It should surprise no one when I confidently make the statement that someday the great bull market of the past six years will come to an end. The question we all want to know is – when? While I do not have a crystal ball providing that answer, I can clearly see that 2015 is starting out on a bumpy path with sharp intraday price swings creating lots of volatility in portfolios. While the overall S&P 500 has reached new highs, it appears to be doing so with low volume and less “gusto” than has been seen in prior breakouts. Uncertainty in the oil market, as well as unprecedented volatility in currency markets, is “rattling the cages” of many investors as we begin to consider the possibility of a Fed rate hike in the “not too distant” future. All this being said, it is a tough case for stock market bears to argue that stocks are poised for a dramatic fall in 2015 as we do have a continuation of underlying slow strength in the U.S. economic backdrop. Stock market bulls make the case that equity prices will continue to rise throughout 2015 based on three arguments I outline in this blog.
What the heck happened to AAPL in the last few minutes of trading on Friday?
If you were watching AAPL at the close on Friday, March 20, 2015, you would have noticed that there was a neck-breaking snap in direction. The stock was chugging along sideways and then, at exactly 10 minutes before the close, it made a wild move to the downside. It dropped over 2%, from $127.74 to a low of $125.15 in a few minutes. It then rebounded to close at $125.90. The move was on very high volume, with the last 10 minutes of trading accounting for nearly 20% of the day’s total volume.
Every time Lucy pulls the football away from Charlie Brown, I get angry….at Charlie Brown. After all this time, shouldn’t Charlie know better? Isn’t it his fault if he is continually surprised by things that he should be able to predict? I do not like to be surprised, especially by moves in my equities. Sometimes the surprise is unavoidable, but more often than not, what looks like a random event, is telegraphed if you only know where to look.
We provide some outside-the-box classes at OptionsANIMAL for members who have come to learn about options behavior, so that they can make a nice profit in their accounts. These classes are in the educational level 8 (top of the curricula) and are labeled “Vegas Trades.” Although we spend some time in the basic education classes showing the importance of implied volatility (IV), we don’t get specific about what can happen to the value of the trade as the IV changes.
We are having our annual equity plan in January here at OptionsANIMAL. When I take a look at the tracking of the equities that were named by OA staff this time last year, I found that they were ranked according to how bullishly they performed during the 2014 year. Other statistics were given, too: Ticker Symbols, Current Fair Market Value, Daily Change (Price), Daily % Change, 52 Week Range, Dollar Change From Selection, % Change from Selection, Beta, Dividends, Ex-dividend Dates, Date of EPS, Sector, Industry, Related Companies. When I take note of the three that I selected, I see that Facebook was the only one that ranked well during the year in terms of change in Fair-Market-Value.
Have you noticed that as soon as we ring in a new year, the commercials on TV change? Gone are the decadent advertisements urging us to splurge on food, jewelry and cars – replaced by ads for weight watchers, gym memberships and ways to monitor our credit scores. The beginning of a new year prompts most of us to take a hard look at the previous year and all too often we find more to regret than celebrate. We beat ourselves up over our failures and vow to do better in the future. This is as true for our trading results as for every other part of our lives.
I was reviewing a list of potential topics for a BLOG when I was touched by one in particular: Financial Crisis Collar Strategy. That topic reminds me of a collar strategy that I managed in order to generate a capital gain with a stock when I sold it more than 50% below the purchase price. What? You are kidding, right? Well, you tell me.
- On August 6, 2008 I bought Long Stock (LS) at $42.62.
- I also bought January 40 Long Put (LP) at $3.94
- Also, I entered a January 45 Short Call (SC) at $4.81
Have you ever experienced sitting in front of your trading computer, ready to pull the trigger on a well-researched trade, only to find that you simply can’t push the button? Let’s face it, we are emotional beings – and there is definitely an emotional component to trading and investing that can be just as challenging to master as the process of choosing and researching equities to invest in. For some of us, working with these emotions is the greatest trading obstacle we face.
Every weekday I turn on my computers at about 8:30am and see what my watchlist is doing before the market opens. For a long time, I recorded what the market was doing about an hour before the open, at the open, at noon and at the close. I had hoped to gain an edge for trade entry and exit.
Trading can be a mental game, at least for me. I use to trade with very directional trades. I was delta positive when I believed the market would be bullish and delta negative when I believed the market was bearish. All of my trades were theta positive so they could work in a sideways market too, just not as well.