Author: The INO.com Team

September Was A Month To Forget

Posted on by The INO.com Team

Earlier in the month, I mentioned that September is a historically weak month for the stock market. This September was no different with the stock market having it's worst September since 2011. Just how bad was it? The S&P 500 lost -3.9%, the DOW shed -2.2%, and the strongest index of the year, the NASDAQ, fell -5.1%. Gold, crude oil, and Bitcoin didn't want to be left out of the party and posted dismal numbers as well. Losing -4.8%, -7.1% and -7% respectfully.

The only bright spot on a monthly level was the U.S. Dollar Index, which posted a gain of +1.7%, it's first monthly gain since March of this year, where it posted a weekly increase of +.93%.

On a weekly level, all three indexes will begin October with weekly gains despite the overnight news that President Trump has fallen ill with Coronavirus. Continue reading "September Was A Month To Forget" →

4-Week Losing Streak For S&P 500 And DOW

Posted on by The INO.com Team

The stock market is trying to end the week on a daily positive note as we head into the close. The S&P 500 is +.9%, the DOW +.6%, and NASDAQ rounds out the positive run with a gain of over +1%, which has helped turn the week positive for the NASDAQ. However, the S&P 500 and DOW will post weekly losses marking four straight weeks losses.

On a weekly level, the S&P 500 will post a weekly loss of about -1.4%, joining the DOW, which will post a weekly loss of about -2.5%. The NASDAQ was looking at a weekly loss heading into the close, but afternoon strength in the tech sector was able to push it into positive territory with a gain of roughly +.25%.

But looking at the bigger picture, the major indexes have had a tough month, with the S&P 500 falling more than -6% in September. The DOW has dropped -5.2% over that time period, and the NASDAQ is down -8.2% month to date. September has certainly lived up to the hype. Continue reading "4-Week Losing Streak For S&P 500 And DOW" →

September Blues Continue For Stocks

Posted on by The INO.com Team

Historically speaking, September tends to be a weak month for the stock market. September has been the worst-performing month for markets, on average, since 1950, with the S&P 500 (SP500) dropping on average about -1% since 1950. And this September is no different as we prepare for the third week of trading. As we stand, the S&P 500 is down just a hair over -5% on the month, the DOW has lost -2.6%, and the NASDAQ has fared the worst with a loss standing at -8%. If we don't see a second-half rally, the stock market will post its first monthly loss in 5 months.

Will we see a late-month rally? Or are we headed lower?

On a daily level, both the S&P 500 and NASDAQ closed out Friday trading with losses over -1% with the S&P 500 losing -1.12%, and the NASDAQ lost -1.07%. The DOW fared slightly better, only losing -.88% after being down over -1% earlier in the day. Continue reading "September Blues Continue For Stocks" →

Options - 35% Option-Based Portfolio Return

Posted on by The INO.com Team

A total of 99 option trades were executed in May, June, July, and August as the markets reached an inflection point and rebounded after the COVID-19 lows. During this timeframe, all 99 trades were winning trades to lock-in a 100% option win rate with an average income per trade of $180 and an average return on investment (ROI) per trade of 7.4%. After the tumultuous market lows of March and into early April, leveraging a minimal amount of capital, mitigating risk, and maximizing returns are essential. An option-based portfolio can offer the optimal balance between risk and reward while providing a margin of downside protection with high probability win rates. As the market continues to rebound, optimal risk management is essential when engaging in options trading as a means to drive portfolio performance.

Through the end of August, an option-based portfolio broken out into roughly three parts of ~40% cash, ~30% long equity, and 30% options matched the S&P 500 performance, posting returns of 35.1% and 35.4%, respectively. Risk mitigation needs to be built into each trade via risk-defining trades, staggering options expiration dates, trading across a wide array of uncorrelated tickers, maximizing the number of trades, appropriate position allocation, and selling options to collect the premium income. Maintaining disciple via continuing to risk-define trades, leveraging small amounts of capital while maximizing return on investment, is essential despite the impressive streak of 80 consecutive winning trades.

Option-Based Portfolio/Long Equity Boost

Anchoring down an option-based portfolio is a key component to taking advantage of black swan events such as COVID-19 via broad-based ETF exposure. During the market lows of March/April, the cash-on-hand component of an option-based portfolio was used to go long equity via Dow Jones (DIA), S&P 500 (SPY), and Nasdaq (QQQ). The cash-on-hand was repurposed to balance out the portfolio into roughly three equal parts of one-third cash, one-third long ETF based equity, and one-third options driven. Through the end of August, an option-based portfolio matched the performance of the S&P 500, posting returns of 35.1% and 35.4%, respectively (Figure 1). Continue reading "Options - 35% Option-Based Portfolio Return" →

Trade Triangles Signal Trouble Ahead

Posted on by The INO.com Team

The DOW had been up as much as 249 points in early trading Friday before finally succumbing to sell-off pressure following the NASDAQ and S&P 500 lower in afternoon trading. As this video was recorded, the DOW was flat, drifting in and out of negative territory. The NASDAQ was down over -1%, and the S&P 500 was down -.39%. But the real story is the Trade Triangles.

At the beginning of the week, all three indexes triggered new red weekly Trade Triangles indicating that a move to a sidelines position is in order for the market. The Trade Triangles were triggered when the S&P 500 lost -2.7%, the DOW -2%, and the NASDAQ -4% as tech continued its sell-off from the previous week.

On a weekly level, all three indexes are looking at weekly losses of over Continue reading "Trade Triangles Signal Trouble Ahead" →