9:00am (EST)
The market spent all of Tuesday in negative territory as the bears finally got back in the win column following three straight sessions of gains. The bulls spent much of the day playing catch-up and at times appeared like they were going to make a push higher. However, midday selling pressure took the major indexes to new lows and they never really recovered as the market fell by 1%, on average.
Wall Street was a little nervous ahead of the showdown between German Chancellor Merkel and French President Sarkozy who got together to discuss the euro’s problems. The market was looking for a bone and seemed disappointed when the two sides offered only a proposal for eurozone government leadership. The hope was to come up with a new plan to restore the euro’s strength with the ultimate goal of protecting economic growth but we really didn’t think anything would come from this round of talks anyway.
As such, the market lacked leadership and the bulls were unable to advance the flag. Instead, they gave up some ground which made the technical picture a little more muddier.
The Dow fell 77 points, or 0.7%, to close at 11,405. The index traded to a low of 11,292 after flirting with the 11,350 level for much of the day.
The S&P gave back 12 points, or 1%, to end at 1,193 and below the 1,200 barrier. Meanwhile, the Nasdaq dropped 31 points, or 1.2%, and went out at 2,523.
Once again, the technical picture looks cloudy which means this isn’t the best time to trade options unless you are using advanced strategies. We may have to start using these option techniques which can still yield powerful profits.
For instance, selling calls and put options on stocks you love or hate can be very lucrative and yields profits of 100%+. So can strangle and straddle option trades which we profile often on our Watch List. We had a perfect candidate yesterday with SodaStream International (SODA, $38.63, down $11.72) and we are sure there will be many more.
Our point is, this market is a tough read and we could stay range bound for the rest of the year, soar higher, or the market could hit new lows. Our gut feeling is the market hits new lows in September or October and from there it will be up to our political leaders to get the economy back on track and create jobs. If that were to happen then maybe 2012 will be a year of enthusiasm.
Considering Congress is still on vacation, and the technical damage the bears have done, it is hard to imagine the market hitting new highs but the bulls have been known to climb wall of worries.
Although our problems here at home are less troublesome than Europe’s, Wall Street is tied to the hip on what the global picture is and the events that take place. We knew it was coming and while we think it’s a good thing, there are still a ton of headwinds out there.
The good news is we will be introducing these strategies in the coming weeks in our Weekly Wrap and through videos. We will show you how to “sell a call option” or “sell a put option” which instantly brings cash into your account but there are risks.
We will also cover strangle and straddle option trades that are far safer than selling an options and are perfect for this type of environment.
Now, this is important, we have already offered our Daily subscribers the Weekly Wrap through September at no charge because we recently profiled some covered calls that were sent to out accidently to our Daily readers. This will allow them to follow the trades and they will be learning the new strategies we will be introducing. So, if you are not a current subscriber, if you sign up today, you will get the Weekly Wrap through mid-September at no extra charge! How cool is that?
If you recently signed up, remember, send our support team an email and we will grant you access to our Weekly Wrap Premium section along with the 2011 Covered Call portfolio. We have closed out 7 winners so far this year for gains of 7%-32% against no losers. If you do the math, our goal is to double your investment in a year.
We also have plenty of room in our portfolio for these types of plays because we have traded light while we wait for the August options to expire which is this Friday. As we head into back half of 2011, our portfolio is still positive which is all we can ask for.
As far as today, futures are pointing towards a slightly higher open. Dow futures are up 39 points, S&P futures are up 5 points. Nasdaq futures are flat. Subscribers, check the Members Area for the updates.
]]>