Okay, lets remove all emotion / sentiment and focus on the technicals... Yesterday the S&P closed right on her 50 day moving average and as we suspected, is sightly higher today.

That puts her 100 day moving average at 1110 and her 200 day moving average at 1120. If she can break through both of those, we'll have a nice rally on our hands. If she can't then of course back down we go, but the question remains, how far down? (Currently she is around 65% on the charts)

Basically the same can be said for DIG as yesterday she closed right on her 50 day moving average, putting her 100 day at $30.00 and she is also 65% on her charts.

SLV on the other hand has broken way out to the upside and is currently 97% on her charts. Just got to love that girl!

Anyway, what does all this mean? Really one could say it means nothing until we see the jobs numbers tomorrow. Then everyone will have a nice long weekend to think about it, and then see where we want to start the fall period come Tuesday.

Personally I believe no matter how bad tomorrow numbers are, and they will be, the market will find a way to go higher on really low volumes. Pushing towards the 100 day moving average and getting around 90% on her charts. Then comes the question... higher or just another bear market rally?

My answer will be to raise cash!

With todays big rally nothing has really fundamentally changed, its more of a technical rally. Which is great because as we spoke yesterday, if the S&P closed under 1040 things could get interesting. And for now we've avoided that.

With a big rally like this, it normally means the following day is flat to slightly up, trying to hold the big gains. And that's what I expect for tomorrow, as we await Fridays jobs numbers.

If we can get some decent numbers, we might have another triple digit green day heading into the Labor Day weekend. Making everyone feel better.

But from there, again nothing has fundamentally changed and the technicals can only carry us so far. So I don't see us having a sustained rally through September, therefore hopefully it will be a good trading month with good volatility and no "Hindenburg Omen" happening.

On a side note, I always find it amazing that the talking heads can be doom and gloom one day, then rally's on the next... Must be why I believe in the technicals!

IF we do close the week out with a rally, I will be selling some covered calls on our DIG & UWM positions along with placing some shorts on the XLE and or QQQQ.

In the meantime, I sure wish SLV would cool her heals and start heading back down on her charts.

Sincerely,
Tim

Technically we don't appear to be in great shape. If the S&P breaks below 1040 the next stop looks to be the most important 1000 level. And if she does not hold that MAJOR support, the next level could easily be in the low 900's.

Not a real encouraging outlook. This sell off is broad based with the exception of Gold and Silver. Energy and tech is just getting killed and one can assume retail will soon follow.

Hopefully we can get some good news with Fridays jobs numbers and avoid a meltdown. One thing is for sure, depending on the size of our next rally, I will be raising cash levels.

But for right now, our positions are set and we wait for any right opportunity.

As we spoke on Friday, no surprise that we're triple digit red today. And no volume... now that's a surprise!

Basically the market is waiting for Fridays jobs numbers, which probably won't be good, then we'll be waiting over the Labor Day weekend to see how everyone wants to react, then we'll be waiting for the big boys to return from summer, then we'll be waiting for... well you get the picture.

So, I guess we'll wait too... as there are no decisions to make today.

As a businessman who has been running a small company for over 25 years, I can personally say that this current economic, financial, political and confidence crisis is the worst one that I've seen.

Our company, which employs over 20 people is in no way thinking about expanding! There is way too much uncertainty that has been created by this administration over taxes, cost of health insurance, taxes on health insurance and other regulations that just are not business friendly.

A good example of this, is one that begins next year that requires companies to provide 1099's to every person or business that the company spends more than $600 dollars with during the year. This will be a HUGE burden at huge cost to small business! And for what? You know the IRS is in no way capable of properly recording the millions of these new 1099's.

And when I hear the talking heads speak about how people saving more and spending less, I just shake my head. Just because credit card debt is dropping does not mean people are saving more. It simply means that huge amounts of debt are being written off turned over to collections and therefore are not counted. Just like the people who have been unemployed for so long that they are no longer counted towards the unemployment rate. Does that mean they have jobs?

People are not saving more, most families are just barely keeping they're heads above water. Take note of the increased bankruptcy filings every quarter, thats the real picture.

Personally I believe that this will be a very long recession with many ups and downs, but a recession none the less.

Bottom line is that a person be must actively involved in securing and managing their portfolio. And that's what we do best, protect and grow...

Sincerely,
Tim M.

Well here's our dead cat bounce, how far will she go? It would not surprise me at all if we're triple digit red on Monday, that's how far...

So it was a good day to eliminate some purchase obligations by buying out of some sold put positions, which I did on UWM, QQQQ and DIG. Also placed some new short positions on the QQQQ and XLE, that's how much I beleive...

But on the other hand, I would welcome another couple days of green. I also purchased myself out of some SLV Sept $17 puts because of where SLV charts are, pegged at the top. The reason I bought myself out of those trades is to enable me to re-enter them when her charts go to the bottom, which hopefully will be very soon.

For now, enjoy the green, your weekend and let's see what Monday is going to look like.

Sincerely,

Its very clear that this market has no clue what to do. Heading into historically the worst two months of the year, in September and October.

Combine that with all the talk about the Hindenburg Omen, the mid-term elections and the fact that our President and his so called economic advisor's have no clue of how to make any right decisions. (Their belief is in The Socialist States of America instead of a strong independent United States of America)

So basically we're stuck... and hopefully not screwed! Nothing to do except wait and see.

OK, so it looks like our "dead cat" bounce has turned into road kill. But the technicals don't get much lower than they are right now, so looking over the past year here's some interesting numbers.

During the past year we've had 7 periods where the S&P technicals remained above 80 percent. The average length of those periods was for 15 straight business days. The shortest was 8 days, twice, and the longest was for 23 days.

Now compare that to when the technicals were under 20 percent. There were 12 periods, with the average length being 5 business days. The shortest was 2 days, three times and the longest was 7 days.

Now one can read many things into these numbers, but basically the market remains under 20% for very short period of times compared to remaining at the top. Naturally one wants to buy at the bottom when things are the scariest and hold into the middle time frame at the top before selling, when everything is looking rosy.

Currently we're in the fifth day of being below 20%. Therefore history tells us that we should get our bounce before long.

This is just one of those scary buying times...

It appears that the S&P is going to hold major support and close above 1050, at least for today.

I do believe this sets us up for a "dead cat bounce" as all the technicals are around 10%. Now, if we can just get some good news somewhere...

Today was a good day to add SLV covered calls and to add some puts to our DIG & UWM positions. I also took profits in some QQQQ shorts that I have, still holding on to others just in case we do drop to that 1000 level.

With all decisions made, we now wait and see how the market reacts.

As expected, a very quiet day with low volumes. Should be the story for the remainder of the week...

Technically everything is setup for a small rally, so I'm waiting to sell some September covered calls, or if we fall further I will be selling some puts. Either way we're ready to take advantage of what the market gives us.

Not much else to say or do...

Another good expiration period, with 7 options expiring during the month for 100% profit. Placing just 10 contracts on each trade generated $2,810 in profits. Not bad considering where the market is.

Technically, the S&P held weak support of 1070 with strong support at the 1050 level. Which we could very easily test, but I have a feeling that we'll have a couple green days before then. If nothing major happens over the weekend...

DIG is currently around 10% on her charts, the S&P is around 18% and the QQQQ is around 25%. So there is plenty of room for a small rally.

SLV is still stuck in the middle and looks like she wants to test support at $17. Which if she does go there, I'm a buy of the equity and a seller of some PUTS.

So the big question is: ARE YOU READY FOR SOME FOOTBALL!

Have a great weekend!

Sincerely,
Tim M.

Some interesting numbers for the "Buy and Hold" vs. Short Term trading debate.

Over the past three years the S&P is down 21%, during the past five years the S&P is down 3% and over the past ten years its down nearly 23%.

Some very shocking numbers! So its easy for me to see and say that the Buy and Hold strategy is extremely outdated. In todays world one must be actively managing money. Does that mean daytrading? No! For me it means short term trading and when I say short term, I mean anything from one week to one month.

Thats why our option / equity strategy is so effective, because you are actively managing your portfolio every week preparing for the third Friday of each month. Then start preparing for the next month.

The selling of options is the best way to collect the greatest amount of dividends that I know of. Then when you combine that with being heavy cash, I believe you have the best portfolio protection along with growth potential that there is.

Sincerely,
Tim M.