• 	OPTIONSMART MORNING UPDATE: Slumped on recession fears
  1. OUTLOOK: The selling effort was most intense against materials stocks, which dropped 3.5%. Commodities and basic materials stocks were pressured by an increase in the dollar. 95% of the S&P 500 companies finished with a loss. In the same time, Microsoft managed to close with a 0.1% gain. AMD was down after having its target price raised. Yahoo also slipped after upgrade. Market breadth was negative and trading volume was moderate. QQQQ's implied volatility inched higher to the 29 level. We expect more volatility later this week.
  2. OPTION TRADING AND EMOTIONS: Markets can be influenced not only by facts, but also with soft and gentle pushes from various comments and picturesque stories. Stock market stories based on strong emotions, such as greed and fear, can influence people’s stock choices far into the future. This is particularly true for many non-professional investors, yet relying on emotion is not an effective trading strategy. Positive emotions can cause us to fail to apply risk precautions. Negative emotions can cause us to hesitate when we should be bold. Trading is a psychological game. Small traders think that they're playing against the market, but the market doesn't care. They really are playing against themselves, fighting their own emotions.   Speculators sell any stories to spread panic or enthusiasm. When the positive or negative trend has played out, they switch their attentions to the opposite direction. The only unprofitable market is a flat market. If a small trader is invested in the market, stock market stories can seem like messages from a battlefield, where the stock is permanently under crossfire. A substantial number of shares such investors buy can be considered a ticket for a movie that almost always promises to be breathtaking. Stock market stories are, as a rule, emotionally colored and lack the balance of pros and cons one would find in research reports. These hard-to-read studies don’t attract the substantial audience required for market manipulation. Stock market stories are not just sold as a product themselves. Such business has a very low margin. These stories are designed to make you buy or sell a stock.
  3. TRADING OPPORTUNITY:  Buy the market on weakness.
  4. OUR FREE MONTHLY TRADING RECOMMENDATION AUTO-TRADEABLE WITH OUR PARTNER BROKERAGES: to be published  in June.   It is absolutely free. Open your brokerage account, select OptionSmart as an newsletter publisher and Free Picks as a service. You will have our free monthly pick auto-traded. That's it!
  5. WISDOM NUGGETS:  Some traders consider trading as a sort of gambling. Without planning and calculations, they throw money at the market. They should distance themselves from gambling behavior. Why a scientific approach is applicable? Markets echo similar patterns over and over again. It allows identify reliable trends and select good trading vehicles.
  6. SPECIAL OFFER:  Subscribe to any service today or tomorrow and save 15% on recurring subscriptions by entering coupon code  E57B during checkout (expires on June 16, 2009). New subscribers only.  Diversify your portfolio by receiving more frequent picks and trading alerts. Subscribe to our paid services!

  June 16th, 2009 at 6:20 am

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