The market didn’t go down yesterday or today because the Fed might raise rates again. Here’s why the market went down…
With all major support lines breached, 50-day moving averages failing, and no positive economic news on the horizon, the market continues to sink lower.
When this happened in February of this year, the S&P 500 saw a 9% dip over six weeks (from peak to trough).
If this is another pullback like that, you still have time to hedge your portfolio against a potential 5% further slide.
That makes it a good time to review what John Hutchinson wrote about a few weeks ago with his laddered bear put diagonal spreads.
Selling has been plaguing the markets for the last few weeks with no end in sight.
How did we get here after experiencing a double-digit rally over the course of four months?
And when will the selling stop and the buying resume?
There are two tickers that need to improve before we see a change in behavior.
By now we’ve heard that the market rally of 2023 was fueled by a handful of tech stocks, but now after a series of tame forecasts from industry giants, we are seeing a rotation out of tech stocks into other sectors.
But, what does that mean exactly? How are we seeing the rotation?
There are a number of ways, but today’s article is all about Relative Rotation Graphs.
Let’s look back at our results since Dave Durham and I took over Options Income Weekly in late March. Since then, we’ve closed 45 winning trades in a row, generating $2,085 in income with just one contract sold.
Here’s how we did it.
On average, two to four times a year, the S&P 500 typically makes a pullback of around 5%.
While we never know what the right side of the chart may bring, knowing that a 5% pullback happens roughly every three to four months can help us put this recent drawdown into perspective.
And when you look at the chart, you’re going to see why we are at an important inflection point that is setting up for a potential big move in the months ahead.
Last week we saw a whipsawed week with investors initially responding positively to the latest round of inflationary data, putting the probability of the Fed pausing another rate cut over 80%.
But last week was full of intraday rallies on down days and intraday meltdowns on up days.
We all know the market needs a pullback before going higher, but as earnings season winds down, we’re left to look ahead to what the Fed will do next.
I’m not convinced the Fed will sit on its hands, and I’ll tell you why…
We’ve had great success trading commodity-related equities so far this month in Options Income Weekly and Income Masters. In fact, we closed out four winning trades in the oil and gas sector between the two services in the first seven trading days of the month.
The market is full of that bear market energy, but the hard part is knowing if this is a pullback or if this is the start of something more sinister.
What if I told you there is one commodity’s key level that can help predict when the market is going to turn around?
This key level was breached, just a few days before the market high. What is it telling us now?
The combination of a low-volatility environment and being in the thick of earnings season can require some creativity in the hunt for option premiums. One solution is to trade exchange-traded funds (ETFs) to avoid some of the single-stock risk associated with earnings announcements.
While not all ETFs provide enough premium to be attractive to option sellers, there are a few that do.