Boy I hate being out of the office for any extended period but I know the folks reading this column know what they’re doing and know what to look for. Can you imagine being a total noob to investing trying to work in this awful trading environment? For those folks reading this in the latter category – here’s a synopsis of what’s going on in the market.
IT SUCKS. The economy. Jobs. The stock market. That’s the bottom line. There really is nothing holding this stock market together. At the end of the day (on many down days) there is intervention going on (whatever the source) that is bringing the indices into the black. Whether it’s short term traders, or as many have suggested direct government intervention, it’s artificial stimulus. It is not real, it is not based on legitimate, long term investment, it is not funds from people like you and me. People like you and I are long gone from the real stock market – we saw it for what it was (a sucker’s game) and chose options trading instead. I call that phenomena “Jesus the Miracle Goaltender” and if you were watching the market at the end of the day today… you might have met him lol.
The other side to the stock market drop is the serious drop in demand for all kinds of goods and services. Drops in retail sales, in durable good sales, in demand for labor. It’s a vicious cycle. There is no fundamental reason for there to be an “up” day in the market these days. That’s why we use options trading instead. We don’t care whether it’s up or down… all we care about is a little bit of movement – and making sure we have the right direction picked.
Picking right means not believing what you see in the indices (which are manipulated for “public good”), and instead focus on the levers used to manipulate them (forex market). The nice thing about the manipulation is that you know what it is (think Elaine on Seinfeld: “fake. fake. fake. fake.”) and can be options trading with some level of certainty that you haven’t lost your mind. On any given day you can say to yourself, “Yes the market is going up, and I would like to believe it is going up, and no I know it is not going up for any reason that makes sense based on overall economic results.”
So when I make up my mind to trade I know my overall bias is negative given these economic circumstances. That’s how I trade it. When the market tanks I keep an eye out for Jesus the Miracle Goaltender. When I see Him (note capital ‘H’ lol) – I pick “up” on my binary options calls (most often as the second side of my binary hedge trade). Otherwise I know the better play is to likely stay (naked) down.
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