The World’s Greatest Salesman
In the 1800’s, we had the world’s greatest salesman and his name was PT Barnum. He sold his product which was the circus better than anyone in the world. Today, we have a new salesman that makes Mr. Barnum look like a piker and he has made billions of dollars for himself while leaving investors out to dry. His name is Elon Musk.
Mr. Musk made his first fortune in a startup that eventually turned into PayPal. He then got involved in Space X in 2002, Solar City and finally Tesla in 2003. Most of the ventures that he has gotten involved in have shown massive losses from day one, but he continues to sell the dream and as long as people will listen he continues to run his companies.
He finally settled with the SEC over the tweet that said that he had $70 billion dollars from wealthy Saudi’s. The settlement required him to pay a $2 million dollar fine and he must have his tweets approved by an SEC attorney before he can have them sent. He also released earnings from Tesla on Wednesday in which he reported a record loss of $702 million for the first quarter.
He blamed the loss on the failure of the company to deliver as many Model 3 compact cars as anticipated. He also braced the street for more losses that will come in the next quarter after he had projected a profit before this latest disaster. He is now considering going to the market to raise more cash. He is officially the world’s greatest salesman!
Ask Mr. Seifert
I am constantly asked questions about trading and how to exploit certain market factors to insure success. Each week I will answer one of those questions with a short paragraph which will cover the trading subject.
What is an Iron Condor, and does it have unlimited risk or reward?
Answer: An Iron Condor is a very useful spread that has limited risk and limited reward. It is initiated by buying or selling two vertical spreads in the same serial. One of the spreads is a vertical call spread the other is a vertical put spread. Each spread is either above or below the current price of the underlying equity. If you sell both spreads you create a credit and are hoping that the price of the underlying asset will stay near the current price until expiration. If you are correct one or both of the spreads will be a winner and you will cash the trade. Your risk is limited to the difference between the strike prices minus the credit that you received when you sold the spread. If you buy both spreads you are creating a debit and you are hoping that the price will move in one direction or the other far enough allowing you to collect on one of the debit spreads that you bought. Most professional traders sell Iron Condors as one leg of the spread must be a winner mathematically and it is possible to collect on both ends of the credit spreads if the price falls in the middle.
The Wise Guy Report: The View From The Floor
Each week I talk about what I think the Wise Guys (floor traders) are up to with the Big Three commodity contracts: Gold (GC), Crude Oil (CL) and Long-Term Interest Rates (ZB). I also track the Market Edge (www.marketedge.com) ‘Market Posture’ which has a twenty-six year record of forecasting the intermediate-term direction of the stock market as measure by the DJIA with around 70% accuracy.
T-Notes
This market continues to look for a direction. Even with the Fed stating that it is not going to raise rates during the remainder of 2019, the ten year has not broken out to the upside. This past week is typical of the price action we have been experiencing for the past six weeks. It is in a broad congestion pattern. It sold off slightly early in the week only to rally on Friday and end the week with a small gain. Until a direction can be found we will stick to our current position.
Crude Oil
Oil continued on its roll early in the week making new highs before backing off on Friday to settle down on the week. With no overhead resistance in sight the only way to play this market is to keep trading with the strong hands which are the longs. Until something stops this trend we will stay with our current long position.
Gold
The precious metal found some legs at long term support and had a reasonable rally. The key here is if it can continue to rally back up to the old highs. The lack of volatility in the equities market certainly has something to do with the current market conditions and if they continue we will get stopped out of the trade. If they hold we will stay with the trade and hope that some event will cause Gold to start to rally.
| The Big Three Commodities Contracts
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| The Market Edge – ‘Market Posture’ | ||||||||||||||||||||||||||||||||||||||||
Based on the status of the Market Edge market timing models, the ‘Market Posture’ is Bullish as of the week ending 4/18/2019 (DJIA – 26559.54).
| Market Timing Models | Current Reading | Prior Week | Connotation | ||||
| Cyclical Trend Index (CTI): | 7 | 7 | Positive | ||||
| Momentum Index: | 7 | 7 | Positive | ||||
| Sentiment Index: | -1 | -1 | Negative | ||||
| Strength Index – DJIA (DIA): | 51.7 | 55.2 | Positive | ||||
| Strength Index – NASDAQ 100 (QQQ): | 48.0 | 46.1 | Negative | ||||
| Strength Index – S&P 100 (OEX): | 50.0 | 52.1 | Positive | ||||
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Mr. Seifert