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Bond Market Affecting Stock Market

Spike in yield on 10-year treasury bond. Hawkish fed. Indexes drop on heavy volume although still above key levels of support. How do we navigate this neutral market? Lower profit targets and expect shorter duration trades. Click here to get today’s free options advice; have A.J. explain option trading to you in everyday language.

Hey trading team,

This is A.J. on Wednesday, October 26th with your Trading Trainer web log. We are your home of market insights for the serious options trader. This web log will cover the events in the market from today as well as prepare you for watching the market tomorrow.

Well team. The nomination of Bernanke as the Fed chief is sending ripples through the bond market. And, that in turn is starting to effect the stock market. Although the stock market resumed this morning with yesterday afternoon’s bullish rally, the bond market hinting at inflation woes and expected aggressive reactions by the Fed especially with Bernanke coming in, as well as some poor earnings results today… had the market close at its intraday lows. And, volume ticked up again from yesterday.

From a technicals perspective we are still within our levels of support and resistance. So, there is no need for us to question our trading bias right now. Neutral bullish is where it should be. At this moment; probably more neutral than bullish.

My Techne January 55 Calls closed down with a bid price of $4.20 per option. I’m drawn down by 30% into my initial investment after 22 days. My Apple January 55 Calls closed up with a bid price of $5.50 per option. My return on invested capital is 12% after 6 days. I bought Google January 350 Calls at $26.50 per option today. They closed up with a bid price of $28.00. My return on invested capital is already 6%.

Here is my recommendations team. We are definitely in a neutral market. We want to watch our broad market indexes that they don’t venture below levels of support. We also want to watch to see if they close up above those magical levels of psychological resistance. 10,400 for the Dow. 2,100 for the NASDAQ. 1,200 for the S&P 500. In the meantime, anything goes.

When I say that, I am saying to you that you need to expect less profits and you need to expect shorter duration trades. I’m not saying become a day trader. I’m saying that if you want to play this market you’ll need to be a little more active and diligent watching your portfolio at least once a day. This is also when you want to err on taking profit rather than holding out for higher potential gains. In fact, tight trailing stop losses when your trades are above your profit targets and break even stop losses when below are critical in this type of market. And, setting limit sells for underwater options.

This is the time when a lot of people sit out and paper trade. That is completely acceptable.

Okay, team. I’m done.

Till tomorrow, happy market watching, trading and money making. Trading
Trainer is here helping you create your dream lifestyle.

Best regards always,
A.J.

Click on the below play button to hear the blog as an audio from A.J. himself!

Do you want to learn option trading? Full time options trader, A.J. Brown, reveals option trading secrets in his daily audio / video newsletter that are guaranteed to make you massive profits in less than 30 minutes a day. Visit TradingTrainer.com now.

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