THREE HUGE PROFITS!

This past week's volatility bounced us out of several trades with great results...

WELLS FARGO (WFC) PLUNGED BELOW OUR TRAILING TRIGGER THURSDAY FOR A MUCH APPRECIATED TWENTY-FIVE PERCENT PROFIT!

THEN SYNAPICS (SYNA) GAPPED HIGHER FRIDAY MORNING SHOOTING OUR JAN 27.50 CALLS TO A FAST THIRTY-FIVE PERCENT WINNER!

AND THE BEST PLAY OF ALL WAS OUR DEC 14 PUTS ON DELL CLOSED FRIDAY FOR AN OUTRAGEOUS ONE-HUNDRED-FOURTEEN PERCENT GAIN!

It was a great week and by the looks of things there are more profits on the way. MLM reversed sharply lower adding value to our Dec 85 puts, and F5 Networks (FFIV) just traded above our trailing trigger and looks ready to blast higher again on Monday.

We've done great and now it's time to keep the momentum going with two new plays. To find the profits let's start by taking a good look at...

WHICH WAY THIS MARKET IS HEADING

The November Non-Farm Payroll report blew away estimates for 130,000 job losses with only 11,000 jobs actually lost in November. Plus the losses previously reported for September and October were revised lower by 159,000.

The September jobs report originally came in as a loss of 263,000--however the report on Friday adjusted September to only 139,000 jobs lost. That is an improvement of +124,000 jobs over the last 60-days. The October job loss was originally reported as 190,000 and that was revised lower by 79,000 jobs to a loss of only 111,000 jobs.

Add up those two major reversions with only 11,000 jobs lost in November and this was a shockingly strong report.

The unemployment rate dropped to 10.0% from 10.2%--it isn't much but at least it was finally headed in the right direction. Despite the market reaction to the numbers there were some problems not reported in the news.

The unemployment rate dropped because 98,000 workers fell off the survey as their unemployment benefits ended. The labor force participation rate fell to 65% which is a new record low for this recession.

Another reason for the drop in job losses was the sharp increase in temporary seasonal workers. For instance FedEx hired over 35,000 seasonal workers and UPS more than 50,000. After this holiday season most of those workers will likely end up back in the unemployment line.

The nearly positive jobs report caused a giant short squeeze in the dollar as it rebounded to 75.91 on the dollar index. After trading as low as 74.26 on Tuesday this was a monumental rebound. It was pure short squeeze as analysts revised their estimates about when the Fed might raise rates. Any rise in interest rates will strengthen the dollar--and pummel the price of commodities--and that is exactly what we saw on Friday.

We started to see the gleam fade from gold on Thursday as savvy traders sold their gold positions ahead of the jobs report. Gold hit a new high of $1,225 on Wednesday evening and then headed lower resulting in a $20 drop on Thursday followed by a $55 plunge on Friday.

In spite of the better than expected jobs numbers the Fed is not going to raise rates for months to come and the U.S. is still selling record amounts of debt. As long as the Fed is on hold and the government is going deeper into debt the value of the dollar will continue to decline. It may not fall for a few days because there are still shorts that need to cover. That means gold could also decline further--but the dip will be temporary as the US Treasury and Fed continues to degrade the dollar.

For example this week we'll see $135 billion in new debt being auctioned. There is $74.3 billion in 3, 10, 30-year notes/bonds and $61 billion 3 and 6 month bills. The Treasury will sell $40 billion in 3-year notes on Tuesday, $21 billion in 10-year notes on Wednesday and $13 billion in 30-year bonds on Thursday. Those 30-year bonds will be the most watched auction of the week.

Plus we've got an Fed FOMC meeting coming up on the 15th--a week from Tuesday. Don't expect the Fed's comments to change much--the Fed understands that this jobs report reflects seasonal hiring and not a big improvement in conditions. They won't change their bias because to do so would crash the markets and the economy. Everyone still expects unemployment to be well over 10% by mid 2010--the Fed can't raise rates in that environment.

The Fed normally begins raising rates 18-20 months after the first uptick in employment. That first uptick would have been last February and "normally" we could expect rate hikes somewhere July-August 2010. However these conditions are not normal as we have just undergone the Great Recession, the worst since the 1930s. The Fed will want to make very sure the rebound has traction before acting.

Another reason rates aren't going to rise is the administration is talking about another stimulus package of some sort and possibly even a payroll tax holiday. The Fed can't raise rates when the government is talking about additional stimulus. The jobs were a fluke and it may take the markets a couple days to return to the past pattern but it will happen.

We'll likely see dollar strength on Monday from additional short covering and then fear of the Fed for the rest of the week. Hopefully investors will realize that the Fed can't act when the administration is proposing additional stimulus. Bernanke has not been confirmed yet so he should be toeing the party line for another week.

The bottom line is we'll likely see a bit more upside in the dollar and a bit more downside in commodities including gold--but after Tuesday the 15th we'll likely be right back to where we were last week with rising stocks, rising commodities and a falling dollar--the question is...

HOW DO WE MAKE MONEY ON IT?

If you don't have a long term position in gold or silver yet this week may be your chance to get one. As far as our plays go we're interested in making as much money in as short a time as possible--and we've got two great plays lined up to do exactly that.

Our first trade is bullish and it's on a company that is seen as recession proof. They do well in good economies and bad and have been doing especially well lately. They're growing earnings in the double digits and this coming year their prospects look especially attractive--and investors know it. The chart has one of the steadiest uptrends you'll ever see and this play should be as easy as jumping on the escalator with the right calls--a move we'll be making first thing Monday morning!

Our next play is bearish and it's on a health care stock that looks scared their profit cart might be upset by health-care reform The stock just broke key support Friday on huge volume and has a long way to fall--a ride we'll be taking with some high-potential puts for more outstanding profits!

We've got two great plays lined up on a market ready to move so let's get to it...

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