May 24, 2010 Weekly Newsletter

Good Afternoon Traders,

The three main indices took a beating last week as a whole.  There is plenty of economic and social anxiety to go around.  Option4Options, LLC trusts that you are prepared for what the market brings us this week as our economy keeps giving us mixed messages.  Our weekly newsletter is meant to help educate you, inform you and give you option trading ideas.

Today's Newsletter will discuss the following:
 

Market Outlook, Briefly Speaking!

Free Virtual Stock Trading

Market Outlook, Briefly Speaking!

Over the past few weeks “we’ve hit the panic buttons a couple of times,” says market guru Woody Dorsey, founder of Market Semiotics.  In early April, Dorsey accurately predicted a four-to-six week decline in the markets that would start at the end of April and last through May.  Since then he has turned even more bearish for the rest of the year.  In the short term, Dorsey expects the markets to trade “sideways to higher” over the next four-to-six weeks and by the end of June, Dorsey says investors should be ready for a “summer bummer”.

The market rally from Friday failed badly and the main indices took a hit again today with the DOW losing 126.82 and the S&P losing 14.04.  The S&P is on track for its worst monthly loss since November of 2008 and moved below its 52-week moving average last week.  The DOW fell 80 points in the last 20 minutes of trading today and has fallen 1,191.44 points from 11,258.01 since April 26^th.  Overall, the market has plunged over 10% the past few weeks.  So far we have merely seen a garden variety correction.

Europe is weighing heavily on the markets with widespread issues.  The $1 trillion rescue plan put in place recently will be a good shot in the arm but is probably not enough and may be putting selling pressure on the markets.  We are at the end of the earnings season and company news is relatively quiet.  At this point investors will need good reasons to be buyers.  If we break 10,000 on the DOW, look for core companies to jump into after that.  The companies that were good at DOW 8,000 should be good then as well.  Regardless, this is not a beginner’s stock market and nothing much has changed since our “Flash Crash” of nearly 1,000 points on May 6^th.  It seems that investor optimism is waning and investor sentiment is reaching extreme levels of bearishness.  If investor sentiment gets too low, we will then look for the next leg of a rally to begin for a short term period.

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If you have a story you would like to share then please share it by emailing us at :

newsletter@option4options.com

We hope our market outlook, education materials and suggestions will be helpful for your trading success.  Please visit our website to view other information and strategies that may interest you at:

 www.option4options.com

Good Investing!

Option4Options, LLC

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