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Market Commentary

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Navistar Reports Earnings This Week: Get Ready For Big Move

Navistar International Corp. is scheduled to report earnings before the opening bell Wednesday.  

NAV shares are up over 1% in 2014, but the ride has not been a smooth one: the stock traded below $30 in February only to rise to above $38 in March.  Then in April the stock fell back below $32 only to retrace above $38 again in May, only to fall below $33 again that same month.  The stock has traded in a 52-week range of $29.08-$41.57.

Big Player

Regulatory filings earlier this month showed Car...

Sep 2, 2014
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Triangle Breakdown Makes Gold an Attractive Short

Recently I've been watching to see if an attractive reward-to-risk scenario would line up for short entry into gold futures. The pieces are falling into place.

The purpose of the accompanying weekly chart is to illustrate how the sideways trend since June 2013 could end up acting as a long pause within a downtrend from the peak in September 2011. A symmetrical triangle has formed and volatility has diminished since March of this year . This generally precedes a break higher or lower.


Gold i...

Sep 2, 2014
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Health Care Stocks Gaining Strength, Agriculture Losing Strength

Health Care stock sector ETF Relative Strength Ratio rose above its highs of the previous 5 months on 8/29/14 and remains systematically bullish. Absolute price rose to a new high on 8/29/14 and remains systematically bullish.

Foreign Stocks ETF Relative Strength Ratio broke down below its lows of the previous 2 years on 8/29/14.

Bond, iShares Barclays 20+ Year U.S. Treasury ETF absolute price rose above its highs of the previous 15 months on 8/29/14, thereby reconfirming its preexisti...

Sep 2, 2014
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Anatomy of a 1,000% Gain

As option traders, we all search for that holy grail that will explain the right edge of the chart.  Naturally, we cannot see the future but at times we can set ourselves up for a big payday.  Yet, we all strive to hit that one golden goose of a trade, the one that puts us on another level financially, mentally and emotionally.  There is no better feeling than nailing a big winner, and we all would like to be prepared and believe we can control it.  Of course, that is really impossible to acc...

Aug 30, 2014
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That’s About as Simple as It Gets

Yesterday, my friend Miggie said to me, “You seem to always write about the general market anymore.” I thought for a moment about the implied question: “Why?”

In that moment, I came up with several reasons for why I focus on general market commentary, which I told her, but in my mini litany of reasons, I heard my words about you, the reader.

Writers write to an audience, but writers are not always afforded the luxury of knowing who our audience is exactly, so we assume. In my case, I write fo...

Aug 29, 2014
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Featured Stories

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The Versatility Of The 1-2-3 Iron Butterfly

Traders may be aware of the iron butterfly, a strategy that creates a limit on possible losses, in exchange for a limit on potential profits. Expanding this further, the 1-2-3 iron butterfly is a strategy consisting of three expiration dates and three butterflies.

The middle is a reverse iron butterfly. This structure means that half of the positions will always become profitable whether the stock price moves up or down. And even with no movement, half of the positions – all of the short optio...

Aug 27, 2014
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Yellen Pulls Away the Punch Bowl, Will Rates Rise?

Let's focus in on negative interest rates and the potential for gold to increase in value.

As the Fed met in Jackson Hole over the weekend, gold was trying to hold on at the $1,300 level. Using a negative real interest rate model, gold should be around $1,400. Why? There is lots of concern about global GDP growth maintaining itself.

Let's take a look at the overall metals landscape. Some precious metals appear to be doing well. Palladium is at a 13-year high and rhodium is up 45% from the start...

Aug 25, 2014
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Use Oscillators To Determine Market Direction (Or Not)

Oscillators come in a number of different forms such as stochastic, relative strength and the commodity channel index.  Although the mathematical equations are different in each, the underlying principal by which oscillator calculations are made remains the same. 

How They Work

All oscillators compare the high and low of a given market move to its close.  This is the reason that oscillators are a bounded set of indicators. As the close of a market move approaches its high, the oscillator tra...

Aug 20, 2014
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The Professional Traders Opinion: Russian Sanctions Smoot-Hawley Revisited

Russia was once described by Sir Winston Churchill, as “a riddle wrapped in a mystery inside an enigma.”  Those words, spoken in 1939, eloquently described the Western sense of Moscow as inscrutable and a menacing country that plays by its own rules; perhaps they are no different now with the extraordinary exception that today’s Russia is dressed in diplomat’s pinstripes folded around a pugilist’s muscle with a checkbook of an oil baron.  

What’s more, today Russia, along with China, Brazil, I...

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Go Long: Concerns Over the Chinese Yuan’s Weakness Are Overblown

On March 6, 2013 we initiated a long recommendation for our clients on the Chinese currency, the yuan, through the purchase of offshore, yuan-denominated bonds an exchange traded fund.   DSUM closed 2013 with a 6.32% gain, the year’s best-performing bond instrument on a risk-adjusted basis, compared to a dismal performance of -4.83% for the average emerging market bond fund.

After this stellar performance, this year’s weakness in the yuan is no surprise to us.  While the U.S. Treasury and th...

Aug 18, 2014
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