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[Weekend Summary]

Dear Member,

There are times to trade and times not to trade. For me, this was a week not to trade options. We are coming into the August doldrums which is frequently a time of little interest in the market and low volume. Many of the major players are on vacation and this situation can often run well into September. In spite of many good earnings reports, the major indices were essentially flat for the week. It seems like they have been ready for a breather.

Only a couple of my positions were up for the week. SPY moved a whopping 20 cents on lighter volume and EBAY moved 76 cents up, also on lighter volume.

The rest of my bullish option positions were represented by stocks that are presently in the "pablum" category; completely unexciting with very modest downward moves to the vicinity of support (CHINA, BGG, NITE, MU, SEBL, and YHOO). Of these, MU is quite interesting because it looks like it is trying to break resistance, but, not unexpectedly, is consolidating its' recent gains. CHINA which I said from the beginning is a highly speculative play is showing some minor signs of life after retreating from the big percentage move the week before. NITE is at a critical point. It is just below the intersection of price support and trend support and, for me, needs to make a move up soon or I'll exit with a small loss.

I like to sell calls against my LEAPS positions on downturns as I did with YHOO the week before, but the implied volatility is so low right now that there is little premium to take in most positions.

I know this report sounds pretty negative, but I really don't mean it to be. Now is so often a time in the market where little happens. Take for example the residential housing stocks. Pulte (PHM) announced astounding home closings for the last quarter on a 10% increase in prices and the stock jumped $3.20 on Thursday but retreated $2.23 today. That could just be profit taking before the weekend, but I am wary of the sector. Many of the stocks, like PHM are near support and just can't seem to break through even on spectacular news. I don't necessarily think that the sector has reached its limit, but I do think we may be looking at an opportunity to enter a downside play for at least the short term.

Many times, it is good not to trade. One doesn't always have to be entering positions to succeed. Sometimes it is better to sit on the sidelines and see what happens rather than throwing in risk money without a clear fell of market direction. The present looks like such a time to me.

Of course, as I prepare to enter what I think are good trades, I'll be sending more alerts. However, I doubt I'll be rushing into too much short term unless I see some more volatility in the market with at least a little more volume support.

Have a great weekend.

Bill

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