There are interesting statistics out there if you take the time to look. I recently stumbled upon a seasonality chart covering the period from July of 1959 – 2009 for the S & P and International Markets. I won’t go into the International Markets, but the information pertaining t0 the S & P is quite insightful.

On the whole, we know the market is cyclical. Old Wall Street sayings, like May go away and October load the boat are a result of these known cycles. For the time period mention above, the seasonality of the year plays out like this.

Most often the months move -

January up 12%, February down 2.5% March up 10%, April, up 14%, May up 4%, June down 2%, July up 1%, August down 17%, Sept. down 10%, Oct up 8%, Nov up 14%, Dec up 15%

Being aware of this average market movement helps us to know which months to more heavily place out trades and in which months to hold back. Based on this information if I was interested in a swing trade or short term play toward the end of January, I might think otherwise about placing the trade, since I can see statically February does not support upward movement. While toward the end of September and into October, like the old saying goes, I could consider my trades as being backed by market seasonality and load the boat.

Lately traders have asked how I evaluate the major indices and then use that information in my option trading decisions.  The easiest way to explain is to look at the $INDU weekly and daily. Depending on whether you are considering a long term option, a LEAP, perhaps, the weekly chart’s picture will better support your decisions. If you are considering a 3-4 month option, the daily chart will give the most pertinent and timely information, with a quick check to make sure the weekly isn’t making a counter-productive move. If you are workings a short term option strategy, then the 60-minute and daily charts will give the most supportive information.

The more chart reading you do the clearer the picture they paint will be. Chart reading isn’t a 100% perfect vehicle predicting an underlying’s movement, but it puts the odds in your favor. We are going to look at the Dow, but this same process can be used for the S&P, NASDAQ, Russell, and sector indexes.

Let’s look at the $INDU’s charts working from a widing to narrowing view. We’ll start with the weekly:

So how does this chart help in our trading decisions. We might assume based on this chart that the DOW will be range bound, creating the right shoulder for a few more weeks. It is showing signs of being oversold and will probably make a correction or two (perhaps as low as 8,000), before breaking out of this range at 9,500 or so.

If you are considering a trade out to December, this Bullish Head and Shoulders pattern would support that move. One might figure the market could reach 11,500 in that time period. If on the other hand you are considering a trade with expiration in September or October, you may still be bound in its trading range, or working its way up from its lowest levels after a correction. The daily chart will provide more information on the short term movement of this indice.

Okay, so we are narrowing our scope, slipping the chart through the smaller end of the funnel. The indicators seem to indicate that the market is turning upwards and returning to its oversold position and will probably pump its head along the resistence line for a while longer. The general public certainly wants the market to continue its uptrend and it is the retailers (you and I) who are involved in the market at the moment. We want to believe the market will return to its old highs but we are on unsure footing. The news waffles on a daily basis. Better to take small profits while we can. We know this by the low volume levels. August is notoriously known as vacation month, the month fund managers are on their last fling before returning to work in September.  

Beyond what the charts says is likely to happen for the next short period of time, there is a Megaphone pattern that seems to be forming. Often time 2 touches to the bottom and then on the 3rd touch, it breaks through to the downside. A megaphone pattern created from a beginning upward trend is bearish. The reverse pattern is bullish (beginning from a downward trend).

So this megaphone pattern is looming out there and if it is confirmed with a break to the downside, it would test the lines of support on the weekly chart. If they hold at or near 8,000 – 7,500 a turn up would likely be the completion of the Bullish Head and Shoulders pattern on both the weekly and daily charts and the market would slowing work its way back up.

If you have access to minute charts (ex: 60-minute charts), specific entries and exits can be determined using the same process using the lesser time frames on the indice charts, as they support the movement of the day and hour.

Underlying entities can move on their own, based on momentary information (news, PR, earnings), but the majority of its movement is initiated through the support of the market as a whole, its sector and industry ranking. It is far better to have those three working in your favor. 

Go make it a happy day!

Now that the book is on bookshelves, it will take a little while to build a community of women option traders; nonetheless, we are providing a 24/7 live chatroom. To start, we will schedule chats Monday, Wednesday, and Friday at 8:00PM,  EST time. Wendy will be online to answer questions at that time.

To come directly to the chatroom paste chatroom site address into your favorites, click here  http://chatroll.com/option-trading  or click on the link on the right side of the  blog.

Remember you can also come directly to this blog site, without navigating through the WomenOptionTraders’ site by pasting the blog ‘s address into your favorites.  www.WomenOptionTraders.com/blog 

When you go to the chatroom site for the first time, please subscribe (left side- upper corner) (no cost to subscribe-just choose a name on the main chatroll site and then join option-trading chatroom when you are finished). We suggest doing this so we can evaluate membership numbers.

The room will be open 24 hour a day for the convenience of the developing community, the relationships that will form, and to accommodate various time zones. We no doubt will have members from Canada, England and beyond???

We look forward to chatting with you.

Make it a happy day!

I was listening to the radio while driving home when a friend called to tell me Amazon.com emailed to advise her that her copy of Option Trading in Your Spare Time- A Guide to Financial Independence for Women had been shipped. Moments before the phone rang I realized that the date was June 30, the anniversary of my mother’s death.

It seemed fitting that the day my dream was becoming a reality also commemorated the day of her passing. 

Death has been on my mind this week, not in a depressed or morbid sense, but because a number of celebrities passed away the last few days. Farrah Fawcett, Ed McMahon, Billy Mays and Michael Jackson.

It’s funny isn’t it, that we never forget where we were when we first hear surprising or shocking news. People will often ask “Where were you when JFK was shot?” Or “Where were you when the planes hit?”

Death has a way of slapping us across the face and waking us up in a way we never forget. The question inevitably arises, “What legacy did these celebrities leave behind?”

When you hear their names you probably have mixed feelings. For better or worse their deeds or accomplisments are the legacies each created for themselves.

Personally, I tend to dwell more on the legacy of their memorable songs, videos, dance numbers, movies, TV shows, and jokes that made me laugh. Those are the things I will continue to enjoy.

How about you? What kind of legacy are you leaving?

Lately, I’ve been asking myself that question more and more often.

The publication of the option trading book is the accomplishment of a major goal, one that has been in the works for more than two years, but I still have a big list of unfinished business personally and professionally that I’m tending to.

Looking back over these people’s lives reminds me that the legacy we leave is a combination of both what we do and how we live our lives.  And that life is short.

For many years I have been involved in one women’s group or another, most geared toward the empowerment of women. The publication of the option trading book is major step in that direction. I want to make a difference in the financial security women experience. Some might call that ego. But I prefer to think of it as simply an honest assessment of the gifts I’ve been given and a compelling vision for my life and what I might be able to do with those gifts. What you share and teach becomes  more strongly rooted within your own personal disciplines. As I teach other women to successfully trade options, I become a better trader.

Oliver Wendell Holmes said, “Most people go to their graves with their music still inside them.”

I’ve  promised myself I’ll hum a tune everyday. 

What is the thing you know deep down you should do, but you’ve been too busy, lazy or scared to try? Maybe it’s taking charge of your own financial future. I’d love to meet you along the path to financial independence.

Whatever your goal, get started today.

It’s painfully obvious that tomorrow may be too late.

Go make it a happy day!

We just received word from our publisher that Option Trading in Your Spare Time will hit book shelves in July 2009, if all goes as planned.  We had hoped it would be released in February, but hope often unseats its rider. For those who have taken advantage of the savings offered at Amazon by pre-ordering, we appologize for the delay, but rest assured your patience will be rewarded.

We are so excited to share the possibilities that option trading has to offer. Whether you are are a stay-at-home mom, retiree, a woman wanting to suppliment her income by working from home (or anywhere else) in your spare time, or  if you are looking to broaden your knowledge of the stock market, perhaps to add insurance against loss in your other investments, option trading holds the key. After learning the basics, it truly can be done in a few minutes a day (any time during the day or night) from anywhere where you have access to a computer.

When you listen to the analyists on TV, the language and concepts can seem overwhelming, but, in truth, the techniques are no different than those required to learn to cook. Understanding and proficiency comes in layers, one technique builds upon another. First comes understanding basic terms (knowing the difference between the measurement of a tablespoon and teaspoon), learning how to select the best ingredients, understanding and practicing techniques like frying, boiling, sauteing and knowing when each method is appropriate to use, and, last and perhaps most important, to know when the dish is done. 

Option Traading in Your Space Time starts with the basics and build layers of understanding, step by step, until by the end of the book, you know and understand how to trade options, know how to set up a trading account, know how to chose stock candidates to trade, and know how to practice trading, allowing your confidence to grow until you are ready for the real thing.   

Once you begin reading the book and become involved, you have a community of like-minded women who are eager to share their experiences and understanding to help you reach financial independence. Knowing where many women succeed in reaching their goals, we can all succeed.

For those who are new to option trading and Women Option Traders, we look forward to meeting and welcoming you to our Inner Circle.