We Made It!

It couldn't have been more fitting that one of the scariest and worst months in stock market history ended the trading week on Halloween. Volatility has been ridiculous lately, so I have taken to using smaller and very few position sizes remaining essentially delta neutral until the market calms down, not to mention most of my time is spent studying for the CFA at the moment. I think volatility should calm down after the election so hopefully we can start some steady trends and options will be more appealing to buyers.

As of right now we seem to have put in a short term bottom at 8,000. Depending on what happens in the coming months and into next year that may not be the ultimate bottom but it seems more and more likely as we go higher from here. The NYSE bullish percent went on to a buy signal on the point and figure charts, which makes it a "bull confirmed" status, meaning bull market. This is supposedly the lowest a confirmation has ever happened at 20%, it could be a false signal but as of now until it is broken buying the dips is much more appealing and trends should hopefully last longer than a day or two.

If hedge fund and mutual fund liquidations are essentially done there will likely be a steady stream of money coming back into the market over the next few months if we don't get any unexpected surprises like a country defaulting.

I recently got approved for Forex and Futures on my new thinkorswim account which should offer some good opportunities to diversify. If europe is/will be in a recession it seems logical that they will continue to cut rates, and since the our rates can only go down another percent I think this will pressure the euro making it good to be long the dollar and buying on dips. A strong dollar will pressure crude and commodities however those have come down so hard from forced selling I think I'll wait for them to regain a correlation.

We broke above 9,250 and finished above it today pointing to higher stock prices going forward. Today was kind of funny because it was much less volatile during the day(ie normal) and seemed boring after we have had such swings all month. In the final 30 mins there was quite the battle though, in 2 mins I think the futures sold off 150 points, traded in a range then finished up back close to their highs within the last 5 mins. I took the opportunity to trade some futures today, it was slightly frustrating but highlighted the necessity of rules and risk management. 3 times in a row I took trades, with the trend and had to get back out with a loss. Then my 4th trade was profitable and made up for all my losses. I ended up making 5 dollars total in the futures haha but it shows that you can take multiple small losses and still make money. My other lesson was to take positions a little bit closer to trend lines. I would get back out when the lines were violated, but would generally see them come back and would have gone in my favor. Oh well, rules have to be followed as we can see and you can't mess around even trading single contracts due to the leverage they allow. Each trade risked about 1%.

Overall I am cautiously optimistic at least in the short term given what has been seemingly priced in. Consumer spending dropped by 3% which was huge and obviously is the main driver of GDP(which was -.03). I think a lot of the announced layoffs will hit next month which could be an issue obviously and is never a good thing in general(take it from the unemployed haha).

It looks like Obama is going to win the election, which I prefer but hope he has a good plan for creating jobs. Stimulus packages like Bush gave by giving out checks are worthless and do nothing but artificially create spending for a month. I hope that is not the same way Obama goes because it would be equally as worthless and add even more to our debt. If jobs get created then people can spend month after month(and hopefully this time save some too) imagine that!

Well, back to studying...