December 30, 2008

Market Review and Commentary for December 30, 2008

DISCLAIMER: These are trades I am doing and may not be right for
you. Use your own Due Diligence when making financial decisions of
your own choosing. This is NOT a recommendation of any security.
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The DOW advanced today 185 points. It was not unexpected. The momentum is ‘up’ and the Bulls are in charge -  at least until January 5th most likely…

If you’re not buying puts or shorting stock yet, you may want to starting Friday. I may do an update Friday morning with some stock ideas… so check in here if you can.

This rally is running out of steam… I will do a video for the Weekend Review with more info and other specific short stock picks and strategies.

The target is 9000-9250 on the DOW for the end of this rally. I favor 9000 or just under.

THANK YOU

I want to thank each of you for being a subscriber this year. It was a tough year to trade. I hope you did well… if not fantastic. If not, there’s always 2009!

In 2008 I made money on trades, lost money on trades and broke even on others but in all it was a good year.

This was my best trade this year:

Impressive, but these last 2 weeks I lost $32,700 of the profits above!! I ‘gave back’ about half of those profits… Ugh. I hate when that happens.

In August I gave up on Monthly Income Trades in favor of Victory Spreads due to the increase in the volatility. The Victory Spreads for those that used them (and I heard from a lot of you saying how great they were working!) were wonderful when the market was really volatile in October and November. Some people emailed me saying they were making $500 to $1000 a week just with Victory Spreads! Awesome…

They may still have their use, but in general Victory Spreads may not perform as well in a lower volatility environment.

2008 SUMMARY / TRADING PLAN for 2009:

Even though my profits were good in the second half of the year, it was a lot easier and a lot more fun trading the first half of the year using Iron Condors and Calendar spreads – monthly income trades.

I love the monthly income trades and am going to focus on them almost exclusively as my trading plan in 2009.

I am also going to add one new type of trade to my Monthly Income Plan which I’m calling “Portfolio Boosters”.

Imagine for an investment of $500 making as much as $50,000 from a single trade. That’s what “Portfolio Boosters” are all about. These are low risk AND low probability trades however. In other words, few will ever make a profit, but the one’s that do could make you wealthy – and we only need a few of them to hit some major home runs in 2009.

So my plan will include Iron Condors, Credit Spreads and Calendars – theta positive trades for monthly income. Then I will occasionally add a “Booster” trade that will have the potential to explode our portfolios.

Thank you to everyone who submitted their ideas for how to make Tradingology better in 2009.

One of the things that almost everyone asked for was a specific trade or two each week that has the potential for large profits.

So each Sunday evening I’m going to be giving you one or two trades I am doing in the coming week that I think has great potential. As with any plan, only trade what you can afford to lose…. but my goal will be to hit at least one trade out of the park each week with a 50% or more gain.

Finally, as stated above, I will be focusing on Theta Positive trades for the coming year.

I will show you my trades each day and how I build inventory, track and manage by the numbers.

I think everyone that emailed me yesterday and today agreed that is what they would like to see and I agree – that’s what I want too. The last 6 months in the market was unusual…  the VIX at 80??? No one would have believed we could even get to those levels 6 months ago. And I don’t think we will see that level for a long time, but you never know so Monthly Income trades were too dangerous in that environment.

I expect 2009 to be a little less volatile but I do not think we will get back to “10″ on the VIX… the new normal for the VIX will probably be in the 20-45 range… maybe hitting an occasional 60… and that’s GOOD. That means premiums (hence theta) will be high and we should do well with theta positive trades.

Overall we will face many challenges ahead in 2009. I will be with you every step of the way and want to give you my very best trading ideas. I do a lot of research, reading and studying of the markets on a daily basis. I spent over $50,000 this past year on my own trading education and I hope to be able to share with you everything I learn in 2009 as well (that’s worth anything in easy-to-understand language.

“Professional Trading Strategies Made Simple” is my trademark on Tradingoloy.com …

HAVE A SAFE AND HAPPY NEW YEAR!

See you in 2009!

Trade With Confidence