OPTIONSMART MORNING UPDATE

OPTIONSMART MORNING UPDATE: Gathers Momentum

1. OUTLOOK FOR THE REST OF THE WEEK AND TODAY: The market fnished with mixed results. Investors continue awaiting further details regarding a government-led plan to help restore the financial system. Only the Nasdaq was able to finish with a gain (chart below), thanks to help from Microsoft. The semiconductor sector made notable gains despite a weak report from the Semiconductor Industry Association. In fact, the semiconductor sector riose on bad news. It is a good sign. Analysts guess that since many chip stocks are now at multi-year lows, the industry is reaching a bottom and may recover later this year. Gains also came from Cisco, Apple and Oracle.

QQQQ chart

As we said yesterday, the NASDAQ index (QQQQ) should bounce back. Even more, it is poised for a break-out in the short-term (chart below). In the past three months the QQQQ stock price shown has consolidated with declining amplitude. At present, it is expected to break out with high volume, signaling an uptrend.

It looks like, the semiconductors and Microsoft will lead the upturn.

S&P 500 and NASDAQ futures point to a higher open. Asian shares rise.
WHAT TO DO TODAY: Buy dips. Buy QQQQ and MSFT on any weakness.

2. TRADING OPPORTUNITY: Mcrosoft (MSFT) looks very attractive at this level. It is deeply oversold.

MSFT chart

However, the software giant remains fundamentally very strong. The downside is very limited.

3. OUR FREE MONTHLY TRADING RECOMMENDATION AUTO-TRADABLE WITH OUR PARTNER BROKERAGES: We recommend to bet on Microsoft. Use the March 14/17 March Debit Call Spread. Buy this spread at 2.40 and sell at 2.75 or higher. The MSFT stock has enough room to rise.The upturn of $1.60 looks very likely and would be enough to close this spread with a nice 15% gain within a month.

Our paid subscribers received this recommendation last weak along with our Research Note (open in PDF format). Subscribe today to take the advantage to know which stock is ready to move!

4. WISDOM NUGGETS:

Hope, fear and greed are not strategies: they are emotions. Simple emotions are not an effective strategy. Positive emotions could cause us to fail to apply risk precautions. Negative emotion could cause us to hesitate. Trading is a psychological game. Most people think that they're playing against the market, but the market doesn't care. You're really playing against yourself.

Reversals build slowly. The first sharp dip always finds buyers and the first sharp rise always finds sellers.

Don't be a hero. Don't fight the trend. Follow the money flow.

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