On audio in the optionmillionaires chat room, for the last few weeks I've noted the wild price action. A few trading days last week felt like there were a good 4 or 5 days worth of action wrapped into one trading session. Today's action, from the opening dip, 20 minute face rip, and late day swoom had no fewer than 12 individual trading sessions wrapped into one.
Take a look at this great chart from Mikey, the man behind that raspy secutive voice in the chat room, and a tremendous call on being long WAG all year.
We've been seeing a lot of this action recently. I have also noted that holding anything overnight is very risky. Tomorrow stock futures could be 3% higher or 3% lower and in either case I would not be one bit surprise. I like that stock prices are moving rapidly. We are even getting big names like $AAPL and $HD to tumble. Some of the momentum stocks like $NFLX have plunged below long term support. It's starting to get real ugly out there.
The excessive price movements highlight the uncertainty out there. The rapid decent in the price of oil has opened up a Pandoras box. We have the Russian economy and its currency in crisis. Are some funds, banks, bonds, and corporations going to go belly up from bad bets on oil? Will this start a wave of defaults and bankruptcies?
Or perhaps the price of oil will stabilize, stocks will recover, and we are looking at another tremendous buying opportunity for the stock market?
I'm not so sure. I do know that stocks are trading under the Abenomics trendline that has offered support for over 2 years. I do know that volatility is starting to spike with wild price swings in the major indices. More often than not wild price swings is bearish for the market, especially since the rips are getting sold. The market can't hold gains these days. It used to be the other way around. Buy the dip is now sell the rip, and as much as I fear a big spike higher out of no where, much like we saw this morning, the money... at least short term will be made trading for lower prices.
Some recent trades highlighted on the blog and in private twitter have done very well:
$AAPL was at $114 when I penned this piece. The puts are now up over 400%
$HD $100 puts are up over 200%
$CAT puts turned in 2,000% and 600% gains.
Let's see what tomorrow brings. Odds are we will see more wild swings and continued uncertainty.