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We had a decent rally, what’s next?

S&P 500  2,656.87 +43.71 (+1.67%)  Dow 30  24,408.00 +428.90 (+1.79%)  Nasdaq  7,094.30 +143.96 (+2.07%)
 

Sell BuyMarket had a few days of relief rally. Is it going to be a bounce or is it going to continue higher? No one knows. Investors are rattled and panic on anything Trump does or does not. If it was not a trade war, it is his political extempore of his people leaving him or being fired, or bashing Amazon, or now possibly bombing Syria. Everything he does so far is just talks. Yet those talks move the markets. Ultimately, this volatility is good as that present a great opportunity to make money trading this market up or down. All it takes is to be on the right side of the market trend. What can we expect then?

 

 

We may see more selling coming this week or we may see a bumpy continuation of this recovery. A few studies I follow and read suggest that we may see a recovery. Out of 16 historical occurrences in 15 of them the markets made new all time high after 10% correction. But it was a bumpy road to recovery. And it is what we may see now. A few steps up, few steps down. 1% or more up, 1% or more down. It looks weird and scary to many people who got used to low or none volatility when the markets moved up constantly and any drop was just 0.20% at most. And that drop was usually bought immediately. Seems no anymore.

As of this writing, S&P futures are down 0.50% on Syria bombing talks. Would that be another reason to panic? Maybe. Maybe not. Maybe investors will shrug it off and keep moving the market up again.

Or not.

Investors now hope, well, bulls now hope, that coming earnings season will be stellar and it will revive the struggling bull market. And I think this bull is not dead yet although it is a bit aged and possibly heading to its end. And I am afraid, Trump is going to help it die unless he starts making smart moves again (which I doubt).

What is the best strategy to do now?

As a trader, I will be reducing my long positions, but I will not be going extremely short either. I will keep watching the market carefully and trade short trades only so I do not lock myself in long term trades. I will keep managing all already opened trades to get them to the end and stay mostly out.

As a dividend investor I will keep holding stocks I already purchased and I will be adding more as the market keeps going down. I may use my trigger orders strategy to purchase the stocks on their way down. But definitely, as Warren Buffett said many times, the best long term investing (which is what I do with my dividend stocks I buy using 50% of my options trading proceeds) is to stay the course and keep buying more shares.

I must admit that I wish this rally continues. It doesn’t have to be extra strong. It is OK for the market to stay put or just move higher (or even slightly lower) but without violent moves up or down. That would help me to close my ATM put positions and raise cash. If this doesn’t happen though, I will not be in bad situation either but it will take longer to get out. And that is what I do not want as of now.

People keep posting their views on where the market would go next so here is my view:

1) what I wish the market will do next: go up
2) what I know the market will do next: Eeny, meeny, miny, moe …

Now you know my market prediction for the next few days…

 

 · Trading activity today

 

A summary of opening and closing trades.
(premiums received / paid: + $433.00)

Note: This is a cash flow of credits, not profits!
 

Today, we opened a few new trades – SPX put spreads and TGT single and put spreads (single put not shown in this list as it was in a different account, but accounted for in the premium summary above).

 
0410trading
 

 

 · Dividend stocks to buy

 

Out of our watch list of 37 dividend stocks the following ones are a good buy at today’s prices (04/10/2018):

 
S&P500
 


Disclaimer: The list above is based on calculated fair value and 52wk high offset valuation. The values are subjective to our calculations and opinion and may differ from your own. If you decide to trade or buy these stocks, do so on your own risk and do your own homework. The list is not our recommendation to you.

 





3 responses to “We had a decent rally, what’s next?”

  1. Trading 101 says:

    Great Article! Do you provide Trading Ideas on a daily basis?

    Thanks.

  2. Trading 101 says:

    Great article! Do you provide Trading Ideas on a daily basis?

    Thanks!

  3. Trading 101 says:

    Great Article. Do you provide Trading Ideas on a daily basis?

    Thanks.

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