Showing posts from June, 2019

Trading the Volatility. Part 1

One of the concepts most used, and perhaps less understood, in the world of trading is the volatility, that is, the degree of variation of the price of a stock in time, in both direction and speed. This variation is directly proportional to the risk. This makes a volatile stock more attractive for trade it (for short-term or swing traders in particular), but also riskier. Knowing how to use volatility in favor of obtaining benefits is one of the arts of stock trading.

Options and Implied Volatility
Known and used by all traders, the options are the best financial instrument to make money investing a fraction of the capital that we would use in stock as such. They are the right, not the obligation, to buy (option: call) or sell (option: put) an asset at a specific price within a specified date, through the paid of a premium. That is, the options involve price and time, the two variables that define volatility, which make it, its main protagonist. (Please refer to Bill Johnson's …

Ideas from my Stock Watchlist for this Week

Market Pulse.
Stocks climbed to new highs this week after the FED suggested it would give a Rate-Cut in as soon as next month, to keep the Trade War from stopping economic growth. The rally comes after trade tensions and uncertainty over FED policies worried investors last month, with stocks posting their worst May since 2010. Dovish feelings in the FED and a probable meeting between Trump and Xi during next G20 summit, helped share prices this month, putting the SP500 SPX on pace for its best June since 1955, and now testing a crucial resistance at 2,950 level. A consequence of the central bank decision is that US Treasury’s yields remain near multi-year lows: the 30-year yield TYX is near 2.6%, while the benchmark 10-year yield TNX is below 2%, the lowest level since 2016.

As usual, crude oil prices climb when geopolitical tensions increased. Now fears come due of a U.S. military attack on Iran after it was reported that Iran shot down an unmanned U.S. surveillance drone over the S…

InterMarkets Analysis. Part 2

John Murphy
This post complements the previous one published a few days ago and aims to give a summarized idea of what intermarket analysis is about, study developed by John Murphy in his two classic books 'Intermarket Technical Analysis: Trading Strategies for the Global Stock, Bond, Commodity and Currency Markets '(1991) and' Intermarket Analysis: Profiting from Global Market Relationships '(2004). Although they may seem out of date because it does not deal with recent events such as the crisis of 2007, its reading is indispensable for a trader because it gives us a global vision and a better outlook when explaining in very detail the relationship between the four markets (currency, commodities, bond, stocks) and how they influence one another. This will allow us to establish our portfolio, telling us the best place to start investing in instruments for the medium and long term.

Inflation and Deflation
A basic idea of Murphy's book is to understand that the cor…