With nearly 55 days until April expiration, this is the time I start looking at index and sector ETF’s for possibilities in selling delta-neutral income spreads.
This is an exercise I do every month where I analyze the current volatility priced into each of the most liquid optionable ETFs and measure where each ETF sits within its most recent 90 day trading range.
Well, this afternoon as I went through my monthly analysis, it was determined that out of all of the major ETFs that I follow not a single one offered appealing volatility to sell into and each ETF was trading near the upper or lower end of its most recent trading range. This tells me that ETFs are continuing to trend -- and a trend is not your friend when you are a delta neutral premium seller.
For those new to the exercise, we take a chart of interest and eliminate the x and y-axes and and all labels eliminated to minimize bias. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. It can even be inverted or a custom index.
The point here is to not guess what it is, but instead to think about what you would do right now.Buy,Sell, or Do Nothing?
When it comes to market breadth, the Advance-Decline line is definitely one of our go-to's. This indicator calculates the net advancers. In other words, the number of advancing stocks less the number of declining stocks. This cumulative measure goes up and down over time, similar to the market indexes themselves.
Something to keep in mind is the fact that we use the Common Stocks Only A-D Line because there are other vehicles that trade on the NYSE, like closed-end funds for example. If we're analyzing the stock market, let's stick to just stocks in our indicators.
As part of my preparation for my Chart Summit presentation on market breadth, I'm looking at a lot of charts this week. In this post I'll share a bunch of them to provide some perspective on where US markets currently sit from a participation perspective.
The real estate arena has been on a wild ride since early December. The sector (as measured by $IYR, US Real Estate ETF), tumbled more than 13% in less than four weeks, only to completely retrace the move in the next four weeks then continue trudging higher as if nothing happened. The move has been nothing short of astonishing. We've made our bet on a fade with $IYR, but to cover our bases, we've going to take a flier on an individual stock in the space that offers us a nice reward-to-risk opportunity and will hedge our sector risk, somewhat.
This is week is Chart Summit 2019 in Breckenridge Colorado!
We're skiing during the day and charting at night! We have skiers and snowboarders coming from all over the world to this unique event. We've even organized snow mobile tours for those who choose not to ride with us on the slopes. Everyone is welcome!
The full schedule has been released. Check it out!
We're back with another episode of The Money Game with Phil Pearlman. Today's conversation is about the internet troll. Phil gives us insight into the science of what is taking place when a person actually has the time, and interest, to go out of their way to consume someone's content, take the time to think about it and then go even further to publish angry and hurtful words about it. There are psychological issues there that we discuss from both the perspective of the troll and the content producer who gets harassed. This is a good topic and just one of many that we'll try and cover here on The Money Game.
Another name in the cybersecurity space we've had our eye on the past couple weeks has offered us the pullback we were looking for to get involved. And there is an earnings event on the horizon that can act as a positive catalyst to drive our gains.
Tuesday we posted a mystery chart and asked you all to let us know what you would do. Buy, sell, or do nothing?
As we expected there weren't any bearish responses, instead most of you were buyers at current levels or on a pullback. We think the evidence is clearly pointing in that direction too, which is why we put the question out there in the first place. What, if anything could we be missing?
Now that we're all on the same side of the boat, let's get into the chart and why we feel it's relevant.
