A big Casino?

The market is a big game of poker. Just like the way players bluff in poker, the way a stock acts doesn't necessarily accurately represent the company behind the stock , he said.
If Wall Street is a game of poker, then the managements behind different companies are the players, They underatnd their companies to be dealt with.

Standing on the sidelines are the analysts, who are always trying to figure out the cards the companies have, he said. They are always trying to read managements' faces.

Then there's the Federal Reserve. The Fed doesn't have any cards itself, but it gets to see everyone else's cards and make judgments. The Fed is the casino, and change the rules of the game at will and at any time.

The emotional of trading

Trading is often very emotional . The market is emotional (fear and greed of course.)

If you are new to trading strategies and are stuck in the rut of ‘getting ready to get ready, to get ready.’ Still reading and reading and making excuses to yourself – be careful. As they say – you can make money or make excuses, but you can’t make both. What is the bests way to battle that – take action, when – now of course. Put on a small trade – 1 contract or 2 contracts. Get skin in the game.

Lastly it’s about the right time for my ½ year review. ½ of the 2007 calendar year is over and it is time to refresh. How am I doing so far? How is my health discipline? Am I working out and getting my heart rate up on a consistent basis? How are my relationships? (This will affect my trading of course.) How is your trading? What are my top weaknesses in trading? Are I spending enough time on your trading? What are the books that I have read so far this year? Have I gotten lazy in ny self-improvement with your trading / with your marriage? What books have I read on being a better husband or wife this year so far? (Remember how you do anything is how you everything.) Finally what are my top 5 goals for the rest of the year? Physically, mentally, spiritually, relationally etc.... What books are you going to read? What will my weigh 6 months from now?

Remember you pay a price in life – regret or discipline. Discipline weighs ounces and regret weighs tons. Decide what one you’ll pay – in advance.

Apple

The premise of Apple stock is that a major new product is going to roll out in the next few months. The product has caught the attention of the mass market and is eagerly anticipated. What would you expect from the stock?

Let’s look at a chart of the stock back in the middle of April, before the launch date of the new product was firmed up.

As you can see there was a nice uptrend over the previous year or so. Some of this stock price increase has been because of the anticipation of new products and some has been on good earnings reports. Now let’s look at what happens when the launch date of this new product is announced and the time right up to about a week before the new product launch.

The stock runs up quite nicely as the launch date approaches. What market condition are we possibly looking at? The famous “Buy on rumor, sell on news” phenomena. As you might have guessed by now, the company is Apple Computer (AAPL) and the new product is the iPhone. Let’s look at one more chart, which shows the stock right up to the close on Friday.

As you can see, the stock has been moving sideways as the actual date approached, with a little bump up the last couple of days. Where does it go from here? There is one last piece of news that still needs to come out. That is the sales numbers for the first weekend, which should be out early next week. There may get another small bump up when those numbers come out, but that the stock will likely trend back down as many traders who positioned in before the launch start to take profits.

Apple iPhone ‘halo effect’ set to drive Mac sales higher

The latest consumer PC survey from ChangeWave Research shows two major purchasing shifts simultaneously hitting the marketplace. One is near certain to have a transformational impact on Apple (AAPL).

First, respondents were asked who had either bought a computer in the past 90 days or who planned to buy one in the next 90 to tell us which type of computer (desktop or laptop) and the manufacturer.

No major surprises here, as Apple’s consumer PC sales for the past 90 days have held steady in both desktops (8%; up one point) and laptops (12%; down 1-pt). The most important finding is the stellar year-to-year comparable on Apple laptop sales (+33%).



But when respondents were asked about their planned computer purchases over the next 90 days that the marketplace transformation becomes apparent.

An astonishing 28% of respondents who plan to purchase a laptop in the next 90 days say they’re getting an Apple Mac – a 9-pt increase since our previous survey in March. Another 22% say they’ll buy an Apple desktop – a 4-pt increase since March

What’s the most likely explanation for such large-scale projected gains going forward? First and foremost, all of the advance publicity surrounding the release of the Apple iPhone is concurrently having a ‘halo effect’ on Apple computer sales. But another likely contributor is the coming new release of Apple's highly anticipated Leopard Operating System (OSX) for Macs.

Bottom Line: For those wondering what a ‘Halo Effect’ looks like, take another look at the above Apple chart.

iPhone Makes Waves

The Apple iPhone made its first appearance at Macworld in January 2007 and survey conducted to gauge early interest levels and the potential impact the device would have on the cell phone industry.

Participants were asked how likely is it that you will buy an Apple iPhone for yourself when it becomes available?

Nearly 1-in-10 respondents (9%) said they were likely to buy the new iPhone product when it becomes available -- 3% said they were very likely to purchase one and 6% said they were somewhat likely to do so.

So, Apple iPhone is set to Roil Telecom Industry and there is strong evidence that Apple should exceed its iPhone sales goals for 2008."

The iPhone is likely to have a big impact on smartphone makers such as Nokia (NOK), Motorola (MOT) and Palm (PALM), which will need to respond to the Apple phone's innovative design and features."

The combination mobile phone, Internet device and widescreen iPod media player has been the talk of the tech world since Apple Chief Executive Steve Jobs unveiled it in January, wrote Investor's Business Daily.

Other respondents pointed to the innovative features, such as a 3.5-inch touchscreen display, and Apple's brand reputation as the main selling points.

With the iPhone poised to hit the shelves on June 29 2007, there will be the accompaniment of extremely high levels of consumer excitement.

While no one is certain how the iPhone story will ultimately play out, surveys have shown the huge potential impact on the cell phone industry

Once the product is released, be on the lookout for the results of a Apple July earning announcement.

Insider Trading

If insiders are buying a stock when it's at its 52-week high, "that is a clear sign that you want in."

Sometimes insider buying is "meaningless" and, on its own, an "insufficient" reason to buy a stock. "A lot of times you'll catch insiders buying their stock because they want to give the impression of confidence, to create an illusion that they're doing better than they in fact are,"

However, "it is pretty powerful endorsement when the insiders buy a whole lot of stock," especially when the buying is occurring at the stock's high. "These guys are not going to buy at the high unless they have some unshakeable conviction about their companies." Therefore, insider buying at the high tells investors that there will not be a pullback, "and there's nothing more bullish than that,"

Insider buying, coupled with a heavy short position, also equals a buy, "This is an explosive combination, and more often than not, it means there's going to be a short squeeze," meaning that the shorts will start buying to cover themselves.

10 Rules for Speculating with Options

1) Be patient. Don't invest everything right away. Decide how much you want to risk in options during the next 12 months and spread your purchases over that time frame.

2) Diversify. Don't put all your eggs in one basket. Take at least two or three positions, and try to always own both calls and puts.

3) Minimize your risk. Pay as little as possible for each option. And always be ready to cut your losses.

4) Plan before you play. If you do not have a game plan that tells you when to take profits and when to cut losses, you will have a very difficult time making a profit.

5) Don't be greedy. The downfall of 90% of all options investors is greed. Putting all your money down on a "sure thing" is a certain recipe for disaster.

6) Maximize your leverage. Try to buy options that will increase in value by at least 100%. Buying cheap options is the first step in this strategy.

7) Buy options on high-volatility stocks. You have a limited amount of time to work with. Your best plays are on volatile stocks.

8) In general, buy out-of-the-money options. These options normally have lower prices, and they tend to carry less risk.

9) Buy undervalued options whenever possible.

10) Be patient. This rule bears repeating. Contrary to popular belief, buying speculative options is not a game that requires action every day. Successful options-buying requires patience and selectivity. It is the only way to win this game.

July Bear Call Spread

LVS – Las Vegas Sands Corp.Las Vegas Sands Corp. and its subsidiaries develop and operate hotel, gaming, and resort businesses. It owns the Venetian resort-hotel-casino and the Sands Expo and Convention Center in Las Vegas, Nevada; and The Sands Macao Casino in Macao, the People’s Republic of China (PRC). The company’s casino resorts include hotels, exhibition and conference facilities, casinos, showrooms, shopping malls, spas, restaurants and entertainment facilities, expo and convention centers, and other attractions and amenities. It is also developing the Venetian Macao resort-hotel in Macao, the PRC; the Palazzo resort-hotel-casino in Las Vegas, Nevada; Sands Bethworks in Bethlehem, Pennsylvania; and the Marina Bay Sands in Singapore. The company was founded in 1988 and is headquartered in Las Vegas, Nevada.

Bear call spread:-

Buy July 85 call
Buy July 90 call

Technicals: The stock had a 52-week low of $57.68 set back in July. After the new low, the stock began a multi month rally which resulted in a 52-week high of $109.45. Since that high price, the stock has been steadily trending lower and much of the time beneath its 30-dma. A previous area of support found at the $90 mark failed to hold and ultimately, the stock resumed a trend lower with no safety net in place. The stock trades in the casinos & gaming industry which has been trending lower for several months. The MACD’s are reading flat while the Stochastics are providing a sell signal. Volume over the month of May has substantially increased as prices trend lower. It seems that there is plenty of momentum for prices to continue to slide.

Trading system

How does a new trader go about creating a trading system? In general how do we decide on indicators for your trading system, and how to optimize them.

Just like in the execution of trades, the process used in the formulation of a new trading system should be standardized. This way, a trader doesn’t find themselves wanting a system or indicator to work and letting that skew their conclusions. Your first step is to decide which indicators you will use for your system (example: MACD or Moving Averages). How do you know what indicators to use? I have my own favorites, but everyone should test out and decide on their own indicators. For beginners, and even experienced traders, I recommended testing individual indicators by themselves. Beginners should test indicators for obvious reasons (because they don't know what works and what doesn't) Experienced traders should test basic indicators because they need to make sure that the indicators they were using 5 years ago still work. You cannot simply say that you think an indicator works well, you have prove to yourself via testing and the use of logic

Once you have tested out and decided on some indicators there are ways to optimize them. This is done by looking at various timeframes in the past and seeing how your indicators interact together. You might find that you were originally going to use a 20-day moving average, but that the 30-day works better combined with your other indicators. Decide on 9 or 10 stocks to run your tests on. Try to pick out some trading timeframes that match the trading timeframes that you are expecting to use. For example, perhaps you are going to be in most of your trades no longer than 1 quarter. Check several past quarters and see how the indicators worked.As you put together your system, there are a couple of other things to keep in mind. Here are a few items to think about:

What percentage of profit are you looking for?
What percentage of stop loss are you comfortable with?
How many trades at once are you expecting to be in?
Do the indicators you have chosen meet these criteria?

It is better to develop a system that meets your criteria then to fit a criteria to a system after it is developed. The best traders plan carefully their system and execute it without changing the rules in the middle of the game.