An Annualized Rate of Return of 78% with an over 90% Probability of Success...

Ah, Autumn. The time of falling leaves...and falling markets. August through October is an historically bearish period in the stock market. In fact, some of the most significant bearish trends in stock market history have developed in the third quarter of the year. The Wall Street Crash of '29. Black Monday (1987). The banking debacle of 2008.


But bear markets don't have to mean doom and gloom--especially for spread traders. As we move into Autumn we should expect to see an increased period of volatility and a shift to the downside. Current world events, particularly, another wave of layoffs for Greece next month, should only add fuel to the fire, and it won't take much to see a massive selloff--perfect conditions for adding bear call spreads to our portfolio.

Trader’s Tip:

Historically,

• The “Summer Rally” is the weakest rally of the year and usually ends in July.

• Since 1987, August has been the 2nd worst month for both the Dow and the S&P 500; 5th worst month for the NASDAQ.

• In the last 13 years, the S&P 500 was up only twice on the next to the last day of August.

• The first nine trading days of August, especially the first one, is usually weak.

• Tuesday, August 24th and Friday, August 27th are bullish trading days.

From a stock (not options ) trading perspective, August is usually a good month to stay out of the market and go on vacation as it leaves most traders frustrated. The middle of August is usually stronger than the beginning and the end.

Key Dates:

• September 16th--options expiration for some indices.

• September 17th--options expiration for all equity and all other index options.

• October 14th--options expiration for some indices.

• October 15th--options expiration for all equity and all other index options

Market Outlook

Last week, pessimism over the economy continued to overshadow the market. Initial jobless claims rose dramatically to their highest level since November 2009. The Philly Fed was expected to rise 7.5 but it fell by almost the same amount---an enormous miss and it shows rapidly deteriorating economic conditions.

As consumer spending shrinks every day, Fidelity reported that 401k hardship withdrawals and loans are up--another sign that Main Street is struggling. In the 2nd quarter alone, 62,000 workers requested a hardship withdrawal compared to 45,000 the same period a year ago--an all-time high. In another confirmation that the situation is actually getting worse for real Americans 45% who took out a hardship withdrawal a year ago took another one this year. What happens when that well runs dry?

In the Pacific, Japan is now discussing a new stimulus package to revive its economy (like they've never tried THAT before). With a strong yen and a decline in growth, their GDP now suggests an annualized rate of just 0.4% during their 2nd quarter – down 4.4% over the previous quarter. As they try to reduce their country’s massive debt which is almost double the size of their GDP, Japan has now forfeited their number one spot in the world's economy to China--something we may be seeing right here in the US if our economic politics don't change.

Meanwhile on the other side of the globe Greece is simmering like a pot of angry lobsters. In an effort to put the country back on the road to economic prosperity, their austerity plan has done nothing but plunge them into a depression. Unemployment is reaching almost 70% in some areas and 20% of the stores in Athens have now declared bankruptcy. To make matters worse, there will be another wave of layoffs next month and some analysts are predicting widespread civil unrest as the population loses faith in their leadership.

One unemployed Greek shipbuilder summed it up best by saying, “If you take away my family's bread, I'll take you down - the government needs to know that and don't call us anarchists if that happens! We're heads of our families and we're desperate."

So in spite of the European Central Bank's assurances there are obviously other factors at work--so what do you think about Greece's potential for a default on their recent bail-out loans? Or the chances of default in the rest of the PIIGS for that matter?

Difficult times lie ahead but they don't have to be difficult for everybody---as options traders we can generate income in any type of market--bullish, bearish or neutral.

What are the Secrets of the Week?

We have two high-potential/low-risk plays lined up this week--a Bear Call spread and an Iron Condor.

Our first play is on a company that ran up over the past month hitting hard resistance and then bouncing lower. Now it’s time to ride it to the downside.

For our second play we've got an ETF that is busy going nowhere--a perfect candidate for a high-odds Iron Condor. Let’s get started.

You can get in on this week's trades along with two new high-probability trades per week by visiting www.cashflowheaven.com/ws.

Stack the Deck on Every Trade,

Robert

To all our subscribers, God Bless and have an awesome trading week!