Monday February 2, 2015 – Weekly Market Update

So, the Super Bowl ends with a highly controversial
play call by the Seahawks and the Patriots hang on
to win!

I am certain that Coach Carroll will be questioned
until the next Super Bowl, if not longer.

But, when you have a running back like the “Beast”,
it really surprised me that they did not hand off to
him every play.

If you want to compare this to the markets, you
can see the similarities.

You think you have everything lined up and you
place your trade.

Then the price promptly moves against you.

Has this ever happened to you?

If you answered no, I would suggest that you are
not being honest with yourself.

This happens to everyone.

The question is can you be discplined enough to know
that you are wrong and immediately cut your losses.

For example, last week I mentioned how you may want
to look at sectors that have been oversold.

And I mentioned a low priced steel stock, AKS.

At that time, AKS was trading for $4.33 and I mentioned
that you could buy the stock with a stop just under $3.83.

And if your entry was right, a move up to $6.20 would
not be out of the question.

Well AKS did in fact drop. It dropped to a low of $3.62.

So, if you had your stop under $3.83, you would have lost
about $.55 per share.

This is where the disclipline comes in. Take the loss and
reavulate the situation.

You can always get back in.

Another position I mentioned last week was NUGT.

I mentioned how I bought NUGT and sold rounds
of weekly calls against the stock. I collected a total
of $1.28 per share.

Friday, it did settle above $18, which was the strike
I sold, therefore I was obligated to sell my shares at $18.

I owned the shares for seven days. The return for
those seven days ended up being 7.5%.

Not too bad for one week. If you annualize that, the
return would be almost 400%.

I will take that everyday of the week.

As for the markets, the volatility continues.

As of today, the average true range for the S & P 500
is 28.57.

A week ago, it was around 26.

So, the volatility is actually increasing.

In these types of markets you have to be careful.

I hope this has been helpful.

Until next week, trade safely.

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