Top Market Blogs

Energy pundits sing natural gas' praises, but Bill Powers, author of "Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth," isn't buying it. He sees serious flaws in how reserves are reported, and his own research shows steep, across-the-board production declines in the near future. Nonetheless, he expects a multiyear bull run for the resource, and recommends investors get positioned before scarcity hits—just five to seven years from now. Find out which companies Powers is betting on in this interview with The Energy Report.

The need for low-cost production may prove to be the mother of invention, argues Emerging Trends Report Editor Richard Karn. Although miners are far more technologically conservative than oil...

Visit the aureport.com for more information and for a free newsletter

By Jeff Pierce

Given how oversold Gold was it doesn’t surprise me to see it rally off the lows, but in my opinion that move is just about over and now is the time to see what this “bottom” is made of. I expect this to pullback to $1445 and if it can hold that level then it may have a real chance at forming a decent trading bottom. If that level doesn’t hold then $1392 is a legitimate level that it could see next. If that can’t hold then all bets are off.

 

The Fed has directly created a neofeudal rentier economy and society.

Federal Reserve Chairman Bernanke is a Reverse Robin Hood, robbing from the lower 95% and giving to the financier class. The Real Reverse Robin Hood: Ben Bernanke and his Merry Band of Thieves (August 31, 2012).
It's worth understanding the mechanisms of this wealth transfer: in essence, the Fed extends low-cost credit (i.e. "free money") to the financier class which then uses this free money to buy rentier assets, that is, assets that generate economic rents for the owners, who add no value and create no wealth.
This is of course the neofeudal model: the financial aristocracy in the manor house own the rentier assets and the debt-serfs toil away to pay the rents and taxes. The financier class (i.e. those that benefit from the financialization of the economy) are as unproductive as feudal lords; they skim the profits generated by the debt-serfs while adding no productive value to the economy.
Financialization and Crony Capitalism Have Gutted the Middle Class (July 13, 2012) The E.U., Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012) Why Krugman and the Keynesians Are Lackeys for the Neofeudal Debtocracy (April 24, 2013)

(I separate the bottom 95% from the top 4.5% and the .5% financier class for several reasons: 1) most of the stocks and bonds are owned by the top 5%; 2) the top 4.5% is shedding debt while the bottom 95% are adding debt; 3) the income of the top 4.5% is rising while household income of the bottom 95% is declining, and 4)the top 4.5% have access to lower-cost credit than the bottom 95%, but they do not have access to billions of dollars in nearly-free credit from the Fed or the shadow banking system like the financier class.)

Let's take rental housing as an example of this Fed-driven rentier economy. The financiers borrow $1 billion in nearly-free money and use these funds to buy thousands of houses for cash. Since they can offer cash, they beat out households with approved mortgage applications. This is the story one hears anecdotally: potential home buyers have a mortgage application approved, all they need is to have their offer for a house accepted. But the house is sold to an investor with cash.
So while the Federal housing agencies are offering low-interest, low-down payment mortgages to marginally qualified (or flat-out unqualified) buyers, the Fed is enabling the financier class to outbid conventional homebuyers.
Here's the key dynamic: cash earns no return, thanks to the Fed's zero-interest rate policy (ZIRP). This means the interest rate paid by the financier class is also near-zero. So the trick is to take all those billions of nearly-free dollars and use them to buy assets returning 3+% annually.
These include rental housing, stocks that pay hefty dividends (for example utility companies), municipal bonds, long-term Treasuries, dividends based on patents and royalties, and everyone's favorite low-risk investment, state-sanctioned monopolies and cartels. (no wonder Big Pharma stocks have skyrocketed.)
Zero interest rates rob from the bottom 95% who do not have equal access to low-cost credit and transfer that wealth to the rentier-financier class. The bottom 95% provide the capital (pension funds, 401K accounts, checking and savings accounts, etc.) for zero return, but their access to near-zero cost credit is restricted.
The financier class then borrows money from the Fed (or the "shadow banking" non-bank credit system that is ultimately backstopped by the Fed) at near-zero rates, which it then uses to buy rentier assets that yield 3+%. The financier class then skims the rents from the debt-serfs, who have been effectively robbed of trillions of dollars in lost interest by the Federal Reserve.
The Fed has directly created a neofeudal rentier economy and society. Giving the financier class unlimited access to free credit with which to buy rentier assets serves two purposes: 1) it drives the valuations of rentier assets ever higher, creating the useful (in terms of propaganda and perception management) illusion of economic vitality, and 2) it greatly enriches the financier class at the expense of the bottom 95%.
Goebbels would approve of the Fed's masterful propaganda campaign: rob the bottom 95% to benefit the financier class, all the while piously proclaiming that its policies were aimed at increasing employment for the bottom 95%.
In terms of propagandistic chutzpah, it doesn't get any better than this. Congratulations, Bernanke, Yellen, et al. 

Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify or understand. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism and the elimination of accountability
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economy
Complex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).

We are not powerless. Not accepting responsibility and being powerless are two sides of the same coin: once we accept responsibility, we become powerful.

Kindle edition: $9.95       print edition: $24 on Amazon.com
To receive a 20% discount on the print edition: $19.20 (retail $24), follow the link, open a Createspace account and enter discount code SJRGPLAB. (This is the only way I can offer a discount.)



Thank you, Christopher B. ($50), for your superbly generous contribution to this site -- I am greatly honored by your steadfast support and readership.Thank you, David C. ($10), for your most generous contribution to this site -- I am greatly honored by your support and readership.
google_ad_client = "ca-pub-6006126731309477"; /* new300X250 */ google_ad_slot = "5310346840"; google_ad_width = 300; google_ad_height = 250; Go to my main site at www.oftwominds.com/blog.html for the full posts and archives.

Last analysis expected upwards movement from Apple which is what we have seen. The target remains at 518.48 and has not yet been reached. I expect more upwards movement. Click on the charts below to enlarge. This wave count expects a five wave impulse for a cycle degree wave a is unfolding to the downside. [...]

Last analysis expected upwards movement for Monday’s session towards a short term target at 1,630. Price has moved slightly higher, but has failed to reach the target by a very long way. The wave count at the daily chart level remains the same. I have two hourly wave counts for you. They have the same [...]

Back to autopilot mode..... After some excitement and a potential breakdown in the middle part of April, stocks have resumed their march upward with most indexes notching 10 gains in the past 12 sessions.  In this environment the main concern is not piling in when stocks are short term overbought and of course buying every dip.  Under the surface a move to more cyclical sectors continues as today was a rare day in 2013 that healthcare, utilities, and consumer staples all sold off yet the market rallied.  The S&P 500 gained 0.19% and the NASDAQ 0.42%.   News flow was slow; there was some Chinese service data released that showed significant slowing but the market is ignoring it.

The S&P 500 and NASDAQ are both back firmly in channel; while short term overbought they continue to grind up.

The two mega cap technology stocks that investors love are back on track - Apple (AAPL) continues to break out of this recent pattern while Google (GOOG) is making new highs.

Momentum stocks such as Tesla Motors (TSLA) and 3D Systems (DDD) continue to lead the way.

Financial stocks also joined into the festivities after not doing much the past two weeks, see Bank of America (BAC).

Overall, cyclicals continue to see a bid as money rotates out of safety sectors and into these groups.

Bespoke Invest has an interesting chart of how long it has taken for the DJIA to hit its 1000 point increments.  You'd think the higher we go the quicker they come since 1000 points on 3000 is much harder than 1000 points on 14,000 but it has not been the case.

To get from 2K to 3K, the DJIA rallied 50% in the span of 1,560 days.  To get from 14K to 15K, though, the DJIA only needed to rally a little over 7%, but it still hasn't been able to do so after more than 2,000 days!

Original post: STTG Market Recap May 6, 2013

Is Microsoft Corp ( MSFT ) back ?
Monthly chart, with a key resistance broken !
Once again a heavy weight in the Nasdaq (Market cap)
A "must" own if you follow tech stocks
You can add Google Inc (GOOG) to the must own tech list

Money: Mining companies need it and investors want to know that companies will use that money to make them money. An innovative conference sponsored by the Society for Mining, Metallurgy and...

Visit the aureport.com for more information and for a free newsletter

Using Daily and hourly chart patterns ;
$USD : Lower highs seems confirmed
$EUR : Higher lows confirmed, now let's wait for the Euro to break and remain above 1.3230.
$JPY : Still bearish, the BOJ does everything to keep it lower
$GBP : Bullish
$CAD : Bullish
$CHF : Neutral
$AUD : Neutral to bearish
$NZD : Bullish

I know a great many people have gotten discouraged during the last 6 months. Many have probably gotten knocked off the bull, and some may even buy into the end of the bull market nonsense that many analysts have been spouting lately. 

I can assure you the gold bull is not dead. Human nature hasn't changed. Bernanke's printing press hasn't stopped. The Dow:gold ratio hasn't reached 1:1 and the world hasn't solved it's ever growing debt problem.

Gold just suffered a minor manipulation event after QE4 that drove price back below $1700 and held it there until the dollar rallied out of it's intermediate cycle low. Then big money manufactured a stop run at the $1523 level to trigger a climax selling event. They used that panic to transfer I estimate somewhere between a quarter to a half  trillion dollars worth of shares in ETF's, mining stock, and physical from weak hands to strong hands.

These players now have huge positions in preparation for either another leg up, or the final bubble phase of the secular bull market. If that's the case then gold should rally for about another year and a half with a final parabolic blowoff top sometime in late 2014 or early 2015.

A top in 2015 would culminate a 14-15 year trend which is about normal for a secular bull move.

As hard as it is to do right now this is the time traders need to be positioning for the next, or the last leg up in this bull market.

For the next couple of days I'm going to make an offer to any expired subscribers, buy one get one free. Buy a one month subscription and I will give you the second month free. This should be long enough to get you through the bottoming process and far enough along to convince everyone the bull market isn't finished. At that point you can decide whether to let your subscription expire or continue.

Make sure you let me know that you are a returning subscriber when you subscribe. I will email you instructions on how to turn off auto renew and get your second month free.

Click on the charts below to enlarge.

By Mike Ber

The following is a special weekend report from ForexAlerts.ca recapping the major pairs they cover, how they traded them this past week, and what they look forward next week. They recently launched their service and are offering a 50% discount for a limited time. To learn more about currencies and take advantage of this offer click here.

USD/JPY – Weekly close @ 98.98

Bias: Bullish-Neutral

USD/JPY – 4 Hour chart

Levels to watch at the beginning of the week:

Upside: 99.788

Range: 95.408 – 99.978

Downside: 95.408

Commentary:

USD/JPY is trading within the 95.408 – 99.978 range. The range is wide because our 98.944 level was taken our recently.

No changes in our outlook. The bias is Bullish-Neutral. The pair has very strong daily and weekly charts, but future outlook remains unclear, due to important upside barrier.

In our last week update we wrote about the expected pullback, but USD/JPY didn’t retrace to acceptable levels for to enter long positions. We have to give the benefit of the doubt to the bulls at the moment, because they have momentum going. USD/JPY is probably will be testing our upper band 99.978 in near future.

We want to make our strategy clear: USD/JPY will need to break 99.978 with conviction. That would mean to actually break the level of 100. For now, the only way for us to enter the trade, is for the pair not only to break 100, but also hold the gains. After that we will be looking to enter long position on a pullback.

Our USD/JPY trades:

Click HERE for the list of our trades in April

No positions

EUR/USD – Weekly close @ 1.3113

Bias: Bearish-Neutral

EUR/USD – 4 Hour chart

Levels to watch at the beginning of the week:

Upside: 1.32486

Range: 1.28655-1.32486

Downside: 1.28655

Commentary:

EUR/USD is trading within a new 1.28655 - 1.32486 range. The 1.3201 level was taken out recently.

We notified our members on Twitter on Thursday that we closed our short position, in order to get back in at a better price. We wrote: “We recommend selling entire EUR/USD position now. It’s trading at $1.3065. We’re not bullish, but it will likely rebound and we can establish a new position at higher prices for next leg down. EUR/USD: We are looking to get short again somewhere between 1.3109 and 1.3123.”

We opened a new short position @ 1.3120. Our stop is 1.3248.

Our EUR/USD trades:

Click HERE for the list of our trades in April

April 25th, 2013 – Entered short position @ 1.3049 – 1/3(targeting 1.28655)

May 1st, 2013 – Added to short position @ 1.3209 – 1/3 ( total position 2/3 – 1.3129 average)

May 2nd, 2013 – Exited short position @ 1.3065 – PL: +64 pips profit

May 2nd, 2013 – Opened new short position @ 1.3120 – ( position size = 2/3)

 

USD/CAD – Weekly close @ 1.0077

Bias: Bearish-Neutral

USD/CAD – 4 Hour chart

Levels to watch at the beginning of the week:

Upside: 1.01663

Range: 1.00136 – 1.01663

Downside: 1.01663

Commentary:

We changed our Bias to Bearish – Neutral from Neutral. The pair is trading within the 1.00136 – 1.01663 range.

If you are short 1.00136 support is probably a good level to take profits. The pair is not rallying up enough to give us a good short entry. We mentioned to our members that we wanted to start shorting @1.01406, and add @1.01663. Unfortunately USD/CAD only climbed up to 1.0131, and we didn’t initiate positions.

We want to see how the pair reacts @1.00604 level of support. If the pair bounces off this level again, this could be an important support that will lead to a rebound in a coming week.

Our USD/CAD trades:

Click HERE for the list of our trades in April

No positions

 

GBP/USD – Weekly close @ 1.5571

Bias: Bearish-Neutral

GBP/USD – 4 Hour chart

Levels to watch at the beginning of the week:

Upside: 1.56703

Range: 1.54643 – 1.56703

Downside: 1.53615

Commentary:

No change in bias or outlook. The bias is still Bearish – Neutral.

The pair is trading within the 1.54643 - 1.56703 range.

From our last week report: “The pair may continue upside movement to 1.5595 level; if the short trade is crowded, there might be a squeeze to this level. We are not over leveraged, and even though we hold a losing position at the moment we prefer the pair to climb to 1.5595 area of resistance, where we will add 2/3 to our short position that we took off previously. Our view didn’t change, the charts are still bearish. We believe that this is one of the cases where big explosive move doesn’t change the overall outlook. The development provides a better entry point.”

We added to our short position @1.5590. The close above 1.5605 level may invalidate our bearish outlook, and we will consider closing our position at loss.

Our GBP/USD trades:

Click HERE for the list of our trades in April

Still hold a small position (short @ 1.5250)

May 1st, 2013 – Added to short position @1.5590 (Total Position size = 2/3, 1.5505 average)

 

EUR/JPY – Weekly close @ 129.85

Bias: Neutral

EUR/JPY – 4 Hour chart

Levels to watch at the beginning of the week:

Upside: 130.90

Range: 126.955 – 130.90

Downside: 125.015

Commentary:

EUR/JPY is trading within the 126.955 – 130.90 range.

Our bias is Neutral. We are waiting on the sidelines until the next trend develops.

It’s obvious that EUR/JPY is waiting for the resolution on USD/JPY’s ability to challenge the barrier of 100. At this point support @ 125.015 provides a good buying opportunity.

The pair is trading in a wedge pattern, and we are looking for a break one way or another.

Our EUR/JPY trades:

Click HERE for the list of our trades in April

No positions

 

 

By Poly 

Crude oil inventories skyrocketed in an announcement today and it sent crude crashing by as much as $3 at the lows of the session.  This was the largest weekly increase since September and it puts inventories at an all-time high.  The announcement was further evidence that a combination of higher supply and weaker demand is having an impact.  This is also the general theme across the commodity space, demand is weak and pricing is beginning to reflect this.  We’re all so fixated on the FED’s impact that we might not be focusing on the right (demand destruction) issue.

Whenever you receive surprising announcements like this which favor the trend of the current Cycle, you generally will end up with larger moves in the price.  My Cycle count has Crude on Week 24 and a Daily Cycle that was more than ready to roll over to form a Left Translated Cycle.  The evidence or confirmation of a LT Daily Cycle has yet to present itself, but I feel that the reaction to this news (while the Dollar was dropping) was exactly how I expected Crude to react at this stage of its Cycle.

So we will need to see if there is downside follow through tomorrow.  Another fall tomorrow would confirm the 10dma is lost and a pattern of lower highs will remain in play.  That pattern projects one deeper low to come, which obviously in my opinion will be the eventual ICL.  If we’re to form a deeper ICL, then we should look for a rapid decline down towards the $82-84 level.

Investor Cycle Trading Strategy – CRUDE OIL

Crude has reversed lower as I’ve been expecting, now its matter of seeing follow through to the downside as this Daily Cycle should form Left Translated and decline over the next few weeks.  If last week’s highs are re-tested and taken out, then it’s likely that the Investor Cycle count is incorrect; I don’t believe new Cycle highs should be made now.

This as is an excerpt from the last week’s  premium update  from the The Financial Tap, which is dedicated to helping people learn to grow into successful investors by providing cycle research on multiple markets delivered twice weekly. If you’d like to receive real time alerts as well as the most up to date reports, you may want to take their FREE 15-day trial to fully experience what they offer. Coupon code (ZEN) saves you 15%.

Related Posts:

True Test Is At Hand For Equities

Extreme Percentage Of Newsletters Short Gold

Double Top Forming In US Dollar?

What is "obvious" to those embedded in the conventional, MSM/state-manufactured worldview is not the same as what is obvious to those outside the asylum.

Longtime readers know my analytic perspective is based on what psychiatrist/author R.D. Laing called the Politics of Experience.
Survival+ 6: The Politics of Experience (April 2, 2009) Survival+ 7: Simulacrum and the Politics of Experience (April 3, 2009)
In his prescient 1972 lecture, The Obvious, Laing explained the inherent difficulty of understanding "the obvious" when a systemic madness is taken as "normal": To a considerable extent what follows is an essay in stating what I take to be obvious. It is obvious that the social world situation is endangering the future of all life on this planet. To state the obvious is to share with you what (in your view) my misconceptions might be. The obvious can be dangerous. The deluded man frequently finds his delusions so obvious that he can hardly credit the good faith of those who do not share them. We can summarize one aspect of this analysis by asking: what is "obvious" to those inside a system and what is "obvious" to those outside the system? Our experience of what is "obvious" says a lot about our cultural context and assumptions: the manufacture of our "news" and consensus, the mystification of our experience via propaganda and simulacra, what we perceive as "normal" relationships, work, goals, etc.
What is "obvious" to most participants is that the stock rally is fueled by central bank liquidity and quantitative easing, and since there is no limit in sight to these policies, there is also no limit to the stock market running higher.
It is also "obvious" that betting against this trend is an excellent way to lose money, so the number of people shorting the market dwindles with each push higher.
Equally "obvious" is the incentive to borrow money via margin to invest in the rising market: the higher it goes, the more you can borrow, and the more you borrow and plow into the market, the more you make. It is a wonderful self-reinforcing feedback loop.
Thus record-high margin debt is not a warning sign but evidence that the music is still playing, so by all means, keep on dancing:
Near-Record NYSE Margin Debt Leads to Caution (Bloomberg)
That the disconnect between the real economy and the stock market is widening is obvious, but there doesn't seem to be any intrinsic reason why it can't continue widening. As a result, many analysts are calling for a brief retrace and then another leg up to new highs. Others see a serious decline (10%+) this summer and a new high in Q4 2013 or Q1 2014.
In other words, what might be obvious to those outside the system--that all liquidity-driven bubbles end badly, usually when participants are convinced there is nothing to restrain the trend from going higher--is not at all obvious to participants and those cheering them on (the MSN, the Federal government and the Fed).
What I sense is a near-universal resignation of those attempting to call a top in the market, an acceptance that the trend is up for the foreseeable future and that trying to short this market (i.e. profit from a decline) is a fool's game.
The number of those willing to short the market, i.e. take the other side of the trade, has dwindled. Every sharp rally like last Friday's eliminates entire divisions of shorts, leaving the trade even more one-sided.
Yes, the market is manipulated and totally dependent on central bank QE, liquidity and outright buying of stocks and bonds. But the market is not as stable as presumed, and one-sided trades tend to capsize when everyone who feels safe being on one side of the boat least expects it.
Every trader wants to short the market after it becomes obvious the trend has reversed. But since there are so few shorts left, the decline (should one ever be allowed to happen) might not be orderly enough for everyone to pile on board. More likely, the train will leave with few on board and the initial drop will leave everyone who was convinced the uptrend was permanent standing shell-shocked on the platform with margin calls in hand.
When it is obvious the trend has reversed, it will be too late to profit from it.
The conclusion? What is "obvious" to those embedded in the conventional, MSM/state-manufactured worldview is not the same as what is obvious to those outside the asylum. 

Things are falling apart--that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify or understand. We will cover the five core reasons why things are falling apart:

1. Debt and financialization
2. Crony capitalism and the elimination of accountability
3. Diminishing returns
4. Centralization
5. Technological, financial and demographic changes in our economyComplex systems weakened by diminishing returns collapse under their own weight and are replaced by systems that are simpler, faster and affordable. If we cling to the old ways, our system will disintegrate. If we want sustainable prosperity rather than collapse, we must embrace a new model that is Decentralized, Adaptive, Transparent and Accountable (DATA).
We are not powerless. Not accepting responsibility and being powerless are two sides of the same coin: once we accept responsibility, we become powerful.

Kindle edition: $9.95       print edition: $24 on Amazon.com
To receive a 20% discount on the print edition: $19.20 (retail $24), follow the link, open a Createspace account and enter discount code SJRGPLAB. (This is the only way I can offer a discount.)



Thank you, Christopher L. ($50), for your monumentally generous contribution to this site -- I am greatly honored by your steadfast support and readership.Thank you, Steven B. ($10/month), for your astoundingly generous subscription to this site -- I am greatly honored by your support and readership.
google_ad_client = "ca-pub-6006126731309477"; /* new300X250 */ google_ad_slot = "5310346840"; google_ad_width = 300; google_ad_height = 250; Go to my main site at www.oftwominds.com/blog.html for the full posts and archives.

By Chris Ebert

For more than a year now, I have posted periodic updates on the performance of several option trading strategies here at zentrader. These updates were intended to give traders an edge in the market, not only by showing which option strategies are currently profitable and which should be avoided, but how the options themselves can help predict future trends in the stock market.

Stocks and Options at a Glance

Beginning next week, I will begin publishing a brand new, re-designed series of option updates. The most exciting change in the new updates will be a new chart entitled “Stocks and Options at a Glance”. As the name implies, this new chart will allow readers to view the current state of the stock market as well as the performance of nearly every common option strategy, in a single glance.

In-depth analysis will continue as usual, so readers will continue to enjoy all of the coverage on performance and trends of all the different option strategies, and the implications those trends have for the stock market. The new chart will simply provide a quick and easy alternative

Click on chart to enlarge

3 Simple Categories Cover Most Common Option Strategies

A new, simplified analysis will break down all option strategies into
just 3 categories (A, B or C), based on the current trend in the S&P 500 index. When A+ trades are profitable, A- trades experience losses, and vice versa. The same is true for categories B and C. The chart will show which trades are profitable each week. For example, A+ B- C- on the chart means Covered Calls, Naked Calls and Short Straddles are currently profitable.

Category A:

• (+) Covered Calls
• (+) Naked Puts
• (-) Long Puts
• (-) Married Calls

Category B:

• (+) Long Calls
• (+) Married Puts
• (-) Naked Calls
• (-) Covered Puts

Category C:

• (+) Long Straddles
• (+) Long Strangles
• (-)  Short Straddles
• (-) Short Strangles

Suitable for Use with Elliott Wave Analysis

The new chart is also intended to be useful for traders who use Elliott Wave analysis. While not entirely the same as Elliott Waves, the options analysis uses a “textbook” wave consisting of stages 0 through 9 for a bear market and stages 0 through 5 for a bull market.

Since stages 0 through 4 are identical in either a bear or bull market, stage 5 becomes an important decision point. In a bear market, stage 5 usually confirms the bearish trend but also has the ability to mark the end of what was merely a correction in a broader up-trend. In a bull market, stage 5 usually entails a resumption of the uptrend but occasionally marks the beginning of a bear market.

A bull market will continue to repeat stages 0 through 5 indefinitely, until at some point stage 5 fails to materialize, at which time the market will be in stage 5 of a bear market. On the other hand, a bear market almost never continues past stage 9. Once implied volatility has increased to such a high level that Covered Call trading can profit, even during the worst of downturns, a bear market is almost always on its way out.

Just a note to readers: Performance of all option strategies shown is based on at-the-money trades opened 4 months (112 days) prior to expiration and closed on expiration day, using an ETF that closely tracks the S&P 500 index, such as SPDR S&P 500 ETF Trust (NYSEARCA:SPY). Savvy option traders may obtain better results with out-of-the-money or in-the-money options or with different expiration dates. ATM options with 112 days to expiration are only a benchmark. Many individual stocks tend to experience similar options performance to this benchmark, except when individual events cause such stocks to loose correlation with the S&P.

Share Your Thoughts

Comments and constructive criticism are always welcome. Enter them in the comment box below, or send them to OptionScientist@zentrader.ca

The preceding is a post by Christopher Ebert, who uses his engineering background to mix and match options as a means of preserving portfolio wealth while outpacing inflation. He studies options daily, trades options almost exclusively, and enjoys sharing his experiences. He recently co-published the book “Show Me Your Options!”

Related Options Posts:

Lottery Fever Infects Stocks And Options

Market’s Thermostat Ain’t Broken – So Says LSSI

Option Indices Don’t Just React, They Predict

The main wave count from last analysis expected further upwards movement towards a target at 1,619. Price moved higher to 1,618.44 for Friday’s session. The alternate hourly wave count had expected downwards movement for Friday. Although this wave count is not technically invalidated it has entirely the wrong look now and will be discarded. The [...]

Movement above 14,768.05 indicated a correction was over and a third wave upwards should have begun. However, choppy overlapping movement for the early part of the week was not a third wave. The third wave arrived on Wednesday.