Cashflow Heaven 2005

[ImakeMONEY]

OPTIONS TRADE

DJVOD DJX MAR 108 Put, I bought 5 @ $1.75 for a total of about $900.

Robert

[ImakeMONEY]

OPTIONS TRADE

bought 7 contracts ECACJ (encana March $50 calls) @ $1.40

Total order about $996




Robert

[ImakeMONEY]

ACCOUNT UPDATE (opening balance)

Total Cash $8,000.87

Account Value: $8,000.87

[ImakeMONEY]

Well I finally opened a US options account. It was a bit of effort and a bit of paperwork, but the place I opened it at seems to be the best of the bunch for options trading for several reasons. I will post a link to them in the ibox.

[ImakeMONEY]

I am preparing to take my first position the first week of January. At this point I am hoping to take positions for a 2-4 week time frame so as to enable 10 - 12 trades in the year.

Once again, this is the link for the newsletter I will be using as my guide for this experiment:

http://coldfusion.affiliateshop.com/AIDLink.cfm?AID=062479

[ImakeMONEY]

if you would like to sign up to receive the free copy of the newsletter, here is my link to it. It arrives every sunday night with views towards what to expect in the coming week. It is interesting reading.

http://coldfusion.affiliateshop.com/AIDLink.cfm?AID=062479

Robert

[ImakeMONEY]

This is the current free issue of the newsletter. I will post the free version only as well as my trades as I make them.

Sunday December 18, 2005

Greetings Market Raiders, Profit Takers and Money Makers,

This past week proved to be a volatile one as the markets shot higher and then finished lower—the good news is…

THE PROFIT EXIT ON OUR CHESAPEAKE ENERGY CALLS WAS HIT FOR A SUPER SWEET SEVENTEEN DAY ONE-HUNDRED-TWENTY-FIVE PERCENT PROFIT!

Natural Gas rallied hard at the beginning of the week reaching an all time high blasting Chesapeake over our 34.00 exit price on Thursday. Since then natural gas—and natural gas stocks—have plunged lower underlining the wisdom of pre-set automatic exit points to capture profits.

The good news is the rally in natural gas is far from over so all this pullback will do is set us up for even more profits in this sector in the future.

Between the Fed rate hike this past week, volatile energy prices and the traditional end of the year institutional positioning there is plenty to drive these markets---to find out where let’s take a good look at

WHICH WAY THIS MARKET IS HEADED

Friday was a quadruple witching day—a time when four different options contracts expire at the same time -- stock index futures, stock index options, stock options and single stock futures. Those contracts expire simultaneously only four times a year and create higher than usual volume and volatility—in this case finishing the week in a down direction.

To get a better view of this past week’s action let’s take a look at the SP-500

As you can see the SPX broke above resistance during the third week in November capping a powerful run higher from the October lows. Since then the index has been moving in a sideways to upward direction in the channel you see above. Based on the historical price action in the last two weeks of the year AND economic fundamentals that are encouraging traders we could easily see a year end rally taking the SPX above this horizontal channel for a strong year end finish.

Now let’s take a look at the Nasdaq.

The Nasdaq is similar to the SPX in that it has been resting in a sideways price channel since the big move higher off of the October lows leveled out in late November. This is positive for stocks and indices to rest after a big move and often leads to higher prices in time.

The big factors driving the markets right now are still interest rates, energy and projected corporate earnings.

Yields on interest rate futures are showing that traders believe that there is a 90% chance of a 25-basis-point rate hike to 4.5% at the Fed’s next meeting on Jan. 31. However the chances for an increase beyond that time period have fallen substantially and the anticipation of no more rate increases after January is encouraging traders.

The markets may be in for a surprise however--according to the Labor Department’s Consumer Price Index report on Thursday core prices rose 0.2% for the second straight month. This upward price trend is keeping the pressure on the Fed to raise interest rates in coming months to keep a lid on inflation.

What saved the CPI this past month is energy prices which fell a record 8% in November, reversing a spectacular 12% gain in September. Still, energy prices are up 18.3% in the past 12 months putting pressure on inflation and the economy in general.

Crude-oil futures dropped almost $2-a-barrel in value by the close Friday and natural-gas futures lost nearly 5% for the week, but don’t expect these prices to stay down for long. The cold blast blowing down from the arctic shows no signs of letting up in the eastern U.S, as the National Weather Service's (NWS) latest 6-10 day outlook calls for continued below normal conditions in the eastern two-thirds of the country where the majority of consumption takes place.

So the two big trends right now are the anticipation of the Fed backing off on rate increases and what looks to be a short term lull in energy prices. The question is…

HOW DO WE MAKE MONEY ON IT?

Our first trade is on a company in one of the sweetest spots of the energy services sector—drilling contracting. This company is one of the most successful in the world at a time when day rates are so high it’s written in their contracts that they need to be adjusted every three months.

You can’t just ‘get into this business’, you have to have the drilling rigs already in place because they take years and millions of dollars to build. So the companies with drill rigs available are in super demand with a back log of orders over a year long—no wonder day rates (and profits) are sky rocketing!

The great thing about this stock is it pulled back on Friday and with luck may even drop further on Monday for a very attractive entry. Once you see how much money is on the call side of this stock you’ll see we aren’t the only ones that think this driller will be going through the roof!

Our next play is bearish and it’s on a company that just broke below two month support on huge volume. This break-down comes from a VERY high price level so this stock really has room to drop. With institutions in a hurry to get rid of their losers before the end of the year the selling on this high flier could really accelerate—and we’ll be along for the ride with some well placed puts!

We’ve got two great new plays lined up ready to go so let’s get to it…