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A Rough Terrain - Learn to Trade Options | #1 Options Trading Education

A Rough Terrain

Published on August 31, 2007

A Rough Terrain

August 31, 2007

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This is a tough market, especially for the income traders. Big candles, either triple digit up or triple digit down. On way down adjust, and then on way-up adjust. Hopefully you are coping with it well.

Bernanke.gifBernanke is going to have the most awaited meeting today and give signals to the market whether or not interest rate cut is in store. Neither he can say FED is not going to help nor that he will cut the rates quickly to help. He will be walking on a very fine line and we can expect market volatility during the speech. There will be tug of war between bulls and bears. But whatever it may be, I think market wants to hear that FED is going to cut interest rates. My personal take is that it is not so near specially after upward economic revisions y’day unless he collects some meaningful data before Sept 18th meeting.

HSE short term.gif

Hong Kong market is sky rocketing. Not just 52wk high, but to highest ever!! Reason, the islanders now have over a billion people qualified who can invest into Hong Kong market as per regulation that was recently announced by Chinese govt.To appreciate the importance of the news further, let me show you  a quick chart- from a low of nearly 19,500 on Aug16th/17th, it is nearly up 23% to a little over 24,000 (compare this with DOW which is up nearly only 5-6%) !! Now where will it stop, no one know. Nothing stopped Shanghai (even 4 rate hikes), how will you stop HK, the new but more matured and polished kid on the block!!

screenhunter_05-aug-31-1602.gifComing back to US markets, mark two key number for Dow; 12,950 and 13,400, if it falls below 12,950 it may test 12,500 again but if it rising above 13,400, good chances that the bull trend is continuing. Today’s speech and after actions can provide a good hint on where are we heading. VIX is above 20 suggesting sufficient fear in the market to buy insurance i.e. via Puts.

There is interesting day ahead, trade carefully but trade profitably, OP

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