Welcome to Straight-Up Profits.
This is your one-stop shop for everything you need to know about the market.
Three times a week, we’ll cover what to expect from the market, professional technical trading techniques, and stocks to watch.
Occasionally, I’ll even share an exclusive trade recommendation, packed with all the details and instructions you need to make money in the market.
See, I don’t trade the markets like everybody else…
My name is Chris Johnson, and I’m a bit of a quant.
I’ve been trading for over 30 years now. And in that time, I’ve been a fully licensed financial advisor. I’ve taught a class on derivative pricing. I earned degrees in finance, accounting, and statistics. I’ve seen technical analysis go from plotting a chart with a pen and paper to creating my own online databases. I even created my own research company. I learned how to trade options – and I made a boatload along the way.
I went from surviving on food stamps to working as a millionaire trader. And now, it’s time for me to share my knowledge with you.
See, today’s market goes way beyond what you see on the surface. Just because a company is doing well doesn’t mean its stock is too. And just because a company is doing poorly doesn’t mean its stock is shot either.
Welcome to the world of technical analysis. It’s the most reliable way to make money in today’s market – and it’s a whole lot easier than you think.
With every edition of Straight-Up Profits, you can learn from my past mistakes. And in just a few minutes each week, you can take advantage of my 30 years of trading experience.
In fact, you can also discover what I call The Four Evolutions of Investing right here. And you can learn how to follow The 10 Commandments of Trading – 10 rules I live and die by in this market – right here.
My manta when it comes to trading? Keep it simple, stupid. And that’s exactly what I’m here to help you do.
WHO IS CHRIS JOHNSON?
From Food Stamps to $1 Million – Chris Johnson’s Story
I’ll never forget the first time I realized my interest in investing.
It was 1983. I was in the seventh grade (please, don’t do the math to find out my age), and my teacher had our class fill out a career quiz. When she handed out our results a few days later, I had four future paths laid on a piece of paper.
Airline pilot. Banker. Stock Broker. Engineer.
My eyes focused on that last one, tunnel vision forming. I come from a long family of engineers – all the men on my father’s side and a few uncles on my mother’s. My mind was made up; this was the path I was going to follow.
From there on out, I started focusing all of my extra time on math and science, determined to garner all the knowledge I needed to pursue an engineering degree in college. But it wasn’t long until I ran into an issue.
Ohio State, freshman year – Differential Equations 101, or as we called it, “Diff EQ.” I loved math in high school, but this was different. This was the first class that tested the limits of my potential as a future engineer. To say I struggled would be an understatement.
I went to my professor’s office hours, stayed after class was over to work with the teacher’s assistant, and was up late hours in the library with my face in the textbook. But still, I was told those dreaded five words: You won’t pass this course. It was a “weed out” class, and I had been weeded out. I wasn’t going to become an engineer.
Even though it felt like it at the time, it wasn’t the end for me. As cliché as it sounds, it was the beginning. My guidance counselor told me to check out the business school – they had some math programs I might be interested in. And then, I realized my true attraction to the capital markets. But I wasn’t after becoming a banker. I wanted to enter the investment world.
Within two years, I had matriculated to the College of Business and was working towards a degree in finance. I was taking advanced mathematics classes and joining investment clubs. Gone was the impending doom that was Diff EQ – I was finally excelling, and I was loving it.
The next summer, I forged my path into finance even further, accepting my first job “in the business.” It was like most entry-level positions in the finance world. My first day, they gave me a book called Marketing and Lead Generation Rules. Of course, lead generation was code for “cold calling” in those days, which is exactly how we cut our teeth.
Every morning, my boss gave me a stack of 3×5 index cards with the details of a lead: name, address, phone number, income, investment interests. From there, it was all “smile and dial.” Time to play the numbers game.
Luckily, I was a numbers guy. So that was a game I knew how to win. It didn’t take long for me to figure out how many times I had to dial the phone to hit my goal on “qualified leads” – those potential investors that I’d call a few weeks later with more information. I grew my client base quickly, giving myself more time to learn about the investments I wanted to offer my clients.
At the same time, I began studying for the dreaded Series 7 exam. The standardized test is the first step that young brokers take to advance their careers, and just like Diff EQ, it was meant to weed out those that shouldn’t get their securities license.
But it didn’t turn out the same way Diff EQ had. My path was already set – the exam just pushed me further along. More than 80% of people failed that year. I passed on the first try.
By 1991, while I was still working toward my bachelor’s degree in finance at Ohio State, I became a fully licensed financial advisor with Prudential Securities. This was my dream, and it intoxicated me. Soon, it was taking up the lion’s share of my time – but I didn’t want it any other way.
Everyone around me had been in the business for decades, and I was a sponge soaking up information. But all they talked about was stocks, so all I did was listen to Squawk Box on my desk every morning and repeat my notes to clients.
Then, something amazing happened – I learned about options. Now, at that point, options were still pretty taboo. Options were traded in the back rooms in New York City and Chicago, not on the 13th floor in Columbus, Ohio. But my mentor had some very active clients that wanted to trade options, so I had a direct line to these back rooms.
The idea that you could control 100 shares of stock for just a small amount of money consumed me. And the results? 25%, 50%, 200% returns on stocks in just a few weeks. And not the stocks we heard about on the Squawk Box. These were stocks we were doing our own analysis on – these were our stocks!
My team and I would sit in one office all day, talking about price movements and option prices for hours. We’d dial up the phone to the options floors over in Chicago to get an ask price on options we were considering before or after earnings, and then watch the prices rise.
That brings me to another important piece of the puzzle: tracking prices.
This was all happening in the early 1990s. There weren’t any fancy computers with graphing packages, and the term “technical analysis” didn’t even exist yet. But that’s exactly what I was learning. Every day, I sat at a desk with a stack of graph paper bound by three rings, pencil in hand. Each page represented the six-month price activity of a stock, along with calculated moving averages and key price levels. I used different colors to plot various lines, and by the end, it was a masterpiece – and I was Picasso.
The actual analysis of a stock’s price! This is what I’d been craving without even knowing it. Now, mind you, this had nothing to do with a company’s fundamentals. The fundamentals were unreliable; there was no way for us to really track that information. But there was one thing that was reliable – the price where a stock closed.
As we added more and more stocks to our so-called “watch lists,” the books started to grow fast. In no time, my team and I were offering other brokers in the office our outlook on a large number of stocks, based on the prices we’d tracked. Without even realizing it, we had created our own internal technical analysis group.
The success emboldened us. We started trading more and more options, making more and more money with a variety of different strategies. Pre-earnings trades, post-earnings trades… we even used options to magnify the returns of stocks we found entering new bullish trades.
I was hungry for more and more information on options. That’s when I learned about heading a portfolio. I was excited, but it came with a caveat. “It’s not right to bet against our clients making money,” my mentor used to exclaim. He wouldn’t let us trade puts on any of the stocks our clients owned.
So if our clients were holding shares of stock that was entering a downtrend, but didn’t want to sell, we’d put together “portfolio-protection” plans to ride our rough patches in the market. That’s where I learned the true value of options, something that only the few in those rooms at the exchanges in New York and Chicago had known for years. They weren’t the high-risk trades that everyone had been warning against. They could do more than just make you money – they could protect you from losing it.
At this point, I had been working full-time to take in all of the education I could get from my mentor. I’d pretty much forgotten about my undergraduate degree, and I was already making more money than any of my friends who were graduating, plunging into the workforce for “entry-level” jobs.
I was so far from entry level that the idea of going back to school for a piece of paper was painful. But then, I got the news that changed my life forever. I was going to be a father.
It was almost too well-timed. I could go back to school, take time off from work, and spend time with my new family. After I finished my degree, I could go back to work again. It was perfect, and everything was set into motion fast.
We moved halfway across the state from Columbus to Cincinnati to be closer to our families, and I enrolled in the University of Cincinnati with two years left to the finish line. I started teaching a class on derivative pricing and the Black-Scholes Option Pricing Model. That’s right – my experience trading options was paying off as a teaching assistant.
Fast-forward about 18 months later, and I had earned my degrees in finance, accounting, and statistics with a focus on derivatives analysis. Try finding a job in Cincinnati with that line up. My search was fruitless, and after months of looking with no success, I was forced to take a position with a local bank, working in their trust and investment departments.
The work was boring. No more fast-paced options trading, no more tracking prices on graph paper. I was dealing with mutual funds and money market accounts, and I wasn’t making nearly enough as I needed to. The burdens of going back to school had settled in, and I found my new family deep in financial struggles.
One of the hardest moments of my life came around when my wife asked if we should apply for the Women, Infants, and Children (WIC) program – a form of welfare that provides basic food to families. I was raised to do things on my own and not lean on people for help, so the suggestion was a hit to my pride. But my dad gave me the best explanation:
“You’ve been paying taxes into the system for services just like this one since you started working at 15 years old. It’s okay for you to take a little bit out and replace it when you’re back on your feet.”
It was exactly what I needed to hear, and those words motivated me more than I ever had been. To this day, it serves as a reminder of where I’ve been and how I’ve gotten to where I am today. I still keep the unused WIC Certificates in my private safe as a reminder of where I came from.
While working for the bank, I happened upon a classified ad in the employment section of the Cincinnati Enquirer. Remember the days when we had to search for jobs in the newspaper? Anyways, the job was with a local investment research firm that worked in the options market. And the title? Quantitative Analyst. I was shocked – how was this a job listing in Cincinnati? Those were the kinds of positions I thought only existed in Chicago, over at the Chicago Board Options Exchange.
Long story short, I interviewed for the job the following week. My boss-to-be told me that he wanted to hire me, but he still had another week of interviews to complete. I had to wait for my dream job, and it was the longest week of my life. But I finally got the call, and my first day was a week later.
My first few weeks went exactly as I would have planned them. Before I even finished setting up my desk, long-term capital management had failed. I had my own trading platform, complete with technical analysis tools and options montages. It was trial by fire, and I loved it hot.
Within a few months, I had started collecting historical stock and option data so that we could do our own “on-the-fly” research and analysis. It wasn’t long before I was giving quotes to writers from the Wall Street Journal, Barron’s, and CNBC. You see, I had amassed volumes of data on the markets that no one else even had a fraction of. I was the media’s go-to.
And I didn’t stop there. Another three months or so later, I was harnessing data to perform daily and weekly scans, searching for stocks that matched a number of different criteria. Breaking out, overbought, unusual options activity, high short interest, technical patterns – the list goes on. You name it, and I could find it in the data.
During those first few months though, something happened – something that jump-started the life I live today.
After all the work I had done analyzing stocks, charting technicals by hand, watching the news, and calling the options pits, it finally all came together. I had crossed into the world of programming, putting together simple modules to run on my databases. Three systems generated scoring systems that would take me right to stocks that were matching the signature of an opportunity at hand.
I’d been studying options for years. Now, it was time to put my first trade on the books.
Intel had had a long run as a market leader, but our charts were showing that that run was coming to an end. There was some weakness creeping into the stock’s daily trading activity, and option traders were increasing their puts – all signs pointed toward something on its way.
That “something” was the semiconductor’s earnings report. Intel was a company that had been handily crushing its reports, but things were different this time. It was September of 2000, and companies like Cisco and Motorola had been pre-announcing lowered expectations. Intel, however, had kept its expectations high.
The stock had ripped through its 50-day, which was now trending lower. A signal that to this day is one of my most effective technical signs that a stock is going lower. I was getting ready to head to Florida on vacation at a friend’s, and just before leaving, I bought at-the-money November puts on Intel in my personal account with almost everything I had left.
I was in the car when the company announced their earnings after market close on September 21, 2000. And what happened next is the reason you’re here right now, reading this.
I woke up on the morning of the 22 to reports that Intel had missed their earnings number and was recasting all of their forecasts. The stock was trading about 25% lower than where I had added the puts just a few days ago. To say that I had hit the jackpot was a massive understatement.
It felt like I had just won the lottery. But this wasn’t the luck of a winning ticket. This was due to years and years of hard work studying the markets.
Over the next few weeks, I continued to unwind the position as the stock moved lower. I paid back debts, covered our family costs, and then started planting the financial seeds for a new future.
After an eight-year career with this company, I decided that I needed more. Back when my family was receiving food stamps, the thought of owning my own research company was something I wouldn’t even let myself dream of. Now, the opportunity was right in front of me. And so began the Johnson Research Group.
The company is built on the same factors that made my first options trade successful – technical analysis, volumes of unique data, and technology that allows us to create market-beating trading models.
Now, some 10 years later, Johnson Research Group has become known for its expertise in studying the behavior of investors, financial markets, market sectors, and indices. Our findings and outlooks are published in the firm’s newsletters and used in various trading module services. I’ve even developed numerous proprietary market analysis tools that quantify and gauge the outlook for equities and the market by harnessing a powerful combination of behavioral and technical analysis.
I’m a frequent commentator on financial markets and have represented Johnson Research Group at many national investment conferences. I’ve been featured in national print media, such as Barron’s, Los Angeles Times, Washington Post, Wall Street Journal, USA Today, and the AP Newswire. In addition to being a guest on several radio shows, I appear regularly on CNBC, Bloomberg TV, and the Fox News Channel as an expert in the field of sentiment and investor behavior as well as technical analysis.
Of course, I still subscribe to the rule “keep it simple.” I’ll never forget where I came from. For all of the tools, charts, data feeds, indicators, and research that I have at my fingertips, I’ve found that success is as simple as a small batch of highly effective indicators used wisely.
I started out as a failed engineer. After multiple jobs, years of school, and a stint of living on food stamps, I’m a millionaire living out the dream job I’ve always wanted. But I’m always searching for more, which is why I’m here.
I want to tell you everything you need to know about technical analysis. It’s time for me to share all of this knowledge with others. Learn from my mistakes – and become a master of the market.