FOMC Announcement this Week: key for Q4 Markets

Highlights that will move the stock markets this week:
- The Fed meets on Wednesday for the final time before the Nov. 3 presidential election with investors hoping to learn more about its decision to tolerate higher inflation. 
The Fed’s decision to tolerate periods of higher inflation effectively means that interest rates will remain lower for longer. Meanwhile, the Bank of England and the Bank of Japan will both hold policy meetings just hours after the Fed on Thursday.

- Markets will also be paying close attention to data on U.S. Retail Sales for August, out on Wednesday, and initial jobless claims figures on Thursday.  The number of new claims for unemployment benefits hovered at elevated levels last week, suggesting the labor market recovery from the COVID-19 pandemic was stalling as government financial aid to businesses and the unemployed dries up.
- Last week’s volatility in stocks could continue with a much-awaited fiscal aid package stalled in the Senate and the election l…

Option Strategies for Earnings Season

Buy a stock just before its earnings report is a bet: it can be highly profitable or devastating for your portfolio. You decide the risk you face. I always prefer to wait for the report, to compare their numbers with the estimates in EPS, sales, and guidance, review the conference call for some additional data and see the next day analyst's ratings, which usually increases or decreases their weighting and price target. And, of course, you can use specific options strategies during these events. Let's overview some ideas as to choose the right strategy. You need to know the following principles:

-  A strategy that involves long options (been calls or puts) will typically gain value as IV increases and lose value quickly with IV decreases.

- On the contrary, a strategy that involves short options (been calls or puts) will typically gain value quickly with IV decreases and lose value as IV increases.

- During an earnings event, the implied volatility IV of the underlying usually…

Markets remain artificially driven by the Fed

As I explained in previous posts, as many cautious traders, since coronavirus emerges, I am working with day and swing trades only, without even creating the usual long-term portfolio, due to the bizarre behavior of the stock market in this year 2020, artificially pumped by the Fed, with not only economic but political intentions. The recovery since March was a great opportunity for gains, now is time to protect them. I am expecting a necessary market correction in the next weeks or months, as we have an extremely overvalued market, which is not in line with the real economy and with many index indicators about to explode (for example, the SP500 put-call ratio or its PE ratio above 25, unseen since 2008).

Levels to watch this week in main indices
The key to a successful application of Price Action Trading is to choose the appropriate support and resistance levels and wait patiently for the price to approach or reach one of them to start making entry decisions. Once decided, the targe…

Trendline Strategies using Price Action Analysis

This post intends to continue what was previously posted here. Knowing the importance of candlesticks, the patterns they form, and their crucial importance when the price reaches trendlines or support-resistance levels, I make here a simplified summary of my trendline strategy for day-trading, using Price Action Analysis. For this, I will rely on the charts from Forex.doc, which are among the best explained and drawn that I have found on the internet. Thanks to their authors for permission to publish some of them here.

Trendline Strategy: Basics
A trendline connects swing highs or swing lows during a trending market, and can act as support or resistance line, but also a break of it can signal a trend change.  In an ideal uptrend, price make higher highs and higher lows. In an ideal downtrend, price make lower highs and lower lows.
The strategy is based on the breakouts and pullbacks made by the underlying's price:
 - A breakout is a potential trading opportunity that occurs when …

Fundamental Analysis: useless in this distorted 2020

Given the indecipherable fluctuations of the economy during this year, the title of this post reflects one of my feelings about this unusual 2020 stock market. A Q1 quarter where the SP500 falls 20% and the next Q2 turns around and rises the same 20% is surely something we will not experience again in our lives. Thus, it's complicated to make a serious analysisas usual, that is to say, reviewing both fundamentals and technicals details, alike.
Powell and the Fed with its zero interest rate (good decision) and unlimited QE (excessive) are artificially propping up the financial markets, literally destroying the risk in markets, instead of investing for growth, just for trying to hide the US (and global) recession, already foreseen since January and accentuated by the coronavirus. Now we have market indicators at dangerous edges, like the SKEW index (that measures the risk of a black swan, a 20%+ plunge of markets) spiking now above its March levels. Or the Nasdaq Put/Call ratio (40…

My Stock Watchlist for June-July 2020

On my Thinkorswim trading platform, I manage several watchlists, differentiating them according to the instruments it contains. There are stocks, futures, ETFs, sectors, and indices watchlists. My different ETFs watchlists usually keep the same symbols in time, diversified by sectors, industries, countries, commodities, both at 1X normal speed and 3X triple speed.  My Indices, sectors, and futures watchlists are also fixed, covering the main indexes and commodities from Wall Street and major foreign exchanges, usual symbols well-known by all traders.

Those that do change, usually monthly, are the symbols of my Stock Watchlist, stocks which I follow on a daily basis, due to my own research, that consider both fundamental and technical analysis, news topics, or simply popularity. Over time, it appears in the list new stocks, disappear others, according to the importance they are acquiring, in my opinion.

June-July Watchlist
After three months using hardly my "coronavirus strategy…