Monday, April 23rd

Dear Member,

One of the things about trading that happens over and over (and why one can always make money), is that if you just noticed that commodity stocks were moving again, then so did every one else. So, make sure you're not the last person that traders, with profits, are selling to.

That's why my strategy is never to wait until its "obvious" to make the trade, because then seriously, you're the last one buying. I like to make trades in obvious uptrends on pullbacks and also on rebounding sectors before anyone notices. Just like we did with Conoco Phillips as well as a very boring stock, Johnson and Johnson. When we bought Johnson and Johnson, everyone had already forgotten about it.

Tomorrow, Arch Coal reports its earnings before the open. This is a very volatile coal stock that moves up very fast, and down very fast. It's also one of my favorite stocks to watch in the coal sector because it's a mid cap stock and competes so directly with Peabody Energy. This will give a bit of a barometer to how well the coal sector is doing.

Of course, in the long long term, I am not so sure about coal, since the direction is nuclear power of course. And, I have my eye on that sector as well for some big gains when the corresponding stocks reach my buy targets.

Good Trading,
IntradayTrades

Friday, April 20th

Dear Member,

There's a poker expression, "If you're playing a poker game and you look around the table and can't tell who the sucker is, it's you."

There is a trading quote as well, "You can always make money as long as there are greater fools to sell to. Just don't be the last fool."

The trading quote is a perfect example of how to make money in the market. A stock can go up and up and up, and you can still make money if you know that there is a greater "fool" to sell to.

Think of gold last year. From $500 to $735 in just a few months. Then at $735, it was the last fool that bought. Take a look at the 10 day Conoco Phillips chart here:

Conoco Phillips 10 Day Chart April 19, 2007

Here is an email verification from a member as to how we did on our COP calls when we got +115%..

We got our options at $1.25 and sold at $2.70.

Today, only two trading days after we got out, the options are trading for only $1.65.

So, like I said a few days ago, I almost feel bad when I am exiting a trade like COP and ponder to myself, who in the world are buying these options? Because, someone has to buy them. But, as stocks trade, so do the options as they just continually follow the stock prices.

That price, at $71.00, was a target I had the entire time we were holding that trade, for 8 trading days. We got out at the precise top, with a +115% gain.

So, when you trade, you must consider:
Am I one of the first in? How close to a "first buyer" am I?

Then as the stock starts rising:
How smart are the people that are buying? then.......

How foolish are the people that are buying? then.......

Where will the last fool buy? Because that is whom I will sell to.

Good Trading,
IntradayTrades

Thursday, April 19th

Dear Member,

Take a look at this quote:

"The Dow Jones Industrials Closed Above 12,800 for First Time in Mixed Session on Wall Street: NEW YORK (AP) -- The Dow Jones industrial average closed above 12,800 for the first time Wednesday, signaling Wall Street's recovery from its steep decline in February as investors rewarded companies with strong earnings."

Well, it's true. And why not? Because in the long run, it's all about the earnings. It really is. The reason a stock like Microsoft went up like crazy for 20 years is because they kept making more and more money all the time.

It's not only about the earnings however, it's about guidance too. That's why I am the most bullish on companies in the commodity sector. Especially companies that build equipment to help you dig anything out of the ground. Because, whether commodity prices rice or fall, the trend is up, and people will just keep digging more of it out of the ground. So, whether you have good management team, of just "okay" management, there will be a lot of demand for the goods you manufacture.

That's why "bottom-up" only analysis is useless. It doesn't matter how good your management is, if no one wants to buy your products. Top-Down analysis focuses on major economic trends, and then you look at the companies after you know the trend.

It's just so simple sometimes. You don't need an MBA or Ph.D to figure this stuff out. Remember the story I told you about the Wharton MBA mutual fund manager that came and spoke at my company who said that AOL would be the biggest company in the world one day. We all looked around the table at each other with the look on our faces, "Is this guy some kind of lunatic?" Then, the AOL / Time Warner "merger" I like to call it even though AOL "bought" Time Warner was the biggest sign of a top in the market I had even seen because two lunatics just put those companies together.

Good Trading,
IntradayTrades

Wednesday, April 18th

Dear Member,

At the beginning of February, I wrote about a friend of mine, Jeff, who cleaned up using the cocktail party indicator. This is a fun indicator and once you know what it is, man are you going to have a lot of fun with it.

Picture this: You are at a cocktail party, and everyone is talking about one thing: "Real Estate is the only way to go. Houses are SURE to double again!" Whenever everyone is SURE of something, then it is SURE to be WRONG!

Where will the buyers come from? Outer Space?

Here's what a member wrote me a few months ago:
"Neil, the cocktail commentary was right on. I watch for that all the time. I sold my house in October 2005 because of the excessive talk and speculation. The "investors" that bought it now rent it back to me. Man did they ever take a bath. Not only has the house gone down in value, but they are negative cash flow every month as well."

So remember, whenever everyone says it's a "sure thing" then you'd better take your money and run.

Now the opposite: If you are at a cocktail party and you even mention an "investment" and you just suddenly lost all your friends by talking about it, then it is almost certainly a bottom. Time to buy.

Sometimes when I sell options, I almost feel bad for the people I am selling to. Because to me, I just took profits and I don't think the risk to reward is there anymore. I mean, we just made +115%, so what do the buyers think? That another +115% is coming right away on the same stock? Maybe they do, but they're crazy.

Today, Conoco Phillips reached my target price of $71.00 and guess what happened immediately after? It sold off almost $1.00. Remember, we use conditional orders to get out at extremely precise exit points. You don't even have to be at your computer. I create the target price at the time of the alert, and rarely change it. So, that's a gain of +115%. If you had bought 10 contracts you would have made a nice tidy profit of $1500.00 in 8 trading days and it would have only taken $1250.00 to do it.

We're Finally Out with Profits of +115% on call options

Good Trading,
IntradayTrades

Tuesday, April 17th

Dear Member,

We made a nice 17.57% Gain on our 4 Day Trading Strategy stocks yesterday! Congratulations to those who made those trades with us!

One of the sectors that is really moving is the Drug sector. Hard to believe, yet if you have to wait until it's believable, then you already missed out on big gains.

Speaking of big gains, our price objective on JNJ call options was reached and we made +60% since the alert on March 19, 2007. We bought the calls for $2.15 and now they trade at $3.45. 10 contracts would have made you an easy $1275.00.

Johnson & Johnson (JNJ) 10 Day Chart April 16, 2007

The stock only moved $2.27 for us to make +60% on this trade!

Notice how the stock went easily from $60.00 to $61.50, then consolidated, then moved up quickly again from $62.00 to $63.00. That's where the price objective is so important. The initial analysis gives the price objective ahead of time. I never changed my objective for the entire month we were holding.

Coal stocks continue to rally, but for me, the resistance is so strong here, that I am still waiting. Even with gold and silver I waited for months while it was a fool's game, and then today another one of our precious metal trades got triggered mid-day and we're up.

Another sector I am watching very closely is Uranium. I have several Uranium stocks I am watching for the right time to recommend them to members.

I said it before and I'll say it again. Commodity stocks are rebounding and I expect them to continue to rally big time as there is more and more proof that the global economy continues to keep growing and growing.

I don't care what any of the Perma-bears are saying. I'm buying, and I'm going to make money.

Good Trading,
IntradayTrades

Monday, April 16th

Dear Member,

In life, when trying to succeed, you will be constantly surrounded by the "Perma-bears". These are the people determined to make their own life, and yours, miserable.

Let me explain. If you told a Perma-bear, "Hey I think I want to start my own business." They will then respond totally habitually, "70% of all new businesses fail." They don’t even want to know what your business idea is!

Then, if you told a Perma-bear, "Hey! I was thinking of getting a home loan, then an extra job, and totally renovating my house!" The Perma-bear would then say, "Interest rates will probably go up. I wouldn’t do it."

Then, if you told a Perma-bear, "I am thinking about selling my business because the economy will probably go south." He will tell you, "For sure. This government is no good."

Then if you told a Perma-Bear, "I am thinking about buying oil stocks and coal stocks and copper stocks and maybe even some authentic gold coins as a store of wealth." The Perma-Bear will respond to you, "Stocks are a scam. My broker lost me a lot of money once."

YOU MUST BLOCK OUT THE PERMA-BEAR!

Perma-Bears are only happy when everyone else around them fails. And, they are so scared of your success, that they will try to talk you out of every idea.
So stop it!

What do you think the Google founders were told when they said they wanted to start a search engine? "It’s been done before. Why bother."

What about when Michael Dell said he wanted people to buy his computers online? "How can someone buy a computer online if he doesn’t have a computer." He was told.

What about when Donald Trump wanted to convert his first major building into a luxury hotel? Everyone laughed at him and said it couldn't be done! That New York real estate was going nowhere!

When you follow your OWN instincts in life, and you don’t listen to others, then you will have the most success. Your own intuition is 99% of the time smarter than everyone else's "common boring consensus on life".

What happens when you are successful and happy? The Perma-Bear will tell his friends, "Some people get all the breaks." Then his friends will say, "Yeah. Totally man."

You have to make your own breaks!

Why do you think 80% of the world’s wealth is owned by 20% of the population? Because they listened to "the general consensus"? NO! It’s because they went their own way and didn’t care what others thought. That is the only way to success. There is no other.

Good Trading,
IntradayTrades

Friday, April 13th

Dear Member,

There's an expression that, "In the gold rush, the people who made the real money were the ones who sold the picks and shovels."

And, it's still true today.

So, where's the gold rush now? Well, the answer has to do with digging up anything out of the ground, and then using the raw materials to build things. And of course, to buy the stocks of companies selling picks and shovels.

So, commodities (copper, oil steel, iron ore), and even stocks related to water. And, since we're digging stuff up anyway, how about gold too.

For months I have been writing that we need to wait for pullbacks in various sectors, and the time to get in is now.

Right now we're already up +77% on our Conoco Phillips (oil stock) Call options. Two weeks ago we got a +47% profit on our Caterpillar (machinery) Call options.

What do these have in common? One of them wants what's IN the ground, and the other one helps you DIG IT OUT of the ground. Sometimes, it's just so simple.

Good Trading,
IntradayTrades

Thursday, April 12th

Dear Member,

When public companies announce earnings, it's never really about the "earnings". It's all about the expectations and future guidance. Because, most of the price of a stock has to do with how well traders think the stock will be doing at least a few months to a year down the road.

Take Apple for example. A few months ago Apple came out with the iPhone, had never sold one, and the stock rallied. Why? Because of the expectations that this would be great. It had to do with future earnings potential.

Today, Genentech, the biggest public Biotech company reported. Here is what they said:
"Revenue was $2.84 billion in the quarter, an increase of 43 percent from the $1.99 billion a year earlier."

"Also, Genentech reiterated that it expects profits to be 25 percent to 30 percent greater this year than last. The company has 10 drugs on the market, three of which exceed a billion dollar in annual sales each."

So, increased revenue, increased profits expectations. Tomorrow morning, DNA could very well "gap-up" in the morning to a higher price, and if it does, it will take the entire biotech sector with it.

However, look at Research in Motion, makers of the Blackberry: "For the quarter ended March 3, the company earned $187.9 million, or 99 cents per share, up from $18.4 million, or 10 cents per share, during the same period in the previous year."

But then? The stock was down about 7% in after hours trading. Why?

"Analysts, on average, were looking for earnings of $1 per share on sales of $935.4 million, according to a poll by Thomson Financial."

So, they just didn't quite make the analysts expectations.

So, in the stock market, and especially in "growth" stocks like these, it's all about not only growing revenue and profits, but growing them consistently, and faster and faster.
Why? Because the stock price reflects the "anticipated" growth story. That's how the market works.

Good Trading,
IntradayTrades

Wednesday, April 11th

Dear Member,

Some trades we have are working out well for us. Our COP Calls are up, and our SSCC calls are doing well also now, having rallied at the end of the day. Here is a chart to review one of the trades:

Conoco Phillips 5 Day Chart April 10, 2007

ConocoPhillips Options were at $1.35 last Thursday morning. Now trading at $1.85 for a +37% profit so far.

In fact, our last 5 option alerts are all winners.

We closed out CAT calls with a +47% profit, and DIA calls with a +31% profit in the past two weeks. Our other two options, JNJ and SSCC are both profitable and we're still holding.

Sometimes you just don’t know when the stock will move, other that it looks set to move very soon. Even SSCC options are up now and it’s been a few weeks there also.

Good Trading,
IntradayTrades

Tuesday, April 10th

Dear Member,

Today is a great time to write about coal. Three of the largest coal stocks in terms of market cap are:
Peabody Energy Corporation (BTU)
CONSOL Energy Inc. (CNX)
Arch Coal Inc. (ACI)

They have all fallen at least 30% since last May. A huge drop!

After all, they all rallied between 30% and 100% the year before.

What's starting to happen is that coal stocks are all gaining relative strength compared to the market just like metal stocks. Just like oil stocks. Just like stocks that have anything to do with digging something up out of the ground.

Sure, they haven't even come close to their highs of last year, however, all three of these are definitely worth watching for ideal entry points on pullbacks. You know, to be the first genius for the next rally (see yesterday's commentary).

So, this is an area that is starting to come back into favor. However, once you see it on CNBC with a big segment on "The Coal Rally", you will have already missed the move. We are going to get into these stocks sometime between now, and the obvious report that will be months down the road. I am just waiting for the inevitable pullback.

Good Trading,
IntradayTrades

Monday, April 9th

Dear Member,

Every day the stock market opens there are only two questions on the minds of those trading the stocks back and forth.

1. "Is the stock of this company worth more, or less than it was yesterday?"
2. "Was yesterday's closing price overvalued, or undervalued?"

The second question is by far the most important. If one were only to ask the first question, it would be based on the assumption that the closing price from the last trading day was a fair price. And, it never is.

Isn't it interesting? The questions one asks are so often based on assumptions are they not?
So, when you trade, you should never actually believe that the price you get for a stock is its "fair value". It is either overvalued, or undervalued. All the time.

However, stocks that are overvalued can often also become very very overvalued! Just so long as there is a "greater fool to sell to". And, usually there is. So, it is very possible to make a lot of money in the market selling to a greater fool.

Just don't be the last fool! The last fool always loses.
Never sell a stock just because it's "overvalued" as long as you think there is a greater fool to sell to.

And, never buy a stock just because it is "undervalued" or a "bargain" as long as there are greater fools that will keep selling at lower and lower prices.

If a stock is rallying and rallying and breaks out to new highs and you finally say, "That's it! I HAVE to buy this!" Then, you are the last fool.

If you watch a stock fall, fall, and fall, and it finally gets to the point where you say, "That's it! I HAVE to buy this!" Then, you are the first genius. Congratulations.

Good Trading,
IntradayTrades

Tuesday, April 3rd

Dear Member,

Well we've seen a lot of swings in indices like the Dow and S&P 500 lately. One of the phrases you never want to catch yourself saying is, "When do you think the next run up in (blank) is going to be?

For example: In 2006 summer many people were saying, "When do you think the next run up in oil is going to be?"

In 2006 summer many people were also saying, "When do you think the next run up in gold is going to be?"

And from 2001 to 2005 many people were saying, "When do you think the next run up in technology is going to be?"

When sectors like oil and gold from 2004 to 2006 had such huge run-ups, and when technology did it all in a year or two, and you missed out on those gains, never ask, "When's the next move?" You're fooling yourself. Because, you're thinking backward. You missed out and you can't stand it. You don't want to miss out, so, you want to "get in on the action." Sure, we could see moves again in oil and gold, just don't expect it to be major moves like 50% a year. Just look somewhere else.

In trading cycles, you can still get the last part of the gains, but if you missed out on the first part, don't let it worry you too much. Because when whatever it is becomes very popular to trade, then it's always going to be a top in that market. However, there can still be gains to be made, just not the incredibly huge ones from the past. But who cares! There's always a new sector or market coming into favor.

In 2000 housing took the place of technology. Then, Euros took the place of the US dollar. So it doesn't matter, just always be looking for the next opportunity. It doesn't matter where it comes from.

And, you'll know you're right when you tell your friends and they reply, "Are you kidding me?" Then you're on the right track. It's a bottom.

Good Trading,
IntradayTrades

Monday, April 2nd

Dear Member,

Well we've seen a lot of swings in indices like the Dow and S&P 500 lately. One of the phrases you never want to catch yourself saying is, "When do you think the next run up in (blank) is going to be?

For example:
In 2006 summer many people were saying, "When do you think the next run up in oil is going to be?"

In 2006 summer many people were also saying, "When do you think the next run up in gold is going to be?"

And from 2001 to 2005 many people were saying, "When do you think the next run up in technology is going to be?"

When sectors like oil and gold from 2004 to 2006 had such huge run-ups, and when technology did it all in a year or two, and you missed out on those gains, never ask, "When's the next move?" You're fooling yourself.

Because, you're thinking backward. You missed out and you can't stand it. You don't want to miss out, so, you want to "get in on the action."
Sure, we could see moves again in oil and gold, just don't expect it to be major moves like 50% a year. Just look somewhere else.

In trading cycles, you can still get the last part of the gains, but if you missed out on the first part, don't let it worry you too much. Because when whatever it is becomes very popular to trade, then it's always going to be a top in that market. However, there can still be gains to be made, just not the incredibly huge ones from the past.

But who cares! There's always a new sector or market coming into favor. In 2000 housing took the place of technology. Then, Euros took the place of the US dollar. So it doesn't matter, just always be looking for the next opportunity. It doesn't matter where it comes from. And, you'll know you're right when you tell your friends and they reply, "Are you kidding me?" Then you're on the right track. It's a bottom.

Good Trading,
IntradayTrades