Wang’s Happy Trading

Submitted by Optiondragon

Happy New Years Folks!!!!

I give thanks to Happy and the Happy Trading members for a most prosperous year! I am only one component in a well oiled collective intelligence machine and have learned as much as I have taught! Being able to trade ideas, bouncing ideas off of one another, learnings new trading styles, option trades and life lessons has been key to my constant desire to improve as a trader and as a person. It has been very successful for me and very entertaining with the funniest, sarcastic traders I have ever met.
We have fun trading. For a beginner, if you have fun you can develop a passion for it. Once you develop a passion for it your chances for success climb exponentially. For the advanced, its a positive environment with great humor that you can relate to, break the monotony with and enjoy.
The Properous New Year is here and I’m bullish on Happy’s Picks and I’m optimistic of the great opportunities that the market will give us!! The Fed is cutting and will be cutting for most of the year, which provides a real nice volatile backdrop to trade with. I’m more interested in finding bullish market sectors globally and domestically and believe they will outperform the market in general. Stock picking and picking the right sectors will still be a key ingredient to success in 2008. We expect volatility to continue as it seems that one factor- “hot money”, new high risk speculative money goes to equities/business investments rather than to real estate investments/housing. The volatility will provide extra juice on returns(if your right) and provides a great trading environment for those who are nimble.
Agriculture and fertilizer stocks such as POT, MOS, AGU, CF, DE, MON should continue to outperform and are in a long term bull market with global demand far exceeding global supplies. 2008 could be the Year of the Farmer, as I’ve already told my parents I want to buy as much farmable land as possible in the near future and grow my way to riches. If you drill for oil there is only so much oil but with crop lands that “oil” could last forever. Food and fertilizer constraints is a strong long term global trend that will not change. Estimates are that the population on Earth is at over 6 billion people and will grow to over 8 billion people in the next 25 years. If fertilizer supplies are in a low supply now with only higher growing demand through the next couple decades where is the solution to the supply problems in the future when fertilizer companies have an economic incentive to keep supplies low thus increasing and supporting higher crop and food prices? We are developing solutions to the energy dependence and future energy problems now but how do we solve the future problem of not having enough food for our food in balance with our growing population?
Another sector of particular interest is the OIH with DO and RIG in particular. With oil prices touching new highs and constantly levitating up at the high end of the price range, this oil price strength bodes well for high stable prices in oil for the foreseeable future and what could be seen as a continuation of a strong global economy. This bodes well for earnings visibility for the industry, supports high rig rates(key metric) and usage for their special deepwater oil rigs.
Another sector to keep an eye on is the emerging market ETF’s such as FXI, EZA, and EEM.
An important sector to be watchful over is the Internets. I love and am bullish on GOOG, MELI, AMZN, BIDU, PCLN. MELI is the one to watch and could be the next big thing in 2008 and was on my Xmas list!
I will be watching and gauging the NYSE TICK,TRIN and Nasdaq TICK,TRIN indicators for market sentiment and liquidity flows in the market, correlating and looking for divergences between the indicators and the markets.
The solars should not be ignored and I believe FSLR or SPWR should be added to the S&P 500 next year. I like FSLR, STP, SPWR, JASO, SOLF, and WFR. SOLF is the one to watch here on the more speculative side.
I will be watching my leading indicator basket of stocks in the formula GAGXX+(FXI+BIDU(.5)), which is GOOG, AAPL(bullish!), GS, XOM, XLF and FXI plus BIDU.
These stocks together have given me another indicator in order to gauge the market and future probable moves and sentiments.
One of my canaries in the gold mine.
This Dragon ETF is updated in order to adhere to new and old market leadership.
Be on the lookout for new market leaders and adjust accordingly. Look for stocks pushing new highs and sectors leading the market higher or lower. Now, with every new bull market or cycle bull market you have a change of leadership composition. New leaders emerge and new sectors lead, some of the seasoned stay, but it is important to keep an eye out for those new leaders, ideas, investments and trades.

January will be volatile so keep a good portion of cash on hand in your portfolio to take advantage of high probability setups and swings. Risk management and staying positive is of upmost importance above all else!
Oh! and its time for earnings which is my favorite time of the year.
MON has earnings on Jan. 3, TXI on Jan. 4, AA on Jan. 8, MOS on Jan 9!(big one). Seeing how stocks trade to their earnings news will also give you market sentiment analysis and future market earnings expectations.
I do see gap trading after earnings (risky)with a nice IV implosion to boot are good trades for the highly skilled and experienced.
It is a fluid situation in the markets and the market will be pricing in news as it comes along, how it reacts to new news and known old news will be important in giving us a clue of market sentiment and future direction. Market technicals cannot be ignored and will give you the objective data in order to achieve market clarity.

Trader Psychology- The Yoda State
I am a big fan of Dr. Brett. He coined the term the Yoda state and I thought it was very fitting name since Andy Wang worked on production of Star Wars I.
All great discretionary traders and high performing athletes can achieve the “Yoda State”. The Yoda State is being in the zone.
It is being on a high level of mental focus and calm concentration needed to access implicit knowledge.
Implicit knowledge is repeated internalized information on chart patterns and recognition created by implicit learning.
Research tells us that implicit learning only occurs after we have undergone thousands of learning trials.
Ex-athletes know what the zone is and seek that mental level in order to attain peak performance during the “game”.
The Yoda State also eliminates performance anxiety. Anyone can attain this high level of mental acuity with practice.

To be the best you must learn from the best. Here is info on one of my favorite traders of all time.
Greatest Traders Of All Time -Bernard Baruch
Books- My Own Story- Baruch, Lessons from the Greatest Stock Traders of All Time- John Boik (Must Read)

Many members have asked for my personal book list.
Here is my personal book list

Here is some clips of our favorite news anchors and please vote for your favorite CNBC newswoman here. I will update with results and new pics but so far:

Number one is still Maria 2.0, the lovely Erin Burnett who was stunning today.
Here is some history about her and her life.

Erin Burnett 24.7%

Becky Quick 22.2%

Trish Regan 18.7%

Michelle Caruso-Cabrera 9.1%

Margaret Brennan 7.2%

Liz Claman 5.1%

Maria Bartiromo 4.3%

Melissa Francis 2.6%

Next post I will be blogging about stop losses and simple rules of trading that I follow. I will also be posting individual fundamental and technical analysis on these select names- MELI, POT, AGU, DECK, AAPL, SOLF, RIG, PCLN. Please stay tuned.
Please remember to take care of yourself because you are very special to someone.
Best Wishes,
Optiondragon