Daily Issues

Short-Side Opportunities Abound

February 9, 2016

Stocks languished for most of the session, finally closing slightly higher despite concerns over global growth and the broad weakness in financial institutions here and abroad. A steep overnight decline in the Nikkei, backlash against negative rate policies, and International Energy Agency skepticism about crude oil production cuts have also been in focus.

The reasons above are enough to support that stocks will falter in the near term, and I have three new short trades to capitalize on the weakness. That said, I have some long ideas that could buck the trend, and I may send them as soon as tomorrow morning if the market finds some traction in the early going.

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Institutional Money Continues to Sell at Any Opportunity

February 8, 2016

Stocks began today's session in liquidation mode, and the selling pressure was unrelenting until the final hour, when a modest rebound erased part of the sting.

Don't be fooled, however. That rebound was tepid, half-hearted and anemic at best. Professional money managers are selling everything that isn't nailed down.

There was no single driver of the sell-off. However, a ramp in credit concerns received a lot of attention. Some of the other usual suspects, such as concerns about monetary policy divergence between countries, the oil rout, a sluggish earnings backdrop and the risks of China exporting deflation, were blamed. Fairly, to be sure, but no single event triggered the hurricane of selling.

In today's Trader's Advantage, I'll share my expectations for where we'll go from here, as well as my latest recommendations for our trades, including the two options we just added in afternoon trading.

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The Line in the Sand

February 5, 2016

Investors were like Keystone Kops the past month: running around in circles, tripping over each other, bopping each other on the head and then running away. It's one of the most juvenile market environments ever – but, at the same time, one of the most deadly serious.

Today, the market drew a line in the sand when the S&P 500 came back to the 1,875 level again and lightly bounced. Based on recent history, from here, expect a robust rebound. But if one doesn't come, we're likely looking at a meltdown.

The seismic swings have made stop-losses tough, and we lost two trades today in the shuffle. But today's action provides one of two possibilities for the market's next move, and there should be a clear sense of which way to turn as soon as Monday. I talk about that in more detail in my latest podcast, so be sure to listen before reviewing our trades.

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Which of the following sectors of the market do you think will outperform for the balance of 2015?

  • Utilities
  • Energy
  • Healthcare
  • Technology
  • Financials
  • Industrials