Last Friday, traders became very bearish due to a combination of domestic and international strife, indicating that the market may finally be reacting to political volatility. Markets then powered up off the lows on Monday before a power rally on Tuesday. We’ve drifted sideways since then, so let’s take a fresh look at our 4 […]
Continue Reading -->Last Friday, sentiment got pretty awful in the wake of North Korea’s threats of an attack on Guam. And then early this week, it went full-on psycho bullish after North Korea blinked and backed off. That was good for me since I’m speculating on a big decline in the VIX… and then it wasn’t so […]
Continue Reading -->Fear is here, courtesy of North Korea. Just a couple weeks after the VIX hit an all-time low, volatility is exploding as traders start to price in a potential conflict with North Korea. This morning, the plot thickened after China said it won’t help North Korea if it launches missles at the US. However, it would not […]
Continue Reading -->1) Fear Returns Traders were on edge again today on fears of a conflict with North Korea. Japan and South Korea warned that they would not tolerate aggressions from North Korea, including a missile launch at Guam. News reports indicate that Japan moved a PAC-3 Patriot missile system to Tokyo to shoot down North Korean missiles. […]
Continue Reading -->It’s foolish to read too much into any one anecdote, especially when it comes to soundbites and one-liners. But this statement from Leuthold Chief Investment Strategist Jim Paulsen on CNBC really caught my eye: “We’ve got a fully employed economy, rising real wages. We restarted the corporate earnings cycle. We’ve got strong confidence among business […]
Continue Reading -->On July 21, I went long VIX calls based on what I saw as: A) Bullish sentiment gone truly out of control B) My expectation that volatility was due for a reversion to the mean. And subsequently, the VIX hit a record low of 8.84, leaving me feeling like a dope. It’s since pushed back […]
Continue Reading -->Traders are too bullish. Seriously. I typically start this report by saying that “permabears always say everyone’s bullish.” They’re wrong 99% of the time. Today is that 1% of the time when they’re right. Let’s go through our 5 sentiment indicators so you can see the numbers behind my reasoning. (click here for a primer on the […]
Continue Reading -->Are traders afraid of earnings? That’s the question to ask following JP Morgan’s (JPM) kick-off of second-quarter earnings season. Last week, traders were in a pretty happy mood despite a pickup in volatility, particularly in tech stocks. Active traders are enjoying the back-and-forth action, because it’s bringing in more opportunities. But let’s take a deeper look at market psychology […]
Continue Reading -->Finally, volatility is picking up. The Nasdaq’s big June 9 pop and drop broke the “buy the dip” crowd’s will to some extend, and tech stocks specifically are showing much more movement. And if you’re an active trader, that’s a good thing. It means more opportunities for action on both the long and short side. […]
Continue Reading -->Last week, I asked if the bulls went too far. Options traders were buying call options like crazy, betting on a big pop into quarter-end. Turns out, the only thing that popped was the VIX, which rose 56% intraday yesterday, its 5th largest range ever. Take a look at this chart: So let’s take a […]
Continue Reading -->