The Market Reveals its Remorseless Fang

Greenspan is a Jack Ass! Wow! How intelligent do you have to be to know that a recession is coming? if the world doesn't get hit by a comet we will have a recession at some point in the future. Alan- just go back to your can of Vienna sausage and leave the public commentary to Uncle Ben.

China's Government... Communist Market Manipulation. Yo East side!

The market is a lot of fun. Lets talk more after the week is over. And if you are wondering...I wasn't stopped out of anything yesterday. More on that later.

Did you all see the VIX today? that was pretty impressive. If it gets up to a 52 week high today you may as well go jump off of your balcony... Not really. NO please don't!

Strong Stocks Near Bullish Breakouts for continuation.

Here they are, no frills or smart ass commentary. Bullish stocks with my price alerts for new high breakouts. Plain and simple. If any of these breaks the following price points on good volume- I am in as long as the new high is confirmed on the day after the new high is set. These are "position trade" set ups in the classic fashion.


AMR Alert @ $41.06

NCTY Alert @ $40.00

FTEK Alert @ $30.00

DLB Alert @ $35.00

COL Alert @ $70.00

DFR Alert @ $17.00

Set your alerts and watch for the emails to roll in. If they don't, they don't. I can say no more.

Have a nice day.

Presidents Day = Nice Break From Trading

Today was a welcome holiday from monitoring my active trades. If you found frustration with the lack of market activity, you should seek professional help. I promise the markets will take their pound of flesh by and by. However, if you found your self enjoying life today, there may be hope for you and your future as a trader.

One final note for anyone who may read this post from foreign soil- I wish you a hardy "piss off!" from all the dead presidents of the US and A- Go eat some French jungle rot AKA Brie cheese

Damons Prefered Trading Strategies

I am often asked what I trade. "Are options better, or are stocks?" You can answer that question for your self. If you want to know how a pro does it, I will break it down and give you a sense of what makes the Smart Bomb tick...



I normally have between 5 and 10 active trades in a single account at any given time. The break down looks a little something like this.

• 5 long stock positions
• 3 synthetic long stock positions – 6 to12 months away from expiration
• 2 short term option plays. Usually single leg (directional) straddle, strangle, ratio spread or spread that I have legged in to.

I have found that this fits my style the best. The belief that one strategy is superior to another is simply not true. I used to think that I had to trade nothing but options to crank out superior returns. I tend to shift my thinking a little from time to time, but what you see here is a reflection of my style. I personally have associates that produce stellar returns using options only. I also have seen others replicate those returns by simply buying and selling stock.

This may come as a shock to some, but I have never seen one shred of evidence that would substantiate a claim that “option traders make more money than stock traders”

The best traders find a good mix that matches their own “Inner Holy Grail” and go with that. My holy grail is to trade stocks primarily- with options as a supplement.

BAM! There you have it.

The recent trade on ABM and the topic of 2 previous posts was a plain and simple long stock position (I bought shares) and I will buy more when it pops again. Here in the big time we call that a "scale in." That's a different subject all together.

The Super Bowl Indicator

OK- I realize that I am a bit of a Jonny come lately with my commentary on the outcome of the super bowl. For those who don’t know what I am talking about, please go buy a copy of Barron’s Dictionary of Financial Terms and look up the Super Bowl Indicator. Sorry, I don’t have time to explain it.

I have seen all kinds of chatter this year from people who know the legend and those who don’t. Anyhow, here is the bottom line: It doesn’t matter!!! Are all the talking heads listening? IT DOESN’T MATTER!!! The funniest thing is that if you know the indicator and all the lore that surrounds it, you also know that according to the legend, the Super Bowl didn’t determine the posture for the coming year. When the semifinals were over, the fate of the market was sealed. Both teams that played in the big game last Sunday are teams that, if victorious, will cause the market to rise in 2007. So again, it doesn’t matter. Oh, and even if it did matter, it still doesn’t matter. Indicators are right until they are wrong.

Nothing takes the place of price trend in the major indices! I will not apologize for it. Watch the market move and trade accordingly. I am so very tired of listening to people pontificate on market internals. Moreover, it means nothing - or did I say that already?

Listen! Dwellers of the Trade-o-sphere! When all of my bullish trades get stopped out, I will rethink my posture. For now, let us just relax and ignore the noise.

ABM Breakout Continued...

As it turns out, ABM did confirm the "nearly perfect breakout" from Monday. Any time a stock hits a new 52 week high on good volume I give it one additional day to confirm. I actually purchased this stock on Tuesday morning. I like to keep it simple and give my self plenty of room to retrace. I bought in at $25.38 and I placed my sell stop at $23.75

What is the next step? In most cases I am looking to own the stock for as long as the trend holds up. I am not using a trailing stop loss. I always adjust my stop loss orders after market close. I don’t anticipate an adjustment of my stop in this case for a few days or even weeks. When the stock bounces off of a new level of support I will raise my stop loss. Until then I will keep my initial stop in place.