What a day in the market. Who would ever have guessed that the Dow would sell off by 512 points. Funny thing: you could lay this whole thing at the feet of the uncertainty created by the politicians, especially the liberals. They live for crisis.
Now what? The market will receive the news about jobs and unemployment tomorrow, I think before the market opens.
It could sell off more, or recover a bit here. I think the negatives about the bad numbers is built into the markets, but the Asian markets are way down, this fine Thursday evening. They're open and falling.
Remember: A stock price today is based on the anticipation of future earnings. We're in the middle of earnings season and many companies are doing really well. But the uncertainty and fear surrounding this political class is stifling. Look for another rocky day.
If you want to learn how to trade the market as a whole, or the Dow in particular, try buying puts or calls on the DJX. The 114 puts, for example, represent the Dow at 11,400. Say they're going for $1.20, ten contracts would cost $1,200. Now put an order in to sell for double, or whatever you think you want to make. Yes, you're just paper trading, so what the hey? If you think it's going to go up, buy the calls.
To learn twice as much, paper trade both of them and do a straddle. I don't normally like straddles because you have the cost of two trades to overcome to make a profit, but we're in the learning mode, right?
No comments:
Post a Comment