The market is trading slightly lower following yesterday’s strong rally which brought the market back near its resistance levels. The bulls are having trouble with overhead resistance as China raised its reserve requirement ratio for banks but they appear to be fighting.
Federal Reserve Chairman Ben Bernanke also chimed in this morning and we aren’t sure if his remarks will help or hurt the market as he criticized China’s currency policy, saying that Yuan is undervalued and the currency is hurting the global economy.
The bears are looking for their third weekly win in-a-row but the bulls are close to picking up the victory this week if they can manage one big push.
The Dow is currently down 11 points to 11,170 and will need to clear 11,192 to give the bulls a “W”. More importantly we would love to see a close above 11,200 which would set us up nicely for a big move higher next week. If we close below this level the bears will target Dow 11,000 and then 10,800.
The S&P is off by 2 points and is at 1,196 and will need to break 1,199.21 to finish in the green for the week so a close above 1,200 would be very bullish. There could be a test back down to 1,175 if not.
The Nasdaq is lower by 3 points to 2,511 and the bulls will try to hold the 2,500 level into the close. To finish positive for the week, the index will need to close above 2,518.
In any event, the slight correction we had prior to this week’s “flat” action was healthy and we believe the market needed it after its strong surge. Next week has the potential to be a big week for the market and we could see some huge price swings like we saw last year at this time.
The charts have been spot on and we have zigzagged lower after a breakout past resistance. The good news if you are bullish is that we appear to be headed higher although the market still faces some headwinds.
One stock trying to extend yesterday’s big 10% move is Aruba Networks (ARUN, $23.08, up $0.10) which reported earnings. We have followed the company for years and Aruba seems to be turning the corner after posting a 45% increase in revenue to $83 million for the quarter. They beat estimates by a penny and added 800 new customers. Impressive.
Imax (IMAX, $24.40, up $0.15) is looking to set another 52-week high as shares try to break $24.82 which was hit yesterday. On the last day of trading in October when shares were at $21-ish, we told you to expect new highs on the rollout of Harry Potter.
We also talked about our trading manual, How to Trade Options on Momentum Stocks, as it was the last day to get a free month service to our Members Area and all of our trade updates (a $129 value) if you purchased the course in October.
The options course is full of tips and information on how we try to find explosive situations that are about to happen in a stock and turn them into option trades. Due to the demand and your requests, we have decided to run that special again until the end of the year. Our first run of copies sold out quickly and we have just got in our second printing.
The manual took 3 years to write and provides real examples, in real time, on successful options trades that worked and why. We also include another manual, Momentum Stocks Watch List, which breaks down dozens of sectors on over 600 stocks and explains what moves these industries.
We are also doing videos that cover different sections of the manual to further explain how to find your own trades. If you are a beginning option trader or a seasoned vet, we honestly believe you will learn valuable information in our option manual that other ”option courses” fail to offer. Many of these programs often want you to spend more money on software upgrades, more course materials, and pay for mentoring but it’s a bunch of hot air.
We show you how to use news, charts, and how to “think outside the box” when it comes to finding successful option trades. All at a fraction of the cost. We truly believe we have the best deal going and this has been our mission since our editor-in-chief started this website. He wanted to show ordinary investors how to find and use option trades to enhance their portfolios.
Yes, options are risky, but they are also CHEAP and they cost a fraction of what the stock is currently trading at in the open market. If you wanted to buy 1,000 shares of a $50 stock it would cost you $50,000. However, to CONTROL 1,000 shares of a stock at $50 it might only cost you $500 or less!
We try to use cheap out-of-the-money options as a way to play a 5% move in a stock that yields 100% or more in an option trade. It’s that simple. Again, if a stock moves 5%, you will double your money if you are in the right option and we show you how.
In fact, here is a recent comment from a subscriber who purchased the option course:
“Rick, just wanted you to know that the manual has been helping a lot. I don’t seem so lost or in the dark as far as to what you are doing or why you are doing them. I feel like I can actually make a trade and feel confident of the outcome.
Quick success story: I placed an alert on (Research In Motion) RIMM when it hit 51.50 (this week). I immediately checked the charts and things looked poised to run to 55. I purchased (2) 52.50 calls for 1.05 each and within 1 day I made 110% on the trade.
Shares are still going up and had I owned more contracts I would have at least half positions still opened. If RIMM can break through the 200-day MA I might look to go long again. Thanks for your help. Let’s make more money!” (END)
UPDATE. This “student” sent us another email today and said he hit a 100% return on some Deckers Outdoor (DECK, $66.93, up $3.59) call options as shares have popped 6%.
We continue to tell you a 5% move in a stock can yield a 100% profit in the right options and our option trading course teaches you these things. Plus our track record is proof that returns of 200%, 500% and even 1,000% are possible with the right options.
We have a lot to talk about in our Members Area before the weekend hits so let’s get on it. Subscribers, check for the important updates and a NEW TRADE!!!