Jan 212017
 
Market Analysis

The transfer of power in the United States peacefully occurred yesterday at noon for the forty-fifth time in our country’s history. Regardless of a person’s individual political views, one cannot discount this rather unique hallmark of American democracy. The president’s first 100 days in office will constitute a period of evaluation. While the new administration will likely make some progress with policy changes that could favorably impact corporate earnings, these economic policies will require time to take hold. Any disappointing data in the meantime could be met with volatility in the markets.

During the shortened week due to the Martin Luther King, Jr. trading holiday on Monday, equities managed to go absolutely nowhere. The S&P 500 opened Tuesday at 2269.14 and closed Friday at 2271.31, up just 2.17 points, or 0.09%.

Click on Chart to Enlarge

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Jan 182017
 
February 2017 GDXJ Strangle

Volatility remains low across the board leading up to the presidential inauguration on Friday. However, the VanEck Vectors Junior Gold Miners ETF ($GDXJ) is currently experiencing very high volatility. IV Percentile is above 82% which indicates that the implied volatility has only been higher than its current level 18% of the time in the past year. With so few products that have high implied volatility right now, I decided to place a trade in GDXJ this afternoon. I have not traded this ETF in the past and am just dipping my toe into the water with a very small position.

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Jan 142017
 

Market Conditions

The second week of 2017 ended up, but just barely as financial firms kicked off the fourth quarter earnings season with solid results. The broader market appears to have temporarily run out of steam as the S&P 500 ($SPX) marches towards the 2300 level. And of course, the Dow is still stuck just below the highly anticipated 20,000 mark. This is, however, in contrast to the NASDAQ Composite ($COMP) and the NASDAQ 100 ($NDX) which did end the week at all-time highs. Volatility remains extremely low with the VIX closing at 11.23 which presents real challenges for traders that invoke option selling strategies.

The S&P 500 opened Monday at 2273.59 and closed on Friday at 2274.64, up 1.05 or 0.05% for the week.

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Jan 092017
 

Readers of this blog may have wondered, “Where has Aram been for the nearly past six months?” Perhaps I am being presumptuous and no one noticed at all! Investment “gurus” come and go like the wind, and for many, my absence was likely perceived as an indication that I “blew up” my account with the so called “risky” or “aggressive” trading techniques that I utilize. For those of you that are still reading this post hoping for a juicy story of yet another trader’s demise, I am sorry, but you are going to be disappointed. 2016 has come to an end and I am happy to report that I am happy, healthy, and just bit better off this year thanks to crude oil, gold, and a few other commodities that I like to trade utilizing options! I did not have a banner year like 2015 (+24.99%), but I did manage to eke out a respectable 13.76% return on capital for 2016. Continue reading »

Jul 162016
 

Market Conditions

Up, up, and away! The bull is clearly back. Equities were up for the third week in a row, reaching a series of fresh record highs. The swift post-Brexit rebound has been driven by falling treasury yields (making bonds more expensive compared to stocks), better than expected economic data, and higher expectations for company earnings growth. The U.S. jobs report showed the strongest monthly hiring since last October, monthly retail sales rose sharply with three-month growth now the strongest in more than a year. Rate hike expectations did edge up a little, but concerns about a rate hike taking place before the end of 2016 are almost non-existent. The fed funds futures market estimates the likelihood of a hike in July at 2.4% while the implied probability of a hike in December sits at 47.8%.

The S&P 500 opened Monday at 2131.72 and closed on Friday at 2161.74, up 30.02 or 1.41% for the week.

Chart_071616_SPX

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