The ride ahead may get bumpy so fasten your seat belts

Fellow Friends and Traders,

I want to extend a Happy New Year on Rosh Hashanah.

The good news is the Iranians have successfully avoided sanctions for a number of months. Talks start October 1st. Israel must be going crazy. Any attack is now put off until early next year. Go S&P! Just a tad early on my DOW 10,000 call by Labor Day.

The timing was extremely bad news as President Obama screwed our Eastern European friends by not deploying a defensive missile shield in Poland and the Czech Republic. See the newspaper headlines in any Eastern European countries. The sheer confusion on Thursday morning raised serious questions about the bureaucratic processes in Washington. It also created more problems than were necessary — and the decision certainly did not move the Russians, if that was the purpose.  I believe Russia's price for Iranian sanctions may be more than we are willing to pay. Nevertheless the Iranians may still feel a little heat to compromise.

We continue to be impressed with our cheap OEX option expiration trades. Friday even with an expected narrow (8 point) range we had almost 3 doubles. We could have entered a put trade into a opening gap higher. The $2.05 puts nearly hit $4.00 an hour later. I suggested in the Chat room a $0.50 throwaway put that hit $1.00. A few hours later a $1.70 call reached $4.00. Later in the Chat Room and on my 2:00 "B" chart I suggested we look at the 495 puts near $1.00 if we retested the day's high. Near 3:30 and before our End of Day (EOD) trade setup I noted for the Chat Room the E-mini was headed back to the day’s high. The put actually did trade at $1.00. In the last 30 minutes the 495's hit $2.50 but closed worth $2.30.  However,Traders who scaled in hedges did leave a few $'s on the table.The E-minis never recovered and finished near the lows.

There is a new opening Range Breakout trade I've introduced into the Chat Room this last week. It’s made money 7 out of 7 trades. I've followed this program for the last few months and it tests very well on Trade Station.  Furthermore, NET trading knowledge improved profitability rather nicely so far.  Remember,I will never stop trying to make things better and more profitable.

Right now NET trading is going just great with limited overnight exposure and our favorite option expo trades. There are 2 new wrinkles in the mix that may effect trading ahead. First,there is an unexpected spurt in our economic growth. Friday, Barclay's Bank raised their 1st Quarter US GDP growth estimate to 5%.

Currency values normally follow the economic strength of a particular country. Right now if you lay a USD chart next to an S&P one we note the lower the USD the higher the market rallies. The USD is now the #1 choice for carry trade setups. Borrow cheap here and buy higher risk assets overseas. If the USD suddenly rallies hard there could be a rather sharp and hard down for risk assets. A stronger USD could become the next real risk out there. We should be looking for a rally in the USD much sooner than not. 

Secondly,I thought you would find the article below rather startling and scary. This has large negative implications for world travel and stock markets as well. I am looking  at leisure travel and hotel stocks for shorts. Stay tuned and fasten your seat belts!!!!!

http://www.guardian.co.uk/world/2009/sep/20/swine-flu-costs-un-report  

Right now I'm on vacation in the San Diego area this week so there will be no attached Chart of the Week or any Intra day Charts all next week. The Chat Room will be opened but with no active moderator. However, I will jump in from time to time with comments and review any breakout trades. There is almost always one breakout trade after the opening range has  been established and sometimes one later in the day in the opposite direction.

y you didn't pay close to $5 or $7 Friday.