Where’s the volume?
We can’t keep running up on no volume and not expect to have a nasty sell-off – that just isn’t the way things work. In yesterday’s Live Trading Webinar, we discussed our aggressive hedge adjustments even as the market drove on to even higher highs. Of course, that’s when buying protection is the cheapest but most traders are reactive and not proactive – so we get to bargain shop by acting a bit ahead of the curve.
Yellen didn’t do too much to boost the markets yesterday, but she gets another crack at Congress this morning to refine her statements. On the whole, she certainly put off expectations of the Fed raising rates until about September and, even then, only if the economy continues to improve – which is a questionable notion at this point (see last week’s posts on the economy).
Still, we’ve been threading the needle and playing both sides of the market. At the beginning of the month, for example, while we were still giving out free trade ideas – we gave you a combo play on oil, which was one of our Top Trade Alerts (Members Only) using 10 long USO 2016 12 calls for $5.75 ($5,750) and selling 10 of the 2016 $22 puts for $5.65 ($5,650) for net $100 out of pocket. Yesterday USO closed at $18.04 and the combo closed at net $2,260 – up $2,160 (2,160%) in less than 3 weeks – you’re welcome.
Of course, that’s nothing compared to our more aggressive call to go long on Natural Gas Futures (/NG) at $2.69. Natural Gas finished the day at $2.90 and, at $100 per penny, per contract, that’s a nice $3,100 gain on each contract. We’re done with Natural Gas longs but we still have a substantial interest on USO longs in 3 of our 4 Member Portfolios, though we did just stop out of longs on the Oil Futures (/CL) at $49.50 in this morning’s chat ahead of inventories.
Chinese stocks came back from a week-long holiday (New Year’s) and fell off into the close,led lower by a nasty drop in the Macau Casinos, which are looking at a 50% drop in revenues compared to last year as China cracks down on the corruption that made Macau the World’s best place to launder money. Real Estate, Banking and Consumer Stocks also fared poorly in China but their PMI came in at 50.1, which is 0.2 better than contracting – so that’s all you’ll hear about today from the MSM, which is pushing Retail Investors to BUYBUYBUY all the crap stocks the Banksters are trying to unload.
