Are you noticing the relative strength in Emerging Markets? That is NOT something we would expect to see if the world was actually coming to an end.
I can't stress this enough, stay away from the glorified gossip columns. They know less than nothing. You know who knows? The market. So that's where we'll get our data.
Think about it like this, there are more people and firms with more money and better intelligence than any of these governments, communist or otherwise. Are you actually going to trust the propaganda being put out in the "news"?
Or do you trust the people putting actual money behind the information they're spending a fortune to get? When we want to know what's really going on, we turn to the markets. The rest is pure junk.
For now, we're in an environment where we want to be buying stocks. We want to be incredibly disciplined with our risk levels, probably more than usual, but buying stocks nonetheless.
For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it’s a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?
We're buying a few Chinese Internet Stocks. If the world isn't ending after all, this could be an interesting place to look for huge winners. I'm already seeing relative strength there.
As March gets under way, it’s time to review positions with March options that remain open (haven’t already hit profit targets or been stopped out).
Wild couple of weeks, but that doesn't mean we deviate from our plans!
Most trades I put on for All Star Options tend to have a minimum duration of 30 days (short premium plays) and often as long as 6-8 months (for long premium plays). As options approach expiration, greeks like theta and gamma start to become my enemy and whipsaw my P/L. Therefore, as options and spreads get into the expiration month, my best practice is to put each position on notice — it’s time to take action.
Today JC discussed our March playbook for Members and outlined some areas we'd be looking for a bounce with well-defined risk and others that we want to be completely avoiding.
I wanted to share a few breadth measures to provide context around the recent decline and see if they offer any clues around what's next.
There are some interesting moves happening in the Indian Rupee, so let's take a look and update our risk management levels and targets.
Here's the US Dollar/Indian Rupee pair on a longer-term basis. What's clear from the weekly chart is that our thesis remains intact. As long as prices are above 69, then the path of least resistance is still higher.
The current market calamity is certainly not sparing many of our long or delta neutral positions. The good news for us is the majority of them have defined risk.
At the open this morning, many of our positions traded through our stop-out levels. But an important point to remember here is that we're looking to see a CLOSE below our stop levels. We're don't jump on an exit the second a level is broken intraday.
There is a lot of trading left in today's session. This is not the time to be dumping defined-risk positions into the hole.
We had mostly "do nothing" responses again this week but buyers or potential buyers came in close second, many of which said they were waiting for confirmation of the momentum divergence and failed breakdown before taking action.
We only had a few sellers, which is interesting because that's the camp we'd fall into as long as prices remain below support.
One of the main reasons for our bearish bias towards this chart is the fact that it's been in a long-term downtrend and consolidations tend to resolve themselves in the direction of the underlying trend.
