The Trade Coach will post past Commentary threads here for Public viewing to give new visitors examples of the private Members content and benefits available from The Trade Coach Trading and Investment Educational Service. 

Happy Holidays to All,

It looks like the site may finally be up and running early in the new year.  We’ve contracted with a very sharp developer who thinks she can get going fairly quickly.

Continues to look like range trading through year’s end with volume drying up.  Will be away through Jan 1, 2008 but will be posting when possible.

Please all have a wonderful holiday and look forward to the service stepping it up in the New Year…

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FYI - See updates on ongoing trades posted regarding carryovers, etc…

Coach BD

We didn’t see any significant action today to suggest any change in the current market downtrend, though the NAZ did show some surprising strength on higher volume but still less than average.

Closed out many positions today with DEC expirations except those with considerable premium left to burn.  We will also be carrying over a few positions to 2008, most notably on the Long side…

AAPL - Evaluating rollout opportunity to continue this consistent winner.  Targeting JAN 09’s now to for a possible LT 2008 trade.  

ATVI - Rolled out JAN 17.50’s to JAN 09 20’s with intention to hold through 2008.

ELON - Holding FEB 15 Calls but looking to add to position with 09’s for LT trade.

ESRX -

ISIS

NVDA

SNDK - Currently Neutral but may shift if this double bottom holds.

VCLK - Neutral but looking for a new breakout.

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Shorts being carried over…

USNA - Adding APR & JUL Shorts with offsetting far OTM Short Calls to cover some premium.

ABK - 12/26 - Covered the remaining portion of our ABK Short today and used ~20% of the profit to add to our original short hedge, creating a ST Long “spec” trade by adding more 35/40 Call spreads with an average price of ~.70.

CROX - Currently Neutral but we’ll see what happens after earnings.

DRYS - Staying Short until, and if, it shows BO strength.

FXI - Still Short and looks like it may finally showing weakness…

IIG

IOC - Neutral and undecided

KBH

LFC - Same story as FXI.  Originally intended as part of our LT portfolio hedge.  Obviously it hasn’t worked out so well…yet.  Fortunately we’ve had the VIX hedge working very well all year.

MBI - Covered ~75% of our core Short in MBI on the news of the Davis deal and put on some ST 25/30 Call spreads for ~.95.  Still holding 20/15 Put spreads as a hedge.  Net Long but mimimal exposure and a healthy upside it the stock rallies to 30 +.

NTRI - Small Net Long now on anticipation that this stock will rally into earnings on their new product release in the strongest quarter for diet systems.  

TOL - Neutral and waiting for a confirmation in either direction.

RMBS - Neutral and undecided but it always surprises one way or the other.

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Tomorrow should be fun….  or not, could be a snoozer.  But we’re thinking January could be very exciting indeed.

Coach BD

Below is a link that appeared on Yahoo today, compliments of Kiplinger, regarding investment scams, annuities, ponzi schemes, and investment brokers and managers.

These are some of the topics that we educate retirees and investors about in our complimentary classes here in Southern California.  A good article to print out and post in your office for reference when these scumbags start hassling you.

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Scam topics will have their own thread for discussion once we get up and running to help all Members avoid these all too common, and unethical, practices.

In the meantime, if anyone has any questions about any related topic, or about anyone who has, or is, contacting you about anything that sounds “too good to be true”, please contact us immediately. 

We are very experienced in dealing with unethical practitioners of these questionable, unethical and illegal “opportunities”.

Be safe out there.  This business is replete with individuals and companies whose only purpose is to separate you from your hard-earned assets.

http://finance.yahoo.com/focus-retirement/article/104057/Protect-Your-Retirement-From-These-Investment-Scams?mod=retirement-post-spending

Coach BD  

Today we got the rebound rally that we thought might come yesterday, however, all in all it was pretty weak, with all of the averages actually ending lower than than the early open strength they showed in the first 30 minutes.

 All ran up against ST trend resistance and backed off by the close, and while all were up slightly on increased volume, it was still below or just average volume.

As we mentioned a few days ago, it is beginning to look like range trading for the remainder of the year.  Technicians have noted we may be looking at what is known as a “flag” pattern developing.  This action is basically when the average’s “range” begins to contract (in a sideways triangle shape) into a smaller and smaller range over a period of time before breaking hard in one direction or another.  It wouldn’t surprise us if this “flag” pattern continued (with a shrinking range) through the year’s end.

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Bad news continues as GS reported “apparently” great numbers only to be met with skepticism because, (November was “horrible”) a large potion of their earnings were related to one-time gains, resulting in very heavy selling the first half of the day, and though the stock was able to recover some of the day’s losses, still closed off 3.5% on >2x average volume, and just below its most recent low on 11/8 of 201.57…

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More bad news today included…

- Mutual Fund “outflows” highest since 2002…

- Housing construction levels lowest since 1991…

- Darden restaurants lowers guidance, citing consumer weakness…  Or our take, folks are eating out less…

- According to LEH, REIT returns will be negative for 2007 vs the the S&P, and likely worsen in 2008…

- Merrill-Lynch may announce more BIG writedowns, aka “LOSSES”… 

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Time to enjoy the holidays, your families, work on your watchlists, and wait for bargains to emerge in the new year.

HO HO HO

Coach BD  

So much for any oversold rally we have been due for.  All the averages finished the day near or at their lows, and on increased volume.

All also broke down through all of their ST & Weekly MA’s, save the 200 Week.  It’s time to begin building those watchlists of good stocks, suffering most, for next year.  Or, for any of you that trade the short side, begin looking for confirming, or continuing, downtrends.

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We have moved the majority of our positions to neutral for expiration to collect the maximum amount of overpriced premium as possible before Friday.  GS reports tomorrow and it’s anybody’s guess what will happen based on their report.  Expectations seem fairly evenly divided on market reaction, assuming they will report great numbers for the quarter. 

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Other than taking advantage of premium decay over the next 3 days with volatility rising, we are looking toward next year now and assessing current positions and evaluating any candidates for carryover to 2008.

Coach BD 

This is one of those dirty little secrets that really gets under our skin about this business…

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Every year, Mutual Funds, Investment Managers, Services, Systems and other entities that manage investment portfolios, report returns for the quarter, YTD, 1-year, 3-year, 5-year, etc… 

Most of the time, investors with money in these services are left scratching their heads trying to figure out why their individual returns weren’t as good as those that their fund or investment managers reported.

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The answer is quite simple really, and the primary reason why investors should never, and we do mean never, trust any claims that investment managers or funds make about actual returns…

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First, and most unfortunately, many of the less eithical entities simply lie about the returns so they won’t lose any clients or investment business, and as a result, lose any of those hefty fees they charge investors.  Those fees, and those fees alone, make up the bulk of the profits that these entities make.

Second, and another unfortunate truth, is that anybody can manipulate numbers and percentages to support almost any conclusion, whether or not that conclusion bares any resemblence to actual facts or performance.

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In figuring your returns, the only numbers that matter are these… 

1) Your balance at the beginning of the year…

2) Add any contributions (or subtract any withdrawals) that you made during the year…

3) Your balance at the end of the year.

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That’s it. Period.

Once you have those three numbers, the equation for determining your return is quite simple…  Beginning balance + contributions = Total contributions.  Then subtract your total contributions from your year-end balance, and THAT is your return for the year.

For example, if your balance on Jan 1 was $100,000, and you made $20,000 in contributions during the year, and your balance at the end of the year was $133,000, your annual return is calculated… 

$133,000 (year-end balance) minus $120,000 (total contributions), equals $13,000 profit…  Divide the profit by $120,000 (total contributions) and that gives you your return for the year, period.

In this case your return for the year would be 10.83%

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In another example, if we suppose that your year-end balance was $117,000…

The equation would be $117,000 minus $120,000 equalling (-$3,000), a loss.  Your return for the year would then be (-$3,000) divided by $120,000… or a (loss) of (-2.5%).

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So, do the simple math for yourself and NEVER take anybody’s self-interested calculations as a sign of anything other than trying to twist the numbers to benefit them first, and you…  somewhere down the list…

Any and all questions or comments are welcome.

Coach BD

Not a very positive end to what could only be termed a pretty bad week.  Even some of the defensive and market leaders like PG and KO have begun to show real weakness with some heavy selling late in the day recently.

These are not good signs.

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Even Cramer said something today that we agreed with, which is unusual.  He suggested, and we now agree, that a good GS report next week may be met agressively by short sellers to drive the financials lower.  This is contrary to what we suggested yesterday, but after he said it we began to rethink our comments yesterday and now believe that this could indeed be a successful strategy in this current market environment.

An environment where everyone is very cautious and unwilling to make any significant commitments to the upside, and where a concerted effort to drive these financials lower could also trigger a major market move to the downside.

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We would not be surprised if the markets rallied on Monday, but we would be surprised if that rally resulted in any significant move above the now declining 50 Day MA’s on the DOW and S&P, especially given that so many market leaders are beginning to show some weakness, most significantly late in recent trading days.

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There just continues to be NO significant catalyst to suggest that the markets have any good reason to rally strongly to the upside. 

Coach BD 

The markets continued their ambivalence toward clarity today without much action of any significance.  Strong open, no follow-through, selling throughout most of the day and sort of meek rally back up at the end of the day.

Declining stocks led advancers by a 4/1 clip most of the day but managed to cut that ratio to 2/1 by the close.  The DOW closed just under its 50 Day MA, the S&P closed just above its 40 & 200 Day MA’s, and the NAZ continues to look weak.

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We noted LEH and COST earnings yesterday, and today both reported numbers that were met with…  Not much enthusiasm, both ending down. 

LEH saw heavy selling in the morning but managed to climb back up by the close.  There appears to be some skepticism about their earnings and their actual financial condition. We expect that if GS reports good earnings next week that LEH and the financial group will probably see some upside.

COST reported in line with good revenue growth but margins were weak, attributed to gasoline costs.  They also noted electronics were strong but price-cutting may have an effect.  This sounded a little dicey to us but after opening down almost $5, it rallied to within ~.50 of yesterday’s close before trending slightly down for the remainder of the day, finishing off by more than 1.5%.

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It’s starting to look like range trading for the rest of the year without a catalyst one way or the other.  Caution prevails.

Coach BD    

…and other Marketing crap…

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One of the primary goals of our educational services is to teach traders and investors how to properly evaluate the wide range of tools and services, and their associated costs, that will be of most value in researching and executing your trading and investment plans.

That means helping you cut through all of the crap that litters many inboxes in the form of marketing spam, service come-ons, failsafe profit systems, etc…  and provide you with our experienced and unbiased evaluation of the vast and unending amount of trading and investment information that is literally forced upon us daily and continuously.

For those of you who have reviewed our mission and inspiration statements sent to you via the links provided in previous emails, you understand how we feel about most of these marketing campaigns, trading systems and other garbage consistently telling us how to make vast fortunes, quick profits and other ridiculous claims of fool-proof investment techniques.

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Many of you have probably learned that most of these systems are nothing more than the repackaging of common techniques in flashy new marketing campaigns with catchy slogans and new names.

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If anyone has any questions about any systems, products or other trading education services out there, please let us know.  Most of these so-called educational services are nothing more than clever sales pitches disguised as education, and usually reliant upon some proprietary product (i.e. software).

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We will include a list of the best services, brokers and research tools (based on our experience) available in the “Evaluation Tools” section of ”The Coach’s Playbook”.  In the meantime, please contact us if you have any questions about this important issue that can, and will, effect the performance of your trading and investment decisions.

Coach BD