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On the 23rd of April 2010 the market closed at its highest point for the rally (pre flash crash) at 1217.28, one point from the projection we made in our Share Market View on April 20th. We are now at the other extreme with the markets over-extended to the down side with further dramatic downward moves limited…
About seven years ago, a study was conducted of approximately 64 active traders. Its aim was to discover whether there were any personality traits and coping styles that distinguished more successful traders from less successful ones. A number of thought-provoking findings where discovered.
Its now the 19th of April and the market is approaching the targets outlined in February. The market is now over-extended and the probability of further dramatic upward moves are limited. Significant resistance exists at 1216 (Basis $SPX) with the market approaching the Fibonacci 1.618 extension of the counter-trend range A-B.
It is often difficult to know which price to set when placing an order for illiquid ASX options. This can sometimes lead to paying too much when buying or receiving too little when selling. This is how I place my ASX ETO (exchange traded option) orders to get the best prices.
In the past 4 weeks the markets have been demonstrating an extreme of negative sentiment which we now believe to be coming to an end. The obvious conclusion to an extreme sentiment event is a sharp reversal in price and it is now we believe that this is most probable. The Marker basis $SPX has formed a solid base above the November swing low.
This is an excerpt from an article written by Len Yates discussing the potential use of $VXX and $VIX36 as a tool which signal possible market tops and bottoms. For students of volatility based trading follow Len’s instruction and verify the method. For new commers to the world of Options Trading access a free trial Of optionVue 6 from this web site and try it out.
It is surprising how widely the option strategy of writing naked puts is advocated. That option strategy is also referred to as writing uncovered puts, or writing cash secured puts, or selling naked puts. If you want to learn how to trade options you need to be aware that some strategies are not so good.
For the past six weeks Global markets have tracked sideways in a major time correction, digesting the gains since march 2009 (basis S&P 500). Price has been capped by the horizontal blue line representing the 50% split between the 2007 high and the 2009 low. This has been important resistance and a psychological barrier [...]
Question: “What will be the effects of the Dubai World crisis on the market?” I treat financial news delivered with such emotional over-reaction with suspicion. The media often elaborates news out of proportion. The Situation: The Dubai government controlled “Dubai World” can’t repay interest on at least US$60B of debt, possibly more than US$80B.
When you trade stock options you need to forecast where market prices might go. We use technical and fundamental analyses to make our forecasts. It is important to understand how the global financial crisis will affect future sentiment.
Global markets became extremely volatile last year. Stock, commodity and foreign exchange prices started to fluctuate wildly. The S&P500 index ranged from 800 up to over 1500 and then down below 700. The VIX volatility index, also known as the fear index, reached a sharp peak, shown below. How will [...]
The S&P500 has reached or is approaching a major level of resistance. A triple neck tie is looming, as defined by 1) the downward sloping trend line, 2) the 200 period moving average, and 3) the resistance defined by the swing high in early January. These three resistance lines come together to form a [...]
The purpose of this article is to try to understand the oil price. It is not possible to make a price forecast here, but if we can understand the factors which influence the oil price we’ll be in a better position to make investment decisions about energy stocks.
It has been very difficult to understand how [...]
Nation after nation in the west is slipping into recession. This raises the obvious question for investors: which market sectors should be invested in or avoided?
All times of change provide opportunities for the nimble. Recessions are part of the normal economic cycle. Recessions serve a purpose. They are necessary because they remove inefficient practice, and [...]
I’ve been asked frequently lately: what’s going on with this financial crisis, and why does this happen? So today, I thought I’d talk about tulips.
Tulip Mania 1634 – 1638
In the 16th century Holland’s maritime reach and interests were expanding around the globe. They were exploring and discovering far and wide. In 1593 Conrad Guestner imported [...]
I’ve been asked a number of times: “What is short selling?”, so I’m going to answer that here.
Imagine my colleague Paul is fortunate enough to be in possession of 10 large boxes of beer, freely available from our local liquor store. Imagine also that I enjoy parties, and in an impulsive fit of haste I [...]
Events in the US financial sector are unfurling dramatically. Or should I say unraveling? And it appears that there is more to unfurl. To understand the US financial sector at the moment we need to understand the chain of money, finance, debt, risk and trust which interlinks homebuyers, retail lenders, investment banks, financial insurers, speculators, [...]
Fuel protests and food riots around the world call for an understanding of global commodities price inflation. It is important for investors and traders to analyse the events which underlie the news. Essentially, there are two major causes of the inflation which is now evident:- firstly, growing Chinese and other demand for those commodities; and [...]
In spite of many bad news stories that would have normally sent the markets into a tail spin last Wednesday, the US markets displayed resilience and moved up with a four day rally. US residential real estate prices continue to fall, US consumer spending continues to contract, and the inflationary impact of rising oil prices [...]
On the 11th of December the US cut their federal funds rate once again, which marked the third rate cut in the past three months. Fed officials stated that “further cuts were possible if the severe housing downturn and mortgage lending crisis gets worse”. The rate cut disappointed the market, leading to a failed rally [...]
