Category: INO.com Contributors

The Gold Stock Correction And What Lays Ahead

Posted on by Gary Tanashian

What’s In-Play Now

It has been about 2 months since the gold stock sector, as represented by the HUI index, topped out. The ensuing correction has been a whipsaw affair of ups and downs, but smoothing that volatility out we find an ongoing correction in time and price that has not been too difficult to manage.

The pattern that some would call a “complex H&S” (TA-speak for a freakish pattern with too many shoulders) held a key lower high on the recent bounce to the daily chart’s SMA 50 (blue line). The neckline has been tested (and held) twice since it was created in September and the negative RSI divergence that began last summer has been guiding Huey downward.

hui

It’s all normal and by the chart above you can see the targets, which have been 195 (minor support) and better support at the convergence of a lot of markers, including major breakout support and a gap at 180, the rising SMA 200 (183), a 62% Fib retrace (182) and finally, the pattern’s measurement at around 172. That’s a lot of technical traffic pointing to the 170s-180s for the correction’s ultimate goal, which is to wash out the excess.

And excess there sure was, as we noted well ahead of time in NFTRH using this chart showing how far HUI got ahead of what I consider the most important macro fundamental indicator for the sector, gold vs. stocks and in particular gold vs. the US S&P 500. Continue reading "The Gold Stock Correction And What Lays Ahead" →

Weekly Futures Recap With Mike Seery

Posted on by Mike Seery

S&P 500 Futures

The S&P 500 futures in the December contract settled last Friday in Chicago at 2970 while currently trading at 2993 up about 23 points for the week as this market looks to move higher, in my opinion, however, I'm currently not involved.

The S&P is trading above its 20, and 100-day moving average as the trend has turned higher. However, the chart structure is poor at the current time. Therefore, the risk/reward is not in your favor. Still, I am not recommending any short position as I do think going into the holiday season prices will hit all-time highs.

We are in the midst of earnings season as that will undoubtedly dictate short-term price action, and so far, the earnings have been very solid as the U.S economy by far is the best in the world. If you take a look at the daily chart, there is major resistance at the 3000 level, and if we can close above that area, I think prices could be off to the races as extremely low-interest rates are also helping to support stock prices at this time.

TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: AVERAGE
Continue reading "Weekly Futures Recap With Mike Seery" →

Options Based Portfolio Outperformance - Keys To Success

Posted on by The INO.com Team

A year-long case study running an options-based portfolio was conducted to demonstrate the effectiveness of this strategy against the traditional stock-picking approach. Options are a great way to manage and mitigate risk while circumventing market swings. Selling options allows you to collect premium income in a high-probability manner while generating consistent income for steady portfolio appreciation regardless of market conditions. Of course, this is all done without predicting which way the market will move since options are a bet on where stocks won’t go, not where they will go.

Primarily sticking with dividend-paying large-cap stocks across a diversity of tickers that are liquid in the options market is a great way to generate superior returns with less volatility over the long term. Over the past 12 months, 298 trades have been made with a win rate of 86% and premium capture of 57% across 69 different tickers. Moreover, when stacked up against the S&P 500, an options strategy generated a return of 6.9% compared to the S&P 500 index, which returned 2.2% over the same period. These returns demonstrate the resilience of this high probability options trading in both bear and bull markets.

This outperformance and high win rate was achieved by following a set of options-based fundamentals. Specifically, position-sizing, sector allocation, maximizing the number of trade occurrences, and risk-defined strategies are some notable areas that traders need to heed for long-term successful options trading.

Essential Options Trading Fundamentals

To effectively and successfully run an options-based portfolio over the long term, the following options trading fundamentals must be exercised in each and every trade. Violating any of these fundamentals will jeopardize this strategy and possibly negate the effectiveness of this approach on the whole. Continue reading "Options Based Portfolio Outperformance - Keys To Success" →

Bitcoin And Cryptos Tank After Futures Trading Begins

Posted on by Matt Thalman

During the last week of September, the major cryptocurrencies got crushed. Bitcoin fell more than 20% from September 21st through September 26th and then slightly rebounded on the 27th by a little less than 2%. A 20% drop for the most well-known cryptocurrency is not uncommon these days, as it fell that much back in July. However, that doesn’t make it an easy pill to swallow when it happens.

But while Bitcoin fell 10% on September 24th, it's closet rivals, Ethereum, Ripple, Litecoin, and bitcoin cash fell even more, somewhere between 15% and 20% respectively. The likely cause was the lack of interest from institutional investors after the highly anticipated Bakkt crypto platform began trading its “physically” settled bitcoin futures contracts.

The Bakkt platform was announced more than a year ago and had partnerships with Microsoft and Starbucks and was being touted as a way for institutional investors to get involved with cryptocurrencies. The platform allows futures trading of crypto’s but settles the order with physical coins, not cash like other crypto futures platforms currently offer. The thinking was that because the futures contracts had to be settled with actual coins, this would increase the demand for the different crypto’s being traded through the futures contracts.

However, during the first hour, the platform was live, only five contracts were traded, and even after ten hours, only 28 contracts had traded hands. Many industry experts, both who follow the crypto markets and general futures contracts actually have come out and stated this sort of activity is normal for the first few days of a new commodity being offered through regulated futures contracts. They claim some brokers aren’t ready to clear it, while others want to wait and see how things go, while others may not even have the tickers populated on their risk systems. Continue reading "Bitcoin And Cryptos Tank After Futures Trading Begins" →

World Oil Supply And Price Outlook, October 2019

Posted on by Robert Boslego

The Energy Information Administration released its Short-Term Energy Outlook for October, and it shows that OECD oil inventories likely bottomed last June 2018 at 2.807 billion barrels. It estimated stocks dropped by 11 million barrels in September to 2.882 billion, 24 million barrels higher than a year ago.

For the balance of 2019, OECD inventories are projected to rise, on balance. The third quarter seasonal stock draw was 26 million barrels. And stocks are projected to rise by 6 million in the fourth quarter, ending the year at 2.878 billion barrels, 15 million more than at the end of 2018. For 2020, EIA projects that stocks will build by 59 million barrels to end the year at 2.937 billion.

Oil

The EIA estimated that OPEC production fell by 1.55 million barrels per day in September, most of which was in Saudi Arabia due to the attack on its oil facilities. It is estimating that OPEC production will average about 29.69 million in October, due to the rebound by Aramco. For 2020, it estimates that OPEC production will average about 29.62 million, above the call (demand) for OPEC oil in 2020. Continue reading "World Oil Supply And Price Outlook, October 2019" →