Futures are green and the Vix is red here with 45 minutes to go to to open. We knew about the possible Moodys downgrade for months now, so to think it was one of the causes for the large sell off yesterday is interesting. Either way, yesterdays action seemed different then any of the sell-offs in may. Still somewhat a short term bull, but starting to question that sentiment. (SUBSCRIBERS ONLY)
Yesterday was a volatile day, with big swings after the fed decision to extend Operation Twist until the end of the year. Figured the USD would get weaker, but it had held its ground, causing a sell off in Silver, Gold, and exacerbating the sell off in OIL. The VIX was down big even on the high volatility, meaning FEAR is leaving the market.
The fact that we are holding ground here is a also good sign IMHO – Just need some duct tape news from eurozone, and we can resume the bull run!
Some stocks to watch today:
Futures have been slightly green to flat pre-market. The currency market has been the 'tell' as of late, with risk currencies leading the charge.
Did the title to this blog post get your attention? I hope it did. Fear is a powerful emotion that can cause irrational decisions by typically normal folks.
Fear is a distressing negative sensation induced by a perceived threat. It is a basic survival mechanism occurring in response to a specific stimulus, such as pain or the threat of danger.
The market in May was definitely "distressing" to say the least. Its lacked the violent swings of 2011, but sure inspired retail investors to sit on the sidelines. It also encouraged money managers to put funds in low risk asset classes. We are only a few years removed from one of the great financial collapses in recent history, so it didn't take much to instill fear back into the market.
It tends to be moments like these that traders can find a bottom. Just when it looks like the rug is being pulled out and when folks are giving up and succumbing to the suppressing negativity.
Thats when we posted about our "LINE IN THE SAND" on the SPY. Since then, the market is up 8%. Now you will start hearing we moved up on "OVERSOLD" conditions and we are now OVERBOUGHT...
How can a retail trader succeed in such a volatile environment when opinions change like a 3 months olds diaper? Thats easy... follow OptionMillionaires.com (cheesy plug).
We have been a short term bull for some time and pointed out the run in growths stocks from Monday. The market was red, but we thought stocks like LinkedIn (LNKD), Priceline.com (PCLN), and Intuitive Surigical (ISRG) were market leaders and indicated a move higher short term.
Well looks like our thesis proved correct... for now at least. We truly expect some type of move from the FED on wednesday to extend the twist three more months till September. Odd since thats when we think we can start playing puts!
The market has been pricing in a Black Swan event for weeks now. We are pricing in a $GREEN EVENT. What is that? Well thats when all the folks start scrambling into equities for the FEAR of missing out on a rally past the 4 year highs hit in April.
Fear is a powerful emotion, and it will be the catalyst for a ramp higher in the next few weeks. FEAR of not making money, can be stronger then the FEAR of losing money.
We are betting on that and the FED to bring us our $GREEN EVENT. I guess time will tell, but it seems to be working out great so far. More to come tomorrow!!!
Hopefully as the 'sheep' retail traders/investors were changing the channel from CNBC during the last two weeks market ramp, they came upon a classic Seinfeld episode entitled "the Bizzaro Jerry", where everything was the polar opposite... Up was down, right was left, and wrong was right. We wrote many times over the past week about the impending short-term bull market. How folks would be forced into equities, and big money would be bidding stocks up on the impending intervention from Central Banks. Watching T.V. and reading newspaper headlines was a sure way to get your trades going the wrong way. There were firms that actually recommended their clients to be out of the market into the weekend! That was not the case here at Optionmillionaires.com.
Call us what you want, but we are short term bullish. "The Bizzaro Jerry". We have bucked the trend since December when everyone was calling for a downturn. We held strong in May, when folks spoke of headwinds for the U.S. Economy, a Eurozone in disaster mode, and a China economy slowing down.
Even today when the market was all about Spanish 10 year yield breaking and holding above 7%, and how that will be devastating for Spain, we were still bullish with the red open. Todays move in market leading growth stocks like Intuitive Surgical, Inc (ISRG), LinkedIN (LNKD), and Priceline.com (PCLN) give credence to a possible market rally. We spoke of 127.75-127.90 as a 'line in the sand' on the SPY and continue to think we move higher here through the summer. Before you blink your eyes the market will be over the 4 years highs we touched in May. This market can be irrational, and trying to fight it, will only get your frustrated.
Stay tuned tomorrow for our watchlist, and make sure your in chat for some more calls like LinkedIn (LNKD) $110 calls from .30 to $1.