Posts Tagged ‘hedge’


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Courtesy of The Pragmatic Capitalist

The market has made an enormous move in a very short period of time.  The 8% move over the past 6 trading sessions is beyond normal.  Unlike the March bottom where we were coming off of extremely oversold levels, the current rally is coming off of only slightly oversold levels.  Unlike the March bottom where we said the initial 10% was likely to lead to more follow-through, I am not as optimistic here.  The recent move has sent the market into an overbought scenario in a very short period of time.  It’s likely that the smart money will begin waiting for a better opportunity to get in.  That means we could see the buying begin to taper off in the coming days.  I still believe there is no real catalyst to send the market substantially lower, however, so don’t expect the market to fall off a cliff here.

Quick moves like we’ve seen in the last few days never make me feel comfortable.  The “better than expected” earnings trade has gotten extremely crowded.  As regular readers know, when one side of the boat starts to get too crowded I always like to jump off or move to the other side.  At this time, I think it’s prudent to move to a more mildly bullish position, but I certainly don’t feel comfortable getting short at these levels.  The risk of near-term downside is very high, however, I would expect any downside to be short-lived and relatively minor.  I would expect buyers to come in 3-5% lower from here.

With that said, it’s prudent to throw on some hedges here if you haven’t already.  The current JP Morgan strategy outlook provides a relatively good framework:

strategy, stock market

One of the best ways to hedge potential downside is to write calls on the positions you might own, however, since we’re not all options traders I’ll detail a few other potential ideas.   If you’re a small investor without an options account you might consider a fund like PBP which is an option writing S&P 500 fund.

Although JP Morgan likes shorting oil here I have to disagree.   I prefer to hedge with non-correlated assets and oil’s correlation to

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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Oil Companies Shift Exploration Tactics, Curb Spending (The Wall Street Journal)

In June, oil giant BP PLC announced what it deemed an “important” new discovery in Egypt.

It turned out to be a modest natural-gas find that didn’t even rank in the top 50 discoveries since 2012.

Gundlach Says ‘Look Out’ for...

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Phil's Favorites

Now it's an avalanche


Picture via Pixabay

Courtesy of Joshua Brown, The Reformed Broker

Reuters on the last week’s fund flows:

Mutual fund investors flooded stockpickers with redemption orders during the latest week, cashing out the most money in five years, Investment Company Institute data showed on Wednesday.

The investors pulled $16.9 billion from stock mutual funds in the seven days through Oct. 19, more than in any other week since August 2011, the trade group’s data showed.

By contrast, stock exchange-traded funds took in $2.4 billion. ETFs most...

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Zero Hedge

The Dark Agenda Behind Globalism And Open Borders

Courtesy of ZeroHedge. View original post here.

Submitted by Brandon Smith via,

When people unfamiliar with the liberty movement stumble onto the undeniable fact of the “conspiracy” of globalism they tend to look for easy answers to understand what it is and why it exists.  Most people today have been conditioned to perceive events from a misinterpreted standpoint of “Occam’s Razor” — they wrongly assume that the simplest explanation is probably the right one.

In fact, ...

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China's Q3 indicates cyclical stabilization, secular challenges

By Dan Steinbock. Originally published at ValueWalk.

According to the third-quarter data, China’s economy grew 6.7 percent for a third consecutive quarter. Critics claim otherwise. Yet, the real disagreement involves business cycles and secular trends.

China’s sequential growth is now at 7.2 percent; fastest in three years. Manufacturing and service sectors may have bottomed around 2015/16 and have risen since, while consumer price inflation rose to 1.9 percent last month. After seasonal adjustments, exports and imports reflect stabilization as well.

Beijing’s effort to rebalance the economy toward consumption and innovation has begun. In the first three quarters of the year, consumption accounted for 70 percent of GDP growth, almost twice as much as 37 percent attributed to investment.


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Digital Currencies

Bitcoin Soars As China Launches Crackdown On Wealth-Management Products

Courtesy of ZeroHedge. View original post here.

After trading in a tight range for much of the summer, coiled within a $100 range around the mid-$500s, over the past several weeks bitcoin has once again started to push higher, closely tracking the decline in the Chinese Yuan as shown below.

However, the most recent burst in bitcoin activity, which sent it surging by over $20 overnight, has little to do with any moves in the official Chinese currency, which recently...

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Kimble Charting Solutions

Connect Series Webinar Oct 2016

Courtesy of Chris Kimble.

We cover the most dominating themes in the markets and share pattern analysis and perspectives to empower members to make better investment decisions.

To become a member of Kimble Charting Solutions, click here.


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Chart School

Tech Hold Breakout,.but S&P Wedge Bound

Courtesy of Declan.

It was a mixed day for indices. Large Caps remain bound by wedge support/resistance, but Tech broke upside yesterday from similar wedges and held those breakout today.

There was little change for the S&P over the last couple of days. The one technical change was the MACD trigger 'buy' as other technicals stayed on the bearish side.

Meanwhile, the Nasdaq cleared wedge resistance yesterday, and was able to hang on to the breakout despite today's loss. It too enjoyed a MACD trigger 'buy', but had an On-Bal...

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Members' Corner

A Lack of Faith, Disturbing?

Courtesy of Nattering Naybob.

Over at Philstockworld... High Finance for Real People - Fun and Profits...   

Phil – "long-term rates are suddenly ticking up as bond buyers have lost faith that the Central Banksters will be able to keep a lid on inflation"More so a rebirth of hope for much needed monetary flows in the form of "dollars" and some form of economic recovery rising in the distance.  Good luck there.  

By now those rogue bond traders should know the power of the dark side and all the carnage which that widow makers trade has left in its wake. J...

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Swing trading portfolio - week of October 24th,2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.


This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...

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Mapping The Market

The Most Overlooked Trait of Investing Success

Via Jean-Luc

Good article on investing success:

The Most Overlooked Trait of Investing Success

By Morgan Housel

There is a reason no Berkshire Hathaway investor chides Buffett when the company has a bad quarter. It’s because Buffett has so thoroughly convinced his investors that it’s pointless to try to navigate around 90-day intervals. He’s done that by writing incredibly lucid letters to investors for the last 50 years, communicating in easy-to-understand language at annual meetings, and speaking on TV in ways that someone with no investing experience can grasp.

Yes, Buffett runs an amazing investment company. But he also runs an amazing investor company. One of the most underappreciated part of his s...

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Epizyme - A Waiting Game

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.

To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more! features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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