Loaded but maybe not locked

Loaded but maybe not locked

Of course, I’m keying off of the phrase “Locked and Loaded” that President Trump has been using to describe the US Military’s readiness to respond to North Korea. Since that phrase is in play, I thought I would use it for this week’s market update.

The major indexes are certainly “loaded,” meaning they are at historic levels and putting in new highs even last week. But the probability of this continuing is by no means “locked” in. Of course they could go higher and maybe they will. If they do, we will profit from that with our current long positions.

But, there is some new information, some new data that is really interesting. I’ve been spending time lately studying the advance/decline ratios and line and it is revealing. The fact is, advancing stocks continue to outpace declining stocks for the most part. But a drill down into that data reveals something unusual. The ratio of the number of stocks that are putting in new lows vs. the number of stock putting in new highs is about five-to-one, meaning a lot more stocks are putting in new lows, even as the indexes are reaching new highs. This hasn’t occurred for more than eighteen months.

Does this mean that a correction is imminent? That is not clear yet, but it does cause me heightened attention to that possibility.
I’ve been carefully watching various sectors and sector rotation and two sectors in particular; Industrials and Materials have my attention as they seem to be starting a pretty significant correction. I spend some time today scanning individual stocks in those sectors for potential bearish trades and I found what fighter pilots would call a “Target Rich Environment.” Without much time or effort, I found twelve short trades in those sectors that meet all of my criteria for high-potential, low-risk trades, all to the short side.

If you would like to see these trade candidates, with exact; Entry, Stop, Target prices, along with Option Contracts to trade them with, just click here to get instant access: https://li257.infusionsoft.com/app/orderForms/FollowMeTradescom-Short-Trade-Picks

Gold is in an interesting situation right now. It looks like it is trying to head higher. It currently is in a pretty wide, sideways channel, but if it can get above ~ $1307, it may be starting a significant rally.

Oil is a bit of a mess and is not trade-able right now. The mega-trend is down, but it keeps showing signs of wanting to turn up. No clarity and no trades at this time.

That’s it for this update. Stay tuned and if new realities emerge, I will send a real-time update.

Trade safe, Win Big and Lose Small,

Dean

2 Comments

  • Larry W Lind

    Reply Reply August 13, 2017

    Thanks for your research and insight on the high ratio of stocks with new lows vs. new highs. To further my concern, last Friday over 90% of my options lost ground, and that included both puts and calls, and this was during an up market day. I’ve seen some indication of this contrary behavior for the past couple of weeks, and I believe I will start shifting more of my options to the put side from the call side.

    Saw your offer of 12 put options for $59, guess that’s separate from those in the market picks?

    Enjoy your picks and your opinions, keep it up!

    • Dean Jenkins

      Reply Reply August 21, 2017

      I think having some positions on the downside makes a lot of sense. I’m currently weighted ~60/40 that way.

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