Option Queen Letter By the Option Royals Jeanette Young , CFP ® , CFTe, CMT, M.S. and Jordan Young, CMT 4305 Pointe Gate Drive Livingston, New Jersey 07039 www.OptnQueen.com [email protected]September 4, 2016 Hurricane Hermine is ripping up the east coast of the United States, leaving power outages in its wake. We look forward to a much needed break from Hillary and “ The Donald. ” For the first time in what seems an eternity, both candidates will hopefully take a back seat. This election season has been one of the dirtiest, nastiest, and valueless seen in modern history. We must remind our readership that no matter who wins, and unfortunately one of these two will win, what they promise will have about as much chance of happening as palm trees growing in the dark cold permafrost of Barrow Alaska next year. We are in the last quarter of the year and you know what that means! Get ready for:: the September sell-off, October crash-a-phobia, November Presidential Election, and finally December tax selling season. While this doesn ’ t sound great for the bulls, much of this is seasonal and as such will pass.. Money is flowing to the USA from abroad because we actually have companies that pay decent dividends and bonds that pay interest rather than charging the investor to park their money. Another piece of support for the market is that baby boomers are retiring and cannot live on the paltry interest rates seen on government bonds and are subsequently looking for dividend paying equities as investment to pay their bills. The only rub is that equities move both up and down and may or may not keep their value while bonds fluctuate in value but eventually pay off at full value when due or called. Seniors have less time to recoup any losses simply because the clock is running on their time horizon. The S&P 500 broke out of its trading range on July 8 th and after a sprint to 2141.50 has been in a tight trading range from 2141.50 to 2191.25. The market rallied 12 handles (points) in the Friday session. The Bollinger Bands have been in a contracted state since August 8 th and at this time are even tighter. We believe that this state of range bound dull trading will continue until we start to see the Bollinger Bands begin to expand. This is awful news for option seller insomuch as the premiums received for sales of options are cheap. That said, these cheap options just might be good buys. Both the stochastic indicator and the RSI are pointing to the upside with plenty of room to move. Our own indicator is still issuing a sell-signal but the momentum is flat. The most frequently traded price was 2178-2178.50-2179. When looking at the Market Profile daily chart, which shows the actual trading for each day, you can clearly see the congestion in the trading range. The market seems to be having trouble getting through
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Option Queen Letter By the Option Royals
Jeanette Young, CFP®, CFTe, CMT, M.S. and Jordan Young, CMT