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Broad Market Reversal On Hawkish Comments From Fed Dove…

For most of the day the bull continued its climb up the stairs. The bear jumped out the window in the last hours of trading. Hawkish comments from a Fed dove triggered the reversal. Will this be temporary? Be diligent with your stop loss orders on long entries. 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 Tuesday, October 4th 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.

Alright team, who watched the market today? Till the afternoon the day was fairly bullish following the same path as the previous days… we were on a slow bullish rally, regaining territory we had lost in the past. Then, that saying came true for us again. The bull indeed was coming up the stairs when the bear… that bear jumped right out the window.

What was the subject that caused the reversal? Why, it was interest rates of course. One of the members of the Federal Open Market Committee that votes on interest rates, a gentleman that typically is an advocate of refraining from raising rates, made a comment today that not only is the fed going to continue to raise rates, but at this point inflation is not being well contained by only quarter point hikes, or so was the jist of what he said. And, of course the market reacted negatively to that. Wouldn’t you?

From a technicals perspective we lost all sorts of ground with prices of the indexes closing below levels of support and below key moving average milestones. Looking as well at our TradingTrainer.com technicals reports, you’ll see the indexes have again returned, for the most part, back to the bearish side of the house.

Because this was stimulated in such a short amount of time, literally in less than three hours, and it was off a person’s comments, it wouldn’t be impossible for this to reverse tomorrow with bargain hunters buying early and maybe combined with a shot of good news to counter the bad, so we’ll keep out trading bias at neutral for the time being and just see what happens tomorrow.

The bid price of my Autodesk November 45 Calls closed down at $3.40 per option. My return on invested capital is 79% after 7 days. The bid price of my Joy Global November 50 Calls closed up at $3.30 per option. My return on invested capital is 65% after 7 days. And, I opened a long position on Techne before the market collapsed. I bought the Techne January 55 calls at $6.00 per option today. The bid price closed down at $4.90 per option. Right out of the gate, I’ve dipped 18% into my initial investment.

Team; as I have been hinting throughout this web log, typically when news of this sort triggers this type of market knee jerk reaction, it has been temporary. So, I’m leaving the trading bias where it is till we see either a reversal or follow thru on today’s movement.

What a move like this does do, however, is put me on the defensive. For tomorrow, I will have my trailing stop loss alerts in place on my AutoDesk and Joy Global call options as well as my static stop loss alert on Techne. And, instead of looking at charts to go long on, I’ll instead be just watching the broad market from the sidelines ready to react on positions in my own portfolio.

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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