Printer Friendly

eMail Article

January 25, 2008

3 Weeks To Go
by Angelo Campione

1/25/2008 6:17:20 PM

Our services' net portfolio gain for 2007 was 107.8%! For a full break up of this performance, CLICK HERE.

Breathe..

Our system has now moved into Buy mode. Does this mean we're in clear blue sky now? Not yet, at this stage the market is taking an in breath from its dramatic exhalation, although there are signs that we may be on the road to recovery.

Current Position:

On January 17th we sold an SPX Feb 1280(SZPNP)/1270(SZPNN) Put Option Spread for a net credit of $1.50.

(i.e. a total premium received of $150 per $1,000 of margin)

SPX Chart - Bigger Picture

We're still in a vacuum between about 1370 and 1320. A weekly close above 1370 will be the first sign that a bottom is in place. At this point, uncertainty and volatility is the name of the game.

SPX Chart - Shorter Picture

In the shorter term we have a band of resistance between around 1375 and 1425. We came close to the overhead resistance today and retreated, 1320 now holds the key in the short term.

What we've witnessed this week is an event that generally only happens once or twice in a decade, a good old panic that flushes out all exuberance. In the past these types of panics have paved the way for some descent rallies. Time will tell if that's what will happen this time, but in order to undo the technical damage, we need to see a break above 1420 to start with and then a continuation through the 1450 region.

Overall, the S&P500 dropped just under 20% and the Nasdaq, just under 25% from their highs of 3 months ago! The sudden drop added a greater momentum to the rubber band effect we discussed last week causing a 100 point swing on the S&P from the low on Wednesday to today's high.

From the perspective of our 1280/1270 February put spread position, we came very close to pulling the trigger again but the support around 1300 held on a daily basis and there is now some breathing space in our position. We are however still in a delicate period.

We have three weeks to expiry left on our put spread, which feels like a long time under the current circumstances. We'll monitor how the bounce plays out and will consider closing our position if we go into sell mode.

This week's quote is from Mahatma Gandhi, "I do not want to foresee the future. I am concerned with taking care of the present."

Have a great weekend and feel free to email me at angelo@stockbarometer.com with any questions or comments.

Cheers,

Angelo Campione

To Learn more about us at: Click Here

Not a subscriber yet? Want to be? Click here and sign up for a no cost trial. Sign up for our TRADE TUTOR weekly newsletter at no cost to get a trading education from Pro Traders.

Important Disclosure:

Futures, Options, Mutual Fund, and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.

Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.

In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.

There is a very high degree of risk involved in trading. Past results are not indictive of future returns. Stock Barometer and all individuals affiliated with Stock Barometer assume no responsibility for your trading or investment results.

Copyright © 2007 Angelo Campione

Image rendition and html coding Copyright © 2000-2008 SafeHaven.com

« BullionVault.com -- Buy gold online - quickly, safely and at low prices »
« Honest Money: A History of U.S. Gold & Silver Currency -- by Douglas V. Gnazzo »

« Opinions expressed at SafeHaven are those of the individual authors and do not necessarily represent the opinion of SafeHaven or its management. Articles are available via RSS/XML. Please visit RSSHelp for instructions. »