Author: The INO.com Team

Q4, 2018: Is That You?

Posted on by The INO.com Team

Hello traders everywhere. As I sit here and watch the DOW drop over 500 pts and the NASDAQ drop over 130 pts I can't help but think and feel like I've seen this before. Does this feel familiar to you?

If not it should, especially if you open a 1-year chart and look at Q4 2018. Yup, there it is, a significant drop to start Q4 of 2018 much like we see this week. The question is, will history repeat itself or is it just a short-term bump in the road.

Concerns around the economy were sparked on Tuesday after the Institute for Supply Management (ISM) said U.S. manufacturing activity fell last month to its lowest level in more than 10 years.

The weak data sent the major indexes tumbling on Tuesday, the first day of the fourth quarter. The Dow dropped more than 300 points while the S&P 500 slid 1.2%, their most significant one-day drops since Aug. 23. Those losses were enough to wipe out the Dow and S&P 500's gains for the entire third quarter. Both indexes had gained 1.2% in the previous quarter. Continue reading "Q4, 2018: Is That You?" →

Time To Sell Chinese Investments

Posted on by The INO.com Team

Hello traders everywhere. The stock market reversed course Friday afternoon erasing earlier gains after reports that the White House is considering limits on U.S. investment in China, aggravating the long-standing trade dispute between the globe's two largest economies.

Trump administration officials are discussing ways to limit U.S. investors' portfolio flows into China. One of those options includes limiting all U.S. investment in China.

The DOW turned flat, erasing a gain of about 130 points after the report. The S&P 500 also reversed all of its gains to trade down -0.5% amid losses in communications services, utilities, and technology. The Nasdaq is being hit the hardest dropping -1.1%.

Shares of Alibaba, Tencent, Baidu, and other Chinese companies, in particular, plunged on the latest U.S.-China headlines, with BABA falling -6%. Those shares all trade on Nasdaq which will now post a weekly loss of over -2% joining the other major indexes with weekly losses. The DOW will lose -.3, and the S&P 500 will lose -.9% on the week.

Key Levels To Watch Next Week:

Continue reading "Time To Sell Chinese Investments" →

China Deal Trumps Impeachment Inquiry

Posted on by The INO.com Team

Hello traders everywhere. Stocks rose Wednesday after President Trump announced that a U.S.-China trade deal could arrive sooner than expected. However, gains were kept in check as Wall Street assessed House Speaker Nancy Pelosi's announcement that she would launch a formal impeachment inquiry on Trump.

The Dow traded 180 points higher, the S&P 500 was up 0.2%, the Nasdaq climbed 0.30%, and the Dollar rose +.55% back above $99.

Keep an eye on the 50-day moving average for the three major indexes as the NASDAQ has broken below the MA, and the S&P 500 looks to be testing it, sitting just above its 50-day MA.

U.S. crude oil futures shed as much as -2.7% to $55.73 a barrel amid worries about weak demand and excess supply. Oil has since backed off that low but is still trading right around $56 a barrel.

Bitcoin has headed lower losing -3.2% on the day backing up the -11.4% loss on Tuesday, it's third-biggest daily loss of the year, testing its 200-day MA.

Key Levels To Watch This Week:

Continue reading "China Deal Trumps Impeachment Inquiry" →

Options: You Choose Whether You Win 70%, 80% or 90% Of Your Trades

Posted on by The INO.com Team

Previously, I wrote an article putting forth the efficient market hypothesis termed “There's No Edge In Stock Picking” and how less than 10% of fund managers outperform their benchmark over the long-term. These bleak performance metrics and the fact that there’s only a 36% chance that you pick a stock that outperforms the index is what makes options trading so effective.

Whether you want to win 70%, 80% or even 90% or your trades, you dictate your probability of success when it comes to options trading over the long-term. If you set your probability of success at ~85% and make trades at that probability level through all market conditions over the long-term on the scale of hundreds of trades, you’ll end up winning ~85% of your option trades. Options trading allows one to profit without predicting which way the stock will move. Options aren’t about whether or not the stock will move up or down; it’s about the probability of the stock not moving up or down more than a specified amount. Put simply; options are a bet on where stocks won’t go, not where they will go.

Options trading can generate consistent income and mitigate portfolio risk while producing high probability win rates. Options allow your portfolio to generate smooth and consistent income month after month without predicting which way the stock market will move. Running an option-based portfolio offers a superior risk profile relative to a stock-based portfolio while providing a statistical edge to optimize favorable trade outcomes. Options are a long-term game that requires discipline, patience, time, maximizing the number of trade occurrences and continuing to trade through all market conditions. An options-based approach provides a margin of safety with a decreased risk profile while providing high-probability win rates that are determined by the trader himself.

Empirically, over the previous 12 months, I’ve produced a return of 8.6% relative the S&P return of 3.2% while winning 85% of my trades via leveraging ~70 different ticker symbols. Continue reading "Options: You Choose Whether You Win 70%, 80% or 90% Of Your Trades" →

China Cancels Visit Causing Markets To Fall

Posted on by The INO.com Team

Hello traders everywhere. Stocks fell to their lows of the day when news that Chinese trade officials canceled a visit to U.S. farms in Montana. Deputy trade negotiators from the U.S. and China resumed face-to-face talks for the first time in almost two months. The deputy-level trade talks are expected to help lay the groundwork for high-level negotiations early next month. This briefly lifted investor sentiment around trade talks.

Washington and Beijing have imposed tariffs on billions of dollars' worth of one another's goods since the start of 2018, battering financial markets and souring business and consumer sentiment.

The Dow traded 130 points lower, while the S&P 500 slipped 0.5% and the Nasdaq dropped 1%. For the week the major indexes will post their first weekly loss in over three weeks. The S&P 500 will lose -.30%, the DOW has the most significant losses with a loss of -.66%, and the NASDAQ brings up the rear with a weekly loss of -.49%. The Dow came into Friday's session 1.1% removed from its all-time high while the S&P 500 was 0.7% below its record mark from late July. The Nasdaq remained 1.9% away from its record.

Key Levels To Watch Next Week:

Continue reading "China Cancels Visit Causing Markets To Fall" →