Sunday, June 8, 2008

Apple Optimists Need Not Apply

Welcome back! A couple weeks ago, the Psychology of the Call team (POTC) predicted the break down of the double top in the Dow Jones Transportation Index. It did in fact fail.


Today, POTC is excited to bring you very time sensitive trading insights regarding E-mini Nasdaq futures. We’re very concerned about the gaps in the Nasdaq at 2,300 and 2,350 just two months ago and we see a very favorable set up:


Quick Psychology: With the buzz around the new Apple iPhone (AAPL) scheduled for Monday, the Nasdaq could see a dead cat bounce to 2,490 or higher. IF that occurs, POTC strongly suggests that aggressive portfolios buy puts on the E-mini Nasdaq June 2008 contract. POTC is highly confident the Nasdaq will break down and close the gap in the 2,300 - 2,350 range rather abruptly, and here are the reasons why:
1. Lehman Brothers (LEH) reports second quarter earnings this week;
http://www.marketwatch.com/news/story/lehman-under-microscope-after-reports/story.aspx?guid=%7B7D9DC3CC%2DE1A1%2D4CD7%2D9A03%2D856E5BEDACC7%7D&siteid=yhoof
2. The unemployment rate is rising;
3. Prices for crude (and everything derived from it) and food continue to rise;
4. The destruction of real estate and credit;
5. The panic over global inflation only getting louder;
6. China's continuing earth quake fall out;
7. The hurricane season is upon us, and last but not least;
8. The UNCERTAINTY AROUND THE UPCOMING JUNE 25TH FOMC meeting,

We’re compelled to buy puts on the E-mini Nasdaq June 2008 contract. How do you interpret this data? (Please feel free to leave a comment.)

This blog is undergoing a facelift of sorts in the following days, as we transition to a hand picked core blogger role on a highly regarded and transparent portal. The Psychology in the Upcoming Week's Economic & Earnings Data which has received very positive feedback from you will be a staple of our business mission going forward. POTC feels investors/traders have an edge in knowing what, when, and how to anticipate economic and earnings data in the week ahead. Trades must be made looking-forward, anticipating the future collective psychology of the herd, which is much more often wrong than right. Too much time and effort is spent on paid sites like Motley Fool, Seeking Alpha and Minnyanville, for example, attempting to handicap and lure you into position trading. We know position trading rarely makes you money, as volatility shakes you out. Jim Cramer is another talking head we distance ourselves from, as he continually misleads his viewers in believing there is a "bull market somewhere". POTC believes in times of stock market panic, as is upon us now, the only bull market is called the bond market and even that investment theory sometimes fails. Therefore, we stress the 11 Commandments of Investing and the 7 Psychological Pillars, and ask that you never underestimate any of the Commandments, especially the 2nd and 10th.

Thank you for returning to our growing blog spot. We are privileged to have you aboard as a student of the market, not merely a follower of the latest fad/trend/stock. The Psychology of the Call team wishes all a healthy & profitable week.

6 comments:

Anonymous said...

Yeah I guess, but you guys seem to be going with the herd. Isn't EVERYONE expecting the markets to bomb this week?

The Call Team said...

It all depends whether Apple is able to jump start excitement out of the starting blocks Monday. Technology has held up better than most sectors, and that psychology could shift after the Apple buzz wears off, no? Financials are in the cross hairs of the regulators, and energy is a mixed bag. Caution in this bear market is warranted; risks are still to the downside, perhaps expect the expected this time, as the herd is very confused.

Anonymous said...

Not everyone expects the market to fall, look at futures, S&P up 2.5 Nasdaq up 4.5 and Dow up as well.
http://www.bloomberg.com/markets/stocks/futures.html
00:32 ET

Anonymous said...

I agree with you guys this time!
Apple is way over priced at $190.00

Anonymous said...

Any tips on what to trade this week (and rest of June) in an account that can't trade options?

mattryan99 said...

Your call played out beautifully so far today - a real nice breakdown on the Nasdaq led by AAPL. Today seems to be yet another case of taking the stairs up (brief attempted rally this AM) and the elevator down.

I picked up a healthy handful of QQQQ puts this AM and I'm one happy camper!