by
Adam Taggart
options
by
Adam Taggart
A month ago, in an analysis titled Defying Gravity, I wrote about the unsustainable state of the stock market's high prices.
In it, I noted how the stock market had risen for an aberrantly-long time time without a correction, and that it hadn't even tested its 200-daily moving average price once since the beginning of 2012:
Gravity Returns – The Market Drops Nearly 5% in 3 Days
by Adam TaggartA month ago, in an analysis titled Defying Gravity, I wrote about the unsustainable state of the stock market's high prices.
In it, I noted how the stock market had risen for an aberrantly-long time time without a correction, and that it hadn't even tested its 200-daily moving average price once since the beginning of 2012:
by
Adam Taggart
by
Adam Taggart
Executive Summary
- What you need to know about hedging with
- Stops
- Inverse and leveraged ETFs
- Shorts
- Options
- Futures
- Deciding which hedging instruments are appropriate for your portfolio
If you have not yet read Part 1: Defying Gravity available free to all readers, please click here to read it first.
OK – hedging sounds prudent. But how do you do it?
Our focus here in Part 2 of this report is to cover the most common vehicles used in hedging strategies. Each one merits its own dedicated report (a series we’ll likely create in the future) to truly understand how and when to best deploy, so this report will focus on providing you with a good introduction to each, with guidance on how to further explore the ones that strike you as appropriate for your needs and personal risk tolerance.
Before continuing further though, let me make a few things absolutely clear. This is NOT personal financial advice. This material is for educational purposes only, and as an aid for you to discuss these options more intelligently with your professional financial adviser(s) before taking any action. (If you do not have a financial adviser or do not feel comfortable with your current adviser’s expertise with these hedging vehicles, we’ll be happy to refer you to our endorsed adviser)
Suffice it to say, everything discussed in this report (even the % cash component mentioned in Part 1) should be reviewed with your financial adviser before taking any action. Am I being excessively repetitive here in order to drive this point home? Good…
How to Hedge Against A Market Correction
PREVIEW by Adam TaggartExecutive Summary
- What you need to know about hedging with
- Stops
- Inverse and leveraged ETFs
- Shorts
- Options
- Futures
- Deciding which hedging instruments are appropriate for your portfolio
If you have not yet read Part 1: Defying Gravity available free to all readers, please click here to read it first.
OK – hedging sounds prudent. But how do you do it?
Our focus here in Part 2 of this report is to cover the most common vehicles used in hedging strategies. Each one merits its own dedicated report (a series we’ll likely create in the future) to truly understand how and when to best deploy, so this report will focus on providing you with a good introduction to each, with guidance on how to further explore the ones that strike you as appropriate for your needs and personal risk tolerance.
Before continuing further though, let me make a few things absolutely clear. This is NOT personal financial advice. This material is for educational purposes only, and as an aid for you to discuss these options more intelligently with your professional financial adviser(s) before taking any action. (If you do not have a financial adviser or do not feel comfortable with your current adviser’s expertise with these hedging vehicles, we’ll be happy to refer you to our endorsed adviser)
Suffice it to say, everything discussed in this report (even the % cash component mentioned in Part 1) should be reviewed with your financial adviser before taking any action. Am I being excessively repetitive here in order to drive this point home? Good…
by
charleshughsmith
Executive Summary
- Understanding the importance of the 'Smith Market Uncertainty Principle'
- Technical analysis techniques for identifying the arrival of a market reversal
- Bollinger bands
- volatility
- moving averages
- Using the above indicators to know when to sell
If you have not yet read The Approaching Inevitable Market Reversal, available free to all readers, please click here to read it first.
In Part 1, we reviewed the case for the Fed-enforced New Normal of “no more downturns” and the case for a trend reversal in the stock market.
In this Part 2, we consider signs that a trend reversal has taken hold.
The Mechanics of Manipulation
Let’s briefly review the mechanics of stock market manipulation. It’s easiest to manipulate a low-volatility, low-volume market, as low volatility (i.e. complacency) lowers the risk premium in index options, and a low-volume market is influenced by the purchase of relatively modest blocks of index options. As a result, the Fed or its proxies can prop up the markets with large purchases of index options that cost very little in comparison to the overall size of the market. (Recall each option leverages 100 shares of the index or stock.)
The other way to manipulate the market is to intervene at the critical technical levels that money managers and trading computers are watching. Every well-known technical system has been programmed into the trading bots, the majority of which appear to be trend-followers: if the market reverses at key technical levels (due to massive blocks of index options buying, for example), then the bots start buying the uptrend.
Since the vast majority of trading is now done by machines, this greatly simplifies the process of manipulation: the manipulator need only defend key technical levels with mass purchases of leveraged index options and the trading bots will jump in and buy the uptick.
Experienced traders have seen this sort of activity countless times in the past five years. It has become predictable that…
The Signals That Will Tell Us A Stock Market Reversal Is Imminent
PREVIEW by charleshughsmithExecutive Summary
- Understanding the importance of the 'Smith Market Uncertainty Principle'
- Technical analysis techniques for identifying the arrival of a market reversal
- Bollinger bands
- volatility
- moving averages
- Using the above indicators to know when to sell
If you have not yet read The Approaching Inevitable Market Reversal, available free to all readers, please click here to read it first.
In Part 1, we reviewed the case for the Fed-enforced New Normal of “no more downturns” and the case for a trend reversal in the stock market.
In this Part 2, we consider signs that a trend reversal has taken hold.
The Mechanics of Manipulation
Let’s briefly review the mechanics of stock market manipulation. It’s easiest to manipulate a low-volatility, low-volume market, as low volatility (i.e. complacency) lowers the risk premium in index options, and a low-volume market is influenced by the purchase of relatively modest blocks of index options. As a result, the Fed or its proxies can prop up the markets with large purchases of index options that cost very little in comparison to the overall size of the market. (Recall each option leverages 100 shares of the index or stock.)
The other way to manipulate the market is to intervene at the critical technical levels that money managers and trading computers are watching. Every well-known technical system has been programmed into the trading bots, the majority of which appear to be trend-followers: if the market reverses at key technical levels (due to massive blocks of index options buying, for example), then the bots start buying the uptrend.
Since the vast majority of trading is now done by machines, this greatly simplifies the process of manipulation: the manipulator need only defend key technical levels with mass purchases of leveraged index options and the trading bots will jump in and buy the uptick.
Experienced traders have seen this sort of activity countless times in the past five years. It has become predictable that…
by
Adam Taggart
If you have money in the financial system (stocks, bonds, retirement funds, etc.) and you share the same skepticism most of our readers have about the markets' future stability, how should you invest those funds?
Most of the folks who inquire about our endorsed financial advisers are far more interested in preserving the purchasing power of their wealth vs. aggressively trying to beat the market average each year. But how exactly does one do that?
In this week's podcast, Chris sits down again with Mike Preston and John Llodra to discuss risk-managed investing.
Ask the Adviser: Risk-Managed Investing
by Adam TaggartIf you have money in the financial system (stocks, bonds, retirement funds, etc.) and you share the same skepticism most of our readers have about the markets' future stability, how should you invest those funds?
Most of the folks who inquire about our endorsed financial advisers are far more interested in preserving the purchasing power of their wealth vs. aggressively trying to beat the market average each year. But how exactly does one do that?
In this week's podcast, Chris sits down again with Mike Preston and John Llodra to discuss risk-managed investing.
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eQRP: Self-Directed Retirement
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