I will get to market trends – but first a little rant!
My value strategy is all about buying good companies when they’re available at a substantial margin of safety. When I can’t find these opportunities – I hold more cash and practice patience.
Unfortunately, the Fed and other central banks have disrupted the normal price discovery mechanisms that support this strategy. When rates are at, near or below zero, people are not rewarded for saving. Folks who would normally buy bonds for income find that they’re getting 0% per year for short-term securities. Investors are forced to move money out of low-risk assets and into high-risk ones in hopes of making enough to just stay even. This process pushes up the price of risky assets like stocks, fundamentally undercutting their attractiveness to value investors like me.
I know it is hard – but I really must encourage you to continue to practice patience in this environment – suggested reading:
- Z Option Trader – My Approach to Investing
Now – to the Markets, where a whole lot of nothing is going on:
The following table is based on the Z Option Market Analysis Tool – which determines if a market is trending by assigning a trending score from -3 to +3. This helps us keep our trading with the trend.
| Symbol | Description | Short Term Trend | Medium Term Trend |
| $DJI | Dow Jones Industrial Average | 3 | 3 |
| SPX | S&P 500 INDEX | 3 | 3 |
| RUT | RUSSELL 2000 INDEX | 2 | 3 |
| NDX | NASDAQ-100 INDEX INDEX | 3 | 2 |
| VIX | CBOE MARKET VOLATILITY INDEX | -3 | -2 |
| /ZB[U6] | 30-Year U.S. Treasury Bond Futures,ETH | 3 | 3 |
| /ZN[U6] | 10-Year U.S. Treasury Note Futures,ETH | 1 | 3 |
| /GC[Q6] | Gold Futures, ETH | 3 | 3 |
| /CL[Q6] | Light Sweet Crude Oil Futures,ETH | -3 | -2 |
| /DX[U6] | US Dollar Index Futures | 3 | 3 |
| $DJT | Dow Jones Transportation Average | -1 | -3 |
| XLK | SELECT SECTOR SPDR TRUST TECHNOLOGY SELECT INDEX | 2 | 3 |
| XLI | SELECT SECTOR SPDR TRUST INDUSTRIAL SELECT INDEX | 3 | 3 |
| XLY | SELECT SECTOR SPDR TRUST CONSUMER DIS SELECT INDEX | 3 | 2 |
| XLB | SELECT SECTOR SPDR TRUST MATERIALS SELECT SEC INDEX | -3 | -2 |
| XLE | SELECT SECTOR SPDR TRUST ENERGY SELECT INDEX | -2 | 1 |
| XLP | SELECT SECTOR SPDR TRUST CONSUMER STAPLES INDEX | 3 | 3 |
| XLV | SELECT SECTOR SPDR TRUST HEALTH CARE SELECT INDEX | 3 | 3 |
| XLU | SELECT SECTOR SPDR TRUST UTILITIES SELECT INDEX | 1 | 3 |
| XLF | SELECT SECTOR SPDR TRUST FINANCIAL SELECT SECTOR FUND | -3 | -3 |
Any market showing a 3 or a -3 is trending strongly – and should be factored into any options strategy you are contemplating.
Oil and Financials are still worried about Brexit – everything else is hovering near all time highs.
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