Option Trading Idea of the Week
New Market Definitions From TerrysTips.com
If the market knocks you down, try laughing instead of crying.
CEO --Chief Embezzlement Officer.
CFO-- Corporate Fraud Officer.
BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius.
BEAR MARKET -- A 6 to 18 month period when the kids get no allowance, the wife gets no jewellery, and the husband gets no sex.
VALUE INVESTING -- The art of buying low and selling lower.
P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing.
STANDARD & POOR -- Your life in a nutshell.
STOCK ANALYST -- Idiot who just downgraded your stock.
STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves.
FINANCIAL PLANNER -- A guy whose phone has been disconnected.
MARKET CORRECTION -- The day after you buy stocks.
CASH FLOW-- The movement your money makes as it disappears down the toilet.
YAHOO -- What you yell after selling it to some poor sucker for $240 per share.
WINDOWS -- What you jump out of when you're the sucker who bought Yahoo @ $240 per share.
INSTITUTIONAL INVESTOR -- Past year investor who's now locked up in a nuthouse.
PROFIT -- An archaic word no longer in use.
Any questions? I would love to hear from you by email (terry@terrystips.com), or if you would like to talk to our guy Seth, give him a jingle at 800-803-4595 and either ask him your question(s) or give him your thoughts.
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I look forward to having you on board, and to prospering with you.
Terry
Andy's Market Report
The market rebounded this past week from its short-term oversold reading as it advanced for five straight sessions. Nine out the ten major sectors finished the week higher and as a result the S&P advanced 4.5% for the week. The recent surge has pushed the broad market index back into a short-term overbought state as the market heads into the week of options expiration.
The S&P 500 (SPY), Dow (DIA), Nasdaq 100 (QQQQ) and Russell (IWM) advanced 4.5%, 4.0%, 4.5% and 6.0%, respectively. For the year, the S&P 500 is up 18.6%, the Dow has advanced 12.4% and the Nasdaq is leading the way with a 35.7% gain.
As I stated last week, the economic calendar was bare this past week, but that obviously did not stop market participants. Tuesday is when the real buying began after the Reserve Bank of Australia announced to raise its key lending rate 25 basis points to 3.25%. Wall Street interpreted the move as just another confirmation that the global economic recovery was still underway. The S&P advanced 1.4% for the day.
Next week the market will see some key pieces of economic data that should sway the market. The calendar includes Retail Sales, FOMC Minutes, CPI and Industrial Production. Moreover, the third quarter earnings season will be in full swing which will definitely play a major role in how this market plays out over the next few months.
On the technical front, the major market indices have all moved in a short-term "overbought" state which typically leads to a short-term reprieve over the next 1-3 trading days. The S&P was able to push through a key level of overhead resistance last week (1020) so I will be watching closely to see if/when a short-term pullback occurs if the 1020 level on the S&P holds. If so, I think we will continue to see the market move higher as we head into the latter part of the year.
"We're going even higher," said Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, which manages $214 billion. "We've got a replacement cycle for technology. Earnings comparisons with last year will be damn good. There are new funds coming into the market. We'll trade above 1,200 on the S&P 500 by year-end."
Andy
Overbought/Sold Condition Report
Overbought/Oversold as of October 9, 2009
Major Benchmarks
- S&P 500 (SPY) - 72.4 (neutral)
- Dow Jones (DIA) - 74.8 (neutral)
- Russell 2000 (IWM) - 70.5 (neutral)
- NASDAQ 100 (QQQQ) - 69.5 (neutral)
Testimonial of the week
(this week we will repeat a colorful email we received exactly one year ago, just after the big market melt-down): "The last few weeks have certainly been excitingly eventful, and I empathize with other folks. The last time there was a "meltdown" I followed your subsequent advice and went half-bear, half-bull, then took flight on the wings of the butterfly strategy. As a gardener I have occasion to watch those buttery bugs flitter up and down, seemingly at random -- no beelines there -- yet landing on all flowers full of fresh nectar and drinking from each and every one, just like their apian cousins. Like the bees, however, I've made an effort to create a stash for hard times and set aside next year's worth of expenses in money market funds (about 15% of the retirement account) just in case of "rain". Now that it's coming down in buckets I can stay dry and wait it out.
Thanks for your latest comments. I'm both distressed by the turn of events and reassured by your even-handed tone and advice. It's good to read it, sensing that this bothers you, too, yet taking the time to tell all us 'Tippers'. Imagine reading an email like this from Peter Lynch =:)" Emilio 10/13/08