The Local's Take: Commodities and Socially Responsible ETF's

Good Afternoon,

Another late day selloff. If we get some bad news, where will the markets go?
I am guessing they get another day or two down. Which sets up some discounted stocks that have nice overall uptrends.

Obviously if we go down a little more, the premiums on the put side will go up. VALE has dropped over 15% and selling OTM puts for a 1 to 3 reward to risk isn't such a bad ratio for a credit strategy. AND you could put in a stop to be out at a 1 to 2 risk or 1 to 1 if you are risk averse.

I attached the chart and the option chain:



On the flip side, we have an ETF that focuses on companies in the water sector that are US based. The $9.5 mark sure looks like a nice entry given the amount of support - both for an investor and trader. Unfortunately due to the recent inception, low volatility and low liquidity, options are pretty much out of the question.



I will be back on Friday, but will update via mobile if I get into any longs over the next few days as I will be ambassadoring/hosting on the mountain at Deer Valley. A foot overnight would be nice!

Have a great week and Be Environmentally Cool with Locals Have More Fun apparel.

The Locals Take: Post Forex Trade Setups

Good Afternoon Traders and Investors,

There was some pretty good action on pretty light volume - it was painstaking to watch as the moves took a lot of time to plan out, but with patience, they finally came around.

The Double Fall Line Trade - USD/CAD - 15 pips immediately with a risk of only 10, so a 1 to 1.5 risk to reward ratio. A very high probability trade allows you to go for 1 to 1 or 1 to 1.5 risk to reward:


There should be some great opportunities over the next 3 days:

• Bernanke vote
• FOMC statement/rate change
• Earnings
• Obama
• Overall addition of new volatility

Be patient and trade with a plan - for EACH AND EVERY trade!!!
You can find out more about trading plans and taking advantage of volatility in my class at the U:

http://continue.utah.edu/lifelong/detail.php?title=Introduction+to+Personal+Trading+and+Investing&subject=llbus&catalog=180&section=1

Seats are filling quickly!

I will also be conducting a one day class for Deer Valley employees on 02/18 at 5pm. Finally, you can attend the next (free) meeting of the Park City Trading/Investing Club on the 15th of Feb.

Speaking of Deer Valley, Lady Morgan Bowl was on the verge of epic - the tree line had face shots for about 3 straight hours on Sunday.

Locals Have More Fun will be at its first event of 2010 when we attend Mom's Day Out at the Sandy Expo Center.

Have a great week of trading and Be Environmentally Cool with Locals Have More Fun Apparel

The Local's Take: Morning Commentary

Good Morning Traders and Investors,

It could be a wild week:

• Lots of Earnings
• President Obama
• Bernanke Vote
• FOMC Statement
• Economic data - unemployment claims, durable goods, consumer confidence/sentiment, GDP

Volatility is also back in the markets with the VIX rising from 18 to 28 - it really took off Friday afternoon as we had a massive selloff as the markets broke down going into the weekend.

Lots of stocks are discounted 5 to 10% or even more. Is this a buying opportunity or a dead cat bounce? I think it is a short term buy but the risk reward isn't great so it could be a place to sell naked puts or bull puts with tight stops.

Let's look at the charts starting with the overall markets using the SP ETF - SPY:


If we didn't move lower from here, then this Fibonacci will measure the amount we retrace of last week's donwmove. The more we retrace, the more likely we will test our highs. The less we retrace, the more likely we will test the lows - severely dampening a chance for a move towards 1200 in the $SPX.


Financials with American Express as the example:

A similar look to the SPY chart (roughly 80% of stocks move in tandem with the broad indexes).
A really nice shorting opportunity would be close to 42 as it is the "fibonacii line of death" and the old trendline that acted as support on the upmove.

Our Socially Responsible Stock for the day - Wal Mart as they have inserted CFL lightbulbs, cut down on packaging and introduced a recycling program:

Pretty sideways recently with a clear cap on the upside at $55.00.

As far as the ski report, well, we have had plentiful amounts with "more" in the forecast. Top runs yesterday: Lady Morgan Bowl and the Chutes. The backcountry should be setting up nicely - I stress should and setting up. Stay low angle as it isn't about the steepness, it is about the experience and coming back.

Check out Lifestyle HQ and you may see yours truly hucking the cornice in the Chutes at Deer Valley.

Have a great day trading and Be Environenmentally Cool with Locals Have More Fun apparel.

The Local's Take: Forex Trade Update

The Local's Take: Morning Commentary

Good Morning Traders and Investors,

Let's talk about the Double Whammy.

When Sundance hits, Locals are hoping for the Sundance effect - snow and tourists who are unprepared for the snow. Therefore, they hit the retailers hard, buying hats, scarves, gloves, boots. They probably all buy them in black, but nonetheless, they buy. Hence, the double whammy.

Since most aren't here to ski as networking and of course the films are the themes over the 2 weeks, the snow is untouched and hopefully plentiful.

Deer Valley received 8" overnight and looks like it is continuing. Great shots in a bowl named after a lady.

When it comes to the markets, volatility adds a double whammy to put positions. In order to protect your portfolio from donwdrafts and bear markets, it is smart to buy puts on the overall markets (SPX) and/or your individual stock position (married put). When the markets swoon to the downside, the VIX or volatility or "fear index" creeps up adding oomph to your put position. Hence, the double whammy: the stock is going down which increases your put value and volatility goes up, increasing your put value. It's like turning on the afterburners.

As far as economic data goes, unemployment claims climbed this week as did the 4 week average. Unemployment is still in an uptrend, we just took a few month break before it resumes (authors opinion).

Let's look at one of the bellweather stocks - Aaple:

210 has become an interesting area of previous resistance and now support. If it goes back below, I would think that you could protect your investments with just OTM options at 215 or 220 with tight money management.

Since the Outdoor Retailer Market is in town, let's take a look at a publicly traded company that attends the show every year looking for new products - Gander Mountain:



This is an example of a stock that you wouldn't want to trade!! We should be trading household names with volume of at least a million per day that fall into YOUR price range.

And finally, the Socially Responsible stock for the day:




Forex updates are coming next as yesterday was very quiet given the selloff in equities. Let's see if the markets hold in and get an early bid, we should see the dollar weaken a bit.

Be Environmentally Cool with Locals Have More Fun apparel.

The Local's Take: Mid Day Commentary

Good Morning Traders and Investors,

It is snowing outside - winter weather advisory for the bulk of the day with more snow in the forecast. I am not going to get too excited as we need more than 2 feet out of these storm systems
to cover provide a true powder day. Whatever you are doing, it is working, so keep doing it.

Maybe it is the "Sundance Effect". A double whammy, unprepared LAian's flood the stores for boots, scarves, hats, gloves. I will be busy entertaining family and friends during the next 2 weekends but hopefully I can sneak a day in on the mountain

Maybe the snow is caused by the continuing lack of volatility in the markets. Certain sectors are moving - see USO and its crude relationship trade:


Pretty nice swing trading if you can be patient as that downmove in middle of the chart ran a little more than most people suggested. Using that area as a support level could be the same as buying USO (crude) at a discount.

Our next trade comes from the education arena (ESI) - it has earnings coming up this week, but I am not sure of the impact of them as this is not a stock I follow. This is for an old friend, so be wary as you know the impact of earnings better than me. If you are thinking of the trade, it is discounted nicely compared to Friday so your risk to reward is even better.


Finally, we have our socially responsible stock of the day. If you have ridden the water WAVE over the past 9 months, you recovered nicely. Are their cracks appearing in the dike? Let's look at PHO:

After such a nice run, there is some resistance and could be time for an investment protection plan to be implemented.

Regarding Forex, not much is going on, but there is a possibilty for a double fall line trade on the GBP if we get another surge upwards:

The EUR is acting very weak to the USD so there could be a possibility of a brekout to the downside given a breakdown in the equity market later today:

If there are any more intraday moves, I will keep you posted. For all of you Locals out there, here is the link to my upcoming class at U of U Lifelong Learning. I will also be conducting a similar class for all of you #1 Deer Valley employees on Feb 15th - and it is free!

Keep praying for snow and Be Environmentally Cool with Locals Have More Fun Apparel.

The Local's Take: Mid-Day Update

A groggy good morning!

After a great night on Main Street with the bands Location Location and The Bravery,
it is nice to see a down day in the equity markets as I feel commodities have had quite a run and therefore sold some ATM covered calls in that sector.

Back to Main Street, thanks to the Sidecar and the Downstairs (and the superb bartending) for an excellent night. Some personal friends are in for skiing, Sundance and Outdoor Retailer so we will be seeing a lot of you in the next few weeks. I will be the designated driver for the bulk of the evenings, so if anyone needs a ride, please shout!!!

Back to the markets!! Not much is going on aside from the bullish equity markets and today's selloff. REMEMBER, MOST of the time, there is a second chance to get in. You have heard of double tops, failures, etc... Just because the Dow goes down and (possibly stays down???) near its lows of the day and then carries through???? a second or third day in a row does NOT mean the trend up has ended. We would need a downmove and then a SMALLER upmove and THEN the bigger selloff. SEQUENCE and FAILURE get you to understand TARGETS and therefore have a TRADING PLAN!!!!

As far as charts go, I am not going to post too many. The Dollar versus the CDN is very, very weak but oil is lower. A few relationships we relied on are breaking down here and there, but for the most part, the song remains the same: weak equities, stronger dollar, weaker oil due to less supply.

Now for the socially responsible tip of the day: Locals were given a big thank you last evening by Ski Utah President, Nathan Rafferty. So share your pride with Locals Have More Fun apparel.

Let's relate this to a "local" stock: Whole Foods as they suppport local farmers/initiatives:


Using the $25.00 mark as support, you can sell naked puts to create income and then gain the stock at a discount if it drops below. BUT, once it drops below $25.00 it broke support, do you want to own a stock when it has proven to be weak. Either way, you have a TRADING PLAN and you DEVELOPED risk to reward.

Be sure to catch the Deer Valley Freestyle World Cup on TV: the competitions will air on NBC Saturday, January 23 at 1:30 p.m. EST and on Versus Sunday, January 24, at 5 p.m. EST and Sunday, January 31 at 4 and 5 p.m. EST.

If there are any major forex moves in the next 2 hours, I will be sure to update you.
Have a great weekend and Be Environmentally Cool

The Local's Take: Mid-Day Update

Good Morning Traders and Investors,

Big events are on the horizon: Thursday's weekly unemployment claims, retail sales and 1st Quarter earnings (kicked off by a miss by Alcoa yesterday).

The Dow is currently down the most in what feels like, well, 2010. Will it stay down? As you well know, the Dow has been like a beachball in water. Push it down and it pops up to intraday highs (see yesterday's close) and then eventually makes a new "recovery" high.

So mark it on your sheets, the Dow has a recent high of 10,676 and the SPX had a recent high of 1149. Another 50 points and we make it to 1200, where for some reason I am hearing would be a major sell point.

Personally, I am surprised we came back this far, but another 50 points wouldn't surprise me as there seems to be undeniable strength. (Shown by more buyers than sellers). We would have to have some really weak economic data, earnings that miss and maybe even other events that would then adversely affect the uptrend and positive vibes in the equity markets.

Even though the Dow is down, the forex markets are pretty slow. I will update a chart from yesterday's post, the iron ore miner VALE.

It has retraced over 61.8% percent of its 2007-2008 downfall. If you were lucky enough to ride the commodity wave, then you should be thinking about protecting your positions because trends don't run forever. I know, I know, the trend is our friend, but let's not get greedy. Vertical spreads such as bear calls and covered calls with TIGHT risk stops are a good play as the TIGHT stop doesn't allow for upside profit in the stock to frustrate/get away from you.

Also, don't focus on the dollar amount of the covered call, as in all trading, it is all about PERCENTAGES. It is also a risk free way to learn to enter/exit trades and create a trading plan using TECHNICAL analysis.

Talk about risk free, try being a weatherman for the Weather Channel. They go from 10 days of sun to 8 days of snow in one day. Do they not see these fronts appearing/dissappearing? Well, whatever the case, snow???? is in the forecast for the greater Park City/Wasatch mountain area.

Must be that famed Sundance effect starting to kick in. The people watching of the "all blacks" starts soon. So hop on a plain and come on out in your best black pants and black shirt as it will be a great year to participate in the fun as the economy has definitely put a damper on the amount of "industry professionals" who make the yearly trec to Mecca.

Let's talk SRI - so any of you traveling to the Park City area, you may notice the pollution in SLC. My snagit editor isn't working, but just google it. Our pollutants in parts per million over the past few days have been the worst in the nation, by far. Don't worry, more highways are being built, but not an expansion of public transportation. Sweet!

The SRI stock of the day is quite conservative - FPL, which invests heavily in alternative (wind) energy. Again, other stock to own in the portfolio and generate cash every month by selling out of the money calls (with management).

I apologize for the chart snafu, but you can check them out on your brokers site. If you are in need of a broker, please email me as I have a pretty good handle on the advantages and disadvantages of most out there.

Happy Trading and Be Environmentally Cool with Locals Have More Fun Apparel

The Local's Take: Early Morning Forex Update

Good Morning Traders and Investors.

The dollar was hammered on Friday and broke through support levels against many currencies and alas, the Sunday night trade in America (the Monday Asian and European session) carried the same tone and hammered the dollar even more.

A few currencies are at their highs against the dollar. The AUD/USD and USD/CAD:





The up trend is the same for the other currencies against the dollar, they just may not be as close to their highs as these two.

Typically this is a good sign for most equity sectors and of course the commodity sector. Let's take a look at VALE which had a very nice breakout in the past few days:
The stock has retraced over 61.8% since bottoming in March with the rest of the markes. Its old highs are in the 40's from 3 years ago. Will it run straight to that point? I guess it depends on how weak the dollar becomes.

As far as our daily look at socially responsible stocks go, I picked one of the bellweathers, FSLR which has a very interesting pattern given the strong uptrend in the broad markets:


That is a very bearish pattern as the stock is making LOWER highs and pressing into its lows. It looks to be at resistance right now, so we will see if it is rejected.

For all of you skiers out there, I will give you a weather pattern that the Wasatch Skiers are hoping for. It is called the Sundance effect. Most Sundance attendees come unprepared for heavy winter snows and all of a sudden, it DUMPS! They flood the retailers looking for hats, gloves, scarves, jackets, boots, etc... BUT, they aren't big skiers. The slopes are empty (see Deer Valley) and the snow is plentiful. Cross your fingers for the same as the Wasatch could use it this year.

If this pattern doesn't come to fruition, put on your carving skis and rip the groomers. The days are starting to get a little warmer and longer and catching some people watching at the "Silver Lake Beach" is always a fun spectacle.

Happy Trading and Be Environmentally Cool with Locals Have More Fun Apparel.

The Local's Take: Mid-Day Forex Commentary and Unemployment Update

Good Morning Traders and Investors,

We did get a bit of a surprise in the unemployment report, but not enough of an outlier to move the markets significantly in either direction.

I digress to say that I have snow envy as the pitter patter of snow with the intermittent 3 to 4 day high pressure system is cutting into the powder days for the 2009/2010 ski season. Although their isn't new snow, Deer Valley has the views, the blue sky and epic groomers - see Stein's Way and Jordanelle.

When skiing Deer Valley, find the mountain hosts at 9:30am at Snow Park and 1:30pm at the base of the Sterling lift for complimentary mountain tours.



The markets were pretty choppy with the usual dollar weakness - see strong crude, strong commodity stocks, weak dollar. So another quiet day with the VIX even lower - towards the 19 level and trades far and few between for the very short term trader.

The markets are still in a sideways to upwards trend with certain sectors outperforming (I mentioned commodities).

Let's take a look at AXP:



AXP is showing some great resistance in the $42.00 range. Even though it is still a sideways to uptrending stock, there seems to be some major selling pressure in the $42.00 range.

Regarding today's unemployment report and the bigger picture, we have an uptrend in job losses and the unemployment rate. Even though today showed 80k in job losses, the revisions showed our first month of job gains since the recession began. What is next?

Are we going to go from job losses to recovery without any hiccups? Or are we going to see a few months of job losses going into the 1st and 2nd quarter of 2010?

My bet is we see stagnation - no job growth or losses with the risk to more job losses in the near future. You must prepare for this by reading the charts and having a clear understanding of trends, support and resistance.

Therefore, the RTH ETF representing retailers will continue to go sideways and thus retailers themselves. Let's take a look at our socially responsible company for the day, WFMI:



It is Friday and time to step away from the markets.
Happy Trading and Be Environmentally Cool with Locals Have More Fun apparel

The Local's Take: Socially Responsible Trade of the Day

Good Morning Traders and Investors,

Whether you make money going long or shorting SRI stocks doesn't matter to me.
A trading opportunity is a trading opportunity and more profit means more charitable donations.

Of course I am a holder of long term SRI stocks in my investment portfolio, but every now and then an opportunity to make money covering, protecting, or shorting stocks and ETF's comes along.

Before we get into the charts, head to Park City for some long groomers and get a tan at the beach at Deer Valley's mid mountain. It really was a "beach" at one time as the lake did exist prior to the miners digging so many tunnels and the water draining below. A ski vacation and people watching at the Deer Valley beach - classic!

Speaking of a tan, let's look at TAN, the global solar energy ETF (get it, TAN!):


If you knew nothing other than support and resistance, you could make money trading TAN. Looks like puts and bear calls are the play in this region, with puts being in favor due to low volatility.

Happy Trading and Be Environmentally Cool with Locals Have More Fun Apparel

The Local's Take: The Classic V Formation Forex Style

Good Morning Traders and Investors,

The last trade of the day yesterday was a loser. After reaching my daily goal, I cut my size and still ended up with a nice day. Shutting down with a loser doesn't feel good, but it wasn't about the loss, it was about sticking to my plan and trading with discipline. I would take the trade again as it was the proper thing to do.

Even better though, after walking away and looking at charts later that evening, I LEARNED something! Let's take a look at the GBP/USD:

The Fibonacci retracement shows us retracing over 76.4% of yesterday's downmove (my loser took place in this area). With that deep of a retracement, there is a good sign we will continue in that direction and alas, last nights Asian and European session continued to drive the GBP lower against the dollar.

This is a classic V formation (or upside down V). Retracements of the entire move lead to contination in the direction of the retracement.

Taking a look at the equity marktes and the rest of the forex markets finds us in very tight ranges. Not much on the data front today either, so unless we start to move, it could be a day to do some research, read a trading journal, or work on different trading strategies in your mini or paper account, or stare at the weather report.

Looks like a minor storm is rolling through with snow expected today and tomorrow, but nothing of "dumpzilla" proportions. If you are going to go skiing, step into some Rossi TI Classic 80's - titanium rippers and go ski Deer Valley - the Jordanelle area in the morning is reaching epic groomer status!

If you are in the Park City area, the PC Trading and Investing Club (PC TIC) is holding its post New Year's gathering at the Sidecar. We will toast last year's gains and get ready for volatility in 2010 (hopefully!!).

Overall it looks like the dollar has a bit of a bid to it with obviously the GBP beaing the weakest after the walloping the doallar took yesterday.

Stay tuned for intraday updates as (if) they happen.

Happy Trading and Be Environmentally Cool with Locals Have More Fun Apparel,

Brian

The Local's Take: Forex Markets start 2010 like they ended 2009

Good Morning Traders and Happy New Year!

It looks like the markets are going to start Twenty Ten like they ended 2009 and it looks like the weather patterns in the Wasatch are going to do the same. High pressure system is sitting, sitting, sitting... so while you are sitting, head down to a new pizzeria (you can never have enough) in Salt Lake City called Vinto.

Oil is up, gold is up and you know what that means for the dollar - DOWN! The dollar has weakened quite substantially against most cross pairs over the last weak and is getting hammered during the Asian and European session.

We wil see if that trend continues in the first US session of the New Year, keeping in mind we have economic data on the docket in the form of Manufacturing ISM at 10am Eastern. It could be a non-event as futures are off to a great start in the equity markets and we have Non-Farm Payrolls on Friday. We could look deeper into the ISM number and focus on the employment component, but come on, it is Manufacturing and we seem to have a pretty good analysis of this sector right now. Nonetheless, due to Friday's report, the employment component could provide quidance.

On longer term charts, the dollar is bumping up against resistance (or support) in certain pairs and broke through in others:

AUD/USD:

USD/CAD:

It is a New Year, so remember your rules and with discipline, it could be a nice first week. BUT, if trades don't develop, don't force it.

If I see volatility and market action/opportunities, I will post a "live in the US equity session" trade update. Then again, you may find the Head Local doing laps on the Red Cloud liftat Deer Valley in an un-named area.

For all of you equity traders, I will give my socially responsible stock of the day analysis. Today's company is a sustainable coffee grower - Green Mountain Coffee Roasters.

Happy Trading and Be Environmentally Cool with Locals Have More Fun Apparel

Brian