Rumor has it U.S. Treasury Secretary Mnuchin wants a stable Dollar and that protecting its status as a reserve currency allegedly is the goal of the Trump administration. Unfortunately it appears that Mr. Mnuchin’s definition of ‘stable’ differs significantly from mine as the DXY has effectively entered a state of freefall over the past week.
While the SPX has been retesting overhead resistance big tech (e.g. MSFT, AAPL, AMZN, GOOGL, FB) continues to linger near recent support levels. That’s a bit surprising given that the NDX immediately surged higher on Tuesday. Whether or not we are looking at sector rotation again, this retest offers us a short term entry opportunity with very defined risk. Just the way we like it.
After two chaotic first quarters which bucked all historical and seasonal trends the third quarter thus far appears to be unfolding exactly per the script, thus offering us an almost eery silence before the anticipated fourth quarter sh…storm. From a financial blogging perspective it’s a bit frustrating, however I can’t help but enjoy every little bit of tranquility I can get even if it’s just temporary. Not sure about you guys but after six months of global pandemonium my adrenals are shot.
Summer earnings season is my least favorite by far due to muted volatility across the board. However with a bit of skill, finesse, and duct tape we ought to be able to squeeze a few R out of this one by focusing solely on IV outliers. Before we get to this week’s goodies let me be crystal clear that the one and only way to play earnings is via options – period. So if you do not currently have an options trading account then I recommend you open one with either ThinkOrSwim or TastyTrade.
As anticipated equities have been running in circles this week and barring a major market moving event we most likely will close inside the weekly expected range. With the meat of the summer season still ahead of us the immediate implication for traders is that directional strategies will suffer – unless of course you keep betting on big tech.
I will be at the hospital early Wednesday to get poked with needles, so I’m posting this ahead of time to keep my hardcore crew entertained. Unfortunately there’s really not too much to add to Monday’s post at this time. As expected we are seeing a lot of gyrations but without any sense of direction. Is that about to change anytime soon? Probably not.
Independence Day marks the onset of the summer vacation season, although to a much lesser extent in 2020 due to global travel restrictions. While I’m stuck in the sweltering heat of Spain Tony managed to plot his escape from Chicago to some camping ground near Kern River, CA. I have very nice memories visiting there and one of the main advantages is that Sequoia National Park with its higher elevations and cooler temperatures is only three hours away.
I rarely hazard lofty predictions as most attempts in foretelling the future usually end in tears followed by monetary losses. But having been around the block a few times I do pride myself in recognizing a glaring bear trap when I see one. Which is why I offered this to my intrepid subscribers last Monday:
If you had asked me a few years ago which week of the year would be the highest grossing statistically speaking I would most likely have pointed at late November or December. Well, close – but no cigar. After running the stats I was amazed to realize that the biggest winning week happens to follow one of the quietest of the year during – right during the height of the summer vacation season. What gives?
Thus far week #26 has played out exactly true to form in that it has remained flat as a pancake with a bit of obligatory but listless whipsaw in both directions. If we take a step back and look at the bigger picture it’s also not overly surprising to see things slowing down a bit after a two month long face ripping short squeeze that ended up demoralizing even the staunchest of beartards.