Option Trade of the Day
Market Timing Pays Off For This Transportation Stock!
Wednesday, April 29, 2015
It is apparent that market conditions are bullish – we are in a bull market – and this theme will continue for some time yet. Only yesterday, we saw the Dow Jones Industrial Average close at 18,110.14, up 72.17 or 0.4%. S&P 500 closed at 2,114.76, up 5.84 or 0.28%. The Nasdaq Composite was a bit of a letdown, closing at 5,055.42, down -4.83 or -0.1%.
However, once this range-bound trading subsides, and a few more positive catalysts appear, then the rally should continue. This means that investors and traders, alike, should consider trading with a Bullish bias by buying Call Options.
There are plenty of signals to support the situation as it now stands based on the signals for market timing.
The Signals for Market Timing
1. The Momentum Indicator -- indicates a bullish trend in stocks. Risk of a trend reversal is low. This means the current short term bullish trend is likely to continue.
2. The Breadth Indicator -- indicates the breadth of stocks moving higher is neutral. The risk of a trend reversal low, which means the current trend, is likely to continue.
3. The Sentiment Indicator – as can be seen above – which indicates that the sentiment in the stock market is showing extreme complacency.
4. The S&P 500 Volatility Index (VIX) is one of the most powerful indicators of future market momentum and is a way to spot extreme sentiment (whether it’s fear or greed) and changes in short-term market direction.
This rock solid tool provides the single-best clues to market moves -- and the long-term trend on the VIX is clearly down, and that’s a bullish sign.
Although the equity market has been pretty tired and trendless since the beginning of the year, earnings are holding up. But while international businesses are feeling the effects of a stronger U.S. dollar, sales and earnings estimates for 2016 continue to be quite strong.
A lot of businesses currently predict much-improved business conditions for next year. The equity market knows this. It is thus a contributing factor to recent strength in the main market indices.
That’s a lot of certainty for the equity market, along with many reasonable expectations.
So while doom and gloom sells more newspapers, it’s more important to follow what the equity market is actually doing as well as what underlying businesses are reporting.
One area that is making all the right moves is the Dow Jones Transportation Average. The transports caught Wall Street’s attention when they
dropped below their 200-day moving average a few weeks ago.
And, sure enough, the index has been bullish for the last few weeks. It recently reclaimed the 200-day moving average, and is on the verge of clearing its 50- and 100-day moving averages.
And as always, there are some transport companies that are doing well and will continue to perform, even under adverse conditions. There is one company that shines above all.
Buy this option trade of the day to receive the recommendation for a call option on a stock that could make you 50% - 100% gains or more.
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