Stock Market Analysis

Thursday, July 10, 2014

US Market Takes Hit from Portugal

US market took a hit today on troubles in a small Portugal bank with the Dow sinking as much as 175 points lower intraday before closing at 16915.

So, how did a small Portugal bank make every investor rush for safety all of a sudden? In fact, it was a truly negative day with the VIX surging in response to the fall, short term bond yields ditching as investors rush back to the safety of bonds and options traders pushing total equities put call ratio above par in a bearish bid in favor of put options trading.

Does a small Portugal bank really have such a big impact on the US market?

Well, I think today's drop was one that was simply looking for a reason, any reason, to happen. The 17,000 points level was a huge psychological resistance level for the Dow and investors were already anticipating a significant correction at this level as the market has been over extended for too long. It only took the most insignificant of reasons for today's drop to happen. In fact, traders have been hedging their positions all month long with the total equities put call ratio lingering around par since the beginning of the month. I too have been anticipating a significant correction by the third quarter of the year with probably a significant bear market by the fourth quarter and I have already been preparing my Master's Stock Options Picks subscribers with some defensive positions in order to hedge against and profit from any unexpected drops.

On the plus side, economic data continues to be great with jobless claims falling more than expected in today's report. This, along with the fact that the Dow and the S&P500 did rebound off their 30MA, tells me that there still are reasons to be bullish in this market and that investors would most likely buy tomorrow on today's weakness. My Master's Stock Options Picks subscribers would then be able to take profit on most of our existing bullish positions in order to prepare for more volatility ahead.

Tuesday, June 17, 2014

Final Leg Up?

The Dow gained 27 points today as investors shrugged off the effects of a higher than expected CPI number and focused on the better sales data and housing data.

A higher than expected inflation data may not necessarily be a bad thing as that is also one of the indicators of a growing economy. The only concern is not for inflation to be too high as to hurt economic growth and the current number is pretty much inline with past inflation data without any significant surprise. This is why it isn't hard for investors to look past it and continue to be bullish. In fact, the VIX dipped while the total equities put call ratio continued to tilt in favor of the bulls.

On the technical side, the Dow bounced smartly off its 30MA with little to doubt about it making yet another new high. This also falls nicely inline with my original expectation of global uncertainty from the 4th quarter onwards with a classic exhilaration bull run just before it all runs dry. In fact, this 5 years bull run from 2009 to 2014 has more or less mirrored the 5 years bull run of 2003 to 2008. History has a way of repeating itself in the stock market so I won't be surprised that this could be the final leg up, so take advantage of it while you can. This, along with the classic business cycle, the cutting of global GDP forecast by the World Bank and the Hindenburg Omen, all points towards the same story.

In fact, this could be the best time to profit from the capital markets just like back in 2007. In fact, we just took another 104% profit off our call options position on CNQ last Friday. Check out how that is done!

Monday, March 31, 2014

End of Q1 2014

The last trading day of Q1 2014 ended well with the Dow gaining 134 points today, ending the first quarter of 2014 on a positive note exactly how I have predicted it at the start of the year. Overall, the Dow gained 1.68% in the first quarter of 2014 or an annualized 6.7%, which is a very healthy bull trend. However, will the US market really gain 6+% by the end of the year? I am skeptical. As I mentioned at the start of the year, I expect the US market to be in a volatile bull trend all throughout the first to third quarter with the fourth quarter looking to be more uncertain. In fact, I am of the opinion that we could see an extremely significant correction by the fourth quarter due to the business cycle and the Hindenburg Omen.

Looking more closely, today's "Bull Day" seems to be a little doubtful as it was slightly overdone on no significantly bullish economic data or news. Bond yields and put call ratio both didn't display the kind of behavior that a truly bullish day in the stock market produces. As such, I would be careful to call this the start of another very strong leg upwards. Doesn't mean it cannot but that this simply isn't the time to jump in long too strongly without further evidence.

Wednesday, March 19, 2014

Strangely Bullish Bearish-Day

The Dow dropped 114 points today after the Fed's hawkish announcement of a pending rate hike after 2pm.

We all know it is going to happen but every time the Fed talks about it, investors punish the market for it. However, we also know one thing for sure, rate hikes during a period of "Confirmed" growth and market strength is actually a good thing and keep the economy and the market growing. In fact, today's "Bearish Day" isn't as bearish as it could be when we take a look behind the curtains.

Bond yields rose across the board as investors returned to equities late in the afternoon, taking the market off its intraday low, the VXO actually dropped instead of rise and total equities put call ratio continued to remain below 0.9 in favor of call options trading. All of these tells me that today's "bearish day" isn't truly bearish but rather a one day kind of thing and looks more like a bullish continuation pattern when taking the overall market's rebound from 30MA within the framework of an intermediate bull trend into consideration. In fact, that didn't stop my Master's Stock Options Picks Subscribers from taking a 20% profit on PSX call options today.

Wednesday, February 19, 2014

Breather Pullback

After an impressive 8 days run, market took a dive today as the Fed once again frightened investors with their mixed sentiments. US market went into a nose dive right after the 2pm FOMC minutes release and closed fully negative (all 3 major index down) for the first time in 9 days.

Yes, it has been a pretty mixed week so far with poorer than expected Empire state index and better than expected sales data and today's FOMC minutes is just an excuse for investors to take some short term profit off an impressive recovery run. The market has proven extremely resilient once again coming out of the recent intermediate correction and shrugging off a much poorer than expected Empire State Index.

Indeed, even though the market is decidedly down today, there is a secret bullish undercurrent. Bond yields actually rose across the board, suggesting that investors are actually buying into the weakness and total equities put call ratio also stayed below par in a more bullish vote. Indeed, this looks more like a breather pullback within a bullish framework and definitely setups for buying into weakness. However, that didn't stop me and my Master's Stock Options Picks subscribers from taking almost 100% profit on QQQ today before waiting for a better re-entry point.

For now, the market remained in all out bull trend.

Monday, February 10, 2014

Negative January Negative Year?

There is a saying "How January Ends So Will The Year". This means that if January is a positive month, the year would most likely end up positive and if January is a negative one, the year would most likely conclude negatively as well.

How true is that statement?

Well, over the past 5 years, there were two Januarys that ended negative with the market ending significantly positive by the end of the year and one January that ended positive but the market ending significantly negative. Only two Januarys followed the adage. So I won't give it too much credit.

So what do I think this year?

I think the adage might just come true this year because the market has behaved almost exactly as I have predicted so far. An intermediate correction, which has just ended, leading into the final leg which will lead to another market crash in the third quarter or so. Yes, it is time for yet another market crash and signals are already flaring up all over Asian markets. The Hindenburg Omen is also something that cannot be overlooked. In fact, I think the next five years will see extreme changes in the global financial picture on power shifts and currency changes. So yes, I do not think the current intermediate correction is going any deeper and I would take any weakness as buy signals for now. Follow how I trade into this year's turbulent market and still profit through my Master's Stock Options Picks service.

Thursday, January 02, 2014

Happy New Year 2014!

Happy New Year 2014!

How time flies, yet another year has passed. 2013 turned out to be an extremely fruitful year especially with the Santas Claus Rally happening exactly as I have predicted despite all kinds of fundamental issues in the US. The S&P500 closed at a historic high of 1848, gaining 446 points or a whoooping 31% gain year on year! In fact, My Master's Stock Options Picks Subscribers managed to take 128.3% profit off call options on QQQ on 31 Dec, closing off our Santa Claus rally trade nicely. (Click here to see how we did it)

Indeed, it is amazing how the US market has managed to ride on Santa's sleigh through so much uncertainties and fear, especially through the QE tapering. However, the reaction to the QE tapering decision was pretty much in line with my expectations. I did expect a positive market reaction to the QE tapering due to the fact that much of the anxiety building up to the point has been digested by the market through the months of "hinting" by the Fed and that the market has held up nicely during the run up to the tapering decision. That told me that the market did consider the QE tapering to be a confirmation of economic strength rather than a bad thing.

This year also marked the 5th straight positive year since the 2008 crash... so what's 2014 going to be like?

Past trend seems to suggest that we should see a significant rally through most of the year before a market crash towards the end of the year. This outlook ties in with the 5 years cycle the market has been in for the past decade and also the triggering of the Hindenburg Omen. Indeed, it is not hard to see global markets actually doing well for the most part of 2014 as investors start to get onboard with the global economic recovery scenario but the trigger for the next market crash has yet to reveal itself.

So, let us continue to be nimble and ride along with the new 2014 market! Here's wishing all my readers Health, Wealth and Happiness!