Michael Clark's  Instablog

CGTS DAILY TRADING SIGNALS
For 21 March 2011, Monday -- the First Day of Spring.

CGTS OPTIONS PORTFOLIO

Our Options Portfolio is still doing well, up 152% since December 20, 2010.  We are making plans to begin taking subscriptions again for our daily email newsletter.  We will provide more information in the next week or so.  During the past few months we have been working feverishly to develop a short-term options trading system that will make money on every grade.

CGTS OPTONS  PORTFOLIO (Since 12/20/10)			Active	$30,000
% Gain	03/16/11	Profit	Trades
152.19%	Option Trades	$441,357	29	$28,470
190.83%	M5 3 ASP LT 2a	$133,581	7	$70,000
1513.05%	M2F 14% Trade	$151,305	1	$10,000
2518.60%	M4 ACCUM 00 14	$251,860	1	$10,000
942.71%	M2F AVG ALT DIFF ASP	$94,271	1	$10,000
683.64%	M5 3 Avg Diff ASP Sum	$68,364	1	$10,000
1328.40%	MJC M2F M53 Combo	$132,840	1	$10,000
1961.75%	CHART METER TR 1/11B (WE)	$196,175	1	$10,000
41.99%	M2F ALT Tweek #2 2/11	$50,385	12	$120,000
-23.54%	M4 ACCUM 14 00 newtrade	-$7,062	3	$30,000
0.01%	M4 Spike Trade new	$1	1	$10,000
165.68%	MJCF Close vs Midp Trend	$82,840	5	$50,000
892.17%	MJCF Close Medium 2 (3)	$89,217	1	$10,000
0.01%	ChartMeter 7x7 TR	$1	1	$10,000
99.33%	T5SS/CM ASP Swift Tr 2	$29,798	3	$30,000

How much damage was done to stocks this week?  Well, clearly, and for good reason, the BIG damage was done to the Nikkei Average.  It will take awhile to assess the damage there, and how long it might take Japan to come back.  I guess the real question is: Will the crushing crisis in Japan lead to another leg down in the global markets?  If so, this is a perfect description of a 'Black Swan' I guess -- an event that can't be imagined that throw flobal markets in to turmoil.

How did the indexes weather last week's selling?  Well, it could have been worse, considering what's going on in the world.  If this is a 'Wall of Worry' then it's a BIG wall, like the Great Wall, I guess.  The second largest economy in the world -- I don't buy the idea that China is a greater economic power than Japan, when you compare a measurement of GDP/GNI (Gross National Income -- per capita); Chinese average annual salaries are $865.03 per person, Japanese are $35,474.10 per person -- potential is with China -- actualities with Japan, that is, WAS with Japan, until now -- crippled by a wall of water (now THAT is a wall of worry) -- being cut off at the knees pretty much guarantees another visitation of the global economy to the red zone of global despair. 

Not to mention what will happen as the Japanese nuclear crisis deteriorates: currently there are readings in Tokyo that are ten times normal levels; water, milk and vegetables in the province where the accident occurred are now being banned from the market.  Nuclear energy is no longer a very friendly solution to global electricity needs.  Earthquakes can happen almost everywhere; and earthquakes, as we know now, can trigger hideous dangers.

We have only two positive momentum indexes; Shanghai; Brazil, and the VIX (not exactly an index in the large sense of the word).  We DO like some stocks and call options here.  We are cautious since we might have made only the first step down in a correction that will lengthen and strengthen over time.

Let's look at some pictures of indexes first, and trades we like second.  The data-picture of the indexes we follow look like this.  We've modified our table somewhat.  Column 3 to the right now informs us the direction the latest CHARTMETER ASP moved when it did move.  In other words, ^AORD is currently (column 2) at +7, the maximum positive reading -- and it's latest move, either up or down, was up.  This is positive.  Column 1 informs us that the current M5 3 Momentum reading is negative -- this is a bit of a mixed picture.  The FCHI is a bit less dubious: -7, bottom zone after a decline, its latest move having been down; and its "5 3 Momentum ASP also being negative.  BKX has a negative ChartMeter ASP and a positive ChartMeter direction...so it is trying to move back up.

Let's look at some charts.

				2	3	1
Symbol	Close	Short-Trend	M4	Chart-Meter	Chart-Meter	M5 3
3/18/11			Momentum	ASP	ASP	Momen ASP
				today	direction	today
^AORD_D	4,715.80	-17.25	0	7	1	-1
^BKX_D	52.09	-0.15	0	-5	1	-1
^BVSP_D	66,879.89	106.49	0	7	1	1
^DJI_D	11,858.52	-28.04	0	7	1	-1
^DJT_D	5,055.95	-12.11	0	7	1	-1
^DRG_D	301.28	-0.87	0	-5	-1	-1
^FCHI_D	3,810.22	-18.26	0	-7	-1	-1
^FTSE_D	5,718.13	-13.33	0	7	1	-1
^GDAXI_D	6,664.40	-40.13	0	-7	-1	-1
^GSPC_D	1,279.20	-3.54	0	7	1	-1
^HGX_D	113.52	-0.33	0	-5	1	-1
^HSI_D	22,300.23	-64.07	96.16	7	1	-1
^HUI_D	536.35	-3.27	0	7	1	-1
^JPN_D	96.15	2.17	0	-1	1	-1
^KS11_D	1,981.13	-5.05	0	7	1	-1
^N225_D	9,206.75	-110.05	0	-7	-1	-1
^NDX_D	2,221.07	-8.42	18.72	7	1	-1
^OEX_D	572.93	-1.56	0	-7	-1	-1
^RUT_D	794.66	-2.11	0	7	1	-1
^SMSI_D	1,057.42	-3.84	0	7	1	-1
^SOX_D	419.2	-2.7	0	-7	-1	-1
^SSEC_D	2,909.40	8.29	0	7	1	1
^SSMI_D	6,098.05	-32.59	0	-7	-1	-1
^TWII_D	8,394.75	-30.02	0	7	1	-1
^TYX_D	4.43	-0.01	0	-7	-1	-1
^UTY_D	413.32	-3.48	0	-3	-1	-1
^VIX_D	24.44	-2.48	100	7	1	1
^XAU_D	204.3	-1.08	0	-7	-1	-1
^XCI_D	935.14	-3.46	0	7	1	-1
^XOI_D	1,310.54	-5.91	0.91	7	1	-1

Legend:
Column A: Index Symbol
Column B: Closing Price
Column C: Short-Term Trend: above zero is positive.
Column D: M4 Short-Term Momentum -- this indicator works the reverse as one might expect: 100 is oversold; 0 is overbought.
Column E: Chart-Meter ASP reading today.  Top range (bullish) is +7; Botton range (bearish) is -7.  Two days show you which direction the indicator is moving.
Column F: Chart-Meter ASP Trend reading.  Show whether last move of the Chart-Meter ASP was up or down -- the direction the indicator is moving.
Column G: M5 3 Momentum Summary ASP Plus.  + 1 is positive; -1 is negative.  This indicator 'normalizes' the indicators below in the charts (M5 3 Summary and M5 3 Summary ASP) showing where the most recent reading of the issue was up or down.

INDEX CHARTS

BKX: Note the bottom pane, a slight uptick in the black line (M53 Summary ASP): this indicates very clearly an attempt to rally back.  But notice the M4 Sum plus 21 reading, secon pane down.  A two-day dip below zero is bearish.  In the bottom pane, both ASP indicators are in the negative zone.  We'll see how far the rally can take us.



XOI, Oil and Gas Index; look how the bottom pane has been positive since the rally started in August.  About ten days ago the M53 ASP broke down.  We should see a rally here for the first few days of this week at least.  The third pane down is moving up out of an oversold reading (M2F); and the fourth pane down (Close vs Midpoint Trend) has just ticked up, which is positive for a near-term rally.



SSEC: Shanghai Index -- most positive stock index.  Still in a pretty well-defined up-move.  M2F Momentum indicator (third pane down) is oversold and ready to rally.  Japan's devastation is both a positive and a negative for China: enhanced political status in Asia as the Big Dog; but losing trade with Japan short-term?



TYX, 30-Year TBond Yield ETF: looks to be breaking down.  This suggests a coming flight back 'to quality' (that is a joke, right?) may be coming again, meaning Europe's debt problem is probably heading for more trouble -- and more social chaos with it.  It looks like a TBond rally is coming.



GDAXI: significant damage to German stocks.  A gap to close; but is it time nOW to close it?



The VIX is back, with a passion.  This is decidedly an anti-stock picture.


OEX looks ready to break down.  Nothing much to like here.  Lower prices seem to be guaranteed.



GSPC, S&P 500; negative.  Oversold (pane 3) but nothing else looks very positive -- intermediate and long trends still both positive; but these are NOT lead indicators, but lagging indicators.


AORD, Australia: negative also.  The ChartMeter (bottom pane) has NOT broken down however, which is suggesting that we might get a rally here.  Generally speaking, we should wait to see what happens here this coming week.




TODAY'S SIGNALS

Traders need to be somewhat cautious here.  Dangers abound.  We like CAT here.  Almost no sellers last week and another buy signal.  ROK is the next-best buy signal we received here.  DBB, Base Metals ETF, is also intriguing.







More dubious is MOO, the Agribusiness ETF.  it has broken short-term support (third pane down) but has several upticks in places we like to see them when a rally starts (third, fourth and sixth panes down).  This is a bit more dangerous play.







A Disclaimer of sorts:
 
I will update these positions regularly, so we can all see how we are doing with our short-term speculating.
 
I am bullish on gold long-term (until Bernanke is fired, and more generally until about 2019, the end of the deflation cycle) -- and I'm relatively bullish on stocks until QE is abandoned.  QE does many things, one of which is to try to make sure that stocks and bonds don't decline.  The Fed, quite likely, has guaranteed to bankers the advance of stock prices.  As long as the Fed is willing and is allowed to backstop stock prices, short positions are very dangerous, except in isolated cases.  Bond vigilantes are showing Mr. Benanke that his designs may not be able to proceed without resistance however.  Rising rates are a slap in the face of American power; the slap is welcomed by those of us who think debt is the problem that needs to be addressed, destroyed, rather than expanded and extended.
 
Trading options is highly speculative and can be dangerous.  Pricing of options is never very clear; buying options is almost always less prefereable than selling options, in terms of likely profits.  But buying options gives an investor a HUGE BANG FOR THE BUCK.  Getting accurate price data on options (especially those thinly-traded) is also often a problem, with which we'll have to work.  Typically we work with the last close, if it falls between bid and offer.  If it does not, then we average the bid/offer.
 
If one knows what direction a stock is moving, short-term options can be profitable.  The problem with options, of course, is that they, like ourselves, decay with time.
 
The cheaper options expire more quickly (one can always buy long-term options is one wishes to speculate on long-term stock or market moves).  I like short-term expirations, cheap options, and getting in and out (with profits).
 
I have many short-term trading systems.  I will use several in this Options Corner.  The first I start with I call "M5 3 Chart Trade" which really relies on the M5 3 Momentum Indicator to trigger the trade, always in the same direction of the major trends.
 
Successful trading!  We know the game is fixed; but let's ride on the back of the dragon for as long as we can.
 
More information on the CGTS systems can be found at:
home.mindspring.com/~mclark7/CGTS09.htm
 
MICHAEL J CLARK
Clark's Gate Timing System
Hanoi, Vietnam
84 4 221 92210