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.