© Copyright 2022 eOption, a division of Regal Securities, Inc., Member FINRA
| Important Disclosures
950 Milwaukee Ave., Ste. 102 | Glenview, IL 60025
The information on this web site is for discussion and information purposes only. All accounts accepted at the discretion of eOption which accepts customer orders only on an unsolicited basis, and does not make any recommendations regarding any security or securities product with the possible exception of orders executed by our full service bond desk. Nothing contained herein should be considered as an offer to buy or sell any security or securities product. Online trading has inherent risks due to loss of online services or delays from system performance, risk parameters, market conditions, and erroneous or unavailable market data.
FINRA BrokerCheck reports for Regal Securities and its investment professionals are available at www.finra.org/brokercheck.
Options Disclosure: Options involve risk and are not suitable for all investors. Prior to trading options, you must be approved for options trading and read the Characteristics and Risks of Standardized Options. A copy may also be requested via email at email@example.com or via mail to eOption, 950 Milwaukee Ave., Ste. 102, Glenview, IL 60025. Online trading has inherent risks due to loss of online services or delays from system performance, risk parameters, market conditions, and erroneous or unavailable market data.
eOption Commissions: Broker-assisted orders are an additional $6. Option strategies involve multiple purchases; therefore your transaction costs may be significant for option strategy trades. A commission rate of $2.00 for equities and $3.99 + $.10/contract for options, per execution, applies to orders entered and filled by eOption's Auto Trade Desk and does not apply to customers who enter their trades directly into the eOption platform and are not utilizing the Auto Trade desk.
Broker Comparison: The competitor rates from published websites were verified on 3/1/2022 and are believed to be accurate, but not guaranteed. Commissions are subject to change without notice. At some firms, commissions may not reflect broker-assisted fees, orders over 1,000 shares, penny stock trades, OTCBB, pink sheet stocks or foreign stock orders. Firms may offer reduced commissions if additional criteria are met.
Blog & Commentary: eOption is neither affiliated with, sponsored by, nor endorses commentary and the opinions expressed are solely their own. Content is provided for educational and informational purposes only and eOption cannot attest to its accuracy or completeness. No information provided has been endorsed by eOption.com and does not constitute a recommendation by eOption to buy or sell a particular investment. You are solely responsible for your own investment decisions, and eOption makes no investment recommendations and does not provide financial, tax or legal advice.
Turkey Crisis – Bad Week For the Country and the Bird
PRE-OPEN MARKET COMMENTS TUESDAY – The market is near the all-time high and gains will be hard fought from now until year end. Momentum and seasonal strength are keeping buyers engaged and the next potential speed bump is a few weeks off.
Turkey is getting slaughtered (sorry, I could not resist the pun ahead of Thanksgiving). Their interest rates are spiking and the currency is tanking. Credit concerns are one thing that can lead to a sustained market decline. Turkey’s issues could be relatively isolated, but it is a reminder that sovereign debt is at an all-time high as a percentage of GDP.
There is little news this week to drive the market. New home sales, GDP and durable goods orders are not likely to move the needle. The FOMC minutes Wednesday afternoon could spark some movement. This is going to be a dull week where momentum and seasonal strength fuel a gradual drift higher on light volume ahead of the holiday.
Earnings season was excellent, but valuations are at 20-year highs. Real bond yields (interest rate less inflation) are falling farther into negative territory and that makes stocks attractive on a relative basis. The system is flush with cash and Asset Managers, retail investors and corporations (in the form of share buy backs) are using that cash to buy stocks.
The next FOMC meeting is on December 15th and it is an important one. We can expect tapering and that could cause some nervous jitters before the release. The Fed does NOT want to tighten and I believe that any selling into that statement will provide an opportunity to sell out of the money bullish put spreads. That dip will lead to a year-end rally on light volume. Powell will retain his position as Fed Chairman and that is bullish for the market. He is dovish and the market has a feel for his policies.
How will we know when the Fed is ready to tighten? Just watch the TLT. If you see bonds selling off, it is a sign that the institutions are preparing for higher inflation. That selling will push yields higher and it will force the Fed’s hand. As long as TLT stays above $140 you do not have to worry about Fed tightening.
Swing traders should focus on selling out of the money bullish put spreads that expire in 3 weeks or less. Find stocks that are breaking through technical resistance on heavy volume and sell the spreads below technical support. That support is your stop. A firm market bid plus a technically strong stock will make this options strategy work. You can distance yourself from the action and let accelerated time decay work in your favor. I like bullish put spreads that yield a 25% return.
Day traders need to be patient. Yesterday I noticed higher quality shorts than longs. The stocks that were moving higher did so in a very sluggish, choppy fashion. Stocks that were dropping had stacked red candles and excellent follow through. I do NOT believe we will see a decent market rally today until the bid has been tested and support has been confirmed. This is a low probability trading environment and you need to trim your size and trade count. Set passive targets and expect two-sided action. When a directional move has run its course, expect a reversal.
Support is at $462 and $466. Resistance is at $470
Content is provided by OneOption, LLC, which has no affiliation with Regal Securities, Inc. (“Regal”) This commentary is provided for information purposes only, and is not a recommendation, offer or solicitation by Regal to buy or sell securities or to adopt any investment strategy. Regal has not participated in the creation of the OneOption content and does not directly or indirectly endorse the content. Any reliance on this material is at the sole discretion of the reader.