Rally Led By Builders And Energy Companies!

Member surprised by rise in market,
although typical after disasters. More
companies needed to do cleanup, problem
solving. Government taking charge as
disaster strikes Gulf. Get the latest at
TradingTrainer.com.

Hey trading team,

This is A.J. on Wednesday, August 31st with your
Trading Trainer web log. We are your home of
market insights for the serious option trader.
This web log will cover the events in the market
from today as well as prepare you for watching
the market tomorrow.

It really is amazing to me. I was talking with a
TradingTrainer.com member today and he was
initially surprised at the market rally. He said
something like, "You would think with all the
devastation for Hurricane Katrina that the market
would decline." Traditionally, that is not the
case. Look back to September 11th, 2001. After
the initial decline, some of the best gains were
made in the weeks that followed. The war on Iraq
is another example. Wars and natural disasters
create work. They are problems that need to be
solved. In come companies to solve those
problems.

Today's rally was led by devastated home builders
and material supply stocks as well as energy
stocks that are benefiting from the high commodity
prices of oil and its derivatives. Chock that one
up to Hurricane Katrina as well. Not only did it
create a lot of work for builders, it knocked out
oil rigs and refineries in the Gulf of Mexico
which hampers the supply of a particular commodity
that is currently feeling the effects of record
demand. What you have to remember here is that
typically it is the government that pays the bill
for wars and natural disasters. That's versus
honest to goodness world demand for a product or
service. You have to ask yourself, the real
estate market in the U.S. is undergoing a
correction, so how can builders do so well today?
That's because the government is now the customer.
They are in charge of putting things back together
when things fall apart. What happens in the long
term then is that we have to fund the government
in the form of increased taxes. Or, the
government can go into debt. Either alternative
acts to slow the markets. So, these short term
positive spikes like the one we saw today, caused
by a natural disaster, but it just as well could
have been caused by a war or conflict, will have a
negative impact on the market in the long term.
Just know and understand that team.

Another aspect of today's rally was that the
Chicago PMI came in below 50 which signals a
decline in activity. That contradicts the growth
we've been seeing for over two years.. The blame
goes toward high energy prices. But the effect is
that investors don't feel inflation pressures as
much when declines are being reported. The
sentiment is that the Fed will hold off from
further rate hikes till news gets better. That
speculation makes the market rally.

My portfolio of mostly options on energy stocks
rallied for the most part of the day with a slight
bump in the afternoon. The bump came when
President Bush announced that he authorized
supplementing oil supplies with those from the
U.S. strategic reserve while supply from the Gulf
has been temporarily halted. Even with that bump,
I sold my Encana Corp October 42.50 Calls for a
"return on my invested capital" of 155%. Not bad.
I think I'll take 10% of the proceeds and treat
myself to two weeks this winter in French
Polynesia.

Team, you have to NOT be afraid to follow the
charts. You know how to protect your investments
once you are into a trade. You need to build
confidence in the charts. Even if you use the
TradingTrainer.com buffered template, the most
conservative, you would have still gained today.
Don't suffer from analysis paralysis which is
really a cover up for your fears. Take action.
At least paper trade. Don't let me be the one
getting rich over here alone.

Like I said, earlier, I sold my Encana October
42.50 calls at $7.40 an option when my trailing
stop was triggered after the afternoon pull back.
I closed that position with a return on my
invested capital of 155% after being in the trade
for 40 days. My EOG resources October 60 calls
closed higher at $5.60 an option. I'm just about
out of that hole with a return on my invested
capital of -10%. I've been in that trade for 40
days. My Pacificare Health Systems November 75
calls closed higher at $2.70 an option. I'm in
the red with a return on my investment of -7%
after being in the trade for 40 days. My
quicksilver September 40 Puts closed way down at
25 cents an option. I'm in the red with a return
on my invested capital of -84% after being in the
trade for 14 days. And my Tenaris October 105
Calls closed up at $11.80 an option. I'm in the
black with a return on my invested capital of 49%
after 5 days in the trade.

This is my plan for tomorrow. I'm going to start
the day by looking at Genentech and Valero for
possible morning purchases. I'll also evaluate
the remaining securities in my portfolio for
possible exits. Tomorrow could be another
volatile day. There's a lot of news hitting
investors tomorrow. Be on your toes. If it's too
much for you; do some paper trading. Take the
edge off. But, the theme of the day is DO
something. Don't just do nothing.

Till tomorrow, happy market watching, trading and
money making. Trading Trainer is here helping you
create your dream lifestyle.

Best regards always,
A.J.

About the Author
A.J. Brown is a full time options trader, author,
speaker and consultant. Watch him review stocks
charts on video each week, listen to his audio
newsletter where he leads you by the hand through
the end-to-end process of successful option
traders and get tips and tested strategies proven
to boost your return on your invested capital by
massive amounts in his membership site at
TradingTrainer.com today.

* You may reprint or distribute this article as
long as you leave the content, the links and the
resource box at the end intact.

Watch For Upcoming Katrina Damage Report!

Full distribution day for S&P and NASDAG.
Market may be heading towards bull pattern.
More volatility coming as Katrina rips
through the Gulf. Get the latest at
TradingTrainer.com.

Hey trading team,

This is A.J. on Tuesday, August 30th with your
Trading Trainer web log. We are your home of
market insights for the serious option trader.
This web log will cover the events in the market
from today as well as prepare you for watching
the market tomorrow.

Today we had a full on distribution day in both
the S&P and the NASDAQ. For the NASDAQ, that is
the fifth distribution day in four weeks. The
Dow is once again below the level of support of
that ascending channel. But, all three indexes
did close today above their respective horizontal
levels of support. And, for the week so far, the
indexes have made gains in price. I watch closely
the Chaikin Oscillator and MACD indicators on our
indexes. The NASDAQ and S&P's Chaikin Oscillator
indicators are both close to crossing above their
zero's. And, the MACD indicators look to be
rebounding off their bottoms. Both of these, when
confirmed would be bullish moves. But, right now,
it is too soon to act on these patterns. Let's
not read into the charts that which is not there.
In the meantime, with the price of oil and its
derivatives reaching new highs, oil stocks, and
their respective options, are shooting through the
roof. If you've been using the TradingTrainer.com
watch lists and filters, you undoubtedly have
options on oil stocks in your portfolio. With
yesterday and today combined, you are undoubtedly
ecstatic. Now... have your exits thought out well.
Do not let greed get the best of you.

My Encana October 42.50 calls closed higher at $5.50
an option. I'm in the black with a return on my
investment of 90% after being in the trade for 39 days.
My EOG resources October 60 calls closed higher at
$5.10 an option. I'm digging myself out of the red
with a return on my investment of -18% after being
in the trade for 39 days. My Pacificare Health
Systems November 75 calls closed lower at $2.25 an
option. I'm in the red with a return on my investment
of -22% after being in the trade for 39 days. My
Quicksilver September 40 Puts closed down at 90 cents
an option. I'm in the red with a return on my
investment of -44% after being in the trade for 13 days.
And, my Tenaris October 105 Calls closed up at $9.70 an
option. I'm in the black with a return on my investment
of 23% after 4 days in the trade.

This is my plan for tomorrow. My Encana Corp options
are nearing my profit targets which means I transition
into a trailing stop exit strategy. That will allow me
to lock in profit while taking advantage of any additional
positive price movement. My trailing stop loss strategy
for tomorrow will be set at 15% off of the bid price. For
EOG Resources and Tenaris Corp, I'll be ratcheting up my
standard stop loss strategy, setting fixed values should
the bid price go lower. I'll be watching my QuickSilver
Puts and making, possibly, a snap judgment to cut my losses
(or not). Same with Pacificare Health Systems. Tomorrow,
the Energy department is reporting on oil reserves from
last week. The results they will release will be from
before Hurricane Katrina stormed through the Gulf disabling
rigs and refineries. It really won't be till Wednesday of
next week that we'll get the official damage assessment
from the Energy department. So, we literally will have
six days of volatile / unguided trading that is going
to commence between now and then. That is for sure a
recipe for me to sit out. At this time, my aim is to
sell off my portfolio. I will only open new positions
if the opportunity is too good to be true.

Till tomorrow, happy market watching, trading and
money making. Trading Trainer is here helping you
create your dream lifestyle.

Best regards always,
A.J.

About the Author
A.J. Brown is a full time options trader, author,
speaker and consultant. Watch him review stocks
charts on video each week, listen to his audio
newsletter where he leads you by the hand through
the end-to-end process of successful option
traders and get tips and tested strategies proven
to boost your return on your invested capital by
massive amounts in his membership site at
TradingTrainer.com today.

* You may reprint or distribute this article as
long as you leave the content, the links and the
resource box at the end intact.

Better Movement But On Low Volume!

Better price movement today. Below
average volume could be effected by
hurricane. Oil and Natural Gas up again.
Keep an eye on the institutional traders.
Get the latest at TradingTrainer.com.

Hey trading team,

This is A.J. on Monday, August 29th with your
Trading Trainer web log. We are your home of
market insights for the serious option trader.
This web log will cover the events in the market
from today as well as prepare you for watching
the market tomorrow.

The Dow rebounded off horizontal support at
$10,400 and bounced back up into its ascending
price channel. I'm watching this closely. The
NASDAQ closed up at its 50 day average. All in
all today had some pretty nice price movement.
What I notice right off is that institutional
traders are just not buying it. Otherwise, I
would see some volume. Volume was below average
all across the boards. The NYSE had slightly
heavier volume than last Friday while the NASDAQ
came in lighter. What is interesting is the
whole dynamic around the hurricane, and its effects
on the price of oil and natural gas as well as its
effects on the market. As the hurricane was moving
through the Gulf, the price of oil shot way high,
above $70.00 a barrel. Natural gas shot way high,
too. Then, as the storm passed, the price of oil
retreated but still closed higher for the day.
Natural gas, too. But, the market rallied in price.
As if to say, we already factored in the ramifications
of the hurricane, so there! It is very unpredictable.
In times like these we want to fall back to our
elementary trend following rules which state that we
want to do what the institutional traders are doing.
Today they sat on the sidelines and watched. So did I.

I'm going to start using the Bid price in my example
portfolio calculations. It is more telling. With
the bid price, we can know exactly what my ROI would
be should I need to sell immediately. Let's take a
look. My Encana October 42.50 calls closed higher at
$4.30 an option. I'm in the black with a return on
my investment of 48% after being in the trade for 38
days. My EOG resources October 60 calls closed higher
at $4.10 an option. I'm in the red, still, with a
return on my investment of -34% after being in the
trade for 38 days. My Pacificare Health Systems November
75 calls closed lower at $2.40 an option. I'm now in
the red with a return on my investment of -17% after
being in the trade for 38 days. My Quicksilver September
40 Puts closed down at $1.85 an option. That puts me
in the black with a return on my investment of 16%
after being in the trade for 12 days. And, finally,
my Tenaris October 105 Calls closed up at $8.80 an
option. I'm in the black with a return on my investment
of 11% after 3 days in the trade.

This is my plan for tomorrow. I will be quick to unload
from my portfolio should the broad market choose a
direction. After amateur hour I'm setting limit sell
orders on all the options in my portfolio, good for
the day, setup to catch profit. I'll also setup my
alert on Genentech - ticker DNA - should it cross above
it's top Bollinger Band. I have my call all picked out,
so should that alert pop, I take a look and if I like
what it is doing, I'll easily open a position. For the
rest of the day, though, team. I'm just interested in
where the broad market is going and what our friends
the institutional traders are thinking. It'll, therefore,
be a low activity day for me.

Till tomorrow, happy market watching, trading and
money making. Trading Trainer is here helping you
create your dream lifestyle.

Best regards always,
A.J.

About the Author
A.J. Brown is a full time options trader, author,
speaker and consultant. Watch him review stocks
charts on video each week, listen to his audio
newsletter where he leads you by the hand through
the end-to-end process of successful option
traders and get tips and tested strategies proven
to boost your return on your invested capital by
massive amounts in his membership site at
TradingTrainer.com today.

* You may reprint or distribute this article as
long as you leave the content, the links and the
resource box at the end intact.

More Loss Today From Katrina!

Market down due to economics, debt, and
political positions. Katrina wrecking more
havoc on markets. May be a good day to
sell tomorrow. Get the latest at
TradingTrainer.com.

Hey trading team,

This is A.J. on Sunday, August 28th with your
Trading Trainer web log. We are your home of
market insights for the serious option trader.
This web log will cover the events in the market
from last Friday as well as prepare you for watching
the market tomorrow.

We had a mixed day of trading this past Friday.
Greenspan's comments warning about painful
economic corrections having to do with the
housing markets, the skyrocketing debt and the
protectionism toward China that some politicians
are embracing, set the mood for a down day.
Throw into that a little smattering of a
Hurricane Katrina threatening all the oil
refineries in the Gulf and you've got a recipe
for yet another broad market distribution day.
All the indexes are below their 50 day averages.
The Dow is below its 200 day average as well. The
Dow on Friday also broke through an ascending line
of support and closed at a level of horizontal
support down at $10,400. Our bias, being set at
neutral, is still fitting but with an added
caveat: we need to refrain from opening long
positions based on trend following templates.
Until the broad market confirms a bias, our trend
following templates have been rendered somewhat
ineffective.

I was one of those that took profits on Friday by
closing my Premcor position. I sold my Premcor
September 75 Calls for $5.60 an option only
getting an 8% return on my investment after being
in the trade for 22 days. I also opened a new
position. I bought the Tenaris October 105
Calls. I bought those options for $7.90 each.
My Encana October 42.50 calls closed lower at
$3.90 an option. I'm in the black with a return
on my investment of 34% after being in the trade
for 35 days. My EOG Resources October 60 Calls
closed lower at $3.60 an option. I'm in the red
with a return on my investment of -42% after being
in the trade for 35 days. My Pacificare Health
Systems November 75 calls closed flat again at
$3.40 an option. I'm in the black with a return
on my investment of 17% after being in the trade
for 35 days. And, finally, my Quicksilver
September 40 Puts closed up at $2.05. I'm in the
black with a return on my investment of 28% after
being in the trade for 9 days.

This is my plan for tomorrow. I'm going to
seriously look at unloading from my portfolio.
After amateur hour, I'm setting limit sell orders
on options in my portfolio, good for the day,
setup to catch profit. I'll watch Pacificare
Health Systems, Cerner Corp and Genetech with
respect to their Bollinger Bands. I again will
place limit buy orders for Calls to trigger
should price break above the Bollinger Bands and
a limit buy orders for Puts to trigger should
price break below the Bollinger Bands. Those
limit buy orders will only be good for the day.
Besides that team, I'm just interested in where
the broad market is going. So, for the most part
tomorrow, I'll be watching from the sidelines.
Okay, team. I'm done.

Till tomorrow, happy market watching, trading and
money making. Trading Trainer is here helping you
create your dream lifestyle.

Best regards always,
A.J.

About the Author
A.J. Brown is a full time options trader, author,
speaker and consultant. Watch him review stocks
charts on video each week, listen to his audio
newsletter where he leads you by the hand through
the end-to-end process of successful option
traders and get tips and tested strategies proven
to boost your return on your invested capital by
massive amounts in his membership site at
TradingTrainer.com today.

* You may reprint or distribute this article as
long as you leave the content, the links and the
resource box at the end intact.

Low Volume Caused By Katrina

Very slow day of trading and low volume.
How hurricane Katrina is effecting the
market. Job market not looking so hot
with more demand than supply. Get the
latest at TradingTrainer.com.

Hey trading team,

This is A.J. on Thursday, August 25th with your
Trading Trainer web log. We are your home of
market insights for the serious option trader.
This web log will cover the events in the market
from today as well as prepare you for watching
the market tomorrow.

Today, we had a day of very light trading on both
the NYSE and NASDAQ exchanges. Even though the
broad market indexes logged gains for the day.
with volumes coming in so low, the confidence
that those little gains will stick is really
little to none. Oil pulled back today only to
close even higher - another record. Investors
are really worried that Hurricane Katrina will
slow supply coming out of the gulf. Jobless
claims dropped last week. This is a lagging
indicator. At the same time, help wanted ads in
July dropped as well. This is a leading
indicator. The supply of jobs is declining.
This is forecasting that demand for jobs my soon
overshadow supply. We'll need to watch that.
From a technicals perspective, looking at a year
long chart of the DOW you can see that prices are
trading in a long term ascending channel.
Yesterday, prices closed at the level of support
of that channel. Today they bounced off. Team,
we need to watch that level of support and if
price breaches it on heavy volume.

Today, with the oil sector moving, my portfolio
moved, too. My Encana October 42.50 calls closed
higher at 4.10 an option putting me in the black
by 41% for a trade that has lasted 34 days so
far. My EOG resources October 60 calls closed
lower at $4.20 an option still leaving me in the
red, down now 32%, also for a trade that has
lasted 34 days so far. My Pacificare Health
Systems November 75 calls closed flat again at
$3.40 an option keeping me in the black by 17%
for a trade, too, that I have been in for 34 days
so far. My Premcor September 75 calls closed
lower at $5.90 an option, still in the black by
13% for a trade I've been in for 21 days so far.
And my Quicksilver September 40 Puts closed flat
at $1.70 an option keeping me in the black by 6%
for a trade I've been in only 8 days so far.

This is my plan for tomorrow. After amateur hour
I'm evaluating and setting limit sell orders
that'll be good for the day on stocks in my
portfolio. The orders will be set so should they
fill, I'll be setup to catch profit. I'll again
employ my strategy around Pacificare Health
Systems, Cerner Corp and Genetech to catch any
break outs from them being in consolidation
patterns for so long. I can do that by placing
limit buy orders for Calls to trigger should
price break above the Bollinger Bands and a limit
buy orders for Puts to trigger should price break
below the Bollinger Bands. Those limit buy
orders will only be good for the day. If they
fill, they fill. If not, no worries. I'll also
look for follow through on Tenaris staying above
resistance. If it sustains, I'll consider a long
position. Other than trying to catch
consolidation patterns and my focus on Tenaris,
I'm staying put on the sidelines during this
volatile time when the lack of volume gives me an
eerie feeling.

Okay, team. I'm done.

Till tomorrow, happy market watching, trading and
money making. Trading
Trainer is here helping you create your dream
lifestyle.

Best regards always,
A.J.

About the Author
A.J. Brown is a full time options trader, author,
speaker and consultant. Watch him review stocks
charts on video each week, listen to his audio
newsletter where he leads you by the hand through
the end-to-end process of successful option
traders and get tips and tested strategies proven
to boost your return on your invested capital by
massive amounts in his membership site at
TradingTrainer.com today.

* You may reprint or distribute this article as
long as you leave the content, the links and the
resource box at the end intact.

New Housing Sales Increase!

Experiencing heavy traffic on the DOW. Oil
prices rise today as stockpiles diminish.
Watch for something to break stalemate
soon. Oil prices boost portfolios. Get the
latest at TradingTrainer.com.

This is A.J. on Wednesday, August 24th with your
Trading Trainer web log. We are your home of
market insights for the serious option trader.
This web log will cover the events in the market
from today as well as prepare you for watching
the market tomorrow.

Today, we had a full-on distribution day. Price
dropped, especially on the Dow. We had heavier
volume on all the major indexes with it
approaching the level of the 100 day average.
Today the commerce department reported that new
housing sales increased. But read the fine
print; the prices are dropping and inventories
are up to a 4-month level. Also, durable goods
orders declined more than expected. And finally,
the capper to it all was oil and all of its
derivatives hitting record closes today after the
energy department reported stock piles dropped
unexpectedly. For the NASDAQ this is the 4th
distribution day in just 20 trading days.
Everyone wants to know if this is the end of the
rally. We can tell with all the consolidation
patterns forming across all sectors that people
are waiting. They’re waiting for a spark of a
hint to break the stalemate in one direction or
another. Tomorrow, we'll be looking for follow
through on today's actions.

Today, with the oil sector running hot, my
portfolio gained somewhat. My Encana October
42.50 calls closed higher at 3.50 an option
putting me in the black by 21% having been in the
trade only 33 days. My EOG resources October 60
calls closed higher at $4.50 an option still
leaving me in the red, down 27% having been in
the trade only 33 days. My Pacificare Health
Systems November 75 calls closed flat at $3.40 an
option keeping me in the black by 17% having been
in the trade only 33 days. My Premcor September
75 calls closed higher at $6.00 an option putting
me in the black by 15% having been in the trade
only 20 days. And finally, my Quicksilver
September 40 Puts closed flat at $1.70 an option
keeping me in the black by 6% having been in the
trade only 7 days.

This is my plan for tomorrow. After amateur
hour, I'm setting limit sell orders on stocks in
my portfolio, good for the day, setup to catch
profit. I'm still running my strategy around
Pacificare Health Systems by placing a limit buy
order for Calls to trigger should price break
above the Bollinger Band and a limit buy order
for Puts to trigger should price break below the
Bollinger Band. Those limit buy orders are only
good for the day. For that matter, I am
employing that same strategy on Cerner Corp and
Genentech. Other than trying to catch breakouts
after consolidation patterns, I'm staying put on
the sidelines during this volatile time.

Okay, team. I'm done.

Till tomorrow, happy market watching, trading and
money making. Trading Trainer is here helping you
create your dream lifestyle.

Best regards always
A.J.

About the Author
A.J. Brown is a full time options trader, author,
speaker and consultant. Watch him review stocks
charts on video each week, listen to his audio
newsletter where he leads you by the hand through
the end-to-end process of successful option
traders and get tips and tested strategies proven
to boost your return on your invested capital by
massive amounts in his membership site at
TradingTrainer.com today.

* You may reprint or distribute this article as
long as you leave the content, the links and the
resource box at the end intact.