What a wild 72 hours!
On the heels of a positive December job employment number, the Dow Jones Industrial Average briefly poked its nose above 29,000 for the first time.
Just a few days ago, it seemed that we could be turning the other direction.
Tuesday evening, I was sitting in my office working reviewing market data.
I was surprised when my systems alerted me that the S&P 500 futures were down 1.6% in the overnight session.
Then the S&P 500 futures ripped off the lows and made a remarkable 2.7% move higher off those levels at the end Wednesday’s market close.
The reason S&P 500 futures dropped lower was in reaction to Iran’s media outlets saying that Americans were killed in the attack.
However, algorithm trading systems reacted - drove the market lower, then rebalanced as the more news came out.
This leads to say, that robots are no less emotional than humans.
Legendary quantitative Hedge Fund founder Jim Simons even overrides his money-making trading systems at times using human logic.
My point is that bots are part of the market, but brains over bots will win.
It's the reason why I love options as an investment vehicle to reduce the reaction and making a poor decision when markets move so quickly.
The fear gauge for the S&P 500, known as the CBOE Market Volatility Index (VIX), at 12.
This is below our key level of 15 we watch, but volatility likes to bounce higher off these levels, which means to be a cautious bull.
On Monday, we bought to open The Goodyear Tire & Rubber Company (NASDAQ: GT) Jan. 17, 2020, $15 call up to $0.35 per contract or better.
Right now, our open positions are:
- The Goodyear Tire & Rubber Company (NASDAQ: GT) Jan. 17, 2020, $15 call.
As always, keep sending your questions and feedback to [email protected]
My team and I will have a new trade for you Monday morning.
To your wealth, freedom and options!