Your Almost Daily Bit of Wall Street Wit & Wisdom

Evil queen

h/t Disney

“That monitor is not your friend.  It’s basically a mirror, looking at all the psychological imperfections it can find in you…it makes you want to do overtrading…you act on impulse, it leads to errors, it leads to exhaustion, and the worst thing that happens is it leads to frustration.  And the frustration is where it starts tearing at the old trader’s soul.  Try to plan the trades that you really want to do.”
— Larry Pesavento

Don’t stare at the market.

Don’t act on impulse.

Don’t overbuy a position.

Don’t add to a losing trade.

Don’t overtrade.

Plan your trade.

Know what you’ll do if you’re wrong.

Know what you’ll do if you’re right.

Subscribe to Options Hotline today to vie for fun and profit.

Happy Friday and enjoy your weekend!

Best regards,

Steve

A Note On Volume

Volume can be a useful tool for traders.  Trading volume tallies the number of shares (for equities) or contracts (for futures) traded on a given day.

Price is king, but volume can indicate the force behind a price move.  This provides valuable information.

For example, on our daily candlestick chart of JPM below, note that over the past few weeks, volume (overlaid on the chart) on down days (black bars) has been greater than volume on rebounds (red bars).

JPM chart

Chart by Steven Sarnoff h/t stockcharts.com

Low volume on a rebound is not a good sign.  It tells me the bounce is more of a short-covering rally and adds weight to the evidence in favor of a continuation lower.

As with all indicators, there is no certainty; there is only probability.

Subscribe to Options Hotline today to vie for fun and profit.

Best regards,

Steve

 

Don’t Chase

JPM price chart

Chart by Steven Sarnoff, h/t stockcharts.com

Options Hotline Update, FYI: Our JP Morgan Chase reco closed +41% in 1 day on a 2% move in the underlying shares, with an always known and strictly limited risk!

That’s Superleverage Power on Display.

Our recommended option trade for subscribers, the JPM December $110 put, triggered yesterday at $2.70 and closed today at $3.80.

JPM closed today’s session eyeing its recent low and a potential visit to the area of its August nadir.  The big banks are getting beaten down.

Resistance is now at $112.41-$114 and $116-$120.  Support is at $109-$110 and $103-$107.

Is that the type of options action you’re looking for?

I’m now in my 21st year at the helm, as the newsletter created by my father approaches its 31st year of publication.

Subscribe to Options Hotline today to vie for fun and profit.

Best regards,

Steve

Your Almost Daily Bit of Wall Street Wit & Wisdom

“Probability is not a mere computation of odds on the dice or more complicated variants; it is the acceptance of the lack of certainty in our knowledge and the development of methods for dealing with our ignorance.”
— Nassim Nicholas Taleb, Fooled By Randomness

You can’t tell the market what to do.  It goes where it wants.  You never have certainty, only probability.”

Subscribe to Options Hotline today to vie for fun and profit.

Best regards,

Steve

Ac-Cent-Tchu-Ate The Positive

bond yields

10-year US T-bond yields, weekly chart by Steven Sarnoff, h/t stockcharts.com

“You’ve got to accentuate the positive
Eliminate the negative
Latch on to the affirmative
Don’t mess with Mister In-Between”
— Music by Harold Arlen, Lyrics by Johnny Mercer (1944)

 

Throughout the summer and now into fall, the spread of very low and, in several nations, negative yields is a glaring warning sign of danger during these uncertain economic times.

As of 10-04-19, here are select 10-year government bond yields:

Canada          1.23%
United States   1.52

Germany        -0.58%
UK              0.44
France         -0.28
Italy           0.83
Spain           0.12
Netherlands     0.45
Portugal        0.13
Greece          1.32
Switzerland    -0.86

Japan          -0.22%
Australia       0.88
Hong Kong       1.04
Singapore       1.62
South Korea     1.36

h/t bloomberg.com

Buying a negative yielding sovereign bond is akin to paying a government to hold your money.  You are buying a loss.  Why on earth would anyone do that?  One reason is the Greater Fool Theory on display.

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Your Almost Daily Bit of Wall Street Wit & Wisdom

The Stock Trader's Almanac

From the archives: First edition of The Stock Trader’s Almanac, with a note from my dad.

“Perhaps it’s Talmudic wisdom but, selling stocks before the eight-day span of the high holidays has avoided many declines, especially during uncertain times.”
— Jeff Hirsch, The Stock Trader’s Almanac

We shall see if last week’s sharp decline is completely retraced, or if Thursday-Friday’s strong rebound is rebuffed, heading into Yom Kippur.

The important thing to remember with such indicators is, as Richard Russell would say, “It’s the little exceptions that get you.”

Best regards,

Steve