Smartly leverage the volatility, don’t fear it.
Computer trading and the financial enterprise news media’s megaphone corrections and rallies that took months now can happen in a single day.
The Dow’s plunged lower by 1,000 points on Monday morning’s open was immediately followed by dramatic intraday swings that included a rally of 850 points. The rally was so strong many thought including myself thought the Dow might even go in to the green.
Alas that rally was but a brief respite. The Dow then fell lower by 700 points only to bounce and flutter down 350 points, but leaned south and ended down 588 points.
Today we did go green until the end of the day giving up all gains before closing lower by -1.35%. Since last Wednesday the S&P 500 has lost -0.83%, -2.11%, -3.19%, -3.94% and today’s -1.35%.
This kind of volatility is driven by lower and lower commissions, fees and being fused with computer trading based on algorithms. It services as possible proof of Artificial Intelligence (AI) being able to threaten human existence. Aside from that, the three day decline is so oversold that Erlanger’s weekly indicators are in an oversold region not visited by the market since October of 2011.
The Dow Jones Industrial Average now has a 13 P/E Ratio. You expect a crash when the P/E climbs over 20, and is most often accompanied by an inverted yield curve. We do not expect one when the P/E is 13.
If you have the guts to go long using two and three week forward options on the Dow and S&P this is an potentially a very rare money making opportunity. A genuine chance to turn $20,000 into $40,0000 or even more. We could climb 65 S&P points in the next 10 days AND Still fall 69 points the following three days. The #$%^&*! computers do not care. The siren song of a press that needs to make money with the latest sensationalized crisis as viewership is at all time lows.
The media needs to pay the bills and make the stockholders happy. The Movie Network missed the impact of the 21st Century’s media cacophony on the financial markets, we are now living.
If you’re not a subscriber of Options Index Trader, then now is the time to jump on board. Click on the link above to review. This is the kind of market Geoff Garbacz and his quantitative sentiment methodology is especially suited for to help you claw your way back to gains in 2015.