So it Happened..

Just like I said it would except not for the reason I said it would. I told you the market would probably end up higher on the day. The markets were either slightly lower or actually up for the day. I told you that the relatively positive economic data would send the markets higher. That wasn't exactly the truth. The truth is that we rallied on the hope that the government would step in and help homeowners with some sort of subsidy. If we had rallied on the economic news I would have felt good. The fact that we went higher at the end of the day because of the thought of more government intervention, is the sign that the market is still sick.

A sick market does not mean that profits can't be made. It means that profits go to good traders. Not good investors. A good investor looks into the fundamentals of the company and determines a value. They then purchase when the stock is cheap in relation to that value. A trader looks at market sentiment based on charts and volume indicators. They buy at a point when the market is jumping in all at once and profit from the herd mentality. There is nothing inherently wrong with one approach or the other, but in times like these traders tend to be more successful.

That said, I will not be blogging Monday for the holiday. What I will do when I return Tuesday is focus more on the specific trades I am making to help add a little life to your portfolio. Specifically I use an options strategy centered around earnings releases. Options have three types of value. They have time value, which is the amount of time until they expire. Less time until expiration = less value. Intrinsic value is based on how close or in the money an option is. Closer to being in the money = more value. The last type of value is volatility. This is based on how much the stock moves day-to-day. More movement = more value. If you can own options that take advantage of the inherent options value creators, you can put trading odds in your favor. That is what investing and trading are all about. Until next time, stay low risk..