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Continued Fear in the Markets = Continued Volatility

22 April 2017

We’ve seen a number of our alerts not workout as we planned all due to an injection of fear! The VIX shot up and the alerts went south.  Our last alert did hit the target.  We exited too soon but still recorded a positive return.  To date Optik is up over 220%.  Fear is still lurking and takes on many forms.  We still have North Korea, Iran, Syria and ISIS brewing.  None of these will disappear but we do believe at with almost everything that the market will become desensitized.  Now we have concerns over who will be the next president of France.  We will learn on May 7th if Le Pen wins and if she does then there is fear that France will exit the Euro as did the UK. The Euro/European Union looks to be on the edge of a total collapse, which will destabilize global markets. We also have oil in play constantly and it pulled the market lower this past week as it dropped significantly lower.  Lastly, the is the dear of a possible government shutdown in the US. President Trump and his top aides applied new pressure Sunday on lawmakers to include money for a wall on the U.S.-Mexico border in a must-pass government funding bill, raising the possibility of a federal government shutdown this week. So we are looking at a long list of issues that should keep the roller coaster moving.  One last comment – we are still in a bull market.  Opportunities are provided on dips to enter.  We will continue to look for those opportunities.

Syria, North Korea, Afghanistan

13 April 2017

We have had a series of alerts that we were stopped out on. We still think that all the alerts we issued were good and would have been very profitable but because of unpredictable geopolitical events the overall market dropped and we were stopped out.  Today the market plummeted after news hit that the United States bombed Afghanistan.  Earlier in the week the United States bombed Syria and also sent Naval war ships toward N. Korea.  All these events had a negative effect that we could not predict.  We are hopeful that the VIX will settle but it has been jumping up higher each day and the direct cause of the VIX spikes and the SPY dropping is the geopolitical black swan events.  We continue to move forward and can still report a positive return YTD and a return that beats most other investments.​

Markets Skeptical of Future

4 April 2017

Markets seem to have stalled trying to determine direction since Trump failed initially at his promise to kill Obama Care.  Because of this some doubt has crept into the markets.  We are also starting a new earnings season and out of the gate earning appear good and helping the market move higher.  We are still in a bull market. Oil prices have seemed to stabilize and that is helping lower the market volatility.  The VIX continues at low levels and more cash appears to be entering the market.  As we stated here, skepticism has hit Trump and the markets. His ability to implement policies favorable to the economy is now in question. “Markets are trading in a very tight wait-and-see range,” said Jeff Kravetz, regional investment strategist at the Private Client Reserve at U.S. Bank. “Investors have moved from optimism to a ‘show me’ mode needed to justify valuations for risk assets.” Many analysts argue that the equity slump hasn’t been particularly severe, with some eager to pick up shares that have fallen in price. We have a string of 3 alerts that failed to mature. But our most recent two alerts have provided a return of 40%+.  We continue to look for opportunities in the SPY and across segments.

Markets Concerned over Trump’s Ability to Pass New Health Care Bill

21 Mar 2017

Markets pulled back today for the worst day since September. Investors see that the market has baked in Trump’s tax cuts and are now fear that President Trump’s tax cut promises may be held up as the GOP and Dems battle about new healthcare legislation. The president paid a visit to Capitol Hill Tuesday morning to close a deal with House Republicans on the Obama care replacement bill. Hit the hardest were financials dropping 2.9% the biggest percentage decline since June but it remains up more than 28% for the past year. A pullback in the stock market is warranted, but the ECB is still printing $60B per month and that money is finding its way into both the stock market.  The market may still continue in turmoil until there is a decision on the new healthcare legislation.  The house was to vote this Thursday on the bill before it goes to the Senate but that vote is even in question.  This is still a bull market for the time being and we should seek opportunities to buy in like today.

The Devil You Say!

19 March 2017

Last week was the anniversary of 666.  Specifically, on March 9, 2009, the S&P was trading at a low of 666.  Unknown to all, it was one of the greatest opportunities presented to investors in a long time to enter the markets! Last week markets continued the move higher with several sector and industry group ETFs hitting new highs.  These include the Technology SPDR, HealthCare SPDR, Consumer Staples SPDR and Consumer Discretionary SPDR. Together, these four sectors account for over 50% of the S&P 500 and this means the bull market is doing just fine. Tech-related ETFs were strong with the Cloud Computing ETF, Semiconductor iShares, Internet ETF and Software iShares hitting new highs. Globally the FTSE All-World Stock Index ($FAW) is trading at a record high. The FAW includes stocks from 47 markets of developed and emerging countries. It recently cleared the 2015 high resuming a major uptrend. That's a positive sign because it shows that the stock market rally is global. The FAW is influenced by the U.S. markets which has soared to new record highs since November 4, 2016. We see, absent a black swan event, the markets continuing to move high but not at the rate we experienced from November 4th to March 1st.  Because of this trend we will continue to watch for dips to enter the SPY ETF.

Markets Jump on Fed Rate Hike

16 March 2017

Janet Yellen in her testimony yesterday said the "simple message is the economy is doing well."  The FOMC did not signal a faster pace of tightening as they kept their projections for two more 25 bp rate hikes this year.  Markets reacted positively and moved up.  We are always very cautious and do not issue alerts normally around the release of the Fed Minutes.  What we did see that was interesting is that the banking stocks/sector sold off on the news of the rate hike.  We thought this was strange and that since the hike directly helps banks that they would move up but they did not.  Today the markets are slightly positive as of this writing.  Crude oil and gold both look to move higher today as well. The EIA Energy reported an unexpected draw of 200,000 barrels (+3.7 million barrels consensus).  Some of today's economic data includes February Housing Starts (consensus 1.260 million), Initial Claims (consensus 242,000), and March Philadelphia Fed (consensus 25.0) at 8:30 ET, while January JOLTS will cross the wires at 10:00 ET.

VIX Extremely Low - Markets Still Bullish

12 March 2017

Vix index has averaged just 11.6 points this year, compared to nearly 16 last year.  Hedge funds systematically bet on volatility’s mean-reversion. Betting on falling volatility through the “XIV” ETF would have netted investors almost over 31% annually since the start of 2011. While long-volatility ETFs have been  exceptional at destroying wealth. Of the $16 billion that flowed into them since 2010, a $14 billion has evaporated, this data is according to Deutsche Bank. While some are warning that the market is setting up for a significant correction we do not see it from out technical indicators.  But trying to attribute every market up or down is a fool's errand. The day after President Trump's address to congress, the market gapped up in response; however, it immediately began a pullback over several days, which filled the gap and then some. The U.S. economy added 235,000 jobs in February, per the Labor Department’s release Friday.

The unemployment rate also ticked down to 4.7% from 4.8% in the previous month. It's a vast improvement from 2009, when unemployment peaked at 10% after the financial crisis. Are there black swans lurking that could derail the market? Always! As we witnessed Thursday oil can have an effect on the trend as it dropped over 5% it pulled the SPY ETF down. Banking stocks are looking good because there are several expected rate hikes coming this year.  But will the Fed hike rates given the reduced GDP forecasts? If there’s no rate hike watch for XLF and bank stocks to fall. 

DOW 21,000 – Now Paused Awaiting Rate Hike?

4 Mar 2017

The Dow hitting another milestone this week, closing over 21,000 on Wednesday for the first time ever. The markets have been a historical run higher. Stocks posted weekly gains Friday, while Federal Reserve Chair Janet Yellen put an exclamation point on the possibility of a rate hike this month. Yellen stated that improvements of late will be a big part of the discussion at the March 14-15 Federal Open Market Committee meeting. Also, all the Fed members finally seem to be singing from the same sheet of music as a number of top Fed officials have indicated that tighter monetary policy may be coming soon. As a result the opinions that the Fed will issue a March rate hike have skyrocketed to 81 percent, according to the CME Group's FedWatch tool.  Economic data released Friday included the IHS PMI, which hit a five-month low and the ISM non-manufacturing index, which came in at 57.6 for February. The three major indexes posted their best day of 2017 with record highs this past Wednesday. The French elections are in the spotlight as well and the VIX continues to slide lower.  We recorded a slight loss on the alert for the SPY ETF Friday as markets retreated for the weekend.

Record Highs Continue – Optik up 295% YTD

2 Mar 2017

After Trumps pump it up speech the markets soared to new highs yesterday led by banks. We took advantage of that and issued an alert on MS, which over night soared for a return of over 100% pushing our YTD return to 295%.  We just don’t know how much more steam is left. There are many that state – brace for a pullback. Others, to include Warren Buffett, say that the market has much more room to move up.  We are on the side of the Oracle from Omaha.  Therefore, we are going to watch for good dips for entry points. It is clear that this multiple year really still has legs and the bull rages on. Short sellers were forced to cover their positions, thus driving up share prices.  When the stock market “gapped up” at the open, high frequency trading kicked in and bought aggressively. That triggered other algorithms to follow suite and push the market even higher. Thus, that was interpreted as a confirmation of how good Trump's speech was.  The talking heads on TV are great at telling you what is happening.  I’ve not seen any that tell you what to buy, when to buy it and the entry and exit prices.  They are on TV for only one purpose – SELL ADVERTISING – without that they would not have a job.  So the need great personalities that provide excitement to the masses. We prefer to use economic data coupled with our technical analysis to determine how to trade the market.

Longest Winning-Streak in 25 Years!

25 Feb 2017

Yes, it is official the DOW has had the longest uptrend turning in all-time highs since 1992.  An incredible feat to say the least as the Dow Jones industrial average ended marginally higher, recording its 11th straight record close on Friday.  Dow futures briefly fell more than 100 points about 30 minutes before the open. European stocks also fell, with the pan-European Stoxx 600 index declining 0.76 percent. Oil seems to have leveled off as the US has become an exporter. Producers and traders shipped out 1.21 million barrels of crude a day from the U.S. in the week that ended February 17, the most in EIA data going back to 1993. Domestic output increased to 9 million barrels per day last week.  Today, Warren Buffett's Berkshire Hathaway released its closely-watched annual letter on Saturday, in which the Oracle of Omaha told investors that the holding company's investment gains would continue to be 'substantial' in the coming years and the U.S. economy would continue its 'miraculous' boom. We are watching to buy the dips as they occur and hope that our latest alert on QQQ yesterday hits our projected target next week.

Markets on Solid Path Up - Optik up 179% YTD

18 Feb 2017

Since the Trump election and his continued string of tweets and press conferences stating that he is going to lower taxes, reduce banking regulation and make american companies grow, coupled with the overall ggood earnings reports that markets steadily, if not a t times rapidly, have been moving up. How long wil this last? It is hard to say we've been in an overlal bull market for about 8 years now.  Thre always lurks a black swan but the adverse effects seem to be modest and temporary.  We continue to look for opportunities to enter the market on dips.  We do not see at this time a good long term short and we are hesitant to try to short given the technical indicators we have.  Therefore, we will wait and enter on dips.

80 Days Around the World – 1,000% in 2017?

12 Feb 2017

Actually, it has been 84 days without a single daily decline of 1% or more! The tweets of President Trump have had focused effect but his overall broadcast of doing what is best for US businesses has set the markets on fire! The S%P 500 hasn’t seen a market this hot since 2006. Earnings have overall been very good and that combined with what people think will be favorable treatment of corporate America is enough to keep moving he markets up. Michael Hartnett, Bank of America Merrill Lynch’s chief investment strategist, says what he calls the market’s three Ps—positioning, profits, and policies are “consistent with one last 10% melt-up in stocks and commodities in 2017.”   There are always black swans lurking that can have an immediate downturn effect with no prior notice and we know that the market falls fast and recovers slowly.  We continue to watch for opportunities for an entry that will poise the least level of risk.  This year had gotten off to a good start for Optik Options.  At the current pace we are looking at possibly closing the year at over 1,000%.  We will certainly try to hit this mark again there are no guarantees.

Markets Topping?

2 Feb 17

Markets are dynamic and the probability of picking an exact top (or bottom) is unlikely.   We strive to identify a trending move.  There can be signs that indicate a correction is coming. Knowing that we will not be able to pinpoint the exact top (whether it be price or time) a trader can take profits when the market begins to show signs of weakness.  Trends can last a long time, nine months is actually a short rally. Some market topping indicators include:  1) the number of 52-week highs begins to decline, despite growth in indexes, 2) the NYSE advance/decline has peaked and is now declining, even though the S&P and Dow continue higher or have stalled, and 3) the major indexes move below a prior low.  Like the ocean the market always moves in waves, not every decline is a reason to exit the market. However, when a series of signals align, it can provide evidence that the market is creating a top and could be entering a larger correction.  

Trump Market Shaking Tweets – Optik Alert Returns 30%

2 Feb 17

Are we experiencing Trump Tweet Market Volatility (TTMV)?  It sure seems so!  Trump tweets Mexico will pay for the wall.  Boeing is charging too much for Air Force One! The list goes on and on.  And the individual stocks and the market does seem to move on the tweets.  Will the markets eventually desensitize to the tweets are will we all need to monitor closely and trade the tweets?  I think it will be a combination of the two.  I have joked in the past that I wished I owned a small country.  I could short the market and declare war on the United States in the morning. Then I could go long and surrender in the afternoon and make several million dollars.  I have read with interest how some people manipulate the markets and how high frequency trading (HFT) and computers are now 80% of the daily trades.  One thing is volatility is key to making large gains and being on the right side of the trend.  In a years time there are about six (6) very clear signals that there is a market bottom.  Market tops are much harder to pinpoint.  You know you’re at or near a top generally but it is hard to tell if it will remain there for a day or a month.  We will continue to monitor and jump on the right trend.  Our most recent alert returned 30% on the SPY February $228 calls.  We are hopeful to make a number more of those calls for profits in February. 

Trump Rally is Over

21 Jan 2017

The Trump Rally appears to have ended.  Overall the market DOW has climbed 8.2% from the close on Election Day. The DOW had its most impressive run from an election to an inauguration in 20 years. The DOW’s best-ever for an election was in the days leading to Herbert Hoover’s 1929 inauguration, when the Dow industrials climbed 22%. And its worst: the period leading to Barack Obama’s first term, when the index fell 17%. While we will give Trump some credit for the rally we think oil prices help to support the rally as well.  OPEC and Russian announced that they are making progress on cutting crude-oil production which is increasing prices. Saudi energy minister Khalid al-Falih said OPEC’ has made collective cuts totaling 1.5 million barrels a day. Oil prices have risen nearly about 20%.  The CBOE Volatility Index ($VIX) is languishing near its lowest level in years, and spreads on high-yield bonds are the lowest in more than two years. We think that the market will continue overall to be bullish but we also think that we will see a pullback very soon that will present a buying opportunity. Historical trends for incoming Republican presidents show that there is a 40% chance the S&P will continue to climb from Inauguration Day for the next 100 days. Only time will tell.  Best of luck to all!

Earnings Season - Optik up 125% YTD

14 Jan 2017

Earnings season has started and banks led the way this past week.  Our alert on Citigroup (C) made a 25% return in just one day!  In fact, thus far this year we are up 125% with one open position remaining from last year.  J.P. Morgan, which is the country’s biggest bank by assets and the world’s largest by market value, broke out Friday reporting a quarterly profit $1.71 beating analyst expectations. Bank of America (BAC) also beat analyst expectations with 40 cents by cutting expenses to offset lower-than-expected revenue.  Wells Fargo however missed expectations with Q4 earnings and revenue, at 96 cents a share and $21.58 billion.  We see 2017 as a year of great volatility with markets overly sensitized to President Elect Trump’s tweeting.  We need to teach the markets that the big dogs bark is much worse than his bite and this it just a methodology to posture and get his adversaries to “think-twice.”  For example, At Mizuho Financial Group in New York a foreign-exchange trader said last year he began discussing with co-workers plans to get the Japanese financial firm to lift its longtime ban on Twitter after Trump’s threats to revise trade policies with Mexico prompted a sell off in the peso. The president-elect has tweeted more than 300 times since the election. Excluding media companies, he has called out publicly traded companies by name or product in 18 separate tweets, including Boeing Inc., Ford and United Technologies.  

Triple Crown Today!

6 Jan 2017

Congratulations!  Today we made history 3 of our 4 active alerts all hit their targets today for an overall return of 75%.  Morgan Stanley (MS), Apple (APPL) and SPY all hit a minimum return of 25% some have continued to rise to provide even larger gains! It is a great way to start off the new year.  The S&P and the Nasdaq all hit new intraday highs and the DOW continues to try to hit 20,000.  As of this writing the DOW is at 19,981.  But, as we have noted is a Dow 20,000 really that significant? The benchmark only represents 30 firms out of the thousands that make up the broader equity market. Moreover, outsize moves in any one of its components, because the gauge is price weighted, can have a big effect on the Dow. Also, the largest firm that has pushed the Dow has been Goldman (GS).  We continue to see volatility ahead especially since the President Elect tweets seem to have focused and broad market effects!  Time will tell if the markets will eventually become desensitized to Mr. Trump’s tweets.  Happy New Year!

Positive Start to 2017

4 Jan 2017

2017 is off to a good start with the markets up.  We've carried over into 2017 a few alerts as well as some new alerts already this year.  Oil seems to continue to be a significant factor in the markets direction. Tensions in the Middle East escalated quickly over the weekend. Saudi Arabia, Bahrain, and Sudan have broken diplomatic relations with Iran while the United Arab Emirates has recalled their ambassador from Tehran.  As oil goes so does the market. Interest rates will also be in focus for all of 2017. The Fed have indicated that they might have to raise interest rates faster than the “gradual” pace that they have stressed for some time, according to minutes of the December meeting. The news of this meeting suggest that the era of a predictable and boring Fed may be over.  Fed officials have penciled in three quarter-point rate increases in 2017 instead of two seen in September. Presently, we have active alerts on XOM, MS, SPY and AAPL.

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