An overall bullish market was good for that play—and will likely benefit our new Baxter International (BAX) calls as well–however this uptrend hurt the put side of our IWM strangle play. We made money on the call side but the put side expired worthless delivering an overall loss with both sides tallied.

The problem is we were stopped out of the call side on a one-day pullback before the really big profits could be made as the IWM continued higher—a rare example of how a trailing stop can sometimes work against you. Which brings up an important point—there is no set of trading rules on the planet that will make you money in EVERY instance—the best scenario is to embrace a set of rules that makes you money in MOST instances—and that is exactly what our automatic orders are designed to do.

The best traders in the world still take losses on many of their positions but manage to make money overall because they trade by a proven set of rules. And they’ll be the first to tell you trading without sticking to your own rules is the fastest way to the poor house. So even though our trailing stop didn’t work out on that play it does most of the time—and that assurance is what guarantees a winning record over the long run.

We’ve got a market with some fascinating influences—and the right sectors are still providing some great opportunities. To find out where let’s take a good look at…

WHICH WAY THIS MARKET IS HEADED

As you can see the markets have been marching relentlessly higher with the Nasdaq leading the charge. The word on The Street is “Sell commodities and buy technology” and that is exactly what we’ve been seeing.

The tech sector and the small caps continue to lead the markets higher. One of the reasons for the tech rally is the growing demand for chips. International Data Corp announced on Friday that worldwide chip shipments grew +3.1% in the second quarter from the first quarter and +16 increase from Q2-07. Analysts credited the strong demand for notebooks and a very aggressive push by Intel in PC chips. Analyst Shane Rau said Intel’s processor shipments drove the growth with a 4.3% growth in processors for the quarter and 20.8% year over year. That’s a pretty bullish story for an economy that’s supposed to be in a recession. They say there is always a bull market somewhere and the tech sector—and the small cap growth sector—seem to be it right now.

Meanwhile commodities and precious metals continue to get beaten to a pulp. Gold fell to around $776 Friday, a nine-month low. Silver fell over 19% in just the past seven trading sessions, near a one-year low of $12 an ounce.  Just about every commodity got slammed last week–all due to a potent combination of remarkable dollar strength and a sudden shift in trader sentiment. The prevailing wisdom says the global economy is entering a slowdown and there’ll be less need for materials, especially precious metals.

However gold, silver and the rest of the commodity sector won’t likely stay down for too long. Thursday’s inflationary CPI number, which showed U.S. consumer prices accelerating at a 17-year high pace, convinced currency traders that the Fed would refrain from lowering rates again. That assumption boosted the dollar index to a 2008 high.

So the dollar index settled Friday at an eight month high of 77.12 while the euro sells for $1.47, a six-month low. The pound closed around $1.86–you’d have to go all the way back to December 2006 to find the British currency that “cheap.” Over the last two weeks the dollar got another boost from the Russian attack on Georgia. Every time a conflict erupts overseas investors flee those currencies to the safety of the dollar.

However don’t let small news eclipse the big picture. The bottom line is a massive sea of newly created dollars over the past several years is inflationary and the only cure is raising interest rates to lessen the money supply. And with a global and US slowdown being the major concern central banks—and particularly the Federal Reserve—won’t likely be raising rates anytime soon. Which means inflation will continue and the dollar’s recent rise will likely be turned south sometime over the next several weeks. A turndown in the dollar will likely reverse the two major trends we’ve seen recently—a rising stock market and falling commodity prices.

That said the current stock trend is up and if we’re going to play we need to play the actual trend. Nowhere is the current optimism more apparent than in the financial sector. In spite of continuing bearish news the sector refused to fall—a pretty bullish sign in itself.

The financial sector (XLF) traded sideways last week in spite of continuing headwinds. Wachovia Bank (WB) announced a settlement on the auction rate security issue this past week. They agreed to buy back $8.5 billion in ARS and pay $50 million in fines. Wachovia is the 5th bank to agree to settle. The others were Citi, UBS, MS and JPM. Merrill is under fire and NY Attorney General Andrew Cuomo said he sent a letter to Merrill notifying them he will sue next week if they don’t settle. In addition late Friday the AG’s office said they were broadening their probe to include Fidelity and Schwab as sellers of the debt and 25 other companies. The markets somehow overlooked this news pushing the XLF higher Thursday and Friday but you have to wonder where these financial institutions are going to find the billions of dollars necessary to buy back their poison debt and pay their multi-million dollar fines.

The most likely scenario is more bail-outs from Uncle Sam (your tax dollars at work). And the only way to do that is create more funny money out of thin air—and that is inflationary.

So gold, silver, oil and every other commodity are not going to stay down forever—but they are sure doing a great swan dive for right now. Meanwhile the techs and certain other sectors are pushing higher almost on a daily basis.

Trade well!

Andy Huang

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Here is a tip of the day from Google Adwords Insiders

“We all know the importance of measuring the impact of your ad campaigns. That’s why, today, we’re discussing the term conversion from the AdWords Glossary, which is defined as follows:

When a user completes an action on your site, such as buying something or requesting more information.

In AdWords, a conversion occurs when a user clicks on your ad, then proceeds to complete an action on your web site that you deem valuable, like a purchase, registration, or sign-up. You can track actions like this on your web site by using one (or both) of the tools we offer:

1. Conversion tracking: A tool for measuring conversion metrics for your campaigns.
2. Google Analytics: A more robust tool that tracks not just conversions, but also gives insight into how your web site visitors found your site, how they navigated through it and how you can improve their user experience — all things that ultimately help you improve the ROI of your web site.

Both conversion tracking and Google Analytics are free tools and are great ways of ensuring advertising accountability and making smarter online advertising decisions.

Learn more about setting up conversion tracking for your AdWords ads, and signing up for Google Analytics.”

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You can expand your affiliate marketing business operation with tie-in products and/or services and use your files to inform old customers of your new products from time to time. When advantageous to do so, place additional classified ads to attract more readers to your new tie-ins.

Optimize your selling price structure as soon as possible after starting in business to maximize your profits. Aim for the highest possible income after expenses have been deducted.

Drop shipping is the foundation upon which many successful mail order affiliate marketing business businesses have been built. What it means is that the products you sell are shipped directly to your customers by the manufacturers or wholesalers. You never handle them.

Although the advantages in favor of drop shipping are of great importance, there are also some disadvantages which you should consider carefully before making a final decision. Perhaps the most important disadvantage is that a number of other mail order companies also have drop ship arrangements with the same suppliers. Another is that retail prices are often established by the supplier and already printed in the sales literature he provides. This can limit your profits. And since others are selling exactly the same merchandise at the same prices your market is diluted. These major disadvantages apply only if you arrange a drop ship agreement with a single supplier and offer only his products to your customers.

The best way to reap the benefits of drop shipping and minimize its adverse effects is simply to make drop ship arrangements with several suppliers. Offer your customers several products of each supplier. You should probably not use the supplier’s catalogs but should develop your own sales literature. However, if sales aids in the form of slips, inserts, folders and leaflets are available from the supplier, you should use these if they describe the products you wish to sell. If only a complete catalog is available, use it as an information source to develop your own sales literature. In this way you do not compete directly with any other drop ship mail order company. Instead, you offer a unique selection of merchandise which your customers can order directly from you.

Those persons who reply to your classified ads are mailed sales affiliate marketing business literature describing all the different products you wish to offer. When an order arrives it will be accompanied by payment in full at the retail price or your established selling price. This payment includes not only the amount you must forward to your suppliers but also your profit. You receive your profit before you pay for ordered merchandise and you pay for merchandise with the customer’s money not your own.

To process an order, you separate the merchandise ordered by the customer into groups to be drop shipped by each different supplier. You then type the customer’s name and address on one of your own shipping labels, typing as many labels as suppliers whose products are listed on the customer’s order.

You then prepare your own order to each supplier, listing the merchandise to be shipped to each customer, inserting the wholesale price.

To your continual success!

Andy Huang

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Hello from Taipei Taiwan,

Many of you might know I am currently on a 2 month long trip traveling in various places in Asia. Here is live from Taiwan’s latest KMT campaign for the 12th president election.

I have planned to fly back to Taiwan to cast my vote for the next president Mr Ma as I firmly believe Taiwan needed a change to move the country forward.

Here are some videos I have shot for all of you while I am at the event supporting the KMT party.

On site Intro Video

Inviting the KMT Chairman

Connecting all Taiwan campaign location

Highlight

Wrap Up

Tomorrow I will be casting my vote for #2, Mr Ma to change the history of Taiwan.

Andy

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