“Buy When Things Look Bad

New all-time highs in the markets has me thinking about peaceful places. So, I set out on one of my favorite inland lakes, without any woes or worries bringing me down…

But I have to wait a few more months for my 1952 Chris Craft restoration project to hit the water. In the meantime, I found a sale I couldn’t ignore…

boat

My new boat has a blue blood pedigree, thanks to the previous owner (pictured above) proudly displaying his 2017 record northern pike.

I was in the market for a short shaft outboard motor to pair with my Zodiac inflatable dinghy – so the deal worked out. Buy a motor and get a classic little boat for free! When most folks were stocking up on snowmobiles in the great white north, I went for the low-demand summer fun equipment on the cheap. Buy low!

Similarly, my “buy when things look bad” strategy in this decade-plus bull market has banked big gains over and over. The stock substitution strategy of buying in-the-money options lowers cost and risk. It also increases returns to land lunkers on just modest market moves…

Keep it In the Money,

Alan Knuckman

Alan Knuckman
Editor, In-The-Money

Chart of the Day: Patiently waiting for a holiday melt-up

Greg Guenthner

The market was stuck in a holding pattern to begin the trading week…

On one hand, we witnessed the vaccine delivery optimism that sparked this week’s initial rally. But stocks started to fade shortly after the Monday morning gap higher. The Dow and S&P’s gains disappeared, and both finished in the red. The Nasdaq, led by some big tech names, managed to finish the day green.

The media wants to blame the slump on stimulus concerns. Will a snowstorm in Washington prevent new stimulus measures from passing before Christmas? It’s impossible to say. But we do know that the market forces desperately want some sort of stimulus settled this week…

On the other hand, we’re seeing more stories about how the market is getting too frothy. That also might be true. But I don’t know if this alone can halt the rally that’s brewing under the market’s surface.

Here’s where we stand right now:

spx

After finishing lower for four consecutive trading days, the S&P successfully bounced Tuesday morning and appears to be setting up for a springboard move to all-time highs. Yes, the averages are stretched right now. It’s good to see some consolidation, following that November rip higher, but I see little standing in the way of a melt-up move heading into the holidays…

— Greg Guenthner

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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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