Monday, March 31, 2008

Weekly Stock Pick

Another week and it still looks to me like it’s a down market for many stocks, just like the last three months. Just to be a contrarian to what looks to me like a down market in many sectors and stocks, except on a global basis, and optimistic about the future of the global economy, I’m picking a long position this week.

AMD – Advanced Micro Devices / Long

Long Position at current prices of Friday’s March 28th close at 5.91. Stop-Loss at 5.3 or below. Take profit leave open. Trailing stop if price starts rising to lockin profits.

Technically, a double bottom is forming. Price wise if all works out, I see AMD possibly going to 12 or so longer term. Short term it could hit 8, which is its most recent high. If their fundamentals and EPS improve, maybe the stock price will too, and it will breakout past 8. We’ll just have to wait and see. In the meantime, I see a possible low risk high reward position in AMD.

AMD’s fundamentals don’t look very good right now, so I won’t even elaborate on them. If you are considering a position in AMD, make sure you’re using stop-loss, in case the price keeps going south.

Advanced Micro Devices, Inc. (AMD) is a global semiconductor company with facilities around the world. The Company offers primarily x86 microprocessors, for the commercial and consumer markets, embedded microprocessors for commercial, commercial client and consumer markets and chipsets for desktop and notebook personal computers (PCs), professional workstations and servers; graphics, video and multimedia products for desktop and notebook computers, including home media PCs, professional workstations and servers, and products for consumer electronic devices, such as mobile phone and digital televisions and technology for game consoles.

AMD's Latest News

AMD Delivers Industry’s First Commercially Available 3D Workstation Graphics Card with DisplayPort Support

ATI FireGL™ V7700 provides superb performance and image quality for professional 3D and imaging markets

Sunnyvail, Calif, March 31, 2008 NYSE: AMD today announced it is advancing application performance with stunning imagery through the introduction of the first commercially available 3D workstation graphics card with DisplayPort support. The ATI FireGL™ V7700 professional graphics accelerator provides superior rendering speed, 3D performance and color fidelity for Computer Aided Design (CAD), Digital Content Creation (DCC) and Medical Imaging professionals. ATI FireGL V7700 delivers the top-quality image quality needed to create photorealistic visualizations of real-world objects and environments —like the design concept for a new aircraft or a home remodel—by providing designers with The Ultimate Visual Experience™.

“Imaging and 3D professionals require innovative, high-performance solutions and are increasingly turning to AMD to meet their real-world needs. The ATI FireGL™ family of workstation graphics accelerators is designed to deliver visible advantages and performance leadership at every price point, from entry level to ultra-high end,” said Janet Matsuda, senior director of Professional Graphics at AMD. “This accelerator with DisplayPort support is the latest example of AMD’s leadership in delivering new graphics technologies ahead of the competition.”

“The balanced power of the ATI FireGL product line has the accuracy and speed needed for medical imaging applications like mammography screening,” said Albert Xthona, product manager for Digital Mammography at Barco. “For example, Mammography viewing uses 10-bit precision to help deliver the most information to the eye of the radiologist, and increasingly other medical applications will rely on 10-bit gray and 30-bit color rendering. With the additional speed offered by the PCI Express 2.0 interface, very large data sets are handled smoothly, saving time for busy medical staff.”

The new ATI FireGL V7700 workstation graphics accelerator with DisplayPort support brings The Ultimate Visual Experience to life. The card features a 10-bit display engine that can produce more than one billion colors at any given time, delivering unprecedented image fidelity at a lower cost.

“Our customers are eager to adopt the latest standards like DisplayPort and PCI Express 2.0 that make their environments more productive while delivering next-generation display capabilities today,” said Peter Chen, president, Exxact Corporation. “As an exceptional innovator and promoter of industry standards, it comes as no surprise to learn that AMD is the first to deliver a graphics card with DisplayPort support. Like most AMD innovations, we plan to implement the solution in earnest.”

Price Performance Leadership

The ATI FireGL V7700 supports emerging technologies while being optimized to work with today’s existing technologies. ATI FireGL accelerators are engineered to deliver continued innovation and reliability for a wide range of professional operating environments, including Microsoft® Windows® XP, Windows Vista® and Linux®. The unified driver, which supports all ATI FireGL workstation products, helps reduce the total cost of ownership by simplifying installation, deployment and maintenance. Additional noteworthy features include:

512MB of memory: Enabling effortless real-time interaction with large datasets and complex models and scenes.

Dual Link DVI Output: The combination of DisplayPort output and a Dual Link enabled DVI output, generates a multi-monitor desktop over 5000 pixels wide from a single accelerator. With native multi-card support, users can see more and do more using four displays driven by two ATI FireGL products in the same workstation.
Application Certification: The ATI FireGL workstation graphics accelerators are thoroughly tested and certified with major CAD and DCC applications, helping ensure reliability and stability.

AutoDetect: Based on a new generation GPU with 320 unified shader units, the ATI FireGL V7700 maximizes throughput by automatically directing graphics horsepower where it’s needed most. Intelligent management of computational resources enables enhanced utilization of the GPU delivering real-time rendering of complex models and scenes while increasing frame rates.
Pricing and Availability

The ATI FireGL V7700 3D workstation graphics accelerator card is expected to begin shipping in April 2008 and will be available from system integrators and AMD channel partners worldwide. The MSRP is $1,099 USD.

Click here to review and Trial For Free the Trading Software we used in determining our long position on AMD.

Good day and good trading!

Thursday, March 27, 2008

ETF Profit Driver Free Giveaway

Free ETF Profit Driver
ETF Profit Driver Course
Click Here To Win A Free Copy
Less Than 4 Days Left!



As you probably know by now, next week is going to be a turning point in the trading community when a brand new course hits the market that will show you how to . . . Claim back your life as you discover the optimal way to supercharge your portfolio with Exchange Traded Funds (ETFs), and how to do it in less than 20 minutes a night!

But here's the big news . . .

Now YOU can get the very FIRST copy from the printers before anyone else even has a chance to.

How?

The developer of the course is going to GIVE AWAY one copy this Saturday evening, March 29th. That's 3 days before it even hits the market.

He's also covering shipping & handling to anywhere in the world.

Want in on the action? Just click here:

Good luck & good trading!

P.S. The deadline for entering the giveaway is March 29th at noon eastern time, Saturday. So don't dawdle if you want your complimentary ETF 'portfolio supercharger' Click here to get it:

Wednesday, March 26, 2008

The Money Mosh Pit

“Other people may be there to help us, teach us, guide us along our path, but the lesson to be learned is always ours.” --unknown

Click here to receive a Free Copy of the "ETF Profit Blueprint" and get out of the money mosh pit before you even get in it!

Have you ever noticed that trading lessons show up in all sorts of places? I have stumbled upon them while playing golf, while both playing and watching poker, and while teaching economics to third graders. I have found another good one in a much more traditional setting.

I played a most interesting money game this week. I’m at a fairly large conference (~300 people) that is focused on growing businesses. It involves some modeling of other business leaders and some pretty deep personal work.

But the interesting game came when the whole group was told to bring money to a game after the next break. Rather quickly, everyone was put into what was basically a mosh pit. The leader gave no instructions except to say “Take responsibility for your money.” Loud music was then turned up and the instruction to “pass your money” was given.

Money was changing hands rapidly all around me and the social pressure to “pass” was pretty intense. When a large wad of cash came my way, it was fairly easy to “pass” my lesser amount of money for that.

Then, a weird thing happened. Amid widening calls from the crowd to “Pass! Pass!,” money kept changing hands and someone snatched the wad from my hand without passing anything back. My great trade had gone terribly bad in an instant.

I was now enlightened to the rules (or lack thereof) of the game – this was basically a free-for-all.

Without boring you with details, over the next minute or two, I was able to pull out a single dollar and make a “legitimate pass” (at least in my mind) for a much larger bill. And then I made no more passes. I later had time to reflect some lessons for traders and investors.

Lessons from Anarchy

I won’t spoil the rest of the game and the debrief that followed in case anyone else gets to play a similar game in the future, but I will share some of the lessons as they relate to trading.

First and foremost: If you don’t understand the game – don’t put your money at risk. This one is sort of obvious, but sometimes it sneaks up on us in subtle ways. Many folks jump into trading with minimal knowledge of how the game is really played. And even experienced investors can be tempted to try a new game (options, forex, spreads, etc.) without getting a working knowledge of the game. Worse yet, many have invested in businesses and other “opportunities” without really knowing the “ins and outs” of the game.

Have a plan. The game I played at the conference was designed to make people act without thinking. Loud music, peer pressure and time pressure were all applied. This can happen to traders in other ways. An unexpected news announcement comes out and you try to play the market response, even though it’s not part of your plan. Or someone presents a great investment opportunity, and you’re tempted to jump in so you don’t "miss the boat." Always have a plan, and especially an exit strategy before jumping into any thing new.

Be wary of blindly following the crowd. Peer pressure, both direct (following your friends and colleagues) and indirect (following the crowd) is a powerful thing. While jumping on the bandwagon can occasionally pay off in the short term, it’s a pretty weak plan for the long run. The greater the fervor and excitement around an idea, the higher the probability that the hype is nearing the end of its run. The “magazine cover indicator” is research-proven evidence of this. Don’t jump onto a trend just because everyone else is doing it. Do your research to see if the trend is sustainable. And if it is, look for prudent places to enter (short-term pullbacks, etc.).

Trading and investing lessons surround us. And many point back to time-tested principals – have a plan, know your exit before you enter and make sure you know the game you’re playing.

Click here to receive a Free Copy of the "ETF Profit Blueprint" and get out of the money mosh pit before you even get in it!

Good day good investing and trading!

Tuesday, March 25, 2008

Free ETF Profit Driver

I've got a sweet trading surprise for you. Click Here.

Next week, on Tuesday, April 1st, the ETF trading community will get turned on its ear. Why do I say that? Because I was privileged to hold in my hands a preview copy of what will probably be considered the "final word" on ETF trading ever released to the public...

Everything about it is first class . . . and easy to understand.

I'll have more information to send you about it on April 1st, but for now I've been granted special permission to give you private access to a Members Website Preview so you can get "up close & personal" with this trading course before the rest of the community gets a chance to.

You see, the author of the course is only releasing 450 copies from April 1st to April 8th . . . but here's the problem: He already has 20,000+ traders interested in it. So he just doesn't have enough inventory to go around.

Are You A Tire Kicker?

That's why he's letting me give you complimentary access to his Members Website Preview, but only until April 1st. He wants to weed out the "tire kickers" so that only the traders who are truly serious about discovering how to trade the ETF markets
in less then 20 minutes a day can get a copy of the course.

Incidentally, April 1st is when the Members Website Preview closes down and re-opens only for students of his new course.

Here are just a few of the goodies you'll get on the preview site, beginning TODAY:

Total access to his PROFIT FEEDER service where you can get daily lists of the ETFs that have met his rigorous trade alert criteria. In fact, these are ETFs that have a high probability of entering into potentially profitable positions any day now. He'll eventually be charging $197/mo for this service, but it's complimentary on the Members Website Preview.

The "Profit Vault", which contains actual ETF trade example "scren capture" videos, so you can see exactly how his students can trade these funds in less then 20 minutes a night.

Bonus insider ETF interviews, where you'll hear the developer 'spill the beans' on some of his techniques as he's grilled by 2 seasoned traders.

Previews of the actual CD-ROMs that ship with the course so you can see exactly the type of material that's on them, and a TON more.

But don't take my word for it. Go ahead and check it out now by visiting the web page by clicking here now.

Good day and good trading!

P.S. Remember, this complimentary preview access WILL expire on Tuesday, April 1st, so I urge you to get in now while you can if you have any interest learning how to dramatically up your "profit potential" while saving hours a day at the same time.

Click here to get the Free ETF Profit Driver

Monday, March 24, 2008

Silver Whipsaw Trading

Everybody knows about the ups & downs in the stock indexes this week, which moved in a whiplash trading range of more than five percent.

Big trading range duly noted, the fact is that the stock market whiplash looks mild compared to the G-force acceleration this week in the silver market.

Last Friday (March 14) saw a session high near $21; by the end of today's trading silver prices were below $17 ($16.85 close). That's a decline of some 24% in five sessions.

Still, it's not really surprising that a move of this size in silver would go mostly unremarked upon, especially considering that it was 180-degrees opposite of what was "supposed" to happen. Surely you've heard all the "bullish reasons" why: Precious metals are hot, the U.S. dollar isn't worth spit, investors are spooked and want hard assets, blah, blah, blah. The air has been thick with platitudes because the psychology has been so strong -- an important sentiment indicator last week registered an all-time bullish extreme toward silver (98%). The bad news about Bear Stearns last weekend only made silver's bullish prospects brighter.

Right?

No. Not right. Once the strongest case imaginable has been made for where a market "should" go, that's the time to think like a contrarian. This is precisely what Bob Prechter was doing in the latest Elliott Wave Theorist, published March 14. That issue is all about precious metals, including silver. One of his silver charts says "Final peak due soon," yet Bob's purpose is also to put silver in its context as a leading economic indicator. That's not the sort of insight you'll get from establishment economists, but the facts and evidence speak for themselves -- Bob Prechter simply spells it out.

Specifically, he devotes an entire page of the issue to three tables that show the "Behavior of Three Key Markets During Ressions." There's a lot to learn from financial history, especially when it's well-organized. As I said, the facts speak for themselves -- Bob's analysis allows no less.

Click here to get for Free from Bob Prechter at Elliottwave, The Most Important Investment Report for You'll Read In 2008.

Tuesday, March 18, 2008

Trading Underground Blueprint Profit Driver

Make sure you read all this because it contains a 'blueprint' that can have a DIRECT IMPACT on your portfolio.

This is what I know so far . . .

The trading community is on the verge of an unprecedented 'explosion' of profit potential trading a group of funds that have largely remained ignored by 'mainstream' individuals . . . but for over a decade, select 'underground' traders have been quietly siphoning this potential directly from these 'under the radar' markets... essentially padding their portfolios, year after year.

So if you have ANY interest in discovering how to get in on what's being called a 'portfolio supercharger' while it's still somewhat 'quiet', you're in for a TREAT.

Click Here To Follow The "Blueprint"

The trader behind this consumer guide wrote it initially as a gift to his readers to thank them for helping him with a survey about the markets in question . . . about 100,000 traders were asked to participate.

But what was intended as a 10 or 15 page 'thank you' note turned into a 57-page 'blueprint' that effectively shows you how to join this 'underground community'.

While these markets have been around for over a decade, they're just now beginning to gain momentum, but they're far from 'popular' . . . And not only are the top 20 questions about these markets answered in clear detail . . . but you'll discover how you can use this information to breathe some much needed life into your portfolio, regardless of what you already trade.

Less Than 20 Minutes

Find out how the author spends LESS THAN 20 minutes a day with TOTAL confidence in these markets, which leaves him the rest of the day to pursue other activities.

You'll also learn:

How you can get an unfair head start using these specialized trading strategies before the 'mainstream' catches on. Don't worry, it's entirely legal (page 54).

How to double your profit potential with half the effort by harnessing a special kind of fund designed to pad your portfolio when the market tanks (page 11).

How to finally let your IRA funnel profit potential out of bear runs. This little-known technique essentially lets your IRA flex its muscles for the first time ever as you trade it almost like a regular brokerage account (page 25).

How to drastically reduce your 'time in the trenches' trading these potent markets by spending less than 20 minutes a day. These 3 discoveries make it all possible (page 38).

How to use his 2-step 'fast filter' technique for quickly and efficiently finding the lowest risk & highest probability funds available. You effectively become your very own "selection service" (page 23).

Plus, there's a TON more you'll get to sink your teeth into about these 'ignored markets' when you get the report.

Sorry - It's Not For Sale

Even though he could probably sell thousands of copies of this report on the web, the author made a decision to give it away (for now, at least).

Why?

Frankly, he understands that there are a lot of hucksters out there who peddle worthless information, so he decided to make himself stand out from the crowd by giving away as much high-quality, actionable trading EDUCATION and CONTENT as possible.

That way, if you want to work with him more closely in the future, you already know what he's made of (and without coughing up a single penny to find out).

I find that kind of attitude refreshing. Don't you?

How To Get Your Copy

To get your copy, just click here right now:

By the way, you also have the author's permission to give away copies of this report to anyone you think needs some 'first aid' for their portfolio.

I hope you enjoy it as much as I have.

Good day and good trading!

P.S. This is a HUGE report. Take your time and read it all, but hurry and download it. Why? Because it's so large, it could be taken offline at any moment if the author's web server 'bandwidth' gets eaten up with all the requests for the report.

Click here to get it free.

Monday, March 17, 2008

Weekly Stock Pick

My weekly stock pick this week comes from the information technology sector, and it’s a long position. I know I said a few picks back I would be posting more short picks these days, and I will continue to do so, but for this week I want to share this global IT investment.

My investment focus for the last ten years or more, and moving forward, is on companies that have their major operations and revenues in the growing and emerging regions of the world especially the entire area of Asia which includes China, India, Australia, Russia, and the rest of Indo-China. Hopefully Japan will restructure itself to export to other parts of the world, not just the USA, so they too can benefit in this new growth and prosperity that’s happening in these regions of the world.

My stock pick for this week is Computer Sciences Corporation. Ticker CSC

Computer Sciences Corporation is a provider of information technology IT and professional services. CSC offers an array of services to clients in the Global Commercial and government markets, and specializes in IT applications. Its service offerings include information technology and business process outsourcing, and IT and professional services. Outsourcing involves operating all or a portion of a customer’s technology infrastructure, including systems analysis, applications development, network operations, desktop computing and data center management. CSC also provides business process outsourcing, managing key functions for clients, such as procurement and supply chain, call centers and customer relationship management, credit services, claims processing and logistics. IT and professional services include systems integration, consulting and other professional services. In January 2008, it announced that it has completed its acquisition of First Consulting Group, Inc. CSC direct competitors are Accenture ACN, and Electronic Data Systems EDS.

CSC Trade Position Setup

Long Entry with a Buy-Stop $42.92
Stop-Loss at $40.10 or more if you like.
As a general rule I do not take anymore than about 8% stop-loss.
Take Profit Areas $44.33 – $45.74, $46.90 – $48.20, $49.96 – $51.34, $56.39 – $57.94, $64.71 – $66.49. Adjust trailing stop-loss along the way to protect profit on position.

Computer Sciences 3rd quarter net earnings increased powered by global commercial revenue. CSC fiscal third-quarter net income climbed to $179 million, or $1.05 a share, from $113.5 million, or 65 cents a share, a year earlier, boosted in part revenue growth in its global commercial sector. Excluding items, earnings were $1.11 a share for the quarter. Analysts, according to Thomson Financial, expected a profit of $1.00 a share for the quarter. Analysts' estimates generally exclude items. Revenue rose 14% to $4.16 billion in the period ended Dec. 28 from $3.64 billion. CSC sees fiscal fourth quarter revenue of $4.2 billion to $4.5 billion and earnings, excluding special items, of $1.33 to $1.43 a share. Computer Sciences forecast for the fiscal year's revenue continues to be $16.2 billion to $16.5 billion, up about 9% to 11%.

CSC Basic Fundamental and Technical Data
Market Capitalization $6.53B.
PE 11.65.
EPS 3.53.
Institutionally Owned 93%.
Average Daily Volume 1.71M.
2007 Net Profit Margin 2.67%.
2007 Operating Margin 4.08%.
2007 EBITD Margin 13.04%.
2007 Return On Assets 2.98%.
2007 Return On Equity 6.77%.
Employees 89,000

Fitch ratings service on February 20th cut CSC debt rating to BBB+ from A-. After the S&P and Moody’s ratings of Ambac and MBIA bond insurers, I don’t give this any creditability or concern right now. I will be looking to see how CSC manages their debt going forward though. These days in this liquidity credit crisis, it’s very important to be investing in companies with a not a lot of debt. I prefer 50% maximum debt to equity, so the lower the better to survive and capitalize in market environments like this currently.

Click here to review and Trial For Free the Trading Software we used in determining our long position on CSC.

Friday, March 14, 2008

ETF and Mutual Fund Trading Techniques

Most people are doing the exact opposite of what the big funds are doing and they pay a big price for doing so.

For example, you put money into a stock after hearing that a fund manager really likes it. However, by the time you do, the fund manager is getting ready to sell.

But what if you could see what the big mutual funds are doing with their money well before they complete a transaction so you could jump in ahead of them?

It would be a huge advantage for you. Next week I will be sharing ETF and Mutual Fund Trading Techniques. Check here on Tuesday March 18th.

For example, if mutual fund managers are buying retail stocks, you'd be able to get into those stocks well before they get in and profit greatly as their activity drives prices up. Imagine what an advantage you'd have over other investors.

Suppose that you are managing a mutual fund and you need to move a billion dollars out of retail stocks into Internet stocks. You don't just tell your broker to sell a billion dollars worth of stock.

Instead, you must give an order to a large brokerage firm that basically says, "You have three days to get rid of this stock… we'd like to get at least $998 million for the stock. If you can get more than that, you may keep the extra as your bonus commission." The market then slowly sees a movement out of retail stocks. And as one fund moves out, another may see the big picture and start to move out as well, thus making the underlying movement even stronger.

Furthermore, as the movement out of retail stocks gets underway, the same fund manager may give instructions to buy a billion dollars worth of Internet stocks – and the broker may have a week to fill that order. Gradually, you'd see retail stocks moving down and Internet stocks moving up as one or more big funds shifts positions.

And the net result is that the internal conditions of the stock market shift even though the major averages may not move that much. What's interesting for you is that you can learn to see the overall shifts in cash flow as the funds start to move money around. In fact, you can spot it quickly. And you could have a huge advantage because big money tends to move slowly, but you can move quickly. In fact, when you get good at observing the flows of funds, you can start making thousands of dollars each day at your convenience.

It's not that hard. Next week, I'll show you just how to do it in this and teach you how to jump in front of the big guys in their trades.

Good day, good ETF and Mutual Fund Trading!

Wednesday, March 12, 2008

Free Options Trading Webinar March 13th

I'm happy to announce that the most popular options trading service - the Options University Strategist - is about to re-open! (But only for a SELECT number of NEW students).

And there's a f.r.e.e. 'virtual tour' webinar planned for this Thursday at 8PM

Click here to review and register for this Free Options Trading Webinar.

The original OUS - launched back in November - was a huge success, and the 300 available slots were snapped up immediately. It's been SOLD OUT ever since, until now...

To refresh your memory, Options University Strategist is the closest thing to a "done for you" trading service we've ever had.

It's like you're looking over our shoulder every step of the way.

Specifically, here's what you get with OUS:

Daily / Weekly option picks, alerts, updates, and POSITION MANAGEMENT

Breakdown of options we recommend to trade, the exact positions for you to enter into your broker platform

Immediate email and direct computer alerts every time we recommend a change in a position (Special software included)

How we handle the "morphing" and/or rollout of the position

How and when to close out the position for the maximum gain

OUS uses cutting edge, state-of-the-art technology to deliver these actual trades to you on a silver platter!

No more guesswork... sweating over making the right decisions...

With OUS you get these actual trades the pros are making - almost at the EXACT TIME they're making them!

Based on the above, is it any wonder why OUS emerged as our most popular service ever?

But things just got more interesting...

You see, as good as OUS was, we knew it could be better. And, based on lots of student feedback, plus the discovery of some really cool new technology...

The Options University Strategist Has Now Been Completely Overhauled!

In fact, I really can't do justice in this short email to try to describe in words the many improvements made to OUS.

You need to see them for yourself.

So here's what we decided to do...

We decided to let Ron Ianieri himself go over the "new and improved" Options University Strategist in a special webinar to be held this Thursday night at 8:00 PM EST.

In this special sneak preview "virtual tour", you'll be able to see "up close and personal" the many improvements made to OUS, and to understand how the service will be of even greater value in the turbulent markets we're in right now.

There are TONS of great options plays in this market, if you know where to look. Some are honestly like shooting fish in a barrel. And those plays will be revealed in the upcoming OUS service relaunch.

But it gets even better...

At the end of Thursday night's webinar, we're going to make a major announcement. I can't let the cat out of the bag yet, but I'll give you a small hint what it's all about...

Now, no matter what type of trader you are - be it a frenetic swing trader or a more relaxed long term holder - the new OUS has a solution for you.

OK - that's it - for the "rest of the story", you'll need to attend the webinar this Thursday evening.

Click here for the registration page for the webinar.

And, as I said, this is just a limited engagement for the relaunch. In fact, just 100 slots will be made available. Even with the new technology, that's all the additional workload we'll be able to handle at this time.

So if you missed out last November, you now have a second chance to get in on what many of our students are calling "the last options trading service you'll ever need."

And the service is now even better.

Join us Thursday night to see why.

Trade Smart. Not Often.

P.S. OUS is truly the closest thing available to 'done for you' trading. Our experts will do all the heavy lifting, analyzing of charts and opportunities, and selecting the very best and most profitable options to trade -- then sending them directly to
you.

All you have to do is place the trade!

But it just got even better.

Join us this Thursday night at the special time to see what the "new and improved" Options University Strategist is all about!

So, if you missed your chance to enroll in the Options University Strategist the first time, or just want to see what it's all about (along with all the new improvements), I urge you to head on over to that page and get registered for their
F.R.E.E. webinar Thursday night.

In case you missed it, click here for the Free Options Trading Webinar March 13th.

Good day and good options trading!

Tuesday, March 11, 2008

Option Buy-Writers Beware!

By Ron Ianieri of Options University

Although the buy-write and covered call strategies are and have always been considered one and the same, I have always seen them as subtly different in a very important aspect. I have always seen covered call writers as investors who write (sell) calls on an existing stock position intended to be held for a time. This stock position was pre-existing. The stock was chosen for whatever reason (capital appreciation, chart driven, fad, stock in own company) but not because the stock had good buy-write potential.

For example, a friend of mine, like many executives, receives stock at discounted prices from his company as part of his compensation package. Because my friend likes his company's product and is very confident in the management team and their business strategy model, he wants to hold onto his shares through thick and thin for the long term.

However, while holding his stock, he ran into a long, stagnant period where the stock became wedged into a tight trading range. Eventually he became frustrated with the lack of return on his investment and started to worry about the potential downside. Not sure what to do, but wanting to do something, he approached me for advice. I suggested selling calls against his stock position. He did it religiously for several years and continues to do so today. Needless to say, he is extremely pleased with the results.

However, my point is that his stock was purchased and held without any thought or consideration about the potential returns of the buy-write strategy. In my mind, my friend's strategy was a covered call writing strategy: that is, writing calls on an existing stock position when the stock is purchased independently for reasons unrelated to writing calls.

Meanwhile, I have viewed buy-writers as mostly traders who have chosen to purchase a stock because they intended to sell calls against it. For a trader, this is usually done to capture the high implied volatility premiums that are sometimes offered in particular stocks, at a particular time

Having made the distinction between the covered call and the buy-write strategies, I would like to finish this discussion talking about the buy-write. The buy-write, unlike the covered call strategy, has two decisions involved. Whereas in the covered call strategy, as I have explained, you only choose which option to sell (you have already own the stock). In the buy-write, you make a dual decision, selecting a stock because of its attractiveness for call writing and choosing which option to sell.

There are many tools that can aid in the due diligence process that should accompany any investment decision. Research, including technical, analytic fundamental and logical should be also applied. As to how to select a buy-writable stock, there are now several web sites that have sprung up to help investors make those selections. But beware, because many of these services are not giving you the whole picture, and may not know what they are saying. Without mentioning names, some state directly on their sites that the secret to successful buy-writing rests solely in the hands of volatility. They suggest, as a matter of course, that you only buy-write high volatility stocks. Their reasoning is that the higher volatility stocks have much higher premium attached to their options. Their thought is that the more premium you bring in, the higher percentage return you will get.

While this idea has merit it does not address the whole situation. The buy-writer should beware! The reason those stocks have so much premium is that they are highly volatile; that is they have a tendency toward large movements in either direction. The percentage chance of this type stock being in the same place at expiration is highly unlikely. If that is the case, then the total return of the strategy is affected. The percentage return you expected to receive from the sale of the option will not be the return actualized. Just buying the stock with the most premium available to sell is not the whole answer.

A more complete answer is expected value. Expected value addresses what return can be expected from all components of the option transaction. According to some web sites, if you were given the choice between two buy-writes of equally priced stocks, you should choose the one giving you the most premium.

However, higher premium does not equate to better buy-write strategy. A stock with higher premium might not be the better one for you. For example, say the first stock offers you a total of a $3.00 premium and the second offers you a $5.00 premium, which one would you choose? It is suggested, by some, that you choose the one that offers the $5.00 premium. Buy writer beware! The volatility that caused the stock's option premium to be $5.00 can also affect the chance of collecting the entire premium involved in the strategy.

What if I told you that there was a 50% chance of receiving that $5.00 premium while the stock that offers the $3.00 premium has a 90% chance of you receiving the premium. The expected value of the $5.00 premium buy-write is $2.50 (5.00 x .50) while the expected value of the 3.00 premium buy-writer is $2.70 (3.00 x .90). Now which buy-write is more attractive? As you can see, the selection of a buy-write is about more than total premium. It is what you can expect all the strategy components to produce. The expected value computation is actually quite simple. It does involve the total premium but the total premium is multiplied by the % chance of the option finishing at-the-money, in-the-money or slightly enough out-of-the-money to still make money. For example, you have just sold an option for two dollars. You estimate that the chance of you collecting that premium is 80%. Multiplying $2.00 by .80 gives you $1.60. Thus the expected value of the buy-write is $1.60. Using the expected value method, two different buy-writes can be compared to each other.

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Monday, March 10, 2008

Weekly Stock Pick

After the terrible non-farm payroll report on Friday you may think I’m crazy recommending a new long position on the following stock in this low liquidity high volatility environment right now. I could very well be crazy but it’s ok, I use the stop-loss rule always. Doesn’t matter if it’s a blue chip or some junk stock. Stop-loss to live invest and trade another day.

This stock is in a sector I like a lot moving forward. The fairly new and growing big industry of Online Content Management. They do have big time competitors of EMC and Oracle. This could be a positive and or negative for them depending a variety of factors and conditions. All in all, this industry sector of business they are in is in demand and should stay that way for the long term.

The internet, the largest network in the world, and those who are playing to win on the net, need to implement the types of things these companies provide, or do it themselves. Either way, it’s a must for winning being online. I know, I operate online and deal with these exact same issues everyday myself.

The company is Interwoven. Ticker IWOV.

From Google Finance: Interwoven is a provider of content management software solutions. Interwoven provides solutions for the enterprise, professional services and global capital markets. The Company’s solutions for enterprise include Interwoven Web Content Management, Interwoven Digital Asset Management, Interwoven Composite Application Provisioning, Interwoven Collaborative Document Management, Interwoven Segmentation and Analytics and Interwoven Multivariable Testing and Website Optimization. Interwoven solutions for professional services include Interwoven Practice Support, Interwoven Electronic Client File and Interwoven Universal Search. Interwoven solutions for global capital markets includes Interwoven P2P (peer-to-peer), Interwoven MessageConnect and Interwoven Trade Lifecycle. In November 2007, the Company acquired Optimost LLC, a provider of software and services for Website optimization.

Fundamentals: PE 24.03. 2007 EPS 0.51. Projected 2008 EPS .067 – 0.79. Projected 2009 EPS 0.82 – 0.96. 2007 Price to Sales 2.46, Price to Book 1.54, and Price to Cashflow 18.67. Institutionally Owned 95%. Average Daily Volume 428,000. No Dividend. Interwoven did issue Q1 2008 outlook in line with analysts estimates.

IWOV Trade Setup: Buy Stop 12.50. Stop-Loss 12.12. Take Profit Targets13.26 – 13.64, 14.47 – 14.84, 15.03 – 15.41, 16.36 – 16.78, 19.08 – 19.56.

Recent IWOV News March 4, 2008

IPC Media Selects Interwoven Optimost to Optimize their Web Presence. Leading Consumer Magazine Publisher to Use Interwoven Multivariable Optimization Solution to Increase Subscription Sales.

IPC Media, a leading UK consumer magazine publisher whose titles include Marie Claire, Country Life and What’s on TV, has selected the Interwoven Multivariable Optimization solution, powered by Interwoven Optimost, to increase visitor conversion rates on its magazine portfolio subscription site, www.giftmags.co.uk. IPC Media, which sells subscriptions for almost 80 media titles, will use the Interwoven Multivariable Optimization solution to identify the optimal page design and content in order to increase subscription sales.

“Online subscription sales have become a huge focus for us,” said Beatriz Montoya, Head of Subscriptions at IPC Media. “We’re looking to improve all areas including conversion rates, time spent on each page, pages viewed and ultimately the number of subscriptions sold.” “We are delighted to be working with IPC Media, the UK’s leading consumer magazine publisher,” said Seth Rosenblatt, vice president of Optimost marketing at Interwoven. “Multivariable optimization can have a profound impact on maximizing a company’s online business performance, and we look forward to working with IPC Media to help them deliver a superior customer experience and continue to evolve their brand online.”

Click here to review and Trial For Free the trading software we used in determining our long position on IWOV.

Good day, good investing and trading!

Friday, March 07, 2008

There's More Than One Monetary Policy "Villain"

By Robert Folsom of Elliottwave

Sellers dominated the trading on Thursday (Mar. 6), as the major stock indexes closed strongly lower on the day.

February Non-Farm Payroll Report today. The biggest economic data report in the financial universe. So heads up!

The Economist magazine published a favorable review today of a book about the housing market crisis, and one comment from the review kind of jumped off the page:

"The story has no single villain, but Alan Greenspan comes close. Under him, the Federal Reserve fueled the housing boom by sharply cutting the cost of short-term money."

So, from "Maestro" to "Villain" -- how's that for a reversal of fortune?

But, in truth, no Fed chairman can be anything "close" to a single villain. The fact is that he's first among equals the Board of Governors who set policy. That board has seven members, who serve 14-year terms.

Maybe you see where I'm going with this. Today Ben Bernanke occupies the chair that was Greenspan's for some two decades, yet Bernanke has direct ties to the Fed which also go back that far. He was appointed to the Board in 2002, and even served as Chairman of the President's Council of Economic Advisors. To call him a policy "insider" is as obvious as calling the sky blue.

But what's not obvious is why Bernanke gets none of the heat that Greenspan is now feeling. The current Fed Chairman was no less intimately involved than his predecessor in the relevant policy decisions. Back when Greenspan was telling the world that potential housing problems are nothing but "froth," Bernanke could have said "That ain't froth -- that's the first ripple of a flood!!"

Not only didn't he say that… what he did say was…

…Nothing.

One other item in today's news was that for the first time on record (since 1945), U.S. homeowners' percentage of equity in their homes has fallen below 50%. And I'll bet that if I look hard enough tomorrow, a story will show up that hangs that fact around Greenspan's neck.

But one man wasn't the single villain -- or anything close to it.

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Tuesday, March 04, 2008

Buffett Says Recession

U.S. Economy in Recession By "Common Sense Definition" Warren Buffett March 03, 2008

All I can say, its about time!

The financial powers that be have long said that a recession is two consecutive quarters of negative GDP growth. If we overlook the several problems with this definition and go along with it for the sake of argument, it's still doomed by a fatal flaw: You have to wait several weeks until the data comes out, and even then the numbers are subject to "revisions" at later times.

In other words, the process amounts to "Exhibit A" for why economists are too often little more than historians with math skills. The "latest" GDP figures don't even tell you where you are, much less where you're going. For anyone who'd paid attention in the previous three months, GDP only tells you what you knew already.

The end of this month will conclude the first quarter of 2008. We'll learn if GDP growth was negative for Q1 near the end of April. If it is indeed negative, then we'll find out if Q2 was negative toward the end of July. Not before then could the economy be "officially" in a recession.

And that's as ridiculous as it sounds, especially if you're an investor who wants information to help make decisions now. Warren Buffet didn't become a billionaire by waiting for anyone to confirm the obvious, which may be why he has publicly said the U.S. economy is already in recession by "common sense definition."

Candor like that is in short supply, but maybe not for much longer. In the U.K. Telegraph, Ambrose Evens-Pritchard said, "The verdict is in. The Fed's emergency rate cuts in January have failed to halt the downward spiral towards a full-blown debt deflation."

These remarks seem true enough about the present, but consider how useful warnings to that effect would have been, say, three years ago.

First, I want to say that I've been thinking that the USA has been a recession since January. With real estate values declining big since last year, then the credit crunch liquidity crisis following that which is a major deal and not over yet, and then the equity sell-off at the start of the new year, and now in the beginnings of bear territory, I would say that this is a recession. Watch the all important employment numbers coming up.

Second, in truth, such a warning is exactly what The Elliott Wave Financial Forecast did provide its readers in March 2005, by saying that a reversal in social mood from extreme optimism to extreme pessimism was at hand. EWFF also said that, in turn, the reversal would drive the next phase of housing, one in which "demand wavers, supply spikes higher and sellers ultimately sell at lower prices."

That was back when the weekly news magazines ran cover stories with headlines with titles like "Home $weet Home." (Time magazine, June 2005.)

Once again, the just-published March 2008 The Elliott Wave Financial Forecast offers readers analysis and forecasts that could soon prove to be "tomorrow's news today" -- such as the bond auction on February 21, when 395 out of 641 publicly offered bonds "failed" due to insufficient bidding. That's nearly "10 times the number of failures recorded in the entire 23-year life of auction rate bonds."

EWFF does more than offer facts like this -- it explains what those facts mean for the future. The entire March issue of The Elliott Wave Financial Forecast, can be on your computer screen within moments.

Click here to find out how with a Free Trial.

Good day, safe investing and trading!

Monday, March 03, 2008

Weekly Short Sell Stock Pick

Electronic Payment Systems for Emerging Markets

This week’s stock pick of mine is a short sell. Net1 UEPS Technologies, Ticker UEPS. The liquidity crisis is far from over, so in the current market environment I’m more apt to take a short term short sale as opposed to a long term long position of any kind right now for the number one reason of liquidity, and a number of other reasons.

UEPS Short Trade Setup

Sell Stop: $28.98, Stop-Loss $29.64, Take Profit Areas $27.66 - $27.00, $25.42 – 24.82, and $23.52 - $22.96.

Below you’ll read some news on UEPS, but revenues from this news will not be showing up until 2009. Along with uncertainty about the war in Iraq, and in the markets makes this stock a good short term short sale in my opinion.

Net 1 UEPS Technologies, Inc. Net1 provides its universal electronic payment system as an alternative payment system for the unbanked and under-banked populations of developing economies. The Company generates its revenues by charging transaction fees to government agencies, employers, merchants and other financial service providers, by providing financial services, such as loans and insurance products and by selling hardware, software and related technology. Net1's smart card to smart card (S2S) products include S2S Pension and Welfare, S2S Wage Payment, S2S Cash Advance, S2S Loans to Card, S2S Medical Management, Patient Monitoring and Distribution, S2S Retail and Wholesale, and S2S Insurance System. On July 3, 2006, the Company acquired Prism Holdings Limited, which focuses on the development and provision of secure transaction technology, solutions and services.

On February 25, 2008, Net 1 UEPS Technologies, Inc. entered into an agreement with a consortium comprising the Iraqi government and local Iraqi banks for the use of Net1's UEPS technology in Iraq. Under the contract, Net1 will provide a customized UEPS banking and payment system to the consortium.

The consortium, International Smart Card LLC, selected Net1 as its partner to assist with challenges currently encountered with regards to the payment and distribution of cash disbursements in Iraq. It is expected that the UEPS technology will also be utilized by Iraqi citizens living abroad, via bank branches in other countries.

The deployment of the UEPS Banking and Payments System will provide a ubiquitous platform for most retail payment transactions in Iraq by providing interoperability between automatic teller machines, point of sale devices and bank branches. The UEPS technology will provide offline and online transaction processing solutions to enable affordable products and services to be offered to Iraqi citizens irrespective of where they reside. Projects identified include the payment of social grants to war victims, employee salary/wage payments and banking products and financial services. The first project will pilot the solution for the distribution of social grant payments to war victims.

The Company expects to commence this project in the fourth quarter of fiscal 2008 and expects to generate revenue from this arrangement in the first quarter of fiscal 2009. Under the agreement, Net1 will receive ongoing transaction and license fees, as well as payments for the provision of outsourcing services and the sale of hardware.

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