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Strategies & Market Trends : Trading with Jerry Olson(OJ) -- Ignore unavailable to you. Want to Upgrade?

To: Jerry Olson who wrote (1261)	11/23/2003 3:43:58 PM
From: Jerry Olson	Read Replies (1) \| Respond to of 1617

my newsletter from the 9th..easy call really... ============================================================ JERRY OLSON'S "POINT" OF VIEW NEWSLETTER DATED 9 NOV 2003 OVERBOUGHT PULLBACK COMING Hello out there my cybertrading friends. I hope you and your family and friends are healthy and happy this fine fall weekend. It's cold here folks...I do not like it one bit<g> The markets have been moving higher from the March 2003 lows to the recent highs in Nov last week. I feel there's a "Wall of Worry" starting to creep into the streets mentality right now. While I feel the markets could correct or shall I say "pullback" soon, I feel the pullback will be shallow and without much force unless an outside event occurs. I remind you markets do not go straight up without solid retrenchments along the way. The last two retrenchments using the COMPX as an example were for 120 points each. When they happened mass buying came into the market with stunning force. I think it will happen again no matter how far we pullback. Markets climb walls of worry. I suggest that the fund managers are having the best 9 months of their lives and surely do not want it to end. What makes me smile is though, will they "chicken" out and bail if the markets begin to fall and start looking bad?. They do not have a solid track record of knowing what to do really. Let's see and watch the "tells" of the markets movements. If we begin to see 2 billion share days with losses of 2% on the indexes then you're witnessing fund selling. Usually it happens 1 day then within 4-5 days and it does the same thing. Clearing out these excesses makes a world of sense to me as the charts are signaling we are too overbought on the indexes, stocks and sectors. They need a breather here, a breath of fresh air so that people or shall we say traders and investors can get into the markets without chasing at these levels. I think this scenario will happen this month. What I want you all to do is get tighter stops on all long trades, and prepare with me a list of stocks and ETF's to buy on this next dip. We are almost ready for this next best 6 months in the market for seasonality. However since we rallied all the way thru Oct and have not pulled back I would suggest we may move lower and stay there a bit longer. Then begin to rally up into the earnings season for January. Along with that idea and the January effect I think will be stellar this year as many corporations have guided higher for the December quarter, known as "upside pre announcements". The 3rd quarter was excellent for earnings and projections. Now it's up to the street to try and bring these overbought stocks back down to reality again. We shall watch a permanent list of stocks that I think could double next year with a good market. We'll begin this week to talk about some stocks I like for your portfolios when and where we being to "invest again". Here are 2 stocks you need to own in your IRA's or stock portfolios. 1st is MO-Phillip Morris company. This stock has had it's share of trouble what with constant law suits about smokers. However many judges are throwing these claims and suits out of court. Also they pay a solid 6% dividend and have not said anything about reducing it even thru all this turmoil. It's RS (relative strength) chart is just .10% away from reversing back up after being down for a long time. It's over bought here "short" term and I would dearly love to see it pullback to 43/44 area. Now if we get this expected pullback this month I would buy it and then write a Jan 2005 Leap call against your shares 5 points above the price you paid or the nearest strike number. Example is the stock comes back down to 44 or so. You would write the Jan 2005 50 leap call..I mean sell that call and take in the premium paid for the right of that buyer to "own" the stock at 50. Now here's the complete scenario as I think it could play out. There are 3 potential possibilities doing this trade. 1.---You hold this stock for 1 year get paid 6% for your 1000 shares you paid $45,000 bucks so thats $2700.00. Next your selling the Jan 2005 50 strike calls and you get say $3.00 or another $3000.00. New total $5700.00 that is now a return of 12 1/2% on your $45,000..If the stock is OVER 50 in Jan 2005 or for that matter over 50 at anytime you may have to give up your shares. But you'll get paid $50,000 for your time and trouble and collect another $5000.00 added to $5700 so the total is $10.700 for your investment. Ok you put up $45,000 and made $10,700 in one year for your trade thats 21% return on investment and the BEST possible result. 2.---You do all of the above but the stock stays under 50 all the way thru Jan 2005 say around 45 and you collect $5700 bucks for a stand still return of 12 1.2% can't get too much better than that folks. 3.---Worst case scenario. MO sells off say 15% down to 38.50 or there about. You received $5700 or the equivalent of 6 points for your 1000 shares..so your downside is protected to 39 if you paid 44.. You would still own the stock and be underwater for not too much. It simply means you did not make money on your investment for 1 year but you are safe and can start all over again for 2006. No harm no foul. The next trade is the SMH, this is an ETF Fund for the semiconductors. It's 100% overbought here at the top of the 10 week trading band. It's due for a pullback..Albeit a short one as last week the Semis Bullish Percent has reversed back up into X's at 82% as I thought they would.. What with the semis cycle just getting started for next year 2004. And we'll see what AMAT has to say on the 12th and KLIC has to say on the 17th, I think they both will be solid reports with upside guidance. Your trade is the exact same thing as above with one extra piece of the puzzle. I want you to buy 1000 shares of this index & 10 Leap calls even though you're selling Leaps on the shares you own in your IRA's or portfolios if you can afford it, without jeopardizing your trading capital for scalping and making a days pay. One trade will be a buy and hold for the options. The other for income. This income is to rebuild your losses for the last 3 years. You can learn to do this each and every year without worrying too much about losses. I can expand on this as well. When you sell or write a Covered Call meaning you OWN the underlying stock and the market corrects and the stock falls along with the option, you can "always" UNCOVER that trade, meaning you can just simply buy back that call and wait till the stock stabilizes. You can also have hard stops under that stock that triggers your selling of that call. It will work like a charm...We always want to have "capital preservation" as the number 1 goal in our trading rules. So as we move thru the next 30-60 days if we're lucky we'll get this much needed pullback so stock charts can reverse down setting them up for a move higher after we stop and reverse back up again. I hope you're understanding me here..it's impossible and dangerous to continue to move higher without a normal pullback to relieve the pressure here. Ok let's move along now to all the indexes.. ================================================================================================ LAST WEEK ON FRIDAY AND IT SEEMS THAT MANY FRIDAYS ARE TURN DAYS THAT HAVE "NOT" MATERIALIZED INTO FULL BLOWN CORRECTIONS YET. WE HAD NEGATIVE CANDLE STICKS AGAIN AFTER ALMOST ALL THE INDEX MADE ANOTHER 52 WEEK HIGH. IT'S TRULY AMAZING TO ME AND I'M SURE TO YOU ALL AS WELL. WE SHOULD SEE WHAT THIS MARKET "NEAR" TERM IS MADE OF AFTER THAT AL QUEDA ATTACK IN SAUDI ARABIA OVER THE WEEKEND ALONG WITH THE NATURAL AREA OF CORRECTION WITH A FOLLOW THRU STICK DOWN. HOWEVER EACH AND EVERY TIME THIS FRIDAY STICK APPEARS IT TAKES 1-2 DAYS OF NARROW RANGE BARS(NRB) BEFORE IT ACTUALLY MOVES LOWER. WE ARE HEADING INTO OPTIONS EXPIRATION WEEK ON THE 17 THRU THE 21ST..THIS IS THE TELLING WEEK BEFORE. WHICH WILL THEY DO FIRST TAKE OUT ALL THE CALL BUYERS OR THE PUTS BUYERS? WE'LL KNOW QUICKLY ENOUGH. DJIA---BROKE A 52 WEEK HIGH AT 9900 AND A DOUBLE TOP(DT) ON P&F. IT TOUCHED THE 61.8% PROJECTION FROM THE SEPT LOWS TO THE OCT HIGH TO THE OCT LOW. A "PERFECT TOUCH". THE 3 BOX REVERSAL BACK DOWN IS AT 9600 AND NORMAL AGAIN. IF WE BREAK 9400 THE WOULD BE A DOUBLE BOTTOM BREAKDOWN AND THE START OF A "SHAKEOUT PATTERN". THE BOTTOM OF THE `10 WEEK TRADING BAND IN CASE IT GETS WORSE IS AT 8900 RIGHT WHERE THE BSL LINE IS LOCATED, THATS THE BULLISH SUPPORT LINE(BSL) ON THE POINT AND FIGURE CHART. I WANT TO MENTION HERE THERE'S A "WEEKLY" GRAVESTONE DOJI FROM LAST WEEKS ACTION BUT THE 20 EMA ON THAT CHART IS 9400. SO LET'S WATCH THIS WEEKS ACTION AND SEE WHERE THEY WANT TO TAKE US. COMPX---MISSED 2000 BY 8 MEASLY POINTS BUT STILL MADE A 52 WEEK HIGH. WE TOUCHED THE 78.6% PROJECTION SAME TIME FRAME SEPT LOW OCT HIGH OCT LOWS. WE HAD A DARK CLOUD COVER STICK ON FRIDAY. 1960 THE 3 BOX REVERSAL BACK DOWN. 1930 THE DB(DOUBLE BOTTOM) BREAKDOWN AREA. 1890 IS THE MIDDLE OF THE 10 WEEK TRADING BAND. COULD THIS BE ANOTHER START OF 100-120 POINT RETRACE BACK DOWN? WE SHOULD KNOW RATHER QUICKLY. TECH HAS BEEN STRONG FOLKS. SOX---GRAVESTONE DOJI ON THE DAILY CANDLE CHART(DCC) ON FRIDAY, IT'S AT VERY HIGH LEVELS WITHOUT A MUCH NEEDED PULLBACK AND ON A "HIGH POLE" HERE. EVEN THOUGH THE SEMIS BP HAS REVERSED UP I WILL BE WARY ON MY SMH LONG TRADE AND TAKE PROFITS QUICKLY ON ANY MEANINGFUL WEAKNESS THAT GOES FOR INTC AND KLIC TOO. A LOT OF PROFIT JUST IN THOSE 3 TRADES FOR ME. THE 20 EMA DCC CHART IS AT 490 AND SO IS THE 38.2% RETRENCHMENT AREA. 50% IS AT 477.00 AND THE 61.8% IS AT 464.00 ALSO THE MIDDLE OF THE 10 WEEK TRADING BAND. WE WANT TO BUY THAT DIP WHEN AND "IF" IT OCCURS. BKX---ONE FABULOUS CHART AT A 52 WEEK HIGH WITH LITTLE SIGNS OF TROUBLE YET. IT TOUCHED 955 WITH DARK CLOUD COVER ON FRIDAY. THE 20 EMA IS AT 935 1ST STOP IF WE ROLL OVER HERE. THE 3 BOX REVERSAL BACK DOWN IS AT 940 BOTH THE 61.8% AND MIDDLE OF THE 10 WEEK TRADING BAND IS AT 905 A POSSIBLE PULLBACK TARGET. BTK---STILL IN A MONSTER TRIANGLE ON BOTH CHARTS P&F AND DCC. THERE'S A DOJI FRIDAY BUT STILL IN A SQUEEZE AREA THAT "COULD" GO EITHER WAY. THE BP BIOM IS AT 58.69 AND NOT MOVING HERE. 490 THE B/O AND 430 THE BREAKDOWN SIMPLE AS THAT. NDX---POWERFUL B/O AT 1450 TO A NEW 52 WEEK HIGH LAST WEEK. MOMENTUM HAS TURNED POSITIVE. THERE WAS DARK CLOUD COVER ON FRIDAY. 1420 THE 3 BOX DOWN 1411.00 THE 20 EMA WE ARE CURRENTLY AT HEAVY RESISTANCE(R) OVERHEAD HERE ON P&F. THE BEARISH RESISTANCE LINE(BRL) IS RIGHT HERE. MIDDLE OF THE 10 WEEK IS AT 1380. LET'S WATCH IT CLOSELY AS SNDK HAS BEEN ADDED TO THIS CAP WEIGHTED INDEX. SPX---INCREDIBLE MARCH TO 52 WEEK HIGHS AND YET ANOTHER B/O BUY SIGNAL ON P&F AT 1060. THE 3 BOX DOWN IS AT 1030. 1010 WOULD BE A DOUBLE BOTTOM(DB) BREAK AND THE START OF A SHAKEOUT PATTERN. SHAKE OUTS ARE A BULLISH PATTERN TO MAKE THE WEAK HANDS EXIT A TRADE OR AN INDEX OR STOCK THATS BEEN IN A POWERFUL BULLISH UP TREND. WE WAIT FOR THE BREAK OF THE CHART AND THEN WAIT FOR THE VERY NEXT 3 BOX REVERSAL BACK UP TO BUY IT WITH A STOP JUST BELOW THE BOTTOM OF THE LAST LOW. I STILL HAVE A TARGET FOR 1100 FOR THIS INDEX. WE TOUCHED THE 61.8% PROJECTION RIGHT ON THE NOSE. LOOKING AT THE RETRENCHMENTS---38.2% IS AT 1030, 50% IS AT 1028, 61.8% IS AT 1019 AN OLD (HEAVY SUPPORT) AREA. SPZ3---A FAILED TEST OF TOP AT 1060 LAST FRIDAY BUT I SEE WHERE THERE WERE PREVIOUS BUYERS AT 1044. PLEASE SET ALERTS FOR ANY BREAK OF 1044 FIRST. A BREAK OF 1040 WOULD BE THE KEY FOR THAT. 38.2% RETRENCHMENT IS AT 1034, 50% AT 1025, 61.8% AT 1018 REMEMBER THIS NUMBER FOLKS?. THE FRIDAY STICK WAS AND INVERTED HAMMER NOT ALWAYS BEARISH BUT WE'LL SEE MONDAY AM. NQZ3---THE B/O BUY SIGNAL WAS AT 1450 THE 3 BOX DOWN IS AT 1420, WITH THE 30 EMA DCC CHART AT 1398 ALONG WITH THE 38.2% RETRACE AREA. THE MIDDLE OF THE 10 WEEK IS AT 1380. IF YOU LOOK AT THE SEPT LOWS TO THE NOV HIGHS THE 61.8% RETRACE BACK DOWN IS AT 1362. SO WE'LL HAVE TO SEE WHAT'S GOING TO TRANSPIRE NEXT WEEK... OEX---POTENTIAL OPTIONS TRADE FOR NOV OR DEC. THIS INDEX ALSO FAILED ON FRIDAY TO TAKE OUT THE TOP THAT WOULD HAVE BEEN 530. IF YOU LOOK AT THE DAILY CANDLE CHART(DCC) WE ARE STILL IN A PENNANT PATTERN AND STILL TRYING TO B/O. IF IT FAILS IT HAS TO BREAK THE UP TREND LINE AT AROUND 508 TO TAKE IT SHORT USING PUTS. WATCH VOLUME ON EITHER SIDE OF THIS TRADE LONG OR SHORT..IT MUST BE HEAVY. BUY THE AT THE MONEY CALLS OR PUTS EITHER WAY. 525'S OR 510'S. ================================================================================================ ALL IN ALL WE CAN SEE FRIDAY WAS ANOTHER BAD DAY FOR CANDLESTICKS IN GENERAL ON MOST INDEX CHARTS THE REAL QUESTION WILL IT HAVE IMMEDIATE FOLLOW THRU OR WILL IT MOVE SIDEWAYS AND THEN FALTER. EVERYONE NEEDS TO BE ULTRA ALERT HERE. OK HERE COMES THE WATCH LIST FOR THIS WEEKS NEWSLETTER..USE HARD STOPS AND TRADE RELAXED WE COULD HAVE SOME FUN ON THE SHORT SIDE FOR A COUPLE OF WEEKS HERE. AMAT---I AM LONG THIS BEHEMOTH STOCK HEADING INTO EARNINGS AFTER HOURS(AH) WEDS THE 12TH. PROBLEM IS DARK CLOUD COVER FRIDAY..NOT GOOD. THIS STOCK IS WELL ABOVE THE 20 EMA AND THE ADX IS VERY HIGH TOO. TOUCHED THE TOP OF THE 10 WEEK. 25.65 THE BTL---24.90 THE SST... BRCM---VERY VERY STRONG STOCK EVERYONE WITH ONE PROBLEM. THERE ARE RUMORS ABOUT INTC BUYING A COMPANY "LIKE" BRCM I HATE THAT STUFF. IT ALMOST ALWAYS LEADS TO A SELLOFF IF NOT TRUE QUICKLY. TOUCHED THE TOP OF THE 10 WEEK FRIDAY. 36.55 THE BTL---34.40 THE SST. KLAC---BEARISH ENGULFING STICK FRIDAY. DID BREAK A SPREAD TRIPLE TOP AT 61 MAYBE IT NEEDS TO REST HERE. THERE'S A HEAD AND SHOULDERS PATTERN 15 CHART TOO. 60.25 THE BTL---58.95 THE SST PMCS---110% PERCENT OVERBOUGHT HERE ON A MAJOR HIGH POLE IF INTC SAYS NO THIS THING IS GONNA FALL DOWN HARD...BUT AS PART OF THAT INTC RUMOR IT WAS FLYING FRIDAY. 22.55 THE BTL---21.75 THE SST NVLS---BIG NEGATIVE STICK FRIDAY FULL BLOWN BEARISH ENGULFING. CHECK IT OUT PLEASE. THE 20 EMA IS ALL THE WAY BACK DOWN AT 40.70...44.30 THE BTL---43.25 THE SST... NSM---INCREDIBLE CHART EVERYONE DOJI'D ON FRIDAY THO, LOOKS A BIT TIRED UNLESS AMAT KILLS IT. TOP OF THE 10 WEEK IS AT 46...44.30 THE BTL---43.30 THE SST TJX---HAS EARNINGS(EPS) ON TUES PRE MARKET THE STOCKS CHART IS AWESOME TO SAY THE LEAST. VERY HEAVY BUYING AHEAD OF THAT NUMBER THURS AND FRIDAY LAST WEEK.. 23.35 THE BTL---22.30 THE SST. I AM LONG THIS STOCK SMH---NEAR THE TOP OF THE 10 WEEK TRADING BAND HERE. DARK CLOUD COVER TOO I AM LONG AT 42.28 I MAY CLOSE THIS EARLY MONDAY I'LL SEE. IF THE MARKET HOLDS UP AHEAD OF AMAT I'LL HOLD. 44.40 THE BTL---43.45 THE SST. KLIC---I AM LONG AT 13.19 I MAY SELL THIS AS WELL AS OTHERS ON MONDAY I HAVE 0VER $3.00 BUCKS IN IT SO WE'LL SEE WHAT THE FUTURES LOOK LIKE. IT HIT MY UPSIDE NEAR TERM TARGET OF 16 PLUS 1 POINT SO FAR. IF IT REVERSES BACK DOWN TO 15.00 IF WE PULL BACK SOME I'LL LOAD THE BOAT FOR THE JAN/FEB 15 CALLS AHEAD OF EPS ON THE MORNING OF THE 17TH..I AM TALKING LARGE AMOUNTS OF STOCK AND OPTIONS THIS CHART IS SAYING IT'S GOING MUCH HIGHER. NOT RIGHT AWAY BUT OVER TIME. SO I'LL GIVE IT TIME. I HAD A 20 BUCK TARGET. 16.70 THE BTL---15.95 THE SST. SINA---INTERESTING DCC CHART. IT HAMMERED ON FRIDAY AFTER BREAKING A DOUBLE BOTTOM AT 39 ON THURS ON P&F. VERY WEAK EARLY AND STRONG LATE. VOLATILE AS PER USUAL BUT SANE COMPARED TO NVEC<VBG> 39.15 THE BTL---38.15 THE SST... NVEC---SPEAKING OF THE DEVIL<G> THAT WAS ONE NASTY STICK ON FRIDAY FOLKS AND I'M LONG THIS STOCK AND UNDERWATER "AGAIN" IF IT DOES NOT BOUNCE ASAP I'LL TAKE THE LOUSY LOSS AND PASS ON IT FOREVER. 42.00 THE BTL---40.85 THE SST..MAN THIS IS NUTS AND THOSE SPREADS? FORGET IT PASS THIS STOCK ALLTOGETHER QCOM---THIS WAS A POWERHOUSE ON FRIDAY BUCKING THE TREND ALL DAY. HAD GOOD EPS AND GUIDED UP. 48.55 THE BTL---47.40 THE SST...NICE P&F AND DCC CHART HERE. CYMI---DOUBLE TOPPED OUT LAST WEEK AT THE 52 WEEK HIGH BUT FAILED TO B/O SO FAR. A HANGING MAN STICK ON FRIDAY LEAVES INDECISION FOR THE TROOPS...49.30 THE BTL---48.15 THE SST. EBAY---WELL IT WAS THERE FOR THE TAKING TWICE. IT'S IN A SEVERE TRIANGLE ON THE DAILY CANDLE CHART. MORE LIKE A DESCENDING WEDGE IT'S ACTUALLY BULLISH BUT ONLY IF THE MARKET RALLIES<VBG>...IF IT WOULD TAKE OUT 57.75 THEN IT MAY FLY UP AGAIN..COURSE IT COULD JUST FALL DOWN HARD TOO<G>...56.75 THE BTL---55.50 THE SST...AND A GOOD ONE TOO... YHOO---PULLED BACK NICELY TO THE RISING 20 EMA ON FRIDAY LOW VOLUME SELL OFFS SO FAR. THIS STOCK IS SOLID AS A ROCK. 40-41 LOOKS LIKE GOOD SUPPORT. 42.85 THE BTL---41.90 THE SST. OVTI---THERE'S A MAJOR GAP TO FILL IF WE PULLBACK HERE FOR 1-2 WEEKS DOWN AT 48. THIS IS ONE FABULOUS STOCK CHART. IT DID BREAK A DOUBLE BOTTOM AT 56 LAST WEEK....56 THE BTL---54.90 THE SST. RIMM---THIS WILL BE ONE OF THE STOCKS WE TAKE LONG FOR NEXT YEAR BUT IT MUST CORRECT. THE ADX ON THE DAILY IS AT 51.23 THATS VERY OVER BOUGHT. IT'S ON A HIGH POLE TOO...46.40 THE BTL---45.30 THE SST. IMCL---I'VE BEEN SAYING THAT "SO FAR" IN THIS TRENDING MARKET IF YOU MAKE A MISTAKE ON THE LONG SIDE MOST OF THE TIME YOUR GOING TO BE OK. IMCL IS ONE OF THOSE STOCKS. IT'S RECOVERING HERE I MAY EXIT THIS WEEK. 38.35 THE BTL---37.20 THE SST. WE'LL ALL OWN THIS FOR NEXT YEAR. AMGN---IT'S FALLEN AND IT CANNOT GET UP..BROKE THAT BSL LINE AND IS VERY WEAK..THE BTK AND BBH ARE NEGATIVE BECAUSE OF THIS BIG CAP WEIGHTED STOCK. 60.55 THE BTL---59.30 THE SST DOWNSIDE TARGET EVENTUALLY IS 56. NEM---VERY NICE CHART HERE SO FAR AT A 52 WEEK HIGH DOES NOT MOVE VERY FAST MAY BE A VERY NICE BUY WRITE STOCK. STOCK HAS A PREFECT BULL FLAG PULLBACK TO THE 20 EMA TO BUY IT HERE. NICE STICK FRIDAY. 43.10 THE BTL---41.20 THE SST.. =============================================================================================== OK THATS IT FOR THIS WEEK. WE NEED TO SEE THE REACTION TO THAT ATTACK OVERSEAS AND THOSE NEGATIVE STICKS FRIDAY. THE PASSWORD FOR THIS WEEK IS................caution.................one word lower case. FOR ALL CLASS MEMBERS WE'LL HAVE CLASS MONDAY AT 4.00 PM SEE YOU THERE. EVERYONE LET'S KEEP IT GOING AS EACH WEEK GETS BETTER AND BETTER. STAY FOCUSED USE STOPS AND I WOULD BE ULTRA CONSERVATIVE TILL WE SEE WHAT'S UP. BEST REGARDS JERRY PS: WOULD JEFF JONES OF CALIF CONTACT ME VIA E-MAIL PLEASE? THANKS jerry olson www.buyitbuyitsellitsellit.com jerry.ols