Riots in the Streets, Panic in the Markets?

I told you Monday that I was headed back to Chicago for a couple of weeks, just in time for the June 8 reopening of the options trading floor.

But I’ve taken a small detour…

While the coronavirus threat still looms large over the city, we’re also dealing with protests and looting. The news of civil unrest is impossible to ignore on a national level. Unfortunately, I had the opportunity to experience the aftermath firsthand.

Here are some pictures I took near the CBOE:

burned police car

looted store

Every 7-Eleven and McDonald’s near the exchange has been demolished. With no shot at scoring any Big Gulps, I decided to briefly retreat back to my lake compound in Michigan. If you live in a major city (or anywhere near the protesting) please do your best to stay safe!

It has certainly been a rough year so far as one tragic even after another upends our best laid plans. Thankfully, we possess a trader’s mindset. We have more than one backup plan — and we’re always ready to change direction, grab profits, or cut our losses. With our limited risk, “anywhere” trading strategy, I’m confident we’ll continue to find great opportunities for big gains no matter what unfolds on the evening news.

For now, it’s time for me to retreat to some peace and tranquility. We can continue trading what we see when we see it from the comfort of our homes or wherever is safest. But I’ll be back in Chicago soon to brave the carnage and pass on my reports from the newly opened trading floor…

Keep it In the Money,

Alan Knuckman

Alan Knuckman
Editor, In-The-Money

Chart of the Day: Tech Falls Behind

Greg GuenthnerI mentioned last week that trading was beginning to feel a little different as some market laggards suddenly attracted new buyers. Financial and industrial names were beginning to perk up while the high-flying tech names took a break…

But this little trend is once again beginning to emerge this week. The mega-cap tech leaders fell behind in Tuesday trade as household names such as Facebook Inc. (NASDAQ:FB) and Amazon.com (NASDAQ:AMZN) dipped into the red early in the session. The Nasdaq Composite also slipped early, digging a huge hole that left the tech index badly trailing the S&P and Dow despite a quick midday rally.

While I’m not ready to totally dump the tech leaders at this point, this rotation into some unloved sectors does appear to have legs. The Dow Jones Industrial Average has jumped more than 6% over the past two weeks as of midday Tuesday. Meanwhile, the Nasdaq Composite is up just 4% over the same timeframe.

compq chart

I also noted last week that I wasn’t surprised to see some profit taking in these high-flying stocks. These little shakeouts can help shore up the longer-term uptrends before they become overheated.

Keep in mind, the Nasdaq Composite is still soundly beating the pants off the Dow industrials year-to-date. The tech-heavy index is up more than 6%, while the Dow remains down double-digits on the year.

We’ll be watching carefully for any additional signs that point to this relationship changing in the days and weeks ahead…

Trading Tip of the Day

As trading legend Jesse Livermore once said, the real money made in speculating has been in commitments showing a profit right from the start.

What Livermore means is your trades that begin to work for you right away are probably going to turn into your biggest winners.

Look back at your most recent successful trade. I can almost guarantee that most of them were strong right out of the gate.

A trade that’s green from the get-go can work wonders on your psyche. With gains on the books right away, you’re not worried about a flailing trade trying to fight its way back to breakeven. Instead, you have a position that has immediately confirmed your thesis. You’re then more likely to hold on for the bigger gains if you’re already sitting on profits…

— Greg Guenthner

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You’re a “Beach Trader” Now

The ability to trade any market, anytime, from anywhere has changed everything. And yes, they’ll soon bulldoze the shoulder-to-shoulder trading pits of the past as well. We’re all “beach traders” now.

Alan Knuckman

Alan hails from the home of options trading in Chicago, where he began working as a clerk on the floor of the Chicago Board of Trade (CBOT). Beginning with his days on the floor, Alan’s worked with all aspects of the options markets for the past 25+ years.

Transitioning from a clerk to a floor...

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