The United States Ethanol Industry benefits mainly from federal subsidies, tariffs, and production mandates. Oil refiners get a credit of 51 cents per gallon of ethanol blended with gasoline. The typical blend is 90% gasoline/10% ethanol. Due to a federal dictate, more than half the gasoline sold in the U.S. now contains ethanol, which accounts for 7% of total gasoline consumption. There is also a 54-cents-a-gallon tax on imported ethanol. The government mandates that 9 billion gallons of ethanol be used this year, rising to 10.5 billion in 2009 and 15 billion by 2015.

Critics make a valid point that ethanol producing companies are only surviving because of strong backers in the Capitol Hill. Ethanol is also widely criticized as a wasteful and inefficient way to fuel automobiles.

Oil refiners are blending ethanol on their gasoline because it makes economic sense. Ethanol now costs $2.50 per gallon — or about $2.00 a gallon to refiners after the federal subsidy. The wholesale price of gasoline is above $3.30 a gallon.

This means that refiners save about $1.30 per gallon by using ethanol rather than pure gasoline. The savings per gallon of a 90/10 blend of gas and ethanol relative to pure gasoline is about 13 cents (10% of the $1.30 differential between ethanol and gasoline). Much of that gets passed on to consumers.

Ethanol may be controversial, but it has powerful friends in Washington and is helping millions of cash-strapped Americans save money on gasoline. This suggests that the ethanol industry is here to stay.

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Options to insure against drop in US stocks can be resorted to as protection. For the third day the costs of using options slid for three days now, which has been within a month the longest streak ever. Computer maker Dell Inc. discloses in a report that profits have been much better compared to estimates.

Dell on June $21 has seen its puts falling down by 84 percent, which was the second greatest decline among US equity options. Regarding American Airlines parent AMR Corp., traders are now speculating on a rally. The airline company has suffered a setback by nearly 50 percent in 2008, following the end of merger talks between two rivals and the lowering of jet fuel costs. Traders also speculate on hunch that Masco Corp. this year will rebound from the 14 percent loss it incurred.

There has been a drop in Jet fuel for a second day, declining by 0.5 percent to $3.80 per gallon.

When UAL Corp.’s United Airlines realized that it would not be advantageous to merge with US Airways Group Inc., since the merger would not enable to company to save on labor costs, UAL is now trying to merge with Continental Airlines Inc.

Based on the present conditions and with a “neutral” rating, AMR, whose stock was unchanged at $7.19, probably won’t have to file for protection under Chapter 11 this year. The company’s July $10 calls, yielded an increase by 17 percent to 35 cents.

Trading the markets makes one a winner and another loser. As my mentor used to tell me, “Markets are summarized by greed, hope, fear and desperation”, all mistakes traders commit including me are always related to the four market moods. I have listed 5 of the most common mistakes we traders make and feel free to choose your own weakness.  

1.       Failing to cut losses

We have to admit that we are humans and we are susceptible in making mistakes. Failing to cut losses not only is expensive for your portfolio, but also a way to wipe it clean.

2.       Adding up to a Losing Position

Cutting loses is bad. Adding up to a losing position is even worse. Some people use this measure to bail out on a position. Simply put you bought 10 shares of XYZ at $50.00 and it fell to $45.00. Some people would buy another 10 shares at $45.00 and sell the whole position at $47.50. Sounds great right? Not really. It is not only getting riskier, but it also gives you more tension in your trading knowing that you are averaging down and might wipe your portfolio clean.

3.       Trading with Emotions

Remember what my mentor told me a while ago? Greed, Hope, Fear and Desperation is the way to go in telling what the current mood of the market is. We have to admit that we traders are motivated with greed, but we also need to understand that in order to be successful in this field, we have to operate like a system, operating without our emotions. Emotions cloud our judgement and logic.

4.       Loving A Position

Yes we understand you made a lot of money in that trade. Even if that issue made you a lot of money previously, you have to take into consideration that past performance is not an indication of future results. No shortcuts are to be made in trading. We really have to do our homework.

5.       Trading the Board and the News

Some trading hours could be boring. And when boredom and impatience strikes traders, all they do is look at the board or the Newswire and stare. Now here comes the fun part, you’ve been staring at ticker symbol ABC for quite some time and you see that it steadily rises to 7%. Sounds great right? You type a buy order at your terminal and the trade is executed. Minutes before closing, you see the ABC correcting and those people who are buying it 2 hours ago are now dumping it. Now you are forced to liquidate and cut your losses. Sounds familiar? Never enter a trade without a trading plan and without doing your homework. What separates gamblers from traders is that traders have systems and plans to follow while gamblers throw their darts at the board.

We have to admit that we cannot remove these overnight. It entails discipline and determination. After all, sometimes you have to get hurt in order to learn, and learning is required if you dream of beating the street.

There are two main schools of thought in analyzing the capital markets. Fundamental Analysis, the use of the company’s books and economic data to determine it’s value, and Technical Analysis, where the supply and demand of an issue, contract, commodity, etc. is being analyzed to forecast future results.

There are a lot of disparities between the two schools of thought. Fundamentalists would go long or short because of valuations while technicians go long or short because of trend continuations or reversal. A Fundamentalist could buy shares of an issue that is nose-diving with his belief that it’s getting cheaper, while a technician would definitely not like it in his portfolio because it broke major trend lines or averages.

There has been an unspoken conflict between the two schools of thought for the past years. A Fundamentalist could be buying the company because of its valuations while a Technician could be shorting it because of its trend.

Fundamentalists call Technical Analysis a “self-fulfilling prophecy” while Technicians do believe that all data are already discounted into the market and books can be cooked. While both of them can be true, the fact is, both of these schools of thought make money.

Ultimately, it’s for the investor to choose what he would like to believe in as long as it makes him money. After all, it’s the profits that really matters in the bloody streets.

Johnson & Johnson’s Board of Directors has declared a 10.8% increase in the quarterly dividend rate, from $.415 per share to $.46 per share.

The increase was announced this morning at the Annual Shareholders Meeting in New Brunswick, NJ.

“In recognition of our solid results in 2007, our strong financial position, and our confidence in the future of Johnson & Johnson, the Board has voted to increase the dividend for the 46th consecutive year,” said William C. Weldon, Chairman and Chief Executive Officer of the Company.

At the new rate, the indicated dividend on an annual basis is $1.84 per share compared to the previous rate of $1.66 per share. The next quarterly dividend is payable on June 10, 2008 to shareholders of record as of May 27, 2008.