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Market Commentary

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Risk Management is Critical To Survival in Trading Options and Stocks

Got a 'Chip and a Chair'?  Then You're Still in the Game!

There is a great story of luck and persistence about  Jack 'Treetop' Strauss.   A towering figure, Strauss was an accomplished poker pro.  In 1982 he was playing in the World Series of Poker, having made his third final table of his career .  So as legend has it, during the second day of the tournament he was heads up in a huge pot and after the last card was dealt he pushed all of his chips into the pot on a bluff.  His opponent cal...

Sep 20, 2014
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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 market is going up without a major catalyst and that says to me its eyes are bigger than its stomach. It ...

Sep 19, 2014
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December Euro Currencies Futures: Trading Idea September 19, 2014

December Euro Currency Futures a Selling Opportunity on More Price Weakness

See on the daily bar chart for the December Euro currency that prices remain in a solid downtrend and this week hit a contract low. The bears remain in firm command. A move below chart support at this week’s low of 1.2843 would become a selling opportunity. The downside price objective would be 1.2450 or below. Technical resistance, for which to place a protective buy stop just above, is located at 1.3000.

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Sep 19, 2014
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What Does Fed Action Mean For Long-Term Rates?

Here we go again.  Hand-wringing over the Fed’s tightening schedule has caused a sell-off in bonds and all things income related.  After falling for most of July and August, the 10-year Treasury yield has jumped to over 2.6% on speculation that the Fed may start tightening monetary policy sooner than previously thought.

We’ll see. The Fed may indeed start to raise short-term rates as soon as the first quarter of next year.  But that by now means guarantees that longer-term rates will follow ...

Sep 19, 2014
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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 find ourselves trying to put a round peg in a square hole.  Let’s take a look at VIX.  In general, equity...

Sep 19, 2014
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A Guide To Alibaba’s (BABA) Record-Setting IPO

Over the past month, the IPO market hasn’t provided traders and investors with many compelling opportunities as activity has dried up. With Chinese e-commerce giant Alibaba lined up to go public on September 19, the IPO market will soon come to life in dramatic fashion.

Demand has been so strong that its expected price range has been bumped higher to $66-$68 from the original expectation of $60-$66.  With BABA offering 320.1 million ADS, its projected proceeds of over $24.6 billion put it o...

Sep 17, 2014
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5 Common Misconceptions About Market Profile®

I was in junior high school the first time I was introduced to Market Profile. My Dad was a grain trader and the hedge manager for Ralston Purina, a huge manufacturer of animal feeds, not to mention the creators of Chex cereals and Rye Crisp crackers. He spoke of a friend, Peter Steidlmayer, who was devising a different way to look at markets. “Any interest in this, son?” Off I went on my skateboard as trading was not on my list of priorities, yet.

Years later, struggling to learn to trade, I ...

Sep 16, 2014
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Sixth Anniversary Of Lehman Collapse: Time To Watch Financials

This month marks the sixth year after Lehman Brothers filed for Chapter 11, an act that served as a precursor to market meltdown of October 2008.   

Six years later, and despite the amazing recovery for the general market since the market bottomed in 2009, the financials as a sector continues to lag.  

Figure 1, the 10-year PerfChart for the S&P Sector ETFs, depicts the Financials relative weakness during a decade plagued by low interest rates that created an environment for risk taking ending...

Sep 15, 2014
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A Game Plan For Trading Stocks In The Fourth Quarter: Window Dressing

Get ready for the most active season in the stock market.
 
The last quarter has the highest trading activity of the year for the stock market and for the market in general.

Here are some of the major events that traders are ready to speculate upon heading into the fourth quarter:

1.    Last earning season of the year – main reason why market will accelerate its action into the year end
2.    Black Friday / Cyber Monday so-called Cornucopia Trading
3.    Christmas Rally
4.    Quarterly Expiration /...

Sep 11, 2014
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Yes, The Market Will Crash: Here's Your Checklist To Prepare For It

With the Dow recently surging past 17,000, the debate is on about whether it is a bubble that is looking for a pinprick or if it is a strong bull market that will power past 18,000 and beyond.

Yes…it could definitely go to 18,000 or 19,000 or more in the short term because the main driver is not a bullish economy…it is the bullish impact of Federal Reserve policy. In other words, this is an artificial bull market that is driven by monetary stimulus. The danger of a pull-back or a sharp correc...

Sep 10, 2014
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