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Showing Posts 1 - 15 out of 60 found.

Something’s Happening Here …

It’s official. I am joining the “wary” camp. As the song goes, “There’s something happening here / what it is ain’t exactly clear …” Yup, I had to go back fifty years for that line from a Buffalo Springfield tune, but the sentiment expresses my new-found wariness about the market. Primarily, my wariness stems from overheating, too much too fast, and chew fifty times before swallowing. The...

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Fear Is Not Rational: The Limitations Of The VIX

Fear Is Not Rational: The Limitations Of The VIX

Most of us as traders and simply as human beings seek clarity.  We innately feel the need to make sense out of chaos.  We want answers.  We want black or white.  Gray makes many of us uneasy.  So, there are often times when faced with the complex world that is trading, we want to boil things down into one universal truth, a methodology that we can apply wherever we go. Problem is we often...

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Can the Market Hold On At This Altitude?

Okay, so I suggested yesterday that Tuesday’s market move was a bit exaggerated for both the current climate and the “news” about the Fed. I must admit, the buying that happened yesterday seemed a bit stronger than warranted. The lack of follow-through yesterday (even after the FOMC notes came out with the language the market supposedly likes to hear) suggested a soft bullishness, a lack of...

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The War Has Just Begun

I must admit, the buying that happened yesterday seemed a bit stronger than warranted. Just the idea that the Fed will have more wiggle room if inflation remains low is not a reason for the market to jump back into record territory. True, underneath the Fed nonsense is the economic story, which goes something like this … Homebuilder sentiment jumped to its highest level in nearly nine years...

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Trading: Timing Is Everything

Trading: Timing Is Everything

Many traders have the experience of being right about a trade, but get shaken out or stopped out well before that trade reaches its expected target. How frustrating is that?This usually results from several common emotionally-driven timing issues: 1)    Getting in too early due to fear of missing out.2)    Getting out too early due to fear of giving back gains.3)    Placing an initial stop...

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OMG, the Fed Stuff Again

Yesterday, my word for the day was “conflicted.” Today, David Moenning over at State of the Markets has his word for the day and it is … The word of the day appears to be weakness. One reason he is suggesting this (among others including his technical charts) is the overseas markets are showing weakness from a lack of encouraging news. Asian stock markets are down across the board this...

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Conflicted? Yup Conflicted

“Conflicted” is the word today. Economic data is always conflicted, as it is today. Industrial Production is slightly down, but the Empire State Manufacturing Index is way up, almost double the previous reading. Unemployment is higher than it should be, when you count the all the folks who have given up looking for a job, but …   In the first half of this year, the (nominal) hourly...

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What Is The VIX Saying Now?

What Is The VIX Saying Now?

The chart below is a long-term look at volatility (the VIX, red line).  The current low VIX readings are similar to the period of low VIX over the years of 2005, 2006, and into the beginning of 2007, which saw the S&P 500 index move from the 1200 level to north of 1500, a 25% gain (black line).   The picture in VIX continues to suggest that the current bull trend remains in force.The...

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Market Consolidation and a Coming Catalyst

Constant news in and constant news out. That is the flow of the market. I would like to call it a problem, but if a thing is the norm, and life revolves around it, then how could it be a problem? It is something you just learn to live with. The daily news flow, and the market’s reaction to that flow, is something market players just learn to live with. The important thing to understand about...

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Respect The Risk Management Gods

Respect The Risk Management Gods

Every now and then I find traders will go out on the risk curve and take a speculative trade.   That's a good thing — because as they say in baseball, 'you cannot steal second base with your foot on first.'  However, there are limits, and often I find these traders stretch too far and they soon find themselves wounded - sometimes a devastating blow that is nearly impossible to overcome.  How...

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Advanced Options: Buy A Strangle Swap Wynn Resorts

Advanced Options: Buy A Strangle Swap Wynn Resorts

When I think that a stock has "settled in" (established a trading range) my first instinct is to sell a straddle or a strangle or something along those lines.  The problem is this involves theoretical unlimited risk and therefore causes a big margin issue for most of my students.  Are we just out of luck?  Certainly not!  In the past, I have showed how we can sell an iron condor or iron...

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Range Bound, Yes, Financial Television, No

First off, I slightly missed the mark yesterday with my intuition. I suggested that if the market show signs of going green, the bulls would jump on board and make the day a green day. Fine, but I followed up with this. My sense, though, is the bulls are not quite convinced and the bears are. The comment above clearly suggested a “hedge” in my bet, which suggests that I am not so certain...

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Some Days, You Just Don’t Know – Most Actually

My guess is it is Wednesday. Yup, I am right, it is Wednesday. So what is the market doing this fine Wednesday? U.S. stock prices fell on Wednesday on growing bets the Federal Reserve may raise interest rates faster than previously thought, while anxiety over whether Scotland might break off from the United Kingdom unnerved investors in Europe, hurting sterling and boosting the dollar....

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Stocks: How To Trade Afternoon Volatility

Stocks: How To Trade Afternoon Volatility

GRMN (Garmin Ltd.) spiked lower following Apple’s (AAPL) watch announcement.  The news of AAPL's new watch caused GRMN to start selling off and created some volatility that I could possibly capitalize on. Start The Analysis My first objective in seeing a stock selling off in the middle of the trading day is to figure out where longer term support/demand exists to eye a potential bounce. ...

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Women Actually Make More Money Than Men?

Today, I am headed off the reservation for a look at something unexpected, interesting, and quite mind boggling, but before I do that, I have just a bit of reservation news to throw out for thought. Treasuries Fall With U.S. Stocks as Dollar Gains on Fed The market is down this morning and the reported reason is the above headline. Apparently, the San Francisco arm of the Fed subtly warned...

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