It’s the weekly bond edition of What the FICC?
I thought it was odd bonds didn’t react to last week’s rate hike. Regardless, the lack of volatility represents a positive development for risk assets, especially stocks.
Check it out!
Expert technical analysis of financial markets by JC Parets
by Ian Culley
It’s the weekly bond edition of What the FICC?
I thought it was odd bonds didn’t react to last week’s rate hike. Regardless, the lack of volatility represents a positive development for risk assets, especially stocks.
Check it out!
I’ve been enjoying a (new to me) book recently. Today, I came across this passage that stopped me in my tracks:
Trading is a journey, not a destination. So you’re a trader. Now what? Trading is a constant process of intellectual and emotional growth, and people who trade for twenty years are still learning what to do and who to be when they finally hang it up.
From Street Freak, A Memoir of Money and Madness, by Jared Dillian.
It was almost like Jared was staring at me when he typed those words.
They hit home.
I’ve been in this game for over 20 years now. This coming summer will be the start of my 25th year! [Read more…]
by Ian Culley
From the Desk of Ian Culley
Markets don’t always trend higher or lower. In fact, traders often deal with churn – which sometimes is nothing more than a range-bound mess.
“Sideways” is a trend that’s all too easy to forget after last year’s historic volatility. Even bonds became risk assets in 2022!
I found it odd when bonds failed to react to last week’s rate hike along with other long-duration assets.
But the lack of bond market volatility might be exactly what risk assets, especially stocks, need right now.
From the Desk of Steve Strazza @Sstrazza
As our Premium Members already know, we have a laundry list of scans that we run internally on an almost daily basis.
Different market environments, naturally, are more conducive to certain scans and less so to others.
We think our Freshly Squeezed scan is perfect for the current market. In fact, we wrote our initial report in December just to be sure we wouldn’t miss the moves that have taken place in recent weeks. We’re confident there is more to come.
With so many individual issues in massive drawdowns as the broader market begins to turn a corner, we’re witnessing some serious short-covering rallies in some of the most beaten-down names.
In fact, it’s already starting to happen. Bed, Bath & Beyond $BBBY was up by almost 100% the other day. It’s very likely they’re going bankrupt. But that’s just the kind of market we’re in.
Our scan is quite simple. It is designed to identify stocks with the highest short positions. When a stock is heavily shorted, we know there are incremental buyers waiting in the wings.
We love this as new buyers are the one true catalyst for higher prices. When shorts are proven wrong, they have to buy their shares back to close out their positions. And when they do, and momentum starts moving higher in these shorted names, it is not uncommon for massive rallies to occur.
For this reason, we pair short-interest data with short-term momentum overlays, as this is the match that is needed to spark a squeeze.
Let’s take a look at what’s popping up on our radar right now and outline setups in some stocks we think investors can squeeze profits out of in the weeks and months ahead.
We’ll also give an update on some of our long ideas from December’s report.
In recent weeks, I’ve gotten several questions from subscribers to our Paid-to-Play income generating strategy wondering about discrepancies in my ETF implied volatility values vs. what they may have seen from whatever data source they personally use.
In many cases, what people see in my recorded videos simply represents a snapshot of when the video was recorded. Implied volatility values for options are dynamically updating throughout the day as stocks and options prices change. They are constantly in motion.
The other more common issue is that different platforms use different (often proprietary) calculations in their version of options implied volatility.
This may be frustrating for anyone who is looking for specific values in order to cue trades to happen. Thankfully, I am not.
I preach this all the time – I’m not at all concerned about the actual volatility score of an instrument. I don’t care how it’s measured. I only care about relative values.
In the case of measuring whether volatility is “high” or “low” for a particular instrument, I’m only focused on where the volatility in the instrument is today, compared to where it’s been over the past 6-12 months – in whichever method is used to calculate the actual value. This is a practice of being present in the now.
In the case of selecting a high-volatility instrument to initiate a delta-neutral credit spread, I like to choose one with higher volatility than its peers. Again, I don’t care about the actual value. I only care about whether it’s higher or lower than its friends. Easy peasy.
If you get trade ideas from me and you see a different IV score than what I’m seeing, don’t overthink it. Think instead in relative terms.
Trade ’em Well,
Sean McLaughlin
Chief Options Strategist
All Star Charts, Technical Analysis Research
From the Desk of Steve Strazza @Sstrazza
When investing in the stock market, we always want to approach it as “a market of stocks.”
Regardless of the environment, there are always stocks showing leadership and trending higher.
We may have to look harder to identify them depending on current market conditions. But there are always stocks that are going up.
The same can be said for weak stocks. Regardless of the environment, there are always stocks that are going down, too.
We already have multiple scans focusing on stocks making all-time highs, such as Hall of Famers, Minor Leaguers, and the 2 to 100 Club.
We filter these universes for stocks that are exhibiting the best momentum and relative strength characteristics.
Clearly, we spend a lot of time identifying and writing about leading stocks every week, via multiple reports.
Now, we’re also highlighting lagging stocks on a recurring basis.
Whoa baby. This might be a fun one. Or not. Either way, we’ll likely find out pretty quickly.
Chinese stocks continue to offer up interesting opportunities. And today’s trade is no exception. And to play it, we’re going to do it in a fairly aggressive manner, but with a tight risk management stop.
Let’s get right to it. [Read more…]
by Louis Sykes
Crypto markets can be daunting for those who come from traditional backgrounds.
There are entirely new market mechanisms, trading hours, different exchanges, and distinct ways to analyze the market, let alone the decentralized nature of how these markets operate.
It’s no wonder that people find this asset class complicated.
Adding to the already heightened perplexity of these markets is how they’re driven and how investors benchmark their performance.
Hear me out.