Bill updates on the demand for bonds. Volume highest in 20 years. Get several bids. 1/8 point is fair spread. Bill points out that there is no electronic market for bonds so price discovery is hard. Vince points out that bonds as an investment is complex. Pricing of bonds in the market depends on the name. Vince relates details on a GS trade. They discuss the benefits of using seasonality to forecast prices. FAS gets a review by Bill. Triple up/Triple down. Up/down 20% on 2 weeks. WFC had minimal exposure to the market crisis. Vince extends offer to review bond portfolio. Bill explains how to use TBT to hedge long term bond portfolios.

Bill discusses how to trade with options.Uses LEAPS to enter the instrument before had the cash. Long is defined as 60 days or more. VIX is low so premiums are lower. Bill has both puts and calls now. Need to fully understand the Greeks before trading. Last two weeks before expiration are best for short term money. Bill is using them for extra income. Could double the annual dividend. Mathematics can get intense if you let it. Keep it simple and match your needs. Do not forget you are trading the underlying. Work with the trend using options.

Vince announces a Houston event later in March. Check back for firm details.

Vince and Bill talk about Roth IRA conversions. You have to examine your situation to see if they make sense for you. Bill explains what a separate account is and why it is important for your broker to have one of these. Prevents commingling of assets should the bank fail.  Bill mentions that all their puts have been closed. Bill is  anticipating a rally into the Spring. Vince will be presenting four things you need in your trading plans.

Jack joins Vince to talk about the new trading options available. You need something that is not correlated to equity.Jack mentions that you can trade the noise in futures. Buy and Hold does not work in commodities. Need active manager to take advantage of market moves. jack suggest that four or more advisors of different styles should be used to eliminate bias in the portfolio. ETFs are trading futures. GLD has no physical gold in the portfolio. Jack cautions that there are high priced risk takers out there. Trading is hard work. Be careful of option traders. You have to understand what they are trading. Jack has max drawdown of 25%.

Consumer confidence took a hit as predicted last week. Oliver observes that there is a strong link between confidence and the market. Divergence over the last several weeks. Expectation was that confidence would be up in line with the rise in the market. Last week in February is historically not a good month. Will use this opportunity to add to positions. Fundamentals suggest move up in the next several weeks. VIX has resistance around 30. Currently about 23. Could retest low at 17.Inflation is still on the horizon. Oil has seen seasonal low in February. Then run to July - August. Oil could get to 100 by June. Copper is tied to inflation. Copper inventories are very high. Makes for limited upside for copper. Cotton is breaking out. Emerging market demand is driving prices higher. India has 12% inflation now. Gold is a standard because it started as a currency. It is trying to break resistance and finding support at the 200 day moving average. Support at 1070. Wheat has good long run fundamentals. Big demand from large traders.

Vince suggest that we could see some more pullback this week. PearlFisher timeframes are 6 months or longer. Yen/dollar ratio is good indicator for bond yields. Japan now the largest holder of US debt. Fed will raise rates sometime this year. Bonds will react negatively. Palladium/gold correlation exists. Palladium has already moved ahead of the 50 day MA. SHould be bullish for gold prices. Bonds continue to decline. Asian markets are not performing as well as Europe. Chinese banks are tightening credit. Euro at major resistance. Dollar may fall for the next several weeks. Dollar will trade in a tight range for the rest of the year. Forecast still in place for 5-10% decline for the year. Preso on Thursday will focus on the next decade and the opportunities.

Fernando Gonzalez joins Vince to explain the key lessons all traders must learn to be a successful trader. A good education at the beginning is critical, so you don't run out of capital before you become consistently profitable. Fernando explains why looking at the broad market is important. Have to integrate the long term into the short term. Skill to see the pattern takes practice and requires continued learning. Top traders need 3-4 years to reach their potential. Never assume you  are going to be right.  Have to manage the flow of winning and losing.

Fernando points out that the market is in slow motion right now. The volatility is very low. Fernando looks at the ATR. Does not use the VIX. Speed of the market is slow and has been for more than Fernando has seen since his start in trading. Take your skills in one market where they are not working. Now with ETFs can trade different asset classes in the same account. Fernando shifts to explaining how to take losses. Fernando projects that 2010 will be negative. Recent rally is countertrend rally in overall downward momentum. 

Carley Garner joins Vince and explains commodities. Carley explains her journey into commodities. Emotions are the key to trading commodities. Reading books will not make you a trader.The new book is for traders new to commodities. It's focus is about preparation before the trade. Explains the different type of commodities. Know the product you are trading. She trades SP and Treasuries futures contracts. Futures are 24/7. Depending on your personality and how close to the fire you want to get. Short options are a good way to start. Mini grains give you the feel without the risk. She recommends using someone with access to the floor in Chicago. She sells the option and if trade works out, she keeps the premium. Risk management is secret to commodities. Futures are taxed 60% long term/40% short term. Long term rate is currently 15%.(mp3)

Carley continues to talk about the amount of capital to invest in commodities. Max of 20% of your portfolio. Managed futures are a way to begin trading. The broker can direct your trades to ensure minimum risk. Trading on leverage makes it different than stocks. This is an active investment. You need to trade the account. Make sure there is adequate liquidity. Lumber is not a good market to trade for this reason. Corn and soybean, oil, gold and silver are liquid minis. Sugar is discussed. Option buying may make sense hear. She recommends an options strategy to play the downside. Gold may be below $950 by June. Fundamentals suggest this may be a top. Selling crude calls here. Selling options acts as a hedge. Keep your emotions out of the trade. (mp3)

Michael Cox joins Vince to discuss his presentation next week. Vince mentions that Michael has just published an article in the New York Times. in it he points out the need for the US economy to adapt to the new global realities. We can not  go back. Change is hard but worthwhile. (mp3)
 

Michael explains why the government needs to get out of the way. Government wants to get more control and votes. US economy must grow the service sector. We currently lead in the services sector globally. Michael will explain in depth at the presentation next Thursday, Feb 25th. Six areas that will be different in the next decade. 3 billion new consumers who are in love with US services. Growth will be ovave to erseas. Consumerism is change forever. The kryptonite to the economy is government debt. Inflation is coming, so change your investments. Michael is seeing that folks are getting the wrong news from the media, politicians, competitors, and academia. The trade imbalance is due to consumer spending binge in combination with government spending. China is using their savings to buy up the rest of the world. Wealth equals freedom. Capitalism grows through creative destruction. When companies use government to erect barriers to innovation that is the wrong use of government.(mp3)

Jon Markman, author of Reminiscences of a Stock Operator Annotated Edition, joins Vince to talk about the timeless lessons from Jesse Livermore. Jon has done additional research on the charecters in the original book to provide context for some of the stories in the original. Vince mentions that this is one of those books that he reads once a year and finds something new each time.(mp3)

Vince and Jon continue to explore the lessons from the book. Jon quotes several passages that are relevent to today and the current market. Jon relates how Jesse Livermore could be described in four sentences. Started with nothing. Won it all. Lost it all. Ended with nothing (mp3)