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Author: Mike Celeste Editor: Tony Ponzo August Circulation: 6734

Stat Sheet Week Ending August 8th 2009

ChangesWeeklyYear to Date
Indexes Points Percent PointsPercent
Dow+198.0+2.2%+594.0+6.8%
S&P+23.0+2.3%+85.0+9.4%
NAS+21.0+1.1%+423.0+26.8%
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In this Issue---
Options---
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An incident happened to a team member this week, and we thought it would be good to remind everyone about what can happen. In particular, this involves writing options, Calls or Puts. Always check news releases before putting in an order. Just as important, check to see when the earnings are going to be released on that stock. If the date falls before expiration of your option, you might want to hold off. Our team member forgot to check the date (Yahoo Finance has the dates) and wrote the Calls the day before the earnings were released. They were written for $.45 and the next day the earnings handily beat the estimates and the future earnings estimate was increased by the company. Boom, up went the stock price, abou 10% and naturally, the Call price went up, too-reaching somewhere around $1.60. If the order were held off until after the earnings were released, now the Call could have been written for almost 4 times the original amount. The stock has settled in and at current levels would be considered a good level to write. There are many things that can affect the stock and option price, and we should be aware of those we can keep track of.

Momentum Plays---
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Well, we go from a nice week last week to an off week. Mostly in that we could not get anything going but we also had one loss as well. That one loss play was very frustrating in that it came so close to reaching our profit goal and just as it looked like we would get that profit target met, for some reason, the bottom dropped out of the stock and then we got stopped out almost immediately. Later in that day, the stock came all the way back and then some making it even more frustrating. That's the way it goes sometimes. The other thing we have going is that with the market being so tricky lately we may have become a little too cautious in getting into a play and we have missed some good ones. We plan to be a little more aggressive next week to see if we can get something going. Right now, we are kind of like a very good baseball team that is going through a temporary slump. So we'll mix things up a bit internally and get our winning trend back in gear.

Indicators---
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The markets are definitely not working to historical standards, with the momentum continuing to the upside. That leads us to be very cautious about making new plays until we see a return to more normal trading patterns.

The Economy, The Markets & Commentary---
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There is no question about what is happening in the stock market. The momentum is so strong to the upside that any small dip in prices during the day results in more money coming into the market and driving it back up. And--this has been going on for a relatively long time in this recovery drive. There is also no question that economic reports continue to improve, even if you consider not being worse an improvement. However, the really big question now remains----how long will this very strong upward pressure continue? Are we getting ahead of ourselves? The markets always go from one extreme to another, that pendulum swings from one direction to the opposite side. Have we reached the point where the pendulum is going to start going back in the opposite direction? I don't know, that's for sure---and it seems the "experts" don't know either, based on their comments on CNBC lately. There is also a question about how accurate the economic reports are. Are they fudged to favor one side over another? There are many who believe they are--or pertinent facts are left out, let's put it that way.

One thing for sure, the Clunker Car program is a roaring success. The original plan was that $ billion was allotted to buy clunkers when applied to a new car, and the program would last until November. The money ran out in the very first week, and the Congress finally allotted more for this program. This is one program that directly benefits the ordinary consumer, you and me, and it has made for a whole lot of sales.

The Health Bill still rages on and it seems more and more people, by a large, large margin, are against the proposal as it is currently being presented. There is a lot of work to be done before anything can be passed, and we won't know the details as it will be changed at the very last moment before the vote is taken. Be sure to express yourself to your government representatives.

The oil/gas situation continues to be one big joke. The last weekly report on oil inventory showed it up again, and oil prices continue to stay over $70/barrel with gasoline prices being raised again on a regular basis. Another item to write to your rep about. Remember to mention that all they have to do is put in a rule change that the margin requirement be raised. As stated on CNBC, there were $13 billion in contracts under normal conditions and the amount went to $300 billion. Could there be any question about whether speculation was involved. Raise that margin from 5-7% to the same as stock margin--50%.

Employment figures continue to be debated--with less initial filings happening, but still tremendous job losses also being reported--but not at the high rate it was before. We continue to expect that employment will lag a recovery.

Housing figures are also somewhat encouraging, but we still are facing a problem with commercial loans. You wouldn't know it by the rapid increase in stock prices related to this sector.

Can the consumer overcome all the diversities facing us, and go out and spend money to prod a recovery?

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

Today's Thought---
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If you want the rainbow, you have to put up with the rain..........Steven Wright


Mike

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