Tuesday
September 22, 2015
1-855-RWT-0008
Sept 30th is the expected government shutdown
Yesterday and Today
Yesterday
The day started out very strong with the Dow climbing 170 points only to have the rally fail after comments coming out that the Fed almost raised rates, and will likely do so in October. Trick or Treat?
Hillary Clinton was doing her share to bring down the market, specifically in the bio-tech area. Mrs. Clinton cited the high cost of meds and how (if elected) she was going to bring the prices down.
Meanwhile the bond market got smashed with the Fed talk, with the TLT falling 1.99 points. This kind of move obviously has an effect on currencies as well. When the rest of the world is lowering rates, a rise in our rates will mean money coming into our bond market. This had the US dollar surge against the EURO.
By the end of the day the market ran right back up near the highs for the day with the Dow up 125 and the SPX up 8.94.
TODAY
Volatile oil markets, a falling bond market fears of rising interest rates and the impending government shutdown will be a difficult thing to shrug off for the markets. We saw that yesterday where every tid-bit of news wiped out the gains for the day, and it took fighting to work its way back up hill.
But it did keep fighting up. I suspect we will be climbing slowly with rapid pullbacks until the moment a deal is struck in DC on the budget. Then is will be a blast off to the upside as traders feel that the worst is behind them. Yes, they are aware the Fed is going to raise rates, but they can live with that.
OPTION TRADERS
The VIX fell to 20.14% yesterday on a slow and steady path back to its mean. The only thing that seems likely to disrupt it now is the government shutdown rumors that are sure to commence shortly.
Last Thursday before the Fed released its minutes we sold out of 20 contracts of a $4 wide put spread and bought 10 contracts of a $5 wide call spread. Later that day, after the Fed announced, the TLT was up dramatically and we turned the long call spread into a long call condor for free. The next day the market was up again, and we bought back the put spreads sold. With the TLT down almost $2 yesterday the position did fantastic.
LESSON
I missed the highs in the TLT with the sale of the long call spread. I spread it off a day too early. With the put spread I sold, I did about as good of a job as anyone could have, but I missed the best spot to buy them back by $0.20 (or so) in the TLT. So in the end it was a good and mediocre trade. But we did save $1400 on the put spreads and we got on a call condor for free. It shows that you don’t have to buy bottoms or tops to do well.
We also started to do a Random Walker in October. More details in your update.
POT is held each Wednesday night at 7:00pm eastern.
Contract the office at 1- 855 ā RWT ā 0008 for more details.
Too True To Be Funny
I will leave this empty for the day and let Donald Trump fill it in.
Attorney Stuff
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