Archive | September, 2011

Going Nowhere, and Fast!

30 Sep

The image above should tell the whole story. We’ve been going sideways for the past two months. Surprisingly it has made for some decent trading, but just wait until we begin trending again. Things will really start to pickup in the options markets because the moves in the individual underlying will trend more.

In these conditions of sideways and high volatility it’s important to stick to your rules and WAIT for your setups and remain patient. As always, think risk first, then reward.

Options Watchlist for September 28, 2011

27 Sep

It’s been a while since I put out an options watch list, but lately we have seen some great moves and option spreads are relatively tight compared to volatility. Here are the stocks we’re watching for tomorrow.

Longs: FAZ, RGLD, TZA, VIX,

Shorts: ACI, CTRP, DOW, DVN, EOG, FSLR, FWLT, GD, GES, GS, HIG, JPM, MET, MMM, MS, MUR, OPEN, PBR, PXP, SU, TS, UPL, VECO

You’ll notice the long plays are inverse ETFs. That’s right ALL of these stocks are bearish plays. This means one of two things will happen tomorrow…

Always Prepare for at Least Two Scenarios

1. More than likely we will gap down given so many of these short setups occur. If you’re not familiar with the TJMacTrading entry methods we like to wait for a break of the low of the high bar, before entering (as apposed to entering a day earlier in anticipation).

If we do open lower and continue to sell off with strongly negative breadth it’s likely we sell off into the close and result in a big body candle on the daily (perhaps selling off down to the S&P 1146 level).

2. The second option is that we fail all of these short setups. A failed setup is stronger than the setup itself, mostly because everyone is not expecting it. If this happens we would continue higher towards the S&P 1225 level.

 

 

The U.S. is in Risk of a Systematic Collapse

8 Sep

Both the S&P500 and the EUR/USD are setting up for extremely large moves which should begin to unfold into the end of 2011.

Two Scenarios for the Economy

With an election year in 2012, one scenario is that the US markets skyrocket to new highs and the EUR/USD breaks down and retraces back to its lows. This would imply a strong dollar and strong US market.

The second scenario is that the S&P500 sells off down to 2009 lows and the EUR/USD rallies to new highs. This would imply a weak dollar and weak US market.

With federal spending and the budget deficit amassing the biggest US concern, a presidential shift to a more libertarian or financially focused president would be a good thing for the markets. We cannot continue to raise the debt ceiling, we must cut spending.

A Systematic Collapse is Near

Unfortunately, the problem has not been addressed at the core. As a matter of fact, I don’t think politicians even know what the problem IS. Simply put, the US is spending more than it’s consuming. It seems as though Washington would rather turn their heads instead of address the issue and cut spending. It may not be what the people want, but it’s what we need.

The fair tax is one option. Ending social security is another. Both would be seen as radical ideas, but necessary as the US lurks closer and closer to a systemic collapse.

S&P500 20 Year Monthly Chart

EUR/USD 20 Year Monthly Chart

The U.S. to Adopt a Fair Tax

6 Sep

The basic problem in the world today is that America is consuming more than it is saving. You need to do everything you can to encourage saving and investment: Eliminate taxation of savings, the capital gains tax, and dual taxation of dividends; bring back the more attractive incentives for IRAs, and 401(k)s. At the same time, you need to do everything you can to discourage consumption. Change our tax structure to utilize a value add tax, which taxes consumption rather than savings and investing.

The above paragraph is a quote from Jim Rogers in the book Market Wizards by Jack D. Schwaeger. This conversation took place on pril of 1988! It just goes to show that history repeats itself.