Options Alert Pro's staff has experienced first hand how some financial news services simply provide a trade idea but never provide any commentary on why they made the suggested trade.  Options Alert PROTM doesn’t  think that instills much confidence – i.e. to tell someone here’s the recommended trade go do it! Therefore, this blog will provide information on why we have made the recommendations we have. 

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Our goal is to post that information as well as market moving news and what to be aware of in the markets.  Our first priority will be to get you the trade and then follow up with why we made the recommendation here within 24 hours.  Sometimes we are too busy and need the evening to catch up. We hope that you will find the information useful and one that distinguishes Options Alert PRO from other services.

TM

Markets Grind Higher

21 July 2016

Markets have had a record streak of up days until today and we saw a little pullback.  Just yesterday we saw the seventh straight day of gains.  New stock market highs are being supported by low interest rates and the belief that the Fed will not hike rates this year.   Aggregate earnings so far in the second quarter have shown a 4.4% decline in profits year-over-year, marking a fourth straight quarter of weaker earnings, according to S&P Global Market Intelligence.  This streak up has been on low summer volume.  We expect a significant pull back to occur.  The International Monetary Fund (IMF) today made an “urgent” call for the world’s largest economies to roll out more growth-boosting policies. Further the IMF asked the Group of 20 largest economies to prepare contingency plans in case of a further downturn.

New Record High on the S&P

11 July 2016

We were able to return 29%+ on our most recent alert on the SPY! Congratualtions to all that participated. The S&P closed at above its previous all-time closing high at 2130.82 with this continued rally after the BREXIT happened.  Participants remained upbeat following a headline beat in Friday's Employment Situation Report for June and in Japan, Prime Minister Shinzo Abe's LDP won a supermajority, paving the way to an easier approval process of potential future stimulus measures. This event helped to push the markets higher as well. The Nasdaq Composite (+0.6%) finished ahead of the Dow Jones Industrial Average (+0.4%) and the S&P 500 (+0.3%). “The record today is a reasonable response to the fact that the world looks a little better than it did a week ago,” said Russ Koesterich, head of asset allocation for BlackRock’s Global Allocation Fund. “But the ability to move higher going forward is going to come down to a better economy and stronger earnings growth.”  Analysts and investors said maintaining these heights will require signs of improvement in earnings, with companies including BlackRock, J.P. Morgan and Wells Fargo scheduled to report this week.  “Ultralow rates are just driving the stock market,” said Bruce Bittles, chief investment strategist at Robert W. Baird. “I’ve been doing this for a long time and I’ve never been in an environment like this.” As of June 30, analysts expected corporate profits to fall 5.3% in the second quarter compared with the prior year, a fifth consecutive quarter of contraction, FactSet data show.

Rollercoaster - One Ticket Unlimited Rides

2 July 2016

As we predicted BREXIT happened and the markets collapsed for a couple days just to recover over the next few and now we are back to where we were before BREXIT! What a roller coaster ride.  There is no denying that the market experienced an amazing rally this past week.  The question is whether this rally will persist now that price is reaching strong overhead resistance once again. We are voting no.  We look to be locked in a trading range that appears to have no end insight.  We do not see any reason for a breakout in the market we think there is a higher likelihood of a breakdown between now and October.  Why would we take this position over a breakout? We have a global low growth economic outlook.  While earnings this past quarter were reasonable, many companies were pointing towards headwinds. The Fed keeps the market guessing – they are falling flat on their faces at unity and leadership in this market it is the worst led Fed in history!  Markets are also still trading with oil. If you watch oil then you can see the direction of the markets. As we stated in our last posting, we plan to start issuing more alerts with short-term gains of about 20%.

Banks are Doomed This Year – Volatility Continues

26 June 2016

BREXIT equates to no rate hikes by the Fed this year, which equates to banks being doomed for the remainder of the year. With no rate hike the banks, which were looking as thought they may be a favorable investment three or more months ago, now look to be sidelined and out of the game. Our prediction for months, if you look back at our old posting, has been continued volatility in a market that is locked in a trading range. We find this to be even more true now. With the Brits leaving the EU uncertainty abounds globally and volatility in the markets shall continue if not accelerate! There will be excellent opportunities along the way and we are planning to increase alerts, as technical indicators dictate, to take advantage of multiple moves on the SPY in a tighter trading range. Our plan is to produce eight or more alerts per month, each with a minimum gain of 20% for a total return of 160% plus per month.  In addition, we will continue to keep an eye out for special opportunities, as we always have, such as we did recently with EEM returning 66%. We will be publishing our Q2 results sometime in July.

BREXIT – Should I Stay or Sould I Go?

23 June 2016

As I write this there is only 15 minutes left to vote in the U.K. on the decision to remain in the EU or leave.  I listened to the former Mayor of London and he made very good points on leaving to include they’ve lost their sovereignty as a result of being part of the EU and they are also incurring financial strain when the have to support and bailout the PIGS (Portugal, Italy, Greece and Spain). He also made an excellent point concerning President Obama wanting the U.K. to remain, which is would the U.S. agree to a joint currency with Mexico and Canada and to be controlled by other nations?  Of course, the answer is no! The world should know sometime on Friday what the outcome will be.  The $VIX (volatility index) sold off today and the markets popped in anticipation that the U.K. will stay in the EU.  But in the afternoon today, the reports I heard stated that the vote to leave was ahead.  As the saying goes, we will not know until the fat lady sings.  If the vote is to leave I would expect the $VIX to spike and the SPY to drop.  

Market Moving Events

14 June 2016

Markets are being pulled in many directions. The fear of what will happen if the United Kingdom exits the Euro is kindling fear. Additionally, there are a number of events this week that will move markets to include release of Retail Sales numbers today at 0830, the FOMC meeting and its release of its decisions on Wednesday. PPI, Yellen press conference on Wednesday, as well as CPI and Philadelphia Fed Business Outlook on Thursday and closing the week Friday with Housing Starts. Oil is still moving the market as well. The WTI ended the day lower by 0.4% ($48.88/bbl; -$0.18). The S&P 500 (-0.8%) ebbed lower through afternoon trade, breaking support at the 2084. The tech sector (-0.9%) underperformed Apple (AAPL) declined by 1.5%. Microsoft (MSFT) finished lower by 2.6% after announcing that it would acquire LinkedIn (LNKD) for $196 per share. The Dow Jones Transportation Average (-1.1%) ended behind the broader market as weakness in airlines pressured the index and the broader industrial sector (-1.1%). The U.S. Global Jets ETF (JETS) ended lower by 3.0%. On the flipside, The CBOE Volatility Index (VIX) jumped 23.3%.

Markets Moving Up on Oil and No Rate Hike

6 June 2016

Markets boosted today by oil prices nearing $50 a barrel and also the theory that after the terrible jobs numbers this past Friday that interest rates will remain in place with no hike this month. Ms. Yellen stated in prepared remarks that she remains positive on the economic outlook of the U.S. economy and warned that too much significance should not be assigned to one monthly report.  Ms. Yellen stated that last Friday's Employment Situation Report was concerning. She provided no hint of a near term rate hike but maintained that further gradual increases in the federal funds rate are likely to be appropriate. Today the Dow Jones Industrial Average (+0.6%) ended ahead of the Nasdaq Composite (+0.5%) and the S&P 500 (+0.5%).

No Discrimination Here

29 May 2016

“The regional and global class system that exists in almost every other arena is nearly non-existent in the trading arena.  The markets embrace you regardless of your color, creed or religion.  All are welcome. All are treated equally.  The only thing the markets demand is that you honestly care about the trade and follow clearly established protocols.” – Gatis Roze.   Nothing is more true. No one sees what you look like, where you live, what religion you are, you are only an account number placing trades in the ether.  It is a scary place and Bankrate.com states that in 2002, 33% of Americans were not involved in the stock market. Today that percentage has grown to 52%.  People are making a bug mistake by not investing, especially younger people. They are missing out on one of the greatest opportunities in the world— investing in the growth and innovation of the world’s biggest, most dynamic, most creative economy.  America is innovative. The world comes here for the capitalist ventures and the opportunity of wealth no available anywhere else in the world.  Long-term, the economy grows and stocks along with it. GDP is at very low lows and no where to go from here but up.  For the long term investor Warren Buffet’s methodology is going to work and now is the time to be all in.

Market Continues Sideways

23 May 2016

As we have reported the S&P is locked in a range running between 1,810 and 2,134 since February 2014 – over 2 years now!  The S&P hit its high of 2,134 on May 20, 2015 and more recently a low of 1,810 on February 11, 2016.  In the last 3 months the S&P ETF, the SPY, has been running between 180.16 (Feb 11th) to 210.92 (April 20th).  We expect this volatility and being locked in a range to continue for the remainder of the year.  The minutes from the Fed's April meeting revealed policymakers intend to raise interest rates as soon as June if second-quarter economic growth picks up, labor market improvement continues, and inflation remains on track to hit the Fed's 2-percent target.  Eric Rosengren, the president of the Federal Reserve Bank of Boston, told the Financial Times that financial and economic indicators swung positive after the Fed’s policy meeting in March. This means that a Fed rate hike is highly likely.  Until last week markets were putting extremely low odds on a summer rate hike. A rate hike will have a negative effect on the markets.  This week we also see the GDP release Friday at 0830 and it is not expected to be good. There is also ongoing global geopolitical concerns with continuing concerns over China’s claims to the South China Sea. It is critical that the U.S. “not to interfere in China's internal affairs," said Li Zhaoxing, who served as China's ambassador to the United States from 1998 to 2001.  Li's remarks came as tensions rise between China and the U.S. over the South China Sea.  Therefore, we see the SPY range to continue between 190 to 210 – be alert.

 

What is real? Not much but OptikOptions is real!

15 May 2016

We have subscribed to many trading alert services. Once we recently looked into sends out and alert then it waits for the very highest return on that option and it published that return, which if never bought or traded, as its performance! If we did this we would hardly ever have a bad return and many would certainly be over 100%.  But we don’t deal in fiction.  Recently, MarketWatch.com published an article online calling out CNBC’s Jim Cramer as a fraud. The article stated in part, “CNBC TV personality and “Mad Money” host Jim Cramer has built a lucrative career as a stock picker, but a new analysis of his charitable fund—a personal stock portfolio he co-manages that the financial website he founded has built a subscription service upon—shows he doesn’t beat the market. Cramer’s Action Alerts Plus portfolio has underperformed the S&P 500 index” total cumulative returns since its 2001 inception, according to a paper released by Jonathan Hartley and Matthew Olson, researchers from the Wharton School at the University of Pennsylvania.  We did not have this data but we have known that the talking heads on TV are 90% entertainment.  If they could pick great plays in the market consistently they would not be on TV they’d be on their private island while their PTF made money for them.  Teddy Roosevelt summed it up about the talking heads on TV (and he was not aware he was) when he said: “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again.”

The Week Ahead       

8 May 2016

Last week the S&P opened the week at 2,067 and ended the week down 10 points at 2,047. The jobs number Friday was well below expectations and initially drove the markets down. But what is this market all about? What drives it? There are two predominate factors that have been at play for months in this market. First, is the price of oil. We have seen the market following oil almost in 100% lockstep and it pretty much continued this track last week. UWTI (Velocity Shares 3x Long Crude Oil ETN) started the week at $31.60 and closed down at $29.11 – so the S&P followed oil. The other factor is the cost of money – i.e. interest rates. The initial kneejerk reaction Friday was that the job number was bad so the market dropped. However, right now bad numbers are also good numbers because they inhibit Janet Yellen and the Fed from raising interest rates. Keeping money cheap keeps the markets up as it allows continued investment and the leveraging of debt at historically low rates - a win-win for corporate America! Therefore, continued low rates equate to an undervalued market that cautiously moves the markets up ever so slowly. We expect continued volatility this year and next as GDP worldwide continue to erode. We will continue to spot great opportunities and take advantage of those opportunities.

Markets Overbought

30 April 2016

The stock market ended the week on a lower note as the major averages surrendered to month-end selling pressure. This coming week there are a number of economic reports that could potentially move the markets. Monday is the ISM Manufacturing Index, Tuesday Motor Vehicle Sales, Wednesday International Trade, Friday the Employment Report.  Markets have been propped up by oil prices.  But Friday the Dow Jones industrial average gave up 57.12 points 17,773.64. It was down as much as 178 points at one time Friday. The S&P 500 index fell 10.51 points to 2,065.30 and the Nasdaq composite index lost 29.93 points to 4,775.36. That was its seventh decline in a row.

It’s Back – Oil Moving the Markets

24 April 2016

We had indications that the markets had separated from oil but that does not seem the case given that the past two weeks markets continue to rise as oil moves up.  This week may be different however because of key economic indicators being released that the market will not be able to ignore regardless of the price of oil. The number one indicator will be the release of the GDP at 0830 Thursday. We are expecting a very weak number and think it will bring the markets down. In addition, Monday at 1000 we have New Home Sales, Tuesday at 0830 Durable Goods Orders and Friday Personal Income and Outlays.  The technical indicators are still showing an over bought market. The exact timing of when this bubble will burst is unknown but this week looks to be key.

2117 Means Real Rally?

19 April 2016

We are watching the technical on the S&P 500 Large Cap Index and for many months, as we have reported, it’s been locked in a range.  The markets are pushing and may punch through the range.  Why?  We have no idea there is no real reason and we have to guess it is just mass hysteria or hedge funds pushing it up to make a fortune on shorting.  If we the S&P moves to 2117 or higher then we see a true longer term bull rally.  We have been expecting a pullback for days now.  We thought it would happen when the oil deal in Doha fell apart and we saw a momentary drop in the market yesterday only to witness a very strong recovery.  Right now we are holding our positions and may add to our September VXX.  We think this is a sure bet with plenty of time to make the numbers. That said our SPY puts that expire this Friday may be in jeopardy absent a correction starting before the close Wednesday.