A House Divided By Itself Cannot Stand
On June 16, 1858 Abraham Lincoln made a speech in which he referred to the problem of slavery as a House Divided by Itself cannot stand. Of course, his prophesy became fact on April 12, 1861 when the South attack Fort Sumter South Carolina setting off a war that would last for 4 years and cost over 600,000 American lives. In the end, the brutal act of slavery was abolished, and the South was destroyed. It took decades after the war ended until the South was once again economically stable.
On Sunday, president Trump announced that Abu Bakr al-Baghdadi, the leader of ISIS had been killed. He set off a suicide vest while he was being pursued by U.S. troops. The blast killed him and three of his children. By any measure the leader of ISIS was brutal. He killed countless men, women and children that were opponents to his view of religion. It is believed that as many as 7,500 people are being held as slaves while he brutalizes them.
No media source condemned the assassination of al-Baghdadi except one, The Washington Post who referred to the brutal dictator as “an austere religious leader.” That is like reporting the death of Adolf Hitler as a former altar boy. The headline caused a tremendous backlash even from some of the most liberal members of our society. The Post claimed that they did not intend to make the monster into a martyr but that they were emphasizing at one point in his life he was a devout religious man who held a doctorate degree from the Islamic University.
Jeff Bezos, the founder of Amazon is the owner of the Washington Post. He bought the paper so that he has a very large mouthpiece for his liberal views. Nothing wrong with that. He has every right to own the paper and to express his views as a liberal. Where the problem comes in is that when he was questioned about the Obituary headline of al-Baghdadi he had no comment. In other words, he approved a headline of a brutal terrorist that had not only killed American soldiers but also killed American citizens.
The U.S. has never been more divided politically. The tactics used by both sides of the isle are appalling. There is no longer a middle ground politically. You are either a conservative or a liberal. No matter which side you are on the other side views you with great skepticism, and as downright evil. If we don’t heed Mr. Lincoln’s advice we may find out the consequences of a house divided!
Ask Mr. Seifert
I am constantly asked questions about trading and how to exploit certain market factors to insure success. Each week we will answer those questions with a short paragraph covering a variety of trading subjects.
Question: Why is it when I buy options on earnings reports and I am right as to the price direction, I still lose money?
Answer: That is because the other side of the trade that sold you your option has priced in movement that would not normally be expected. If you are trading ABC stock and it has a normal range of +/- 4.00 a week, it is not uncommon for the stock to have its range increased by 50% to 100% just before earnings are released. Over my thirty-five years of trading options, I have seen hundreds of times when the earnings release is as expected, and the stock barely budges. When that happens all of the options go down in value, it doesn’t matter which one you own. My advice is that if you want to trade earnings never buy naked options, especially the expiring straddle or strangle. If you want to play this game you should spread the premium. Either sell vertical or horizontal spreads. You might not hit a home run, but you will hit a lot of singles and doubles and will have very few strike outs!
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
The same old same old. As rates have reached a level that Mr. Trump wants them to be, they have completely lost all volatility. I am looking for one final rally that will allow me to get short near yearly highs. With this week’s price action, that is not happening. I will be patient and remain in observation mode.
Crude Oil
Crude Oil is in a large congestion area and cannot seem to find a direction. Usually, when you get this much congestion you will get a big breakout. So far that has not happened. I am waiting for either a top to get short crude or a bottom to buy it. Until I can get the price movement that I want I will continue to remain on the sidelines.
Gold
Once again gold cannot find a new direction. This week gold had a very small trading range on low volatility. I will continue to hold my position but as each week passes and the volatility continues to shrink I am getting less patent with this position. Another week or two and I will give up the ghost and get out of this trade.
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The Big Three Commodities Contracts
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The Market Edge Market Posture
| Market Timing Models | Current Reading | Prior Week | Connotation | ||||
| Cyclical Trend Index (CTI): | 6 | 6 | Positive | ||||
| Momentum Index: | 11 | 11 | Positive | ||||
| Sentiment Index: | -4 | -3 | Negative | ||||
The Market Edge ‘Market Posture’, which has been Bullish since the week ending 09/13/2019 (DJIA 27219.52) remains Bullish at this time.
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Mr. Seifert