Crazy Nancy And The Stable Genius!
Weeks ago, I wrote that the Mueller report wasn’t the end of the war, it was the beginning. The Mueller report was a weak, spineless review of what happened in the 2016 election. It was a deliberate attempt to keep throwing gas on the fire. It created the firestorm that we have today. It was designed to do that. Currently the U.S. government is not functioning. It has become a circus act that is divided strictly across party lines.
On one side we have “Crazy Nancy Pelosi” that is saying that Mr. Trump needs a family intervention because if he steps down it is in the best interest of the country. It would save the long and drawn out constitutional crisis that she has created. On the other hand, Mr. Trump is insisting that he is an “extremely stable genius” who is very capable of running the government. The country has not been more divided than before the civil war in the 1860’s. The way it is running now is a farce.
Both sides are completely motivated by power and I doubt that either one cares what happens to the country. They only care about being in the position to run the government. No matter what the GOP says it is “offensive” wherever that term came from. What the Dems say is dismissed as just another plot of turning our capitalist based economic system into socialism. There are so many crackpots on both sides of the isle that it is hard to tell where the next one will come from. When Kanye West seems to be the voice of reason I think that should pretty much sum up the state of the union.
Mrs. Pelosi and the Stable Genius have a big risk here. The Dems are still trying to win the next election and listening to Bill and Hillary Clinton talk about women and government wants to make me barf. Pelosi is afraid to start the impeachment process as this could backfire and cause the Democrats more problems than they want. The Stable Genius seems to be trying to goad Mrs. Pelosi to fire the first impeachment shot. He knows he can’t lose in a Senate trial and he could come out looking very strong. How this is going to end is anyone’s guess, but the bookmakers in London still have the Donald as a strong favorite to be reelected in 2020. We will see!
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.
Is it possible to sell a credit spread that can has less risk than reward?
Answer: Yes, it is possible to sell a credit spread that has less risk than reward. The trade is called a 60/40 and it is an aggressive, directional spread. Here is how it works. Normally when we sell a credit spread, we sell the ATM strike and buy a strike that is further out of the money. When we do a 60/40, we sell a spread that is slightly in the money. We are not taking a neutral position but rather trying to predict the direction that the underlying stock will move. So instead of selling a five wide spread for $220 and assume a $280 risk, we sell the spread for $280 and assume a $220 risk. We never risk more than the difference between the strikes minus the premium we collect. The difference is that with the 60/40 spread, if the price doesn’t move in our favor we will not collect the entire $280 credit, only a portion of the spread. The 60/40 spread is a trade that many professional traders use when they are confident that the price of the underlying stock will move in their favor.
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 week T-Notes finally succumbed to fright and buyers moved money from equities to fixed income. It wasn’t a great amount, but it moved interest rates above long term resistance. This is the first flight to quality that we have seen since the panic in the fall of 2018. We will hold our long position with an eye on the double top. If we continue to move higher we will stay bullish. If we can’t stay above resistance we will take our profit and look for a new spot to enter
Crude Oil
Oil continues to remain in a broad congestion pattern. It did rally this week, but it was weak and on low volume. I keep waiting for this market to come to life, but it is stubborn and the strong and weak hands keep changing place every other day. All markets eventually find a direction and this one will also. I just hope I am on the right side of it when it happens
Gold
You would have thought with the selloff in the equities, and global tensions mounting that gold would be the beneficiary of this type of environment. However, the market could seem to care less. The precious metal found some legs at long term support and had a reasonable rally but is now stuck in tight congestion with very low volatility. It tried to break out above long term resistance but when it could not penetrate recent highs it fell back into congestion. We will continue to hold our position as long as long term support is not violated.
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The Big Three Commodities Contracts
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Market Edge Market Timing Models |
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The Market Edge ‘Market Posture’, which has been Bullish since the week ending 04/18/2019 (DJIA 26559.54) remains Bullish at this time.
The Optionomics Scoreboard – YTD Traders Results
| Week Ending: | 05/24/19 |
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| Risk Capital: | $20,000 | ||||||||
| $ Win For Week: | $574 | ||||||||
| $ Loss For Week: | -$359 | ||||||||
| $ Total Profit/Loss For Week: | $215 | ||||||||
| % Total Profit/Loss For Week: | 1.1% | ||||||||
| Win % For Week: | 80.0% | ||||||||
| Average # Trades Per Week: | 5 | ||||||||
| Performance Since Week Ending: | 01/04/19 | ||||||||
| YTD Number Of Trades: | 86 | ||||||||
| YTD Number Of Weeks: | 21 | ||||||||
| YTD S&P 500 % Gain/Loss: | 13.7% | ||||||||
| YTD Optionomics % Gain/Loss: | 26.6% | ||||||||
| YTD Annualized % Gain/Loss: | 65.8% | ||||||||
| Win % YTD: | 63.8% |
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