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Watch As Analysts Are Wrong!

Neutral trading bias set. Broad market
not pushing stocks. Look towards builders
and energy. Federal interest rising.
Find how well my trades have gone.
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Hey trading team,

This is A.J. on Tuesday, September 20th with
your Trading Trainer web log. We are your
home of market insights for the serious option
trader. This web log will cover the events in the
market from today as well as prepare you for
watching the market tomorrow.

So maybe the market had not digested the rate
hike as was previously thought. I love it when,
again and again, analysts are proven wrong. It
gives me a sense of pride in a twisted sort of
way to know that common sense still works
even put up against the university educated,
manages a large-number research staff, has
direct access to all sorts of data, logic shrouded
and driven, still boils right down to emotion
under it all… analyst’s opinion. See, in the
beginning of the fed’s interest rate raising
adventure, the fed interest rate was sitting at
around 1%. It was great, but everyone knew it
was too good to last. But now, 11 sessions
later and right after a natural disaster that
brought a good portion of the country to its
knees for a week there… there are a lot of
people that are hoping that the Fed was done.
And, so no… the market had not digested the
rate hike. In fact, moving forward, I would not
be surprised, if after every Federal Open Market
Committee meeting, when the fed decides its
next step, if the market doesn’t react. We’re not
all on the same page anymore.

Suffice it to say, the market dropped today, after
starting up – kind of a rebound from yesterday’s
drop – and today’s drop, especially with the
Dow below 10,500, had me drop our broad
market trading bias to neutral. If anything, I’m
starting to believe more the key reversal price
patterns we saw on our weekly charts this past
weekend. A neutral trading bias means the
stocks themselves that you choose to follow are
not getting any push from the broad market and
so it better be doing well on its own merits. It
also means, you might consider dropping down
a level of granularity for your pushes – to the
sector level. For instance, with the energy
sectors doing so well, perhaps looking for long
positions on energy stocks is in order. Another
example is builders. With builders suffering
from higher interest rates and the potential
softening of the real estate market, perhaps
looking for short positions on builder stocks is
in order.

Whatever your strategy, some more
conservative trading rules are required. First,
we need to lower our profit expectations. I’m
now only looking for 50% return on my
invested capital versus 100%. Second, we need
to be fast, especially with exit strategies. In a
neutral trading bias, we want to be taking profit
more times than waiting for follow through.
We want to err on the side of taking profit and
staying out of trades, versus waiting dips out
and jumping into every trade possible.

I sold my Tenaris October 105 Calls today. I
closed that long position by selling my calls at
$18.00 an option. After 25 days, my return on
invested capital came to 128%. At this point,
my option trading portfolio is empty. Even with
the loss on Quicksilver, I still made out like a
bandit this round. On to the next round. Bring
it on..

Tomorrow will be interesting team. There
could be some bargain hunters out there like
there was today driving prices up, at lease when
the session opens. There could also be more
profit takers that didn’t get out today, driving
prices down. There’s nothing to guide us;
except for the Energy department report on oil
stockpiles – which if still low, will send energy
stocks up and the rest of the market down. We
also have Rita to watch. Anyway, when there is
no underlying sentiment, I like to take a break.
That is most likely what I will be doing
tomorrow, just watching and enjoying the
antics. I think I’ll take tomorrow and just have
some fun counting the money I made from this
last round.

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!


About the Author
A.J. Brown is a full time options trader, author,
speaker and consultant. Watch him review stock
charts on video each day, listen to his audio
newsletter where he leads you by the hand
through the end-to-end process of successful
options traders and get tips and tested strategies
proven to boost your return on your invested
capital by massive amounts in his membership
site at TradingTrainer.com today.

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