Morning Update: January 17, 2014

Friday Jan 17, 2014

Monday is Second Session

1-(855)–RWT-0008

After having just killed his uncle by feeding him for 30 minutes to a pack of hungry dogs, and celebrating by having Dennis Rodman and the all senior citizen has-been basketball team perform for him, Kim Jung UN-stable is feeling empowered and making more threats at South Korea and the US.

Anyone else miss his dad, The Asian Elvis impersonator? 

NOTE: Maui ’14 people and POT people will receive separate updates.

Dow Closed down 64.93 at 16,417.01

AAPL down 3.11 at 554.25. 

The VIX closed up 0.25 at 12.53. 

The TLT closed up 0.70 at 105.04. 

GLD = 119.79 up 0.13

SLV = 19.35down 0.05. 

170.97 up 6.84. 

Yesterday

A quiet day in the markets despite it being down. The Dow was down about 100 points at the lows, and hung out in a tight range of down about 70 all day. I can’t believe we may be entering a period of 2 sided markets without a major correction first. And no, Monday’s drop of 179 points was not a major correction. 

Today

Um….higher?

Don’t know. As you know I have been saying for a while that things are going to be harder to predict after the new year.

Also, everyone expects the markets to move big one way or the other at the start of the New Year, but most of the time it is not until the 3^rd or 4^th week until the markets start moving in a big way. Below are the graphs of the SPX cash over the last 4 January months. Only in 2010 did we have a down move of any significance. 

In short, who can look at these four years and make any predictions of this year? We have a very divided government, a new Fed chairman, coming off a +30% year, tapering starting, etc. Yet with all that it is still an unknown.

Despite Rocco thinking (no matter how hard we try to convince him otherwise) that we try to make prediction and directional bets, Random Walk is named this way for a reason. We have no idea where the market will be at any given day, including tomorrow.

Sometimes the markets undergo certain phenomenon that we can’t explain, such as large trends. Sometimes it is easy to say that the market will bounce because any unknown scares people, but once the unknown is over the markets celebrate. Once in a while it is easy to predict that markets will close on the highs for the year because you know the major funds are not allocating enough capital, and you know how funds are set up. Yes, in these circumstances one can make a fairly good guess at market direction, which I got lucky with from June or July.

Most of the time I have NO IDEA where the markets will move. That is why an option trader benefits from options having 5 variables that can be utilized instead of just market direction (delta). So today….? I have no idea, but it is expiration so I am going to say higher (the coin landed on heads).

PLEA

Please tell someone you know that they do not have to be a victim in the government created stock market bubble. I don’t care where they learn to hedge from. Send them somewhere else if you like. Buy them our BASICS book for Christmas. Buy them someone else book But help a friend out. 

Attorney Stuff

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