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Market Commentary

More Market Commentary

The CBOE Skew Index Reaches Levels That Say A Correction May Be Coming

I wrote about the CBOE Skew Index here a couple of months ago and talked about how it had become a fantastic predictor of correction market moves in 2014.  To review, the skew index is a compilation of bets placed on out of the money options, mostly puts.   These bets are 'looking' for a big move south very quickly, perhaps the result of some sort of 'black swan' event.  For the most part, these tail risk bets rarely pay 0ff - mostly 5% of the time or less.

But when they do, the gains are sha...

Dec 26, 2014
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P.S. The Russell 2000 Passed Its 52-week High

Well, like most folks who celebrate these holidays, I stepped out of my normal life and into a world of over consumption and lots of sitting around sipping. Yup, I feel sluggish, a bit heavy, and, well, tired today. Given that, I want to make just a couple of quick points for consideration before heading into the weekend for more overconsumption and sitting around sipping.   

  • Consider that the Dow Jones Industrial Average went from a mere 6,547 in March 2009 to 18,000 today. That's almost thr...
Dec 26, 2014
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Time For a Look at 2015 – Part I

While we still have a few trading days left in 2014, it is now time to prepare for 2015.  There is always some excitement and anxiety as we turn the page on the calendar, but, as it relates to markets, we can pretty much rely on the same patterns and current themes. 

My entire process revolves around Federal Reserve policy.  Each year around this time, I look at the current policy and try to figure out whether or not there will be a big change in the upcoming year.  Fortunately, the great tra...

Dec 26, 2014
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March ICE Cocoa Futures: Trading Idea December 26, 2014

March ICE Cocoa Futures a Buying Opportunity on More Price Strength

See on the daily bar chart for March cocoa futures that prices are in an uptrend and have recently hit a seven-week high. The bulls have upside technical momentum to suggest prices can continue to trend sideways to higher in the near term. A move above solid chart resistance at $3,000 would give the bulls fresh upside momentum and it would also become a buying opportunity. The upside price objective would be $3,150, or above...

Dec 26, 2014
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Use Leverage To Maximize Profits

Leverage – it's one of the biggest plusses to trading options.  I would argue that if you don't maximize your leverage, you should not be trading options. Not using leverage is like using a Ferrari as a paperweight.  Sure, it holds the paper down, but there are a lot less costly ways to get the job done. If you are not using leverage to trade options, you are probably wasting capital to get the job done.  

Let's take a look at a bullish play in Marriott. Our time horizon is February expiratio...

Dec 26, 2014
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Featured Stories

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Melco Crown (MPEL) – Still a Compelling Play on the Rising Chinese Consumer

Over the last 12 months, Macau casino-gaming stocks have declined by 35% to 65% as gross gaming revenues declined by 30%. We believe Macau’s GGR decline this year was a result of a “perfect storm” that includes tightening junket liquidity, hotel room constraints, the Chinese government’s anti-graft movement, and the rise in cancellations of Hong Kong/Macau packaged tours due to the “Occupy Central” protests in Hong Kong .

We believe these factors are transitory. Thus, the recent weakness in ...

Dec 22, 2014
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Build Smart Performance Tables in Excel® Using RTD

If your vendor supports using Microsoft’s RTD syntax and provides the ability to call market data by a date from the platform into Excel, then you can build a valuable market-performance table.

Traditional charting for reviewing past market-action can be somewhat tedious when looking to see how a particular stock or futures contract has performed during previous periods. For example, maybe you would like to see how Apple has performed during the month of December for the past ten years. Or p...

Dec 22, 2014
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Holiday Stress and Trading Pressure: How to S.T.O.P. the Torment

The holiday season is here.  It’s time for celebrating and good cheer.  It’s also a time of heightened stress.  For many traders, who already feel lots of stress, the holidays can feel doubly difficult. 

Trading and Holiday Stress

We all know trading stress.  Recent losses and drawdowns can bring on stress.  So can managing a position, especially if it backs up on you.  Even profitable positions can be stressful.  We don’t normally think about profitable trades as stressful, but I have seen m...

Dec 16, 2014
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RSI, Better Price Oscillator Than MACD

Most traders are unaware there are three types of oscillators used for stock analysis. These are based on three different data streams –

  • Price Oscillators that use price and time data,
  • Volume Oscillators that use quantity and time,
  • Hybrid Oscillators that use price, quantity, and time.

There are innumerable price and time indicators and many are oscillators, but one stands out from all the rest – Relative Strength Index . It is not the most popular, but it is the best price oscillator for sho...

Dec 16, 2014
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Trading Fears – Why We Have Them And What To Do About Them

Trading fears are not the sole domain of new traders, actually far from it. Much misunderstood, fear can hit at any time. The real issue about trading fears has to do with bumping up against your thresholds, which can happen at any time.

Growth and Development, Evolutionary Universal Laws

You are growing and changing all the time, for the most part not noticing that it is happening. However, when an evolutionary impulse hits, and you are standing in the way, like most people are, it can get ...

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