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Investing Strategies For 2014 Economic Numbers And Media Data

This Week's

Investing Strategies For 2014

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Economic Numbers and Media Data

Monday

Markets are closed in France and Germany for WHIT holiday

St Louis Fed president James Bullard gives remarks at the Tennessee Bankers Association meeting.

Hertz Global reports after the close ( HTZ 0.09 vs 0.21 )

Tuesday

Radio Shack RSH ( - 0.74 vs -0.35 ) earnings worsen

10:00 hrs Wholesale Inventories April ( 0.3% vs 1.1% )

10:00 hrs JOLTS- Job Openings ( NA vs 4.014Mln )

Wednesday

Jack Lew Sec of Treasury speaks Breakfast Econ Club NYC

OPEC meets in Austria less influence than in past years.

07:00 hrs MBA Mortgage Index 06/07 ( NA vs -3.1% )

10:30 hrs Crude Inventories 06/07 9 ( NA vs -3.43 Mln Bbls )

14:00 hrs Treasury Budget May ( NA vs -$ 138.7B )

Thursday

Lululemon: LULU reports before open: ( 0.32 vs 0.32 )

07:30 Challenger Job Cuts May ( NA vs 5.7% )

08:30 hrs Initial Claims 06/07 ( 315K vs 312K )

Continuing Claims 06/07 ( 2638K vs 2603K )

08:30 hrs Retail Sales May ( 0.7% vs 0.1% )

Retail Sales Ex-Auto ( 0.4% vs 0.0% )

08:30 hrs Export Prices Ex Agriculture ( NA vs -1.2% )

Import Prices Ex-Oil ( NA vs 0.0% )

10:00 hrs Business Inventories Apr ( o.4% vs 0.4% )

10:30 hrs Natural Gas Inventories 06/07 ( NA )

Friday

08:30 hrs PPI May ( 0.2% vs 0.6% )

CORE PPI May ( 0.1% vs 0.5% )

09:55 hrs Michigan Sentiment June ( 82.9 vs 81.9 )

Investing Strategies For 2014

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Fundamentals

The Fed's Age of QE3+ continued lower on a monthly basis, purchases dropping to $45 billion in May from $85 billion in December, as dictated by the FOMC. Notwithstanding, stock Indexes continued to make new all- time highs. The S&P 500 ( SPY: 1949.44 ) plus 25.87 or 1.4%, closing right on all-time highs. The Dow Industrials ( 16,924.28 ) up 207.11 or 1.2% is now in short distance from a Dow 17,000. The Russell 2000 ( 1165.21 ) + 30.71 or + 2.7% reversed its losing ways , which threatened, but never closed below its 50 week moving average.

On a daily basis the Russell traded down to its 13-day moving average but never closed below it. Now the 13 is poised to cross the 50 day M.A. going North.

It is a dichotomy to have a stock market rally with better economic values while concomitantly having declining copper prices. Copper was a disappointment falling again to $ 305 for a second consecutive week, another 2.3%. On May 27th Copper was$ 317.00. Housing has been a real drag on the economy. However, China should report excellent number this week which would support buying copper.

Economic performance by both Manufacturing and Services seemed to be more than satisfactory taking the place of the Fed to supply economic impetus. The Institute of Supply Management ( ISM ) numbers were not ebullient, but constructive at 55.4, better than the 54.9 reading in April. ISM Services rose to 56.3 well above the 55.2 in April.

The S&P 500 is currently trading around 19 times trailing earnings (vs. an average multiple of 15.5x since 1871)! Again, history is littered with examples where above average P/E multiples were sustained for prolonged periods of time. In fact, during the last bull run (2003-2007), stocks spent more than a year trading north of 20 times earnings.

Investing Strategies For 2014

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Technical Information

Support Levels S&P 500 1887

Resistance S&P 500 1967

Support Levels DOW 16,510

Resistance DOW 16,987

Support Levels QQQ 89.70

Resistance QQQ 94.68

Support Levels NASDAQ 4145

Resistance NASDAQ 4385

Investing Strategies For 2014

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Economic Data

Nonfarm Payrolls added 217,000. More workers joined up as the percentage of long term unemployed fell to 34.6% from 35.3%. Hourly earnings for May grew 0.2% after being 0.0% in April. Wages have increased about 2% yeat-to-year. However, the quality of jobs remains far behind what it was before the recession which began in 2008. There are still 1.65 million fewer manufacturing,1.49 million jobs behind in construction and 507,000 fewer in government, which are of course the better paying jobs.

Consumers showed their confidence in April borrowing a record $ 26.8Bln on their credit cards. Consumer credit has increased an average of $ 16.2 Bln per month in 2014. The April Trade deficit widened to $ 47.2 Bln, the biggest deficit since March 2012. Exports were $ 0.3 Bln less than March while imports surged $ 3 Bln.

Much of the borrowing found its way for buying $ 1.2 bln increase of imports of cell phones and other household goods. There was an increase of 0.8bln in capital goods, excluding autos.

The S&P 500 is now up over 180% since the low point in March 2009 and it has been almost 3 years since the market experienced a 10% correction. Historically, market corrections happen approximately every 2 years on average. However, this time everyone is expecting the correction and everyone can't be right.

The rally has been long in duration but watch Apple and Nasdaq for leadership. Ironically, the bears have been looking for a stock market correction while at the same time world economic numbers are improving.

The Institute of Supply Management data has been steadily improving throughout the U.S. This is a survey of purchasing managers for manufacturing as well as services. The ISM Manufacturing came in at 55.4 for May up from 54.9 in April. The New orders segment increased to 56.9 from 55.1 in April. The production Index increased to 61.0 from 55.7 in April. The Midwest US states were the strongest.

Arkansas: The May overall index declined to 58.9 from April's 62.9. Components of the index were new orders at 52.1, production or sales at 54.1, delivery lead time at 64.6, inventories at 57.1 and employment at 62.7. "Despite recent growth in the Arkansas manufacturing sector, the state's manufacturers are employing approximately 17.2 percent fewer workers today than before the beginning of the national recession," Goss said. "However, our surveys over the past several months point to solid improvements for manufacturing and the overall state economy in the next three to six months, with healthy wage additions," he said.

Iowa: Iowa's overall index slipped to 66.5 from 67.2 in April. Components of the May index were new orders at 74.7, production or sales at 75.1, delivery lead time at 50.8, employment at 69.6 and inventories at 62.6. The state's manufacturers are employing about 6.1 percent fewer workers today than before the beginning of the national recession, Goss said. "On the other hand, the manufacturing wage rate has expanded by a solid 4.4 percent from one year ago. Our surveys over the past several months point to solid improvements for manufacturing and the overall state economy, with healthy wage increases," he said.

Kansas: The Kansas overall index declined to 58.8 from April's 61.0. Components of the May index were new orders at 57.2, production or sales at 68.8, delivery lead time at 46.9, employment at 53.4 and inventories at 68.0. Kansas manufacturers are employing about 14 percent fewer workers today than before the beginning of the national recession. On the other hand, Goss said, the manufacturing wage rate has expanded by very strong 9.7 percent from a year ago. "Our surveys over the past several months point to solid improvements for manufacturing and the overall state economy for the next three to six months," he said.

Minnesota: For 18 straight months, Minnesota's overall index has remained above growth neutral. It rose in May to 67.3 from 64.9 in April. Components of the index were new orders at 76.7, production or sales at 78.3, delivery lead time at 57.0, inventories at 69.8 and employment at 54.8. "Despite impressive gains for manufacturers in the state over the past year, Minnesota's manufacturing sector has approximately 6.6 percent fewer workers today than before the national recession began," Goss said. "Our surveys over the past several months point to solid improvements for manufacturing and the overall state economy for the next three to six months, with upturns in wage gains," he said.

Missouri: The May index slipped to a still solid 57.7 from 54.8 in April. Components of the survey were new orders at 57.4, production or sales at 62.7, delivery lead time at 57.3, inventories at 51.6 and employment at 59.4. Missouri's manufacturing sector has about 13 percent fewer workers today than before the national recession began.

On the other hand, Goss said, the manufacturing wage rate has risen by a strong 6.5 percent from one year ago. "Our surveys over the past several months point to solid improvements for manufacturing and the overall state economy for the next three to six months," he said.

Nebraska: For the fifth straight month, Nebraska's overall index remained above 50.0. It rose only slightly, though, to 55.6 in May from April's 55.1. Components of the index were new orders at 58.6, production or sales at 59.2, delivery lead tim

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Cycles

For the first time this year, DJIA, S&P 500 and NASDAQ are all positive year-to-date at the same time. Solid across-the-board gains in May and new all-time highs by DJIA and S&P 500 appear to have broken the midterm election-year curse. This improves the odds, according to the Stock Trader's Almanac, that the worst two-consecutive quarters of the four-year presidential election cycle could be better than average. Markets have broken free of the typical midterm year pattern since 1950 and now appear to be tracking the Sixth Year of Presidential terms more closely.

China begins reporting substantial amounts of economic data on Tuesday morning.

July Sector Seasonality ( Stock Trader's Almanac )

One sector begins its favorable seasonality in the month of July, Gold & Silver based upon the Philadelphia Gold and Silver index. The Transport sector begins its seasonally weak period in July. As of this writing, there is still no Bear/Short ETF available that directly focuses on the Transport sector to take advantage of its seasonal weakness. No official trade will be made in the ETF portfolio. However, option traders could consider put options on iShares DJ Transportation (NYSEARCA:IYT) as it has a reasonably deep chain.

On the other hand, Gold & Silver offer numerous possibilities to trade. Because gold, silver and the companies that mine and explore for the metals have been significantly beaten down over the past month and are within striking distance of their respective 52-week lows, a diversified approach will be taken. As seasonal gold and silver strength begins, we will look to own both the physical metals and the miners at attractive prices. Global X Silver Miners (NYSEARCA:SIL), iShares Silver Trust (NYSEARCA:SLV), Market Vectors Gold Miners (NYSEARCA:GDX), SPDR Gold (NYSEARCA:GLD) can all be bought on dips below their respective buy limits (listed below in the ETF Portfolio). Should the buy limit for SLV be reached, we will simultaneously add SLV to the portfolio and sell ProShares UltraShort Silver (NYSEARCA:ZSL).

SIL top five holdings include: Silver Wheaton, Fresnillo, Primero Mining, Fortuna Silver Mines and Industrias Penoles. GDX top five holdings include: Goldcorp, Barrick Gold, Newmont Mining, Silver Wheaton and Newcrest Mining. SLV and GLD are physically backed ETFs that hold the actual metal in storage. GDX, GLD and SLV have billions of dollars in assets and trade millions of shares per day on average. SIL however, has assets of $206.7 million and daily trading volume around 200,000 shares per day, substantially less, but still sufficient to trade.

Investing Strategies For 2014

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Rule 17B Attestations

Princeton has approximately 2,581,578 shares of AIVN both free and restricted and represents them for I.R.. Princeton also has about 40,000 shares of TXGE. Princeton is paid $ 1,500 per month from RMS Medical Products. Princeton has bought 81,100 shares of RMS Medical Products. Princeton Research has been paid $ 2,500 to write a report on Xinergy.

Princeton has been engaged by Target Energy. No contract is currently in place. When there is no movement in penny stocks, even though there is none or very small losses, we will liquidate ( sold AIVN on stop ) even though we like the company, if money is needed for better opportunities.

We now believe REPR represents upside opportunity. The Target ADR trades at about $ 4.50 in U.S. vs 0.045 in Australia. Princeton owns 400,000 Australia shares and about 500 U.S. ADR's. Princeton was paid about 500,000 shares of Leo Motors.

Pursuant to the provisions of Rule 206 (4) of the Investment Advisers Act of 1940, readers should recognize that not all recommendations made in the future will be profitable or will equal the performance of any recommendations referred to in this e-mail issue. Princeton may buy or sell its free-trading shares in companies it represents at any time.

This options trading strategies information is from the June 9, 2014 Investing Strategies For 2014 Newsletter.

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