Option Trading with John

Having kidney stones
is worse than giving birth.

Classic example of why we wait until Thursday morning to trade this week.

Stock futures cut their gains in half early this morning absorbing the news that the euro zone deposit rate for the ECB was at the lower end of expectations.

And that’s not all, the central bank said more policy measures would be announced at a press conference they were going to be having soon.

It appears the ECB dropped the deposit rate on money parked at the bank from -3% to -2% the left other lending reason changed. Further monetary stimulus measures will be announced when a meeting takes place about the same time our markets open today.

Option Trading this Week
This is a great lesson today for everybody who is following this a daily newsletter.

It was Monday that I said we’re going to wait until Thursday before we trade simply because some major things were taking place. 1st it was Janet Yellin speaking on Wednesday. If you look at the market you know what happens. Cousin of her speech the market dropped over 2 points.

Secondly, we were going to wait until today after the ECB made their announcement about interest rates. Again if you look at premarket trading your goosy a huge dip in a reactionary move by the market because the ECB lowered their interest rates for deposits.

More can happen as the news conference takes place here soon. We will watch and see what the markets do early and then we will consider trading this morning. Depending on how the markets are reacting I may send you an email that organ wait till this afternoon.

I am just not sure how the markets are going to react to the ECB news so we’re just have to wait and see.

But it is a really good lesson to learn as to why we need to look at the news information before we decide when Marina trade each week.

This week we will not start trading until Thursday morning because of miss Yellin’s speech and also Draghi’s speech early in the morning. Speculation says we can trade Wednesday but you know me—never trade on assumption.

Do not be surprised if we see new highs in the S&P 500 between 1175-2200 by the end of the year. This whole possibility may be given a shot in the arm if the ECB increases the stimulus like is expected.

We are getting into the last month of our trading and some economists believe we could see a rally with new highs by the end of the year.

What about the rate hike in December? Many added that they think it’s already been factored in.

It is early Thursday morning and it is trading day as we watch the stocks attempting to rise before the morning bell.

I believe there building on Wednesdays jump after the Federal Reserve signaled confidence in the economy.

What happened yesterday?

The Federal Reserve report said it showed confidence in the economy that it could handle an interest-rate hike in December. Is there anything more definite than this?

By past history we would think that this would make the markets go down but it didn’t the markets celebrated yesterday with a nice sizable gain. I could not predict this and I would never try. This is why we look at the market one week at a time and observe what it’s doing.

In a sea of uncertainty, stock market is drifting lower this Wednesday. I believe investors are bracing for a set of minutes from the last Federal Reserve meeting they could possibly firm up expectations for interest rate hike at December’s meeting.

If this isn’t enough, a fresh set of terror related headlines dampened the investment mood across Europe as well is America.

So, what do we look for today. The big influence toward the end of the day as I wrote earlier will be the Fed minutes that will be released.

Do not be surprise if you see a downward movement in the markets if the interpretation of the minutes is that there is a definite (more than it is now) possibility of raising interest rates in December.

This is what everybody is looking for.

Following my observations on what other people are writing, I believe we should be watching the economic news that comes out this week. Remember last week as we went down and then this week as we’re going up, we have to understand why we’re going up.

Not only have we had some good earnings reports (which have a mild influence) what the short-term rise in oil prices has been listing the market.

After a sluggish start yesterday, the markets found their footing and ended the day with a comfortable gain. This Tuesday morning, it looks like they will continue where they ended the day yesterday.

The markets are taking a cue from European stocks as oil companies over there continued to trek higher.

Why are we inching higher? For one, financial results from Walmart stores were better than expected. Today we also have inflation data as well as house price index coming out which could help define the tone of the markets.

Higher oil prices also helped drive gains yesterday.

Since we already have the fear of the Federal Reserve potential rate hike in December, don’t be surprised if we see a few more days of selloffs because of the attacks keeping us in a high volatility market while people look for safer places to put their money.

The rest of the world markets fell as they were still unnerved today.

Other than that, it’s going to be a quiet day so I don’t have a real lot to write about yet. We do have the Empire state manufacturing survey out early but then there’s no federal speakers either so… At least not till tomorrow and it’s a trio.