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Watch For Upcoming Katrina Damage Report!

Full distribution day for S&P and NASDAG.
Market may be heading towards bull pattern.

More volatility coming as Katrina rips

through the Gulf. Get the latest at
TradingTrainer.com.

Hey trading team,

This is A.J. on Tuesday, August 30th 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 full on distribution day in both
the S&P and the NASDAQ. For the NASDAQ, that is
the fifth distribution day in four weeks. The
Dow is once again below the level of support of
that ascending channel. But, all three indexes
did close today above their respective horizontal
levels of support. And, for the week so far, the
indexes have made gains in price. I watch closely
the Chaikin Oscillator and MACD indicators on our
indexes. The NASDAQ and S&P’s Chaikin Oscillator
indicators are both close to crossing above their
zero’s. And, the MACD indicators look to be
rebounding off their bottoms. Both of these, when
confirmed would be bullish moves. But, right now,
it is too soon to act on these patterns. Let’s
not read into the charts that which is not there.
In the meantime, with the price of oil and its
derivatives reaching new highs, oil stocks, and
their respective options, are shooting through the
roof. If you’ve been using the TradingTrainer.com
watch lists and filters, you undoubtedly have
options on oil stocks in your portfolio. With
yesterday and today combined, you are undoubtedly
ecstatic. Now… have your exits thought out well.
Do not let greed get the best of you.

My Encana October 42.50 calls closed higher at $5.50
an option. I’m in the black with a return on my
investment of 90% after being in the trade for 39 days.
My EOG resources October 60 calls closed higher at
$5.10 an option. I’m digging myself out of the red
with a return on my investment of -18% after being
in the trade for 39 days. My Pacificare Health
Systems November 75 calls closed lower at $2.25 an
option. I’m in the red with a return on my investment
of -22% after being in the trade for 39 days. My
Quicksilver September 40 Puts closed down at 90 cents
an option. I’m in the red with a return on my
investment of -44% after being in the trade for 13 days.
And, my Tenaris October 105 Calls closed up at $9.70 an
option. I’m in the black with a return on my investment
of 23% after 4 days in the trade.

This is my plan for tomorrow. My Encana Corp options
are nearing my profit targets which means I transition
into a trailing stop exit strategy. That will allow me
to lock in profit while taking advantage of any additional
positive price movement. My trailing stop loss strategy
for tomorrow will be set at 15% off of the bid price. For
EOG Resources and Tenaris Corp, I’ll be ratcheting up my
standard stop loss strategy, setting fixed values should
the bid price go lower. I’ll be watching my QuickSilver
Puts and making, possibly, a snap judgment to cut my losses
(or not). Same with Pacificare Health Systems. Tomorrow,
the Energy department is reporting on oil reserves from
last week. The results they will release will be from
before Hurricane Katrina stormed through the Gulf disabling
rigs and refineries. It really won’t be till Wednesday of
next week that we’ll get the official damage assessment
from the Energy department. So, we literally will have
six days of volatile / unguided trading that is going
to commence between now and then. That is for sure a
recipe for me to sit out. At this time, my aim is to
sell off my portfolio. I will only open new positions
if the opportunity is too good to be true.

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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