Chat Notes 12-14-10
What happened today ??
NO interest rate change and 600 Billion to buy treasuries at a rate of 75Billion per month
It protects the bond market – US Debt, institutions, foreign countries, Banks
PPI, CPI , Retail sales ALL better than expected
BBY – ate it hard, poor sales, poor outlook
Business inventories was great
Out from Left Field – National Federation of Independent Business Sentiment rose 1.5 to 93.2 or the highest since Dec 2007
What can happen at 12:30 AM EST tonight – Senate finished the debate period and can vote on the bush tax extension – Last time voted 85 – 15 for – Which means it can be sent to the HOUSE tomorrow
What will happen if TAXES get passed ? MARKET SHOULD GAIN IT’S 100 Points
Market ran to up 90ish points, last half hour down to the low 20’s, and finished above 40
What will happen the rest of the week?
Wed – CPI, Core CPI, Empire, Industrial Prod, Cap Ulitization,
Thurs – Initial, continuing claims, Housing starts, Building permits, Phil
RIMM, GIS, DFS, ORCL, FDX all report on thursday
Friday – Leading indicators, Options expiration
Looks pretty good for a Christmas Rally – Bullish Run, Low volume, Ignores bad news
I still think we have some upside potential BUT, I’m protecting and booking profits
Set my portfolio for next year :
2011 S.M.A.R.T. GOALS – A must read
As a coach I’ve heard two questions over and over again in the last couple of weeks.
What do you think the market will do in 2011? – What are your goals for 2011?
LET’S TALK ABOUT GOALS !!!
Both questions are intertwined and here is my “two cents”. I believe more people will lose money in 2011 as they set their primary goal to make back EVERYTHING they lost in 2008-2010. Ego loses people money just as easily as fear and greed. There are no guarantees in the market and there is no proof the market will bounce back next year. It would be great to make back everything you’ve lost but a profit is still a profit. You don’t go broke by taking profits! I would hate to see anyone in the market think they know more than the market does and try to outguess the market. It just doesn’t make any sense at all to put on risky trades to make back what you’ve lost in a week, month or last year? Let me introduce you to the idea behind being S.M.A.R.T. in your goal setting.
- S. – Simple, Specific, Schedule – Keep it simple stupid just like old acronym says – KISS. Set a simple return just like you set your primary exits in your trade. Decide on a specific amount (I will talk about this later) and write it down. Schedule it in your planner! Remember your schedule is to make that return over a year’s period not in the month of Jan or in the first half of the year. Make sure you see your goal on a daily basis as you check you schedule on a daily basis.
- M – Measurable – Most people set what is called a “pinpoint” goal. We might decide that we want to make a simple market average return of 7% in a 1 year period. What happens in real life? We hit the goal and then we Quit or Stop trying as hard. Set a range goal. Maybe you always want a minimum return of 7%ish so set your goal to be between 7% to 20%. On the bullish years 7% is easy so I set a goal so If you do make it you still have something to shoot for.
- A – Attainable – Make a plan to how you will attain your goals. Start this step by asking yourself what or who do you want to become? ie… a better trader, a full time trade, a stay at home dad, a millionaire. Too may people at the start of every year write down a wish list not a goal. I wish at the end of the year I can make this amount of money or lose this amount of weight. How will you do it and what will you do to get there? How much of your portfolio will be safe in collar trades? How much will be pure option strategies? How much will you use for vegas trades? Will you use margin to reach your goals? Figure out the details to how you will get to where you want to be at. Start with the end of the year goal on Dec 31st and walk yourself backwards.
- R – Realistic, Relevant – I always want to make a 50% return or more. Some years like this past year I wasn’t quite close to being at that goal. What happens in real life? We are nowhere close to our goal and we quit. We give up on the whole thing because we will never hit the goal. Step by step progression in trading is fine and make sure your goals remain relevant throughout the whole year. Don’t forget goals can be adjusted like a trade that may go south. S&P Ave 7.74
- T – Time – Set the time period that you want to accomplish your goals. Set short term, intermediate, long term, and life long goals you want to reach and hold your self accountable. Let others know the time period you expect to reach your goals and get the support needed to get there. Whether it is between you and your spouse, your kids, your parents, your education program or maybe the good Lord himself, find support during the tough times. I promise you they will come.
What do I mean by I‘m setting my portfolio for next year? – I obviously collar
Going to cash, waiting for my entry triggers – earnings, support or new bullish signals
I’m waiting on BA, RIMM PP for earnings, ISRG
I am looking to sell a 67.50 Feb 11 short call for $1.75 ish because my cost basis with LP is 67.50 ish
I am also looking to do a 1 day S/S on Rimm for earnings at 60 or 62.50
Wayne’ ? – 58.77+5.05=63.82 CB. Where are you getting 67 CB – I got fed up with the trade and exited RIMM with a 4.17 loss as I quite
Let’s talk about goals – HOW ARE YOU GOING TO GET THERE
Conservative Trades (Perhaps 70% of your portfolio):
Cash or T-Bills –
Collar Trades – (level 3)
Protective Puts (also known as Married Puts) – (level 3)
Covered Calls (level 3)
Medium Risk Trades (Perhaps 20% of your trades):
Bull Put – (level 5)
Put Calendar – (level 5)
Call Calendars – (level 4)
Straddles / Strangles as a volatility play – (level 8)
Put and / or Call Ratio Backspreads – (level 8)
Winged Spreads – (level 8)
Bull Calls (standard application) – (level 4)
Bear Puts (standard application) – (level 5)
Straddle / Strangle (level 3)
Bear Calls – (level 5)
High Risk Trades (Perhaps 10% or less)
Long Calls or Long Puts (as a non-hedged directional trade) – (level 2)
Short Put – (level 2)
Short Call – (level 2)
Vegas Trades (Outside the box trades) – (level 8)
Timelines for your trading – End of year, Q1 Earnings, Q1 foreclosures coming to the market, first part of the year and last part the year
Some of the things I’ve noticed for next year from the PRO’s
Economy is coming back,
S&P to have a 11% gain
DJIA to finish in the mid 12,000s – Resistance levels in the 12K, 12000. 12200, 12400, 12500, 12750, 12850, 13000
I noticed support and resistance didn’t seem to matter this year due to sentimental issues
Shadow foreclosure inventory sits at 2 million
New equity positions for 2011 that I am looking at – WM, ALK, X, FLSR, MON, MOS
I still like my favorites – AAPL, SNDK, BIDU, ZION, CAT – BA is my wildcard