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Author: Mike Celeste Editor: Tony Ponzo June Circulation:

Stat Sheet Week Ending June 6th 2009

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+260.0+3.0%-13.0-0.1%
S&P+22.0+2.4%+37.0+4.0%
NAS+80.0+4.5%+272.0+17.2%

NEW!: We told you that we started up a My Space page. We now have a discussion group set up for people to go in and write up their thought on trades etc. Go visit the the page by clicking on Discussion Group

Highlight of this past week: The Indicator Strategy continues its success with its first win in June and the Momentum Strategy still sits on a 322% profit margin for 2009!


In this Issue---
Options----
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An interesting development popped up this week. We mentioned earlier about using the option calculator before entering a play, if you have time. Often times, more than you might think, the option price gets out of whack with the theoretical value of the option, based on historical prices. All fine and dandy--but--you have to rely on the info given by the calculator to be accurate. We have been dealing with our broker's new calculator offering. The trouble is, it came up with vastly different values between two of our computers checking it for the same option at the same priceand the same time. A call to the company (twice in a week) resulted in them acknowledging the problem and stating they would work on it. Information is of little use if it is not accurate and if it is not consistently accurate. If you have the time, give a good double check to the option value. You don't want to buy an option thinking the calculator says it is worth more or less than what its fair value is when it really isn't. We do look for the ones that are really out of line with true value, as eventually they do return to a truer value level. If they are overpriced on a Call you might want to write the call, expecting the price to come down to a true level, and thus you benefit--being able to buy it back at a lower price to close your position.

Momentum Plays---
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We got a very slow start for the month of June with only one small SPY win on Friday. We had a number of potential W plays that we wound up passing on. With the market in such a strong up mode, we keep getting W down signals at the end of each day. But then the next day the market has strong futures and our plays are going in the wrong way and by a lot. So we have no plays. There is one thing about these plays that we would like to bring up to the members. And we would like to hear some feedback. On a number of these W plays that we passed on, it turns out that if we had just entered the play at the open or very shortly after, it would have made the profit goal. Of course we are trying to play things as cautiously as possible but in these cases, we may be playing too cautiously. Our question to the members is, if we changed the rules somewhat to get more aggressive on these plays, would you be comfortable with it or would you prefer keeping it as is, even though we may miss a few plays. Anyway we would be interested to hear your thoughts.

For non-members who would like to know more about this strategy click on this link Learn more

Indicators---
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We are going to take a closer look at our criteria for this play. We missed an excellent play on Friday by deciding at the last moment not to enter the play. If we had gone along with the computer we would have had a huge profit on a Put for the Spy. We did have an excellent Indicator play on Wednesday and that would have made it two wins this week, and we had to settle for just one. Our attempts to refine the system to a more exact point hasn't worked out as well as we wanted it to. Sometimes it is better to set a tight stop and take a relatively small loss and move on to the next play. The winners more than make up for the losers, and we shouldn't lose sight of that. Team members keep posted for more on this subject. Also, we have another signal for an Indicator play on Monday, so team members be watching for our commentsand check the site. Learn more

Feedback---
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Here is some feedback about our attention to servicing our team---
" Tony, THANK YOU for the detailed answer and taking the time to really explain. My wish for you and your team is for all the wonderful things about being an American Entrepreneur helping others comes your way, thanks Pete"

The Economy, The Markets & Commentary---
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There is a growing feeling within our group that the market can't decide what it really wants. We definitely recognize that the market doesn't want to decline in any major way, and at every hint of a decline it seems to rally ahead. What are the reasons for this? That's what is hard to determine. First, new reports come out that are negative, but not as negative as the prior month--and that is determined to be a positive, because it is less bad. Then, "less bad" is determined to not be good enough and it becomes a negative. The next day another report comes out and "less bad" is good again. This all culminated on Friday with the employment report. The numbers were down, but not nearly as much as had been estimated. Since the report comes out pre-market, we saw the Dow futures up over 130 points. Then discussion of the employment numbers started and they were picking it apart. The market opened up, but slid back, then went up again and slid once more. By the end of the market day the Dow was up only 12 and the Nas was down very slightly. On Wednesday the market fell over 100 points, but just before the close it rallied--maybe short covering. The down move was attributed to data on manufacturing and the service sector disappointed the investors. The reports were both an improvement over April, but that wasn't good enough. The next day, on Thursday, the market went up--because unemployment numbers weren't as bad as expected. Now, less negative was good again. The same reasoning, less negative, is good one day and bad the next, or vice versa. First of all, employment has been a key element lately--but why? Everyone knows that employment is a lagging indicator both at the beginning of a recession and at the end. In other word, layoffs don't occur until well into the recession and employment doesn't go back up until well after a recovery has started. If this is a lagging indicator, why is so much importance put on it now, where its effects are immediate, if not lasting? It seems to me we should be concentrating on other sectors of our economy that are more indicative of the present.

Cities and states continue to be in a horrible bind. That has a long way to go to be worked out--and we don't hear about Federal bail out money for them anymore---at least not as it applies to the present circumstances. Auto sales are a mixed bag. They are down so low that cities that have dealerships are reporting a loss of sales tax income in the range of 40-50 percent, probably depending on the manufacturer that supplies that particular line of vehicles. It is true that there was an improved number sold in the last reporting period of May vs. April. It is not enough, but it did give a boost to the market. The question is whether it is a positive trend or just a bump up in the sales road. Pending sales of homes showed an increase in April. That resulted in some "experts" saying the housing problem is over. They are idiots--in my humble opinion. Mortgage delinquencies are on the rise was in another report, so we may have a new wave of foreclosures coming. Retail sales were disappointing and it showed the consumer, with the raise in confidence that spurred the market big time earlier, is still not buying enough, even if they are more confident in the future. It could still be a positive, tho, because if the consumer continues to gain confidence, the buying will increase at some point.

An interesting development has occurred lately. The last trading day of the week for the last 3 weeks has given us a signal for our Indicator play. On the first trading day of each of those 3 weeks, the market has had very big rallies. On May 18th, the Dow was up 235 point. On 5/26 the Dow was up 196 points. Then, this week, on 6/1 the Dow was up 221 points. Let's remember this and see what happens Keep in mind that we could have triple digit moves up or down---

Finally--another scam in the multi-billion range has been charged, so we are not through with this yet. This one is about a hedge fund, and we'll bet that there will be more to come.

Stay tuned...............

 Today's Thought---
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There is nothing more marvelous than doing something you love to do, and getting paid for it. It ceases to become work, money and effort: and it becomes fun, your expression of the joy of life.........Stuart Wilde, Author re consciousness and awareness

Mike
PS--You old timers, don't forget how important D-Day, the 6th of June was in our history

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