The Opening Bell Newsletteris a publication of AIQ SystemsP O Box 34764,Reno NV, 89533

E-mail:openingbell@aiqsystems.com

In This Issue

Introduction to The NewOpening Bell .....................1

Richard Croft - The OptionPricing Maze......................2

Steve Palmquists - TimelyTrades ............................ 5

Dan Zangers - The ZangerReport.................................9

January 2009 Vol. 18 Issue 1

Opening BellNewsletter

Digest

AIQ

Stephen Hill is President of AIQSystems. For the past 15 years he hasbeen involved in all aspects of AIQSystems, from support and sales toprogramming and education. Steve is afrequent speaker at events in the U.S.and Europe, talking on subjects asdiverse as Portfolio SimulationTechniques, Advanced Chart PatternAnalysis and Trading System Design.

The New Opening BellBy Steve HillAIQSYSTEMS.COM

Introduction:

Welcome back to Opening BellMonthly. The last 5 months we’ve beenin a hiatus while we focussed on a newlook to our magazine.

With this first edition of 2009, we’llintroduce three conributors, each ofwhom will be regular features eachmonth.

Dan Zanger - Chartpattern.com

Dan is the worldrecord holder for thelargest percentchange for a personalportfolio for a 12month period of timeand an 18 monthperiod of time in thehistory of the stock

market. The first twelve months of thisincredible record have been audited by

a firm that specializes in auditingprofessional money managers. For oneyear the record is 29,233% using marginon high flying Internet stocks during themarket bubble from 1998 through 2000.

Dan has been featured in FORTUNEMAGAZINE and appeared on a segmentof EXTRA TV. He was also the weeklyhost of his own half-hour show on theBusiness Channel in LA and featured innumerous leading trade magazines suchas Active Trader, TradersWorld, Forbesand Stocks & Commodities.

Dan has been an AIQ user since 1992and uses AIQ’s advanced list feature incharts for his daily stock screening.

Richard Croft-Croft Capital Management

Richard N Croft hasbeen in the securitiesbusiness since 1975.Since February 1993,Mr. Croft has beenlicenced as aninvestment counselor/ portfolio manager,operating under thecorporate name R. N.

Croft Financial Group Inc. The companyprovides personal portfolio managementand consulting services to individualinvestors.

Mr. Croft authors a regular MarketCommentary column on E*TRADE

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AIQ Opening Bell Digest January 2009

March 2002

The Option Pricing Maze By Richard Croft Croft Capital Management

One of the most frustratingpositions for an option trader isdealing with the uncertaintysurrounding how an option isvalued. Even if we understand thesix basic components in the optionsprice;

• Strike price

• Price of the underlyingsecurity

• Time to expiration• Risk free rate of interest• Dividend if any• Volatility of the underlying

security

We know from previous discussions

that the only unknown in the optionpricing formula is the volatility of theunderlying stock. When evaluating thecost of an option, we always have tomake our best guess about futurevolatility. It is the one componentwithin the pricing model that traderscan use to compare one series ofoptions against another.

that appears each Tuesday. He isalso a regular contributor to theMoneyLetter, where his articlesfocus on utilizing individual stocks,mutual funds and exchange tradedfunds within a portfolio model.

In 1998, Mr. Croft co-developedthree FPX Indices for the NationalPost which examine the returns fora series of portfolios geared toaverage Canadian investors. In 2004,Mr. Croft extended that concept toinclude three RealWorld portfolioindices which purport todemonstrate the performance of theFPX portfolio indices adjusted forreal world costs. In both cases, theseindices provide portfoliobenchmarks for individual investors.

In 1999, Mr. Croft developed twooption writing indices for theMontreal Exchange, and regularlyauthors options commentary at theMx Website. He also developed theFundLine methodology, which is agraphic interpretation of portfoliodiversification. Specifically theFundLine defines what elementsofdiversification a specific mutualfund brings to the portfolio.

He also developed an index forrating the performance of fundmanagers. The proprietary modelknown as Manager Value AddedIndex (MVA Index), rates mutualfund portfolio managers on a riskadjusted basis relative to abenchmark.

Steve Palmquist -Timely Trades

Author StevePalmquist hasbeen an activetrader for overtwenty years.Steve has sharedvarious tradingtechniques atseminars acrossthe country,

presented at the Trader’s Expo, andhas published trading articles in Stockand Commodities Magazine, Trader’sJournal, The Opening Bell, andWorking Money.

.

In 1999, Mr. Croft co-developed aportfolio management system forCharles Schwab Canada. Thisportfolio program was designed toprovide registered advisors atCharles Schwab Canada with adefensible long term investmentprogram that could be marketed toCharles Schwab clients worldwide.

Mr. Croft is a global portfoliomanager who focuses on riskadjusted performance. He believes itis not just about return, it is abouthow that return was achieved.

Most recently, Mr. Croft co-authored a Canadian best seller onportfolio building entitled ProtectYour Nest Egg. This was Mr. Croft’sninth book.

January 2009

Steve is also the founder ofwww.daisydogger.com, a financialsite that provides trading tips andtechniques, and is the publisher ofThe Timely Trades Letter, in whichhe shares his market analysis, tradingsetups, and trading tips twice a week.

ProvenCandlestickPatterns- by Steve Palmquist.

Currently one themost widely used chart types,candles have the potential to bean effective tool for extractingprofits from the market.

But with all of the informationout now about candles, how canyou tell which ones work andwhich don’t?

After testing every knowncandlestick pattern, StevePalmquist has determined whichcandlesticks are the mosteffective and gives you extensivedata and techniques for how tobest incorporate them into yourTrading strategy.

90-minute DVDONLY $89

aiqsystems.com/stevepcandlesdvd.htm

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January 2009 AIQ Opening Bell Digest

If, for example, a six month call onXYZ with a strike price of 100 istrading with an implied volatility of40%, all things being equal, we knowit is more expensive than an ABCthree month 40 call that is tradingwith a 20% volatility.

The volatility implied by a specificoption contract takes all of thecomponents within the options priceand breaks them down to the onecommon denominator. In much thesame way as the yield to maturitycalculation provides a commondenominator in valuing bonds withdifferent terms to maturity anddifferent coupons.

We also know that changes involatility will quickly impact the priceof the option. We know also thathigher volatility means higher optionprices. When volatility increases, itbenefits traders who are long options,when volatility declines it benefitstraders who are short options.

The best of all worlds is theindividual who buys a call or a putwhen it is trading at a 20% impliedvolatility. Then watches as the stockrises or falls and the volatilityincreases. The option buyers gets thedouble benefit of an option whosevalue increases because of therelationship between the stock priceand the strike price, and because ofthe change in the volatilityassumption.

Problems arise when we begin tocombine strategies. Especiallystrategies like spreads where we buyand sell options at the same time. Theimpact a change in volatility can haveon a spread is often much differentthan you might imagine.

For example, suppose you arebullish on the outlook for XYZcurrently trading at $100 per share.We will assume that the stock doesnot pay a dividend, and has strikeprices from 80 to 120. The followingtable prices the six month XYZ callsand puts assuming a 30% volatilityassumption.

Table 1 XYZ at $100, six month calls and puts, Theoretical fair values assuming 30% volatility

Now let’s examine the impact achange in volatility can have on anXYZ bull spread. There are of coursetwo ways to enter a bullish spreadon XYZ, one is the debit spread usingcalls, the other is a credit spread usingputs.

With the call spread, you could buythe XYZ 90 calls at 14.93 and writethe XYZ 110 calls at 5. The total costfor this spread is $9.93. Maximumpotential gain is $20, the differencebetween the 110 and 90 strike prices.Maximum loss is the $9.93 net debit.

Here’s the question; what happensto the XYZ call spread if the volatilityassumption went from 30% to 50%.Because you are long and short calls,the increase in volatility willpositively impact the long XYZ 90 call,but will negatively impact the XYZ 110call. Overall, the issue is which optionwill be impacted the most.

Most investors would think that abullish call spread would benefit froman increase in volatility. But in pointof fact, a higher volatility assumptionhas a negative impact on the value ofthe position.

Table 2 looks at the same six monthXYZ options on the same strike prices,but this time with a 50% volatilityassumption.

Look at what happens to thetheoretical fair value bullish callspread. It falls from $9.93 to $9.017.Even with no change to the price ofthe underlying security. Of course, inthe real world, you would not likelysee a change in the volatilityassumption if the price of theunderlying security remainedconstant.

Table 2 XYZ at $100, six month calls and puts,

Theoretical fair values assuming 50% volatility

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AIQ Opening Bell Digest January 2009

March 2002

With the call spread, a change in thevolatility assumption has a greaterimpact on the out-of-the- money callthen it does on the in-the-money call.Hence the negative impact on theoverall bullish call spread.

You get a similar effect on thebullish put spread, but for differentreasons. Using the same strike prices,you might write the XYZ 110 put andbuy the XYZ 90 put. This positionwould be established – assuming a30% volatility assumption - with a$10.03 credit.

When we look again at the positionwith the data from table 2, we see thatthe same bull put spread with a 50%volatility assumption, would beworth $10.77. In a bullish put spreadthat is established with a credit, youwant the net premium to decline, notrise. So again, higher volatility has anegative impact on the spread trader.But unlike the call spread, the changein the volatility assumption had agreater impact on the in-the-moneyput then it did on the out-of-the-money put.

When looking at the option pricingformula, there is a derivative knownas “vega” that can be used to calculatehow much of a role a 1% change inthe volatility assumption will have onthe value of the underlying calls andputs… all other things being equal.Keeping with our XYZ example, wehave reproduced tables 1 and 2, onlythis time we have included a columnfor the options vega.

Notice at each strike price, the vegafor the calls is quite close to the vegafor the puts. Note also how the vegadeclines, the further the strike priceis from the current price for theunderlying stock.

Looking at the XYZ 90 call, wewould expect the price of the call tochange by 20 cents for each 1% changein the volatility assumption. Comparethat to the 24.8 cent impact a changein volatility has on the XYZ 110 call.

The impact can also be seen on theput side of the table. The in-the-money XYZ 110 put has a vega of .239,compared with .203 for the out-of-the-money XYZ 90 put. Again, explainingwhy the put spread is negativelyimpacted when volatility increases.

When you think about this in thereal world, the impact from a changein volatility makes sense. Normallywe use spreads, because we think theoption premiums are high. The saleof the out-of-the-money call helps tooffset some of the cost associated withpurchasing the in-the-money call.Similarly with the bullish put spread.You sell in-the-money puts to capturean inflated premium, and buy the out-of-the money put as insurance againsta catastrophe.

This concept goes beyond thetheoretical, when you begin to low atreal world pricing that includes a bidasked spread. Changes in volatilitynot only have an impact on thetheoretical value of the option, butalso on the size of the spread.

Summary

What I wanted to demonstrate wasthe impact changes in volatility canhave onthe options price. But moreimportantly, the options price. Butmore importantly, we need tounderstand how that impacts strategydecisions.

Table 3 at $100, six month calls and puts,theoretical fair values assuming 30% volatility

Suppose for example, you arebullish on the outlook for XYZ. Onthe most basic level, you could buycalls. You would do so if you thoughtthe options were cheap. Meaning theoption’s price is understating futurevolatility. With the call buyingstrategy, you hope to benefit from anincrease in the value of the underlyingstock and perhaps from an upwardrevision to the volatility assumption.

If you thought the options wereoverpriced, you have a number ofother bullish choices. You couldimplement a covered call write, writea naked put or use a bullish call debitspread or a bullish put credit spread.

The covered call write, the nakedput or the spread strategies are allstrategies designed to reduce risk. Inthe sense that you believe the optionsare overstating the risks in theunderlying security. By writingoptions, you take advantage of thatview. If it turns out that the optionswere actually understating futurevolatility, then we should expect thepositions to be negatively impactedfrom an increase in the volatilityassumption.

About the Author:

Mr. Croft is a global portfoliomanager who focuses on riskadjusted performance. He believes itis not just about return, it is abouthow that return was achieved.

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January 2009 AIQ Opening Bell Digest

Timely Trades Jan 4, 2009 By Steve Palmquist

NASDAQ Outlook &Key Trading Levels:

The market was up during threeof the last four sessions; and thisprice action took it above the top ofthe narrow basing range that wehave been watching. The priceaction is positive, but it came ondeclining volume. Moving up ondeclining volume is typically anegative indication, but in this casethe pattern formed during a holidayperiod when volume is typicallylight. The volume pattern this weekwill tell us if this move is important.

The trading plan was, ‘A moveabove the 1600 area is clearly a callfor longs, and the volume patternwill indicate how many positions touse.’ Because of the proximity of thetop of the narrow trading range tothe upper Bollinger Band; the plancalled for taking a couple of longson a low volume move, and morepositions if the move came onstrong volume. The market brokeabove the top of the narrow tradingrange, but the move came on low,and declining, volume; whichindicated it was best to just take acouple of long trading positions.

There were plenty of long triggersto choose from last week. ATMI,CAT, CWT, and THOR triggeredand saw profitable moves of 2% to5%. EAT, JBLU, and VRX sawtriggers and profitable moves of 8%to 10%. When we see a lot oftriggers, and the plan calls for onlyopening a few trading positions, Iget emails focused on two questions.Some people are frustrated by ‘toomany triggers’. Well, ‘too many’ isa blessing, and a lot better than toofew. I don’t think you can have ‘toomany’ triggers. I look at the volumepatterns to select the ones I amgoing to trade. I focus on thetriggers with the largest percentageincrease in volume over the previous

days volume, or the largest percentageof above average volume. I also lookat the risk/reward ratio forprioritizing trades.

The other thing that some newtraders worry about when there arelots of triggers is whether or not theyshould be taking them all. Theywonder if they will ‘miss the move’.Trading is about risk management, notentering positions. When the marketis clearly trending I will use moretrading positions. In the currentsituation, the market is trying to setup a new trend but it is not very strongon the volume pattern. The lowvolume move, and the proximity to theupper Bollinger Band, indicate that itis better risk management to just entera few trading positions and let themarket prove itself before ‘going allin’.

Any move worth trading, almost bydefinition, does not require you toload up in the first few days.However, loading up early can reallyhurt if the move is a fake out, and thenreverses. I am constantly looking at therisk of the current tradingenvironment and using position sizing,and number of positions, to adjust todifferent risk environments. If thismove is the beginning of somethingbig, then the market will prove it byshowing the appropriate price andvolume patterns. When it does, I willincrease my exposure by taking moretrading positions, and using increasingposition sizes. It is not what CNBC andthe news says that matters, it is whatthe market shows us.

The market closed slightly above theupper Bollinger Band on Friday. Aquick look at a chart will show thatthis is usually not a good time to buy.Strong markets will tend to ‘ride thebands’, but again the first day of beingon the band is not a trend. If themarket remains above the 1600 area Iwill keep trading the long positions I

have. If the market shows someaccumulation I will increase thenumber of trading positions I amusing. If the market continues risingwith up days having clearly largervolume than down days I will increasethe number of trading positions I amusing.

If the market falls back into thenarrow trading range I will close anylong positions that are not moving upon increasing volume. If the marketfalls back into the trading range onstrong volume, or shows somedistribution, I will be taking profits onlongs. Shorts are not attractive now,with the usual exception of onestriggering on something arounddouble average volume.

There are several signs that themarket environment is changing. Thebreak above the narrow base, theincreasing number of bottomingpatterns, for the first time in a fewmonths there are more interesting longsetups than short setups, and theleadership in ETFs is changing fromones like IEF, SHY, and TLT to oneslike HYG, EEM, EWM, GXC, and SLV.These observations do not guaranteethat the market is going to bounce here;but for the first time in several monthsthe internal strength to bounce is there.If the market continues up and showsa strong volume pattern I will beincreasing my exposure. If the volumepattern remains negative, I will remaincautious.

There are no risk free trades. I wantto manage risk by looking at each setupand asking, ‘what is the lowest riskway to enter this trade’? I then wantto compare that risk to what my otherchoices are. I am not focused on onestock, I am looking to manage units ofrisk by looking at all available trades,the various entry techniques, and thepotential risk to reward that each tradeyields. I then take the best of what isavailable, within the constraints of the

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AIQ Opening Bell Digest January 2009

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trading plan. I do not focus onwatching for triggers to within thepenny. I am looking at all the potentialtrades and then picking the ones thatare best.

Exit Strategies:

Holding periods and profit takingshould be based on current marketconditions. Take profits quickly intrading range markets, and givepositions more time to work intrending markets. In non trendingmarkets holding periods are usuallynot more than a few days. In trendingmarkets holding periods may beseveral weeks or months.

In non-trending markets considertaking profits after the initial popfrom the trigger. Look to exit as thestock approaches the Bollinger Band,a recent high, a trend line, or whenthe market approaches support/resistance. In trending markets,consider trend lines and majorsupport/resistance areas for exits.Strong stocks move up on aboveaverage volume. If the volume is lowwhen moving up consider takingprofits. When in doubt take profits.There is no guaranteed technique thatalways works, watch the setups thatare triggering and adjust accordingly

.Entry Strategies:

In uncertain markets, or narrowtrading ranges, consider pairingaccumulation and distribution, or bulland bear flag, setups at current levelswithout waiting for a trigger. Inuncertain markets, look for strongervolume on the trigger day beforetaking positions. In trending marketslook to enter flags near the bottom ofthe flag base or when they hit theclassical trigger. Volume measures

interest, the stronger volume triggersmay be lower risk choices, especiallyin uncertain markets. Traders willingto assume more risk may enter lowervolume triggers or withaccumulation/distribution/flagsenter before a price trigger occurs.Traders seeking lower risk maylookat triggers that occur on aboveaverage volume when the market isbouncing off support or resistance.

Risk Management:

In an indecisive or uncertain marketI will just be trading a portion ofmyaccount, using a few tradingpositions. When an individual trade

Figure 1 NASDAQ Market

hits either the stop or limit order(which I enter after getting filled) Ican then look for another setup thattriggers to replace it. For example, ina trending market I might be trading10-15 full size positions. In anuncertain market I might be trading3-5 half size positions. When all thepositions I am willing to trade in agiven market condition are filled, Ieither let new triggers go, or have toclose an existing position to makeroom for a new trade. I focus onadjusting the number of tradingpositions and the position sizes as away of controlling risk in differentmarket conditions.

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7

January 2009 AIQ Opening Bell Digest

Long Trade Opportunities:

Focus on Long setup’s that hit theprice trigger when the market isbouncing off support, breaking aboveresistance, or in a clear up trend. Seeinformation on Market conditionsabove to determine if longs areappropriate. Do not take positionsjust because they reach the pricetarget, check volume and marketconditions to determine if taking aposition is appropriate. An Initialprotective stop loss is typically placedjust below the low of the pattern. Ifthe set up does not trigger the nextday, watch the pattern for a fewmore days. Interesting Long set upsinclude:

AU on a move above 28.21. Base.

BRCM on a move above 17.77.Double Bottom.

DLTR on a move above 42.67.Pullback..

HEI on a move above 40.61.Accumulation.

MAXY on a move above 9.26.Accumulation.

RGLD on a move above 50.06.Accumulation.

SLW on a move above 6.97.Accumulation.

PLD on a move above 14.73.Accumulation.

Shorting Opportunities:

Focus on Short setup’s that hit theprice trigger when the market isretracing from resistance, breakingbelow support, or in a down trend.See information on Market conditionsabove to determine if shorts areappropriate. Do not take positionsjust because they reach the pricetarget, check volume and marketconditions to determine if taking aposition is appropriate.

An Initial protective stop loss istypically placed just above the high ofthe pattern. If the set up does nottrigger the next day, continue to watchthe pattern for a few days. InterestingShort set ups include:

ALOG on a move below 25.89.Base.

FE on a move below 47.89.Retrace.

GCO on a move below 15.88.Retrace.

HNT on a move below 10.68.Retrace.

ETF Corner:

Exchange Traded Funds, REITs, andclosed end funds may have lowvolatility and thus may provideopportunities for intermediate termholdings. Some are not stronglycorrelated to the market, and provideinteresting trading opportunities inpoor market conditions. I generallytrade these using trend lines for entryand exit points.

I watch for trend line breaks on pullback’s, or a break above a long termdescending trend line for entries. Forexits I look at topping patterns andbreaks below ascending trend lines.The volume is often low on ETF’s, soI use limit orders for entry and exits.

I generally hold ETF’s longer thanstocks and look for movement ondeclining volume, approachingresistance/support, or when themarket approaches resistance/support, as times to take profits andmove on to another ETF setup. ETF’sthat currently look interesting include:

DBC is interesting if it breaks andstays above the descending trend linedrawn between the highs of 07/11/08 and 09/24/08. A break above the22.60 area also indicates a doublebottom pattern.

EEM is in the finishing stages of adouble bottom pattern and looksinteresting on a move above the 26.77area.

EWJ is forming a triple bottompattern and looks interesting on amove above the 9.76 area.

EWM is breaking above an eightmonth descending trend line andlooks interesting around currentlevels with a stop under the recent lowin the 6.89 area.

FXI is interesting if it breaks abovethe descending trend line drawnthrough the highs of 05/19 and 07/23.

SLV has started forming higherhighs and higher lows and looksinteresting around current levels fora small test position with an initialstop in the 10.49 area.

Trader Tips:

Finding good swing trading set upsis fairly straight foreword. However,just taking every trade that comesalong will lead to mixed results. Theleverage in Swing-trading comes fromlearning to time the trades with therhythm of the Market. This requiresspending some time in the school ofhard knocks, and learning to focus onthe charts; not emotions or CNBC.

When the Market is trading in a basethe best time to take new swing-tradeson the Long side is when the Marketbounces from the bottom of the base.New Short trades should be takenwhen the Market retraces from the topof the base. The middle of the base isthe ‘no zone’, avoid new trades in thisarea and manage existing tradesinstead.

Sometimes the top and bottom of abasing area are flat, making it easy totell when the Market is approachingsupport or resistance. Frequently thetop and bottom of the base slopes

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AIQ Opening Bell Digest January 2009

March 2002

which makes it a little harder to tell ifthe current swing has reached theupper or lower boundary of the base.In practice it is often best to closepositions as the Market approachessupport or resistance rather thantrying to time the exact top or bottom.

The number of positions I take atone time depends on the marketconditions. When the market is in astrong trend I want to be fullyinvested, this is the least risky timeto trade. When the market is in a widebase I usually trade half size positions.When the market is in a narrow baseI usually stand aside or take only oneor two small positions. I let the marketconditions tell me when and howmuch to trade. This is why the firstsection of the Letter looks at marketconditions.

The NASDAQ tends to lead theother indexes on both the up anddownside. It is generally the first toindicate a change in trend and is morerepresentative of the overall market.The DOW doesn’t tell you much aboutthe market, but is the one the newsalways reports (there is a messagethere). SPY is a good indication ofhow big caps are doing, but does notinclude much in the way of mid andsmall cap stocks. In short, I use theNASDAQ for market timing becauseit works better than the others. I donot limit my trading to only NASDAQstocks. I just use the index to gaugethe health of the overall market.

I watch the market for awhile afterthe open, but it is not necessary forswing trading. I don’t take trades justbecause they trigger, I also need themarket conditions to be favorable andI adjust the number of trades basedon the market conditions.

I generally do not wait for a stop totake me out of a position, I close themwhen they approach resistance orsupport, if they start moving on lowvolume, or if the market approachesone of the key levels noted in theLetter.

The Letter is an outgrowth of myprocess of writing down my tradingplan every evening. It is somethingthat reflects my thoughts afterrunning my scans and reviewing themarket. I use the first section todetermine whether or not I should betrading and if so which direction andhow aggressively. If the market isfavoring Longs then I look at any longsetups that trigger and decide to takethem based on the volume, and whatthe current market conditions tell meabout how close to fully invested Iwant to be. If the market is favoringShorts then I analyze the Shorttriggers in a similar way.

About the Author:

Steve Palmquist a full time traderwho invests his own money in themarket every day. He has sharedtrading techniques and systems atseminars across the country;presented at the Traders Expo, andpublished articles in Stocks &Commodities, Traders-Journal, TheOpening Bell, and Working Money.Steve is the author of, “Money-Making Candlestick Patterns,Backtested for Proven Results’, inwhich he shares backtesting researchon popular candlestick patterns andshows what actually works, and whatdoes not. This best selling book isavailable through:

www.daisydogger.com.

Steve is the publisher of the, ‘TimelyTrades Letter’ in which he shares hismarket analysis and specific tradingsetups for stocks and ETFs. To receivea sample of the ‘Timely Trades Letter’send an email to

sample@daisydogger.com.

Steve’s website .daisydogger.comprovides additional tradinginformation and market adaptivetrading techniques.

Terms of Use & Disclaimer:

No one associated with this letteris an investment advisory service, nora registered investment advisor, orbroker-dealer; and we do not intendto suggest which securities readersshould buy or sell for themselves.Readers should always check withtheir licensed financial advisor andtheir tax advisor to determine thesuitability of any investment or trade.Trading stocks involves risk and youmay lose part or all of your investment.Do not trade with money you cannotafford to lose. The Informationprovided in this newsletter is not tobe relied upon for your investmentdecisions. Your decision to buy or sellany securities is a result your owndecisions, free will, and your ownresearch. We are not recommendingthe purchase or short sale of specificsecurities.

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January 2009 AIQ Opening Bell Digest

The Zanger Report Jan 4, 2009 By Dan Zanger

Hello out there stock fans. TheS&P-500 and the NASDAQ havefinally broken out of their smallchannels after three consecutive up

days on light holiday trading. Andwhile breaking out of these channelsshould be positive for at least two tothree weeks, one has to be careful the

first few days of the New Year as thistime is often filled with wild swings.

Let’s see those channels on theleading averages.

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AIQ Opening Bell Digest January 2009

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My short term trading oscillatorclosed at a very high overboughtreading of plus 71 on Friday. Areading this high leaves little room

for another big up day at this time,but usually suggests some weaknesscould be coming up in a day or two.Now on to some of the best moving

stocks in the market, many of thesestocks were up from $3 to $15 eachby the end of the day.

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January 2009 AIQ Opening Bell Digest

D I S C L A I M E R

This newsletter is a publication dedicated to theeducation of online stock traders. The newsletter isan information service only. The information providedherein is not to be construed as an offer to buy or sellstocks of any kind. The newsletter selections are notto be considered a recommendation to buy any stockbut to aid the investor in making an informed decisionbased on technical analysis. It is possible at this orsome subsequent date, the editors and staff ofchartpattern.com and the Zanger Report, may own,buy or sell stocks presented. All investors shouldconsult a qualified professional before trading anystock. The information provided has been obtainedfrom sources deemed reliable but is not guaranteedas to accuracy or completeness. Chartpattern.com staffand The Zanger Report make every effort to providetimely information to subscribers but cannot guaranteespecific delivery times due to factors beyond ourcontrol.

About the Author:

Dan has been featured in FORTUNE MAGAZINEand appeared on a segment of EXTRA TV. He wasalso the weekly host of his own half-hour show onthe Business Channel in LA and featured in numerousleading trade magazines such as Active Trader,TradersWorld, Forbes and Stocks & Commodities.

Dan has been an AIQ user since 1992 and uses AIQ’sadvanced list feature in charts for his daily stockscreening. More info on Dan’s newsletter can be foundat Chartpattern.com.

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All material in the web site Chartpattern.com andthe newsletter “The Zanger Report” are protectedunder copyright laws of the United States. You maynot reproduce, post or transmit, in anyway, any partof this letter or any material in the web site, withoutprior written notarized consent of the author.