In this week’s SimplerCast (https://soundcloud.com/user-169864316/simplercast-08-04-16-john-carter), John pointed out that August is usually a low volume month which can make for a quiet market - or it can see a lot of manipulation as no one is around. That is why he turns his attention to earnings. “While the market may be quiet, there is always some action with Apple or Tesla.”
He started his discussion with Tesla (TSLA). It’s lack of movement on earnings was surprising. It normally has great volatility and it also has huge short interest. If those shorts get scared, it will take a while to cover the short interest and the stock could explode higher. Because of the volatility, it is a good stock on which to use selling strategies – “charging Manhattan rents”.
He talked Apple (AAPL) which he compared to both Microsoft and a quiet bank stock as it’s volatility has quieted down. It is still a good stock, but one that is in “maintenance mode”.
He went on to discuss oil, some of its fundamentals and the best ways to play it. The USO ETF is one way to play oil, but maybe not the best. You can trade options on crude oil itself, but that is a futures option.
Next up was gold. “It is hard to not be enthused about gold”. He talks about gold, futures, options and the GLD. The other place to look is silver which he is bullish on. Both gold and silver provide potential hedging solutions depending on what the Fed does.
John wrapped up talking inflation, deflation and the bonds. The bond market can give us an idea of whether we are headed down a deflationary road or if Fed can lead us out of that.
This article was written by Simpler Trading's Editor-in-Chief, Chris McKhann
Chris McKhann has been involved professionally with the stock market for more than 15 years and specifically with derivatives for 12 of those. He started as a stock broker, but quickly moved on to options and futures trading. He spent some time as the Derivatives Product Manager for TD Ameritrade. He was the chief analyst and hedging strategist for OptionMonster. He has been an options trading educator and content provider for many years. His writing and analysis has been featured on Reuters, the Wall Street Journal, Forbes, TheStreet, CNBC and internationally. He has also designed and traded option and futures strategies for prop trading firms and hedge funds as well as managed accounts.