Investors in this country are under complete mind control by the Fed. They tend to think that the stock market will always move higher. It amazes me how easy it is to manipulate the minds of the American people.
It’s time to wake up and pay attention to what’s going on around you. Our leaders are leading us to financial ruin and war and we are just blindly following without the first thought of why or how we got here. Americans are a population of stupid, ignorant, uneducated and apathetic zombies.
The dumbing down of the American populace has surely paid off for the elites. They have successfully brain washed the masses through Hollywood and the media propaganda machines. They can tell us anything they want us to believe and we follow their lead like the Pied Piper.
You’re being lied to by your government and the main stream media. The recent unemployment numbers, as an example, are complete garbage and the propaganda machine is controlling your mind.
Markets are crashing all over the globe and investors are finally witnessing now, what we’ve been warning them about for the past few years. Once it begins to affect their own pockets, only then does it become reality, unfortunately by then it’s too late.
Options were originally designed to allow investors with a limited amount of cash to invest in stocks with limited risk. Options allow you to ‘rent’ the stock for a specified amount of time at a price that is considerably less than the actual cost per share of the underlying stock.
Let’s say you want to buy 100 shares of Microsoft (MSFT) at $54 per share. That means you will have to invest $5,400 to buy 100 shares of MSFT or you could choose to ‘rent’ those shares by purchasing an Option to buy 100 shares of MSFT for only $5 per share or $500.
This type of trade limits your total risk to only $500 rather than $5,400. If the stock goes up, then you make money, but if the stock goes down, the most you can lose in the trade is $500. That’s based on a 100% loss.
If you had bought the stock shares at $5,400 with a 20% stop loss. A 20% loss would have been $1,080. Therefore, you would have lost twice as much in the stock trade vs. the option trade.
Options allow you to risk much less and profit just as much as if you bought the stock outright.
People who consider options as risky don’t understand how options were designed to work. It’s not the option that’s risky; it’s the strategy that traders use that can make them risky. Used the right way, options are much less risky than stocks.
Options only become risky when you overleverage the trade by taking out a much larger position than you would have if you were buying the stock outright.
If your plan was to buy 100 shares of MSFT, then you would only want to trade an option for 100 shares, which is equal to one option contract.
Greed takes control of novice option traders and they think, if I have $5,400 to invest, I’ll trade 10 option contracts for 1,000 shares of stock at $5,000 and make 10 times as much.
That’s a set-up for disaster. Remember you have a 1 in 3 (30%) chance of a winning trade; the position will either go up, sideways or down.
I will show you additional strategies in coming reports to show you how to improve your odds of a winning trade.
The daily chart of gold below shows no indication that we have bottomed or have started a new bull market. However, fundamental indicators are screaming that gold and silver are due for a huge upswing. The only problem with fundamentals is that the central bank manipulators have successfully been able to keep the fundamentals suppressed with their naked shorts and market interference.
The only thing that shows that we might have a significant change to the upside is the net long position by the commercial banks and the hope of an end to the manipulation once the SGE fix comes on line in April.
This is why I tend to stay away from short term trades in gold stocks and position myself for longer term expirations of a year or more. Eventually this manipulation will come to an end, either by political or natural market forces and I want to be positioned to benefit from it when it happens because when it happens, I think it’s going to be spectacular. I still think this could be the year and that’s why I have 2017 Calls in my gold stocks.
We are seeing a big upswing in gold this morning due to the crash in oil and global stocks. Gold is up 20 points before the open and should continue higher throughout the day.
Stock Market Indices: (SPY) (QQQ)
The S&P continues its downward trend into 2016. In fact, this has been the worst start to a new year since 1929. We had a slight pause in the downward motion on Thursday, but the bear continues today.
The technical indicators have become ‘oversold’, suggesting, by some analysts, that we are due for a bounce, but if you study bear markets of the past, you will note that a market crash will continue down even when they are oversold. The down trend will feed on itself as investors lose faith in the market.
In the daily chart below, you can clearly see the peak and rollover of the S&P followed by lower highs. This is classic behavior for the beginnings of a bear market. Not to mention that virtually every economic indicator shows the global economy in free fall. We’re almost back to the August lows and I expect we’ll see a break of the August lows within the next week.
This baby’s going down!
Energy Stocks: (XLE) (UNG) (USO) (LNG)
Crude oil has crashed through the $30 handle this morning. This has caused global markets to crash and the U.S. market is no exception. I wouldn’t be surprised to see oil fall below the $25 range before we have a significant change in direction. It crossed the 2008 bottom several days ago and is now making all-time lows.
Oil is a seasonal market and tends to rise during the months of February through June. As a result, oil should continue its downward movement until sometime in February. I’m shooting for after Valentine’s Day to keep an eye on a possible bounce.
This could be a set-up for a possible February thru June swing trade. I will keep you posted.
Financial Stocks: (XLF) (IYF)
IYF gapped down this morning matching the direction of the S&P. This ETF will follow the markets down over the coming months.
Commodities: (FCX) (JJG) (DBA)
Commodities are so hated and oversold right now you would think now would be the perfect time to get in, but I think more pain is on the horizon as the global economies continue to fall. China is one of the largest consumers of commodities and with their economy faltering, expect the commodity markets to continue to trend down from here.
US Treasury Bonds: (TLT)
I think investors will move from a failing stock market to safety, which will temporarily be treasuries and for the longer term, precious metals.
(SPY) December 2016 PUTS 190 Strike
(IYF) August 2016 PUTS 84 Strike
(XLE) June 2016 PUTS 57 Strike
(SLW) January 2017 CALLS 13 Strike
(GDX) January 2017 CALLS 15 Strike
(ABX) January 2017 CALLS 10 Strike
(RGLD) July 2016 CALLS ATM
Global Debt Crisis To Increase Worldwide Panic As Historic Super-Bubble Begin To Burst
The only three undervalued assets today are gold, silver and their respective equities.
Newsflash From The December 'Jobs' Report - The US Economy Is Dead In The Water - David Stockman
Here’s a newsflash that CNBC didn’t mention. According to the BLS, the US economy generated a miniscule 11,000 jobsin the month of December.’ …the BLS fiction writers added 281,000 to their headline number to cover the “seasonal adjustment.”