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Buy or Sell? This Insight May Help You Decide

Option Market Optimism

Buy or Sell? This Insight May Help You Decide It’s a tough decision. We’d like to help by showing you some unconventional market evidence. By Elliott Wave International By February of this year, investors had almost forgotten what stock market volatility looked like. And then something unprecedented happened. On Monday, Feb. 5, the DJIA closed 1,175 points down, the biggest single-day drop in the index’s history. Since then, stocks have been going haywire. Was this spike in volatility unpredictable? Hardly. Our December 2017 Financial Forecast warned: The CBOE Volatility Index declined to 8.56 intraday on Nov. 24, the lowest level […]

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-1,175 Points! We Just Witnessed The Largest One Day Stock Market Crash Ever

The mainstream media seems so surprised that the stock market is crashing, but the truth is that it isn’t a surprise at all.  In fact, this crash is way, way overdue.  If the Dow Jones industrial average fell another 10,000 points, stock prices would still be overvalued.  I have been warning and warning and warning that this would happen, because stock valuations always return to their long-term averages eventually.  On Monday, the Dow was down a staggering 1,175 points, which was the largest single day decline that we have ever seen by a very wide margin.  In fact, it shattered […]

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The #1 Trigger for Rising Rates, Volatility and a Deflationary Crisis

If you’ve read any of my work, you know I think the iceberg that will ultimately sink the global Titanic is China. It has the greatest overbuilding and debt bubble in history, not to mention the obvious real estate and stock market bubbles. But the Chinese government has too much control over its economy to just let it slide. No. China won’t be the first domino to fall. Rather, the dubious honor may go to lovely and charming Italy. Italians are fun, laid-back people. I love visiting the country. But would I bet on it? No way! Italians think they’ve […]

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A.I. Bets & All-Time Low Bond Volatility (Macro Musings)

Tyler here with this week’s Macro Musings. Just a reminder, we’re releasing the newest issue of our Macro Intelligence Report (MIR) early next week. In it we’re covering a basket of agricultural stocks that are ready to rip just like our IPI play (if you don’t know what I’m talking about, read our article below). Phase 3, the Overheat Phase, is a target rich environment. There’s a lot of profits to be made. If you’d like to come along for the ride, make sure you subscribe to the MIR by clicking here. Our Recent Articles — The Overheat Phase: We […]

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Profiting From French Election Volatility

Attempting to predict the outcome of an election is a fool’s errand — we don’t bother with it. But that doesn’t mean we can’t make money off the vote… Over the last few weeks we’ve discussed the reasons for the rise of populism and how it’s impacted the false trend in European equities. We explained how these Soros-style false moves are dependent on narrative “tests” that either strengthen the trend or reverse it. In Europe’s case, its narrative test is arriving in the form of French elections. This year’s elections are pivotal because the French are dangerously close to electing […]

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Do Buyers Of Options Benefit From High Volatility?

Search “options and volatility” in Google and you’ll get a dozen websites that say the same thing: option buyers want high volatility and option sellers want low volatility. Oddly enough, this old and relied upon rule of thumb isn’t completely correct. In reality, as an option trade plays out, trend has a far more powerful effect than volatility on final P&L. There are four scenarios that can occur before an option expires: Low Vol, Low Trend Low Vol, High Trend High Vol, Low Trend High Vol, High Trend The charts below illustrate the P&L of a long put in each […]

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Low Volatility Begets Low Volatility. Here’s Why…

The following is an excerpt from our monthly Macro Intelligence Report (MIR). If you’re interested in learning more about the MIR, click here. The trading community has been yapping away about the VIX trading sub-11 and the extreme number of speculative shorts involved. They’re saying it’s gotta burst higher. Their proclamations are presented with a chart like the one below which measures net nominal non-commercial positioning. But these positioning charts are misleading. They fail to account for the growth in open interest. The VIX futures in particular become heavily distorted because open interest and volumes have increased 10x since they first […]

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Expect Higher Correlations And Volatility In This Fed Manipulated Market

We’re trading in some truly interesting times. Check out the index below from Credit Suisse depicting contagion risk across global markets and asset classes. It’s now showing that global markets and assets are at their highest correlation since the index was created. It’s interesting because normally correlations rise during a bear market. But right now we’re hitting record highs while many global markets are still in an old cyclical bull. These high linkages are why, on Friday’s sell-off, there was hardly a drop of green in any market around the world. Take a look at the heat maps below. This […]

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