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Market Commentary

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Options 101: How To Construct A Directional Play

When I identify an opportunity for a directional play, how do I decide:

a) what type of trade I want to do and

b) what strikes do I want to use? 

Typically, with a directional play, I look for some sort of vertical.  This lowers my cost basis .  But most importantly, I attempt to "target" a specific strike.  I do this by "triangulating" a few approaches. 

First, especially if it is a non-earnings play, I can identify support/resistance levels.  Simply have your short leg of your vertical coi...

Oct 24, 2014
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Skew: Did Option Players Get The Sell-Off Right This Time?

If you want to figure out the next move the markets will make, I have a secret to tell you about. Option traders have a trick that most investors and traders have never heard of, let alone understand. It is a little thing called skew, which is a real time view of where money is being bet.    

Winning bets on skew requires outlier moves, which have a less than 5% probability . There is no better way to decipher which way the market is leaning when faced with a big event than looking at skew. O...

Oct 24, 2014
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December Euro Currency Futures: Trading Idea October 24, 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 have backed off this week and the bears have gained fresh downside momentum. A move in prices below chart support at 1.2600 would become a selling opportunity. The downside price objective would be 1.2200 or below. Technical resistance, for which to place a protective buy stop just above, is located at 1.2800.

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Oct 24, 2014
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Emerging Markets Are Losing Strength

Emerging Markets Are Losing Strength

iShares MSCI BRIC Fund Relative Strength Ratio broke down below its lows of the previous 7 months on 10/23/14.

Emerging Markets Stocks ETF Relative Strength Ratio broke down below its lows of the previous 7 months on 10/23/14.

The S&P 500 Composite Index opened higher and continued to work higher until the final 91 minutes before reversing. SPX closed above the closing prices of the previous 10 trading days, thereby confirming a short-term minor bou...

Oct 24, 2014
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More of the Same But Different?

Let’s start today by going back to yesterday, another in a series of volatile days. I think the market took my advice a bit too seriously, as all the major indices dropped with gusto. I am not sure why, but it seems the buyers simply ran out of gas.

  • Stocks took on some water today, but it can't be a complete surprise. I think it was yesterday we pointed out the S&P 500 had rallied more than 6.0% in four days, which is a tough act to follow. A lull was likely - even necessary - to let the bull...
Oct 23, 2014
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Featured Stories

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Psychology: How To Stop Trading Hesitation

Procrastination, and in particular trading hesitation, over your trade set-ups is very frustrating and detrimental to the health of your trading account and your emotional and physical well being. Whenever we observe behavior patterns that prevent us from trading profitably value conflicts born out of incorrect assumptions about your reality are always at the root of the issue.

In a world that is changing in all areas faster than is comfortable for the conditioned limited mind, hesitation is ...

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Trading: Communication Is The Key To Lowering Your Taxes

How many times have we been told that communication is the key to a good marriage or a good friendship? In the business world, we are told that communication is the key to success. I am a big believer in the power of open communication. It’s one of the main reasons that Guardian Accounting Group has a flat fee structure. We never want our clients to be afraid of talking to us about a tax situation because of an hourly fee. Clients are encouraged to call us with all their tax questions and con...

Oct 16, 2014
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Market Profile®: 3 Important Ways It Can Improve Your Trading

You can look at markets and make trading decisions in many ways. Market Profile® has been an indispensable tool in my trading career. While Market Profile is a lifelong study, three characteristics I use to increase the probabilities of making successful trades are areas of acceptance and rejection, trade location, and context.

Areas of Acceptance and Rejection

The most useful characteristic of Market Profile is how it paints the picture of acceptance and rejection of price over time. It show...

Oct 15, 2014
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The Case For Gold: “The Good Old Days”

In a recent interview, Rick Rule of Sprott Asset Management made a strong case that this bear market may be looked back on as “the good old days” in terms of the golden opportunity to invest in the precious metals sector.

Rule said there has been “carnage” in the precious metals markets over the past three weeks, adding to “slow motion” carnage since 2012. He said it is “Difficult for people to see benefit in this type of carnage.” However, he argued, “Three or four years from now, we’ll look...

Oct 13, 2014
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Gaining Viral Profits With Global Health Panics

When fears grip the public about the spread of virulent diseases such as Ebola and other malicious conditions, it is time to assess the situation and enact strategies to enhance safety…health-wise and financially as well.

World health authorities believe that that Ebola and other contagious maladies will have a significant effect on the world economy. The U.S. is enacting emergency procedures and our healthcare industry is gearing up for what will be a difficult challenge for society at large ...

Oct 10, 2014
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