Leading Indicator???

Interestingly, foreign markets have been doing extremely well while US markets sleep. This ought to be a good indicator of how the market will open tomorrow. Bullish as usual. The Xetra DAX was up 1.3 percent, the FTSE up 1.5%, CAC 40 up 1.4%, Hang Seng up 1.7%, TSE up 1.2%, JSE up 1.7%, everything is going up!!!! This is likely to bleed off into US markets tomorrow morning, so be prepared to get off and going. Now that January is here have you heard of the "January Effect?" If not here you go...


"The January effect is a general increase in stock prices during the month of January. This rally is generally attributed to investors buying stocks that have dropped in price following a sell-off at the end of December by investors seeking to create tax losses to offset any capital gains."


The first couple days of January are a great barometer to how the month of January will perform, and the month of January is a great barometer as to how the entire year will perform. As for me and mine...

Yay Jeff's back! Market's closed? Bummer. Hope you had a great break and beautiful New Years! As for this January rally - how does it pan out with Earnings being in the latter half of the month?

Jeff, if a person buys otm options coming into earnings, will the drop in Implied volatility kill
the profitability of the trade,
assuming a possitive announcment
and a couple point move, and assuming getting in 2-3 weeks before earnings.Do they drop the
Implied volatility all at once after earnings is announced, or is
it done in stages? Steve

Steve - The rule is to stay away from earnings announcements. If you want to take the risks, I would highly recommend putting in a mechanical stop. If you want a good site to look at volatility, check out http://www.ivolatility.com.

Chad

Steve,

Think of Implied Volatility as anticipation. Anticipation of earnigs will increase up until the announcement. After the announcement, there is nothing left to anticipate, therefore anticipation goes away, since the event has already occured. IV will rise up until earnings, then dry up after the news is released. Check some of my prior posts on the topic for more details!

JK

Emily,

The market may be choppy, but it will be something we will feel out along the way. Until then take note of your earnings date on each of your plays and try not to hold over the announcement unless you consider yourself "informed."

Good Luck!

Jeff,

Happy New Trading Year!!! Welcome back!!! Lisa did an awesome job keeping us addicts in check try as we may to entice her to give up her secrets!

My wife Terri and I have been here in Utah since the 26th of December enjoying some awesome skiing with our twin Special Operations sons and significant others!!! What a blessed time to spend a week together in such a beautiful place. Terri and I are very excited about attending the 3 day Live Workshop starting tomorrow. Hopefully we will be able to meet you as well.

Looking forward to another great trading year!!!

Best Regards,

Randy B.

Does anyone think PRU confirmed today? I bought in so lets hope so!

PRU was right on the edge I was watching it but i seen it come down hard just like everything else. I didnt take the trade but i might tomorrow.

Danny DR

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  • I'm Option Addict
  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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