit target in gains.

Tomorrow, I’ll also be watching Garmin - ticker GRMN - and Techne - ticker TECH - for possible entry points. But, I am fully aware that right now we have to play it day by day. So, if an entry is not compelling, I am prepared to pass. Do you agree team?

Okay, team. I’m done.

Till tomorrow, happy market watching, trading and money making. Trading Trainer is here helping you create your dream lifestyle.

Best regards always,
A.J.

Click on the below play button to hear the blog as an audio from A.J. himself!

Do you want to learn option trading? Full time options trader, A.J. Brown, reveals option trading secrets in his daily audio / video newsletter that are guaranteed to make you massive profits in less than 30 minutes a day. Visit TradingTrainer.com now.

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