The Circus Never Stops In Washington!
It couldn’t have been a better week if you love the circus in Washington. We had it all going on last week. The Senate hearings on Brett Kavanaugh’s nomination to be the next Supreme Court Justice, which normally would be the highlight of a Washington week, to the suggestion of a rat in the Administration that is accusing the president of well, being himself.
Let’s start with the nomination of Judge Kavanaugh and the Senate hearings that surrounded it. The hearings started off with the Democrats asking that they be delayed until they could get a better grasp on what Judge Kavanaugh is really about. One Senator who acknowledged that there were a million pages of documentation surrounding the nomination said that she still needs to read 42,000 pages before she felt prepared to question the nominee. That took one second to squash and things got underway.
The questioning was strictly on a partisan basis. To the Republicans he was a saint who had a perfect perspective on the constitution. To the Democrats he possessed very dangerous views on liberal issues and wasn’t qualified. To top off the circus, the Dems rolled in 79-year-old John Dean who was Richard Nixon’s attorney in the notorious “missing tapes”. Dean warned that if Kavanaugh were to be appointed that most likely the U.S. would not be a country as we know in 10 years. If the voting is strictly along party lines Judge Kavanaugh will be confirmed before October 1.
Mr. Trump had his usual problems, but this time it started with an anonymous op ed in the New York times that claimed a high ranking official in Mr. Trump’s administration is concerned that the president is not fit for the job and that there are other members of the White House team that claim they have the situation under control. Mr. Trump was furious and claimed that the creator of the piece was a coward for not addressing him personally. I have to agree with Mr. Trump’s view. Whoever it is needs to face the president and make his or her claim. It is already the toughest job in the world and it certainly won’t work with a rat working behind the scenes.
Ask Mr. Seifert
I am constantly asked questions about trading and how important execution is to insure success. Each week, we will answer those questions with a short paragraph on a variety of trading subjects.
Question: What is the best way to initiate a credit spread?
Answer: Getting the spread on correctly is important. Novice traders blow themselves up trying to get the “edge” on the market makers. Forget about that strategy, it won’t work. You are not going to be able to out execute the market makers. T
There are a couple of choices that will work when getting the spread in place. First you can “leg” the spread on by buying the long side of the trade first and selling the short leg second. I use this strategy when I have a preference in market direction. I get my limited risk leg on first and then try to sell the credit side with more premium. Second, you can set your browser on the site you are using to find out where the spread is currently trading in the market place. You should be able to get filled within a few cents either way of where the spread is trading. The third way is always the wrong way. It is to leg the spread on by selling the short option leg first. This is selling a naked option and will eventually cause a big loser. You are not going to beat the wise guys at their game. Eventually the impossible will happen and as soon as you sell a naked option, Élan Musk will get stoned and twitter some crazy comment about TSLA and you will take a possible risk of $280 and turn it into $3000. You will then email me and tell me that I don’t know what I am doing, and the risk is much greater than I claim it is. Remember, bulls and bears make money in the market while pigs get slaughtered! Don’t be a pig. There is plenty of money to be made doing it the right way.
The Wise Guy Report: The View from The Electronic Floor
Each week I talk about how the Wise Guys (floor traders) find the soft spots in the market and take advantage of price dislocation in three major commodity markets: Gold (GC), Crude Oil (CL) and Long-Term Interest Rates (ZB). On the equity side, I cover MSS which is the Mister Seifert Sez Composite Index. This is a proprietary index that I created which measures the dollar flow of the four major indexes (S&P 500, Nasdaq 100, Russell 2000 and the Dow Jones Industrials) on an unweighted basis. For a change of pace, let’s take a look at some foreign and emerging markets.
Emerging Markets Get Thumped (Downtrend)
It isn’t often that I comment on foreign markets but after the last six months I think it is time to look at what they are doing. The Shanghai Composite is down 24% since it peaked in January. Some of that loss may be attributable to the Dollar-Yuan spread which has led to about 3% or 4% points of the loss but the rest is due to aggressive sellers. The emerging markets are getting crushed on two fronts, the dollar and the value of the equities. The MSCI Emerging Market Index is now in Bear territory, down more than 20% since its peak this winter. There isn’t as much mystery as to what is happening there. They simply borrowed too much money to jump start their economies and now they are paying the price. Their currency as a whole is just plunging against the dollar and any other country with stable financing. The chief concern here is contagion where the financial crisis spreads from one country to another. Investors have short memories and may have forgotten the housing crisis that started ten years ago this week when Lehman Brothers busted out triggering a financial panic around the world. The worst thing you can do on a break like this is to get short, you don’t have to buy it but you shouldn’t get short. This situation bears monitoring.
Get Your FREE Two-Week Trial Subscription
The option trades and strategies offered by The Optionomics Group are very unique in that they all have limited risk while creating great leverage. Our basic BL – BR Credit Spread Strategy (and all of the others) let you control 100 shares of a $200 stock ($200*100 = $20,000) for only $500 (the spread differential) or 40:1 leverage with your risk limited to only $500. Plus our strategies produce winning transactions in four out of five possible outcomes.
The Optionomics strategies let you become the casino whereby you have a mathematical edge that lets you grind out consistent returns in any kind of market environment. These strategies are designed to produce good returns over a short to intermediate term time frame. It is an approach to the stock market which will be hot, cold or average over time, but the end result should be very good in any type of market environment.
I offer a FREE Two-Week trial to the various subscription services with no cost or strings attached. Each strategy is explained in a 5-7 page booklet which includes sample recommendations and model portfolios. I doubt that you have ever seen anything like this. During your FREE trial, you can paper trade the various strategies and get a feel for the deal without risking a penny. Simply click on the appropriate tab on the Optionomics’ Home page to access the informative booklets and then sign up for one or all of the weekly subscriptions.
- The Bullish – Bearish Credit Spread Strategy: The basic strategy of trading weekly credit spreads.
- The 21st Century Covered Calls Strategy: A modern day alternative to the old fashioned covered call strategy.
- The Low Cost Put – Call Hedge Strategy: Sleep at night knowing your portfolio is protected for little or no cost.
- The Earnings Trade: Get in on potential big movers with little or no downside risk.
- The One Day Wonder Trade: Get ready for some real action. A one day trade with great potential.
- The Blow Off Top – Bottom Trade: A lot of action and big moves too.
Each Monday morning by 11:00 EST, the plays for the upcoming week plus updated model portfolios for each strategy are posted on the site. The prices in the reports are Monday morning’s opening prices. In addition, I have a webinar on Thursday afternoon where I discuss various option strategies, what is happening on the floor and answer any questions that you may have. Don’t worry if you miss the show. They are archived on the site. Sound Good? Good! You can subscribe to one or more of the subscriptions for only $19.95 each per month on a month to month basis with no contract or strings attached. If you subscribe to three, it is only $49.95 per month while you can subscribe to all six for only $79.95 per month, a 33% discount. I think you will agree that this is a super offer so give it a try. Click on www.optionomicsgroup.com to access the Optionomics Group web site and get started today doing what the pros do –
“Don’t Buy Them – Sell Them”.
Mr. Seifert