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Fed’s, Katrina, What Caused The Rally!

Volume increases today. Temporary events
cause rally in market. Possibility of
bumping up trade bias lines. Unsure about
today’s rally. Get the latest at
TradingTrainer.com.

Hey trading team,

This is A.J. on Tuesday, September 6th with your
Trading Trainer web log. We are your home of
market insights for the serious option trader.
This web log will cover the events in the market
from today as well as prepare you for watching the
market tomorrow.

Our friends the institutional traders were out in
numbers today buying up stock shares, driving
stock prices high. Why? Could be that crude oil
prices are down thanks to the subsidies of crude
and its distillates coming from other countries as
well as from the U.S. strategic reserves. Could
be that the sentiment out there is that the Fed is
going to take a pause from raising rates at the
end of this month. It could be the $10.5 billion
that the U.S. government is injecting into the
economy in the form of disaster relief. It could
be that the institute for supply management’s
service sector index, pre-Katrina came in higher
than last month versus the estimates which had
everybody set for it to come lower. Or, maybe
it’s the retail segment stores that are hinting
that their sales are going to be alright if you
don’t factor in Katrina. Now. what do all these
news bits have in common, team? That’s right,
they are temporary. So, what do you think about
the rally? How long will it last? This is
definitely something for us to watch. What we got
today was similar to the follow through you need
when pulling off the “counting method to determine
a market bottom”. It confirms that a down trend
is over and a confirmed market rally has begun.
The only question in my mind was, were we in a
down trend? I need to wait a few more days and
see if today’s gain is sustainable. If it lasts,
I’ll be bumping up our trading bias and moving up
our horizontal lines of support and resistance on
our broad market index charts.

My EOG resources October 60 calls closed higher at
$7.40 an option. My current return on my
invested capital is 19%. I’ve been in that trade
for 46 days. My Pacificare Health Systems November
75 calls closed higher at $4.00 an option. My
current return on my invested capital is 38% after
being in the trade for 46 days. My Quicksilver
September 40 Puts closed lower at $0.40 an option.
I’m in the red with a return on my invested
capital of -75% after being in the trade for 20
days. And my Tenaris October 105 Calls closed
higher at $15.40 an option. I’m in the black with
a return on my invested capital of 95% after 11
days in the trade.

This is my plan for tomorrow. I’ll be setting my
stop loss alerts for EOG resources at 10% return
on invested capital and for Pacificare Health
Systems, I’ll set it 20% return on invested
capital. With respect to Tenaris, I’m going for
the trailing stop loss strategy starting at 15%
below the after amateur hour price. For all of
these I’ll be watching where price is relative to
the 7 day moving average. Throughout the day,
I’ll be watching Alcon - ticker ACL - and deciding
based on tomorrow’s performance as well as the
broad market performance, whether opening a long
entry would be worthwhile. I have to be honest
team, today’s rally after last weeks volatility
gives me the willies. So, tomorrow, I’ll be more
apt to stay out of new positions taking a seat on
the sidelines than I would be getting in there.
It would have to be compelling for me to open a
new position tomorrow.

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!


About the Author
A.J. Brown is a full time options trader, author,
speaker and consultant. Watch him review stock
charts on video each day, listen to his audio
newsletter where he leads you by the hand
through the end-to-end process of successful
options traders and get tips and tested strategies
proven to boost your return on your invested
capital by massive amounts in his membership
site at TradingTrainer.com today.

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TradingTrainer.com Web Log

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