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Low Volume Caused By Katrina

Very slow day of trading and low volume.
How hurricane Katrina is effecting the
market. Job market not looking so hot
with more demand than supply. Get the
latest at TradingTrainer.com.

Hey trading team,

This is A.J. on Thursday, August 25th 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.

Today, we had a day of very light trading on both
the NYSE and NASDAQ exchanges. Even though the
broad market indexes logged gains for the day.
with volumes coming in so low, the confidence
that those little gains will stick is really
little to none. Oil pulled back today only to
close even higher - another record. Investors
are really worried that Hurricane Katrina will
slow supply coming out of the gulf. Jobless
claims dropped last week. This is a lagging
indicator. At the same time, help wanted ads in
July dropped as well. This is a leading
indicator. The supply of jobs is declining.
This is forecasting that demand for jobs my soon
overshadow supply. We’ll need to watch that.
From a technicals perspective, looking at a year
long chart of the DOW you can see that prices are
trading in a long term ascending channel.
Yesterday, prices closed at the level of support
of that channel. Today they bounced off. Team,
we need to watch that level of support and if
price breaches it on heavy volume.

Today, with the oil sector moving, my portfolio
moved, too. My Encana October 42.50 calls closed
higher at 4.10 an option putting me in the black
by 41% for a trade that has lasted 34 days so
far. My EOG resources October 60 calls closed
lower at $4.20 an option still leaving me in the
red, down now 32%, also for a trade that has
lasted 34 days so far. My Pacificare Health
Systems November 75 calls closed flat again at
$3.40 an option keeping me in the black by 17%
for a trade, too, that I have been in for 34 days
so far. My Premcor September 75 calls closed
lower at $5.90 an option, still in the black by
13% for a trade I’ve been in for 21 days so far.
And my Quicksilver September 40 Puts closed flat
at $1.70 an option keeping me in the black by 6%
for a trade I’ve been in only 8 days so far.

This is my plan for tomorrow. After amateur hour
I’m evaluating and setting limit sell orders
that’ll be good for the day on stocks in my
portfolio. The orders will be set so should they
fill, I’ll be setup to catch profit. I’ll again
employ my strategy around Pacificare Health
Systems, Cerner Corp and Genetech to catch any
break outs from them being in consolidation
patterns for so long. I can do that by placing
limit buy orders for Calls to trigger should
price break above the Bollinger Bands and a limit
buy orders for Puts to trigger should price break
below the Bollinger Bands. Those limit buy
orders will only be good for the day. If they
fill, they fill. If not, no worries. I’ll also
look for follow through on Tenaris staying above
resistance. If it sustains, I’ll consider a long
position. Other than trying to catch
consolidation patterns and my focus on Tenaris,
I’m staying put on the sidelines during this
volatile time when the lack of volume gives me an
eerie feeling.

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.

About the Author
A.J. Brown is a full time options trader, author,
speaker and consultant. Watch him review stocks
charts on video each week, listen to his audio
newsletter where he leads you by the hand through
the end-to-end process of successful option
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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