In the past quarter century, only 2002 & 2008 have been more volatile than 2022. None have seen less strength beneath the surface than 2022. Other than this year, the only year to see more volatility than strength was 2008.
Why It Matters:
Every year is its own experience, but we can see similarities in market environments over time. The current environment is consistent with past periods of persistent weakness.
We recently closed an October Short Strangle in the Energy ETF $XLE at our profit target. The timing was pretty fortuitous, considering the wild ride all stocks have been on since the latest Federal Reserve interest rates announcement.
With volatility ticking backup up quite noticeably, $XLE has climbed back up near the top of my implied volatility list of ETFs, and the November options are priced in such a way that we can sell some pretty far out-of-the-money strikes increasing our odds of success.
I was in the city yesterday for a few meetings and dropped by Fox Business to have a little chat with Charles Payne.
Charles is one of the few who let me talk about whatever I want. No agenda. Just price action.
I appreciate that.
It was just a short hit. But we talked about the seasonal tailwinds for stocks, how a stronger Dollar means stocks will remain under pressure, and what Financials and Homebuilders are telling us about the market.
The most significant insider activity on today's list comes in Form 4 filings by Robert Harris and Jonathan Glaser, directors of Hudson Pacific Properties $HPP.
Harris and Glaser filed Form 4s reporting purchases worth a combined $393,320.
Tuesday night we held our September Monthly Conference Call, which Premium Members can access and rewatch here.
In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each
Like it or not, the current one is heavily influenced by the Federal Reserve. And the Fed is not alone. Almost every central bank around the world is raising rates – and doing so as quickly as possible.
The Fed raised rates by another 75 basis points at yesterday's FOMC meeting, bringing the year-to-date total to three percentage points of tightening. And they are not done yet. That was the message Chair Powell delivered and that was the message received, reluctantly at first, by the market.
The four previous times that the Fed raised rates this year, the S&P 500 was up sharply on the day of the announcement, with daily gains ranging from 1.5% to 3.0%. Without those gains, S&P 500 would be down close to 30% YTD (versus the actual 20% decline). That changed yesterday, as the S&P 500 closed down 1.7% (after being up on the day going into the FOMC announcement).
Investors lose money and look to others to blame for their mistakes. It's human nature; it takes less mental fortitude to pin the blame on an externality rather than adopt responsibility and work on yourself.
In bear markets, conspiracies are born, and hatred is often devised.
"If it wasn't for the Fed, my equity curve would still be sloping up."
"Wall Street and the wealthy are conspiring to make me poorer."
In my short stint in this industry, I've noticed a lot of this self-destructive behavior.
One particular notion I've seen catch traction in recent days is that the CME Group -- operator of the world's largest financial derivatives exchange -- is actively trying to suppress Bitcoin from global adoption.
