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CGTS OPTIONS CORNER FOR WEDNESDAY 2 MARCH: NEW INDICATOR SUGGESTS MARKETS STILL BUILLISH, DESPITE (OR BECAUSE OF?) CORRUPTION, MISMANAGEMENT AND MIS-DIAGNOSIS OF ECONOMIC WOES.

CGTS DAILY TRADING SIGNALS
For 2 March 2011, Wednesday

We're still getting buy signals on a lot of stocks.  The question is: is this the Big Top; or is  BIG CIRCUS RALLY sponsored by Ring-Master Bernanke still alive and heading north?

We need to look carefully at the Macro view.  Even stocks with wonderful-looking charts will have a heck of a time advancing if the macro picture begins a heavy downdraught.  So far at least, the markets look pretty positive.

I've created a new indicator that seems to be quite remarkable in pin-pointing short-term turning points in indexes and stocks.  I am posting several charts to illustrate this indicator (M5 3 Momentum ASP) and I am also now including a version of this new indicator in the table below.

See the legend below the table to see what each column means, in terms of different indicators.

I have received many emails from readers wondering about subscription availability and pricing.  In all honesty, I'm not offering subscriptions at the moment.  I working on five books -- four novels and one book of financial history -- and I'm not ready to resume subscription services, which take much time and energy.  I WILL be offering a subscription at some point in the near future however.

In the past I have worked with a nightly email subscription.  I have also traded accounts for investors.  This involves setting up an account to which I can have trading access.  So, it would be wise -- for anyone wishing to do this -- to keep the account small, since you don't know if I'm really trustworthy.  This co-trading option costs the investor 40% of profits.  Where there are no profits there are no costs.  Payments are determined monthly on the basis of account value.  I set up with the investor the % of the account that can be trading the market at any given time (usually between 10-25%).  This is a more radical approach than simply a nightly email -- but it's much more fun for me, and usually more profitable for the investor.  I will be discussing both options more in the near future -- I'm off to Thailand for a vacation first.

So, far, the market is not in any real danger of crashing at the moment.  But I will keep readers up-to-date as things change.  Things can change VERY FAST.

  

Symbol Close Short-Trend M4 Chart-Meter Chart-Meter M5 3 Index
3/2/11     Momentum ASP ASP Momen ASP  
        yesterday today today  
^AORD_D 4,890.80 4.606 100 7 7 1 All Ordinaries Australian Index
^BKX_D 52.19 -0.344 100 -3 -5 1 Banking Index
^BVSP_D 66,242.63 144.651 100 7 7 -1 Sao Paolo Brazilian Index
^DJI_D 12,058.02 16.064 100 7 7 1 DOW JONES INDUSTRIAL AVERAGE
^DJT_D 4,956.59 -48.787 100 7 7 1 Dow Jones Transport Index
^DRG_D 306.251 0.233 24.517 1 1 1 Pharmaceutical Index
^FCHI_D 4,068.59 7.159 100 7 7 1 CAC French Index
^FTSE_D 5,936.34 6.582 100 7 7 1 FTSE Daily Index
^GDAXI_D 7,205.16 9.967 77.063 7 7 1 DAX German Index Daily
^GSPC_D 1,322.75 2.17 0 7 7 1 S&P 500 Index
^HGX_D 110.7 -1.353 100 -3 -5 1 Philadelphia Housing Sector Index Daily
^HSI_D 23,396.42 -43.364 0 7 7 1 HANG SENG INDEX HONG KONG
^HUI_D 574.645 3.194 0 7 7 1 Gold Stock Index Daily
^JPN_D 111.911 0.19 0 3 3 1 Japan Index
^KS11_D 1,937.58 -10.578 100 7 7 1 Kospi South Korean Index
^N225_D 10,565.18 21.618 77.46 7 7 1 Nikei Japan Index
^NDX_D 2,315.26 4.383 100 7 7 1 Nasdaq Index Daily
^OEX_D 587.2 0.888 100 3 1 1 S&P 100 Index
^RUT_D 807.08 1.652 100 7 7 1 Russell SMall Cap Index Daily
^SMSI_D 1,102.37 4.126 100 7 7 1 Madrid General Index Daily
^SOX_D 449.78 -3.349 100 7 7 1 Phildelphia Semiconductor Index
^SSEC_D 2,908.53 12.849 25.754 7 7 -1 Shanghai Composite
^SSMI_D 6,615.13 4.005 5.264 7 7 1 Swiss Index Daily
^TWII_D 8,683.55 -30.787 16.955 7 7 1 TAIWAN WEIGHTED INDEX
^TYX_D 4.49 -0.024 100 -3 -5 1 30 YEAR TREASURY YIELD
^UTY_D 424.84 0.222 87.33 -5 -3 1 Utility Index
^VIX_D 21.01 -0.28 0 5 5 -1 CRB Volatility Index Daily
^XAU_D 217.26 0.851 0 7 7 -1 Philadelphia Gold and Silver Index Daily
^XCI_D 983.254 1.21 100 7 7 1 Amex Computer Index Daily
^XOI_D 1,345.50 3.303 100 7 7 1 Oil Stock Index



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 yesterday and today.  Top range (bullish) is +7; Botton range (bearish) is -7.  Two days show you which direction the indicator is moving.
Column F: 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.
Column G: Index Name

Visual examples of the M5 3 Summary ASP Indicator:




The M5 3 Summary ASP indicators both use zero as a transition point.  As long as zero holds a decline, the bullish trend is still on; if an issue breaks below zero, then all bets are off: sell long positions; shortsell if the trends are also down.  The FTSE above is still positive, and has been positive since early July.  It did predict the pullback in April of last year -- but it told you to 'get back in' quickly, after the sell-off.

The M5 3 Summary ASP (Second Pane) is a 'normalized' version of the M5 3 Summary Indicator (bottom pane).  It smoothes out the indicator and 'eliminates' erratic moves that do not breach zero.



The Hang-Seng Index (Hong Kong) is still positive also.



The Nikkei is also still positive.



The SSEC, the Shanghai Index, is negative, and has been negative since mid-October.

Looking at the table again, there are only a few indexes that are in a bear move as defined by this M5 3 Summary ASP indicator: BVSP, the Bovespa; SSEC, the Shanghai Index, VIX, the CBOE Volatility Index (this bearishness is bullish for stocks); and the XAU, the Gold and Silver Stock Index.

So, we are still willing to buy call options, on a selective basis, looking carefully at charts of each signalled stock before doing so.


OPTION TRADING SCORSHEET (prices updated weekly)

We are up 185% trading options since 12/20/10.

CGTS OPTION  PORTFOLIO (Since 12/20/10)        Active
% Gain    03/01/11    Profit    Trades
184.80%    Option Trades    $369,601    20
DAILY TRADES PLUS       
35.60%    M5 3 ASP LT 2a    $99,670    28
118.54%    M2F 14% Trade    $177,805    15
163.89%    M4 ACCUM 00 14    $196,664    12
197.79%    M2F AVG ALT DIFF ASP    $118,676    6
205.52%    MJC M2F M53 Combo    $102,758    5
158.35%    M5 3 Avg Diff ASP Sum    $79,174    5
655.95%    CHART METER TR 1/11 B    $196,784    3
0.01%    CM DIFF ASP NEW    $1    1
117.58%    M2F ALT Tweek #2 2/11    $47,034    4
188.90%    MJCF Close Medium 2 (3)    $113,339    6
50.53%    CM ASP UP2    $5,053    1
24.63%    T5SS/CM ASP Swift Tr 2    $7,389    3

TODAY'S TRADING SIGNALS

3/1/11    TUESDAY          
√√√               
CSCO    M2F ALT Tweek 2/11    18.56    SHORT
√    CSCO March 20 puts    1.46    SHORT
√√√               
HSI    M5 3 ASP LT 2a    23396.42    LONG
FXE    M5 3 ASP LT 2a    137.16    LONG
TNP    M5 3 ASP LT 2a    9.57    SHORT
√    TNP March 10 puts    0.5    SHORT
SDP    M5 3 ASP LT 2a    15.59    SHORT
IRE    M5 3 ASP LT 2a    2.15    SHORT
√    IRE March 2.5 puts    0.4    SHORT
DRR **    M5 3 ASP LT 2a    42.49    SHORT
EUO    M5 3 ASP LT 2a    18.96    SHORT
√    EUO March 20 puts    1.15    SHORT
√√√               
PPD    M2F 14% Trade    65.57    LONG
BEN    M2F 14% Trade    123.26    LONG
GES    M2F 14% Trade    44.53    LONG
DJI    M2F 14% Trade    12058.02    LONG
TXN    M2F 14% Trade    35    LONG
PCL    M2F 14% Trade    40.89    LONG
CAT    M2F 14% Trade    99.86    LONG
BA    M2F 14% Trade    70.12    LONG
TAN    M2F 14% Trade    8.08    LONG
KWT    M2F 14% Trade    12.73    LONG
AORD    M2F 14% Trade    4890.8    LONG
SNDK    M2F 14% Trade    47.77    LONG
UTX    M2F 14% Trade    82.08    LONG
√    UTX March  80 calls    2.76    LONG
JNK    M2F 14% Trade    40.33    LONG
SH    M2F 14% Trade    41.99    SHORT
DXD    M2F 14% Trade    18.84    SHORT
√    DXD March 20 puts    1.45    SHORT
DOG    M2F 14% Trade    42.3    SHORT
√    DOG March 43 puts    1.7    SHORT
√√√               
FDX    M4 ACCUM 00 14    87.88    LONG
HOT    M4 ACCUM 00 14    58.48    LONG
CRM    M4 ACCUM 00 14    128.05    LONG
C    M4 ACCUM 00 14    4.57    LONG
YHOO    M4 ACCUM 00 14    16.1    LONG
HOG    M4 ACCUM 00 14    39.28    LONG
AAPL    M4 ACCUM 00 14    349.31    LONG
√    AAPL March 355 calls    6    LONG
UPS    M4 ACCUM 00 14    72.35    LONG
LWSN    M4 ACCUM 00 14    9.86    LONG
√    LWSN March 10 calls    0.25    LONG
RS    M4 ACCUM 00 14    53.61    LONG
DJT    M4 ACCUM 00 14    4956.59    LONG
X    M4 ACCUM 00 14    54.97    LONG
VRX    M4 ACCUM 00 14    39.79    LONG
SLX    M4 ACCUM 00 14    71.92    LONG
SEA    M4 ACCUM 00 14    27.01    LONG
PPS    M4 ACCUM 00 14    37.76    LONG
PPA    M4 ACCUM 00 14    19.66    LONG
IBM    M4 ACCUM 00 14    159.97    LONG
√    March 160 calls    2.46    LONG
GOOG    M4 ACCUM 00 14    600.76    LONG
GNW    M4 ACCUM 00 14    12.8    LONG
DE    M4 ACCUM 00 14    89.06    LONG
COL    M4 ACCUM 00 14    63.13    LONG
BBL    M4 ACCUM 00 14    78.36    LONG
√    BBL March 75 calls    4.3    LONG
HGX    M4 ACCUM 00 14    110.7    LONG
XCI    M4 ACCUM 00 14    983.254    LONG
VPRT    M4 ACCUM 00 14    48.89    LONG
√    VPRT March 52.5 calls    0.42    LONG
MA    M4 ACCUM 00 14    240.36    LONG
MA    M4 ACCUM 00 14    240.36    LONG
PNC    M4 ACCUM 00 14    60.35    LONG
TNX    M4 ACCUM 00 14    3.414    LONG
BKX    M4 ACCUM 00 14    52.19    LONG
BIDU    M4 ACCUM 00 14    117.83    LONG
PPD    M4 ACCUM 00 14    65.57    LONG
BEN    M4 ACCUM 00 14    123.26    LONG
√√√               
SLW    M2F AVG ALT DIFF ASP    43.58    LONG
√    SLW March 40 calls    4.3    LONG
AXPW.OB    M2F AVG ALT DIFF ASP    0.81    LONG
√√√               
FXM    M5 3 Avg Diff ASP Sum    82.46    LONG
TNP    M5 3 Avg Diff ASP Sum    9.57    SHORT
√√√               
IRE    CM DIFF ASP NEW    2.15    LONG
√    IRE March 2.5 puts    0.4    SHORT
√√√               
FMCN    M4 3 stocks    26.2    LONG
√    FMCN March 25 calls    1.75    LONG
SLM    M4 3 stocks    14.34    LONG
√    SLM MARCH 13 calls    1.51    LONG
RRGB    M4 3 stocks    23.55    LONG
√    RRGB March 20 calls    3.85    LONG
WPRT    M4 3 stocks    17.99    LONG
GNK    M4 3 stocks    11.99    LONG
DWSN    M4 3 stocks    48.94    LONG
VIX    M4 3 stocks    21.01    short
YCS    M4 3 stocks    15.88    short
√    YCS March 17 puts    1.12    short
VXX    M4 3 stocks    32.45    short
√√√               
EXM    M4 7 stocks    4.89    LONG
√    EXM MArch 4 calls    1.23    LONG
BSX    M4 7 stocks    7.52    SHORT
√√√               
ITMN    T5SS/CM ASP Swift Tr 2    36.63    LONG
SLM    T5SS/CM ASP Swift Tr 2    14.34    LONG
URR    T5SS/CM ASP Swift Tr 2    30.65    LONG
SNDK    T5SS/CM ASP Swift Tr 2    47.77    LONG
SBUX    T5SS/CM ASP Swift Tr 2    32.39    LONG
     SBUX MARCH 30 CALLS         LONG
XME    T5SS/CM ASP Swift Tr 2    70.0675    LONG
KRE    T5SS/CM ASP Swift Tr 2    26.31    LONG
JJC    T5SS/CM ASP Swift Tr 2    59.31    LONG
HOG    T5SS/CM ASP Swift Tr 2    39.28    LONG
AAPL    T5SS/CM ASP Swift Tr 2    349.31    LONG
     AAPL MARCH 345 CALLS         LONG
MOO    T5SS/CM ASP Swift Tr 2    55.27    LONG
GE    T5SS/CM ASP Swift Tr 2    20.25    LONG
BEN    T5SS/CM ASP Swift Tr 2    123.26    LONG
YKOO    T5SS/CM ASP Swift Tr 2    16.1    LONG
GNW    T5SS/CM ASP Swift Tr 2    12.8    LONG
AAPL    T5SS/CM ASP Swift Tr 2    349.31    LONG
MOO    T5SS/CM ASP Swift Tr 2    55.27    LONG
√√√               
3/1/11    CURRENCY          
TUESDAY    MONDAY          
                
USDCHF    M4 Rev 3√    0.9297    SHORT
CNYCHF    M4 Rev 3 √    0.1414    SHORT
USDBRL    CM Close Midpoint √    1.6615    SHORT


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