Option Investor
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AN INDICATOR YOU CAN'T REFUSE

HAVING TROUBLE PRINTING?
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On the surface, it looks like the market wants to continue down to retest the recent lows. But, the undercurrent of low volume makes one wonder if we're just being set up for an upside move. Monday should be fun. It's the end of the month and the end of the quarter. Mutual fund managers like to screw with their portfolios. They sell their losers so those stocks are not listed amongst the holdings to lure in potential mutual fund investors who bother to look at the fund's holdings.

We'll have a lot of economic data this week, but we already know that the economy is weak. So, that won't likely move mountains or markets. We also have the beginning of earnings season. A lot of reason for the markets to go both up or down.

There are many ways to interpret the data - dozens of indicators that market technicians swear by. In hindsight, these indicators are accurate - until they're not. I'm sure that sooner or later we'll bounce off some sort of Fibonacci line or something. Sooner or later we will - and we'll hear an "Aha! I told you so."

To stay on the cutting edge of technical analysis, I've come up with a new proprietary indicator. I'm sure that soon there will be books written about it. It's called the Lincoln Wave Trend Index (LWTI). You can forget Stochastics, Bollinger Bands, MACD, RSI, MOM, SUV, KYMG and GFY indicators. You won't need them anymore. You won't need any expensive sophisticated software, either. The Lincoln Trend Wave Index is calculated daily. About 20 minutes before the market opens, you take a Lincoln head penny and toss it 11 times.

If you get six or more heads, the market is going up. Six or more tails means the market is going down. If you get more heads than tails three days in a row, it constitutes a trend. If you get four days in one direction, prepare for a reversal. What about the wave? Those who believe this crap, can take their room temperature IQs and "wave" goodbye to their money.

We're Getting Closer
With three weeks left in the April option cycle, I'll be looking for potential short straddle plays. I usually put on these hypothetical trades with slightly more than two weeks left.

If you were putting on a short straddle today, where would you look? The SPX is at 1315.22. If we put on a short straddle in with 1315 being the center strike, we could take in over 60 points of premium. That would make our profit range from 1255 to 1375.

Looking at the charts, the 1255 parameter would be a bit below the 1270 closing lows earlier this month. The 1375 parameter would actually be below the 1395 levels touched in January. Perhaps we can either raise the bridge or lower the water. If these support and resistance levels are meaningful for you, you can put on a short straddle with a slightly bullish bias ? and use a center point of 1335.

What does that accomplish? Well, it makes the profit range is about 1275 to 1395 - closer to being in line with the above support and resistance levels. Looking at the option chain, the amount of premium is the same - approximately 60-61 points.

That's just another alternative - a way of thinking about how to incorporate some chart stuff into the decision making process before putting on a trade. It's still a little early for me. I'll let you know when I feel more comfortable about placing a hypothetical trade.

Feedback
I was pleasantly surprised and gratified by some of the feedback I received as a result of my rant on Thursday night. Here are just a few of the responses. This is what makes it all worthwhile.

Mike - I am a happy long time subscriber and have the profits to prove it. Your system is the most consistent winner that I have used. - Dave

Mike - I've been trading for 50 yrs. Thanks for the education, maybe an old dog can learn new tricks. - Leonard

Mike - you taught me how to fish and I thank you for that - this is a system that works for me and I am happy to have learned it. Any one who thinks they know everything about iron condors or bull put spreads is fooling themselves.

I have had one losing month. That is something you also must learn for yourself. I called you and you generously gave me the best advice ever, BUT only I could execute and learn from that advice. That loss was the best thing that could have happened to me - it made me focus on risk as you tried to teach us. - Rick

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S&P 500 Support and Resistance - Closed at 1315.22
Resistance:
1317 is the early February low
1322 is an ancient trendline
1325 from May 2006 peak prior to the summer 2006 correction
The 18 day EMA at 1326
The 50 day EMA at 1349 is key resistance on a rebound
1368 is the high in this recent lateral consolidation
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
1396 is the January 2008 peak
1406 is the August and November 2007 closing low
1419 is a longer term trendline from the August 2003/September 2004 lows

Support:
1305 to 1302 from an August 2006 peak and matches a range of support from March and April 2006.
1294 from the January 2006 peak
1288 from June 2006
1280 from June and August 2006
1272.66 is the March 2008 low
1270 is the January intraday low
1260 from July 2006
1258 to 1255 from May and June 2006 lows

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NEW SEMINAR DATE - LAS VEGAS - June 21 & 22
I will be presenting a two-day advanced CPTI seminar in Las Vegas on June 21st & 22nd (Saturday & Sunday). Come on down! As of this evening, eight spots remain.

I've also negotiated an unbelievably low room rate for the weekend. Vegas is great for a getaway as well as for attending a seminar. Check out your calendar and contact me as soon as possible. Send your phone number to me at - Contact Support. I will personally call you to go over the details and to answer any questions you may have.

Also attending (and speaking) at the Las Vegas seminar will be Mike Cavanaugh, my personal broker and option strategist extraordinaire. Actually, he knows this stuff better than I do. I guaranteed you?ll be impressed.

Early Bird Special - SAVE $100 - 11 Days Left
If you reserve your spot for the upcoming Las Vegas seminar by April 11th, you will only pay $895 - $100 off the normal low $995 seminar price.

Reserving early will accomplish a few different things. The earlier you reserve, the lower your airfare will be. Plus, you will be assured of a spot. The last two Las Vegas seminars have sold out well before the seminar dates.

Las Vegas Retakes Are Gone
As you may know, if you have previously taken one of my seminars (at any location), you are entitled to retake the seminar a second time at NO CHARGE! There were five retake spots available for the Vegas seminar. They are now gone. If you would like to be put on a waiting list, contact me. There is the occasional cancellation.

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CPTI APRIL POSITIONS
CPTI April Position #1 - RUT Bull Put Spread - 683.18

On 3/5, with the RUT at about 674.50, we sold 20 RUT April 560 puts and bought 20 RUT April 550 puts for a credit of $.55 ($1,100). Maintenance is $20,000. We will look to put on a bear call spread in the future - IF it makes sense.

CPTI April Position #2 ? SPX Bull Put Spread - 1315.22

On 3/10, with the SPX at about 1288, we sold 20 SPX April 1110 puts and bought 20 SPX April 1100 puts for a credit of $.55 ($1,100). Maintenance is $20,000. We will look to put on a bear call spread in the future - IF it makes sense.

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ONGOING STRATEGY - THE ZERO-PLUS Strategy
In the past, I outlined a strategy based on an initial investment of $100,000. At that time, $74,000 was spent on zero coupon bonds maturing in about seven years at a value of $100,000. The principal $100,000 investment is guaranteed. We're trading the remaining $26,000 to generate a "risk free" return on the original investment. We are not compounding our profits by dramatically increasing the number of contracts we trade. With the March profits, our new cash total is $60,460 ($58,660 $1,800).

ZERO PLUS POSITION - SPX

On 2/6, with the SPX at 1342, we sold 30 SPX March 1140 puts and bought 30 SPX March 1130 puts for a credit of $.60 ($1,800). Maintenance is $30,000. Position closed 100% profitable. Profit: $1,800. I?ll be looking for our next position. Stay tuned.

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SEMINAR DATE -

LAS VEGAS ? June 21st & 22nd

Take your trading from a "hobby" to a profitable "business." You need the information you'll learn at my CPTI seminar. You'll learn more than the "how to's" of trading our strategies. You'll learn a new lifestyle - one that can last a lifetime.

DO YOU HAVE PROFIT-ABILITY?
It's always a challenge (and a pleasure) for me to have a roomful of bright people who have a passion for, and are excited about, learning. We go over everything imaginable - from the non-directional strategies to the psychology of trading. We cover a lot more than the mechanics. Inquiring minds want to know the whens and the whys -- not just the hows. That way, they're prepared for the best (and the worst) - and know the best way to handle either situation. Contact me and I'll personally call you with all the details.

If you're a SERIOUS options trader, you want to learn the nuances of our advanced non-directional trading strategies and hone your trading skills. Contact me ASAP at mparnos@optioninvestor.com. Send me your phone number. I will personally call you with all the pertinent information. The price is a bargain - ONLY $995.00 -- less than the profit from one Iron Condor trade. Take advantage of the "early bird special" and save $100. You'll have a two-day experience that you'll remember, and profit from, for a lifetime. I limit my CPTI seminars to ONLY 25 ATTENDEES. And, as a bonus, if you attend one of my CPTI seminars, you are entitled to RETAKE the seminar a SECOND TIME at NO CHARGE!

59 OUT OF 64 PROFITABLE MONTHS!!
WANT TO ACHIEVE SUCCESS WITHOUT STRESS?
OF COURSE YOU DO!!
USE OUR CPTI WEALTH-BUILDING TECHNIQUES!

You should definitely attend one of my seminars. With what you learn, you'll see a substantial increase in your trading results. Contact me at: mparnos@optioninvestor.com. If you've already signed up, I'll see you there. If you haven't signed up, what are you waiting for?

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Couch Potato Trader Disclaimer
All results reported in this section are hypothetical. While the numbers represented here may have been achieved or beaten by our readers, we make no representation that any individual investor achieved these exact results. The tracking for the plays listed in this section uses closing prices for the day the newsletter is published and it is not meant to imply that any reader actually received those prices (though many often do) or participated in these recommendations (even though many do). The portfolio represented here is hypothetical and for investment education purposes only. It is only an illustration of what type of gains a knowledgeable trader might receive utilizing these strategies. If you don't get close to these results, guess what. It isn't the fault of the strategies.

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