Black Friday Could Have A Negative Bias. This Rally Is Heading Into the 9th Inning

November 27, 2013
Author: Peter Stolcers, Founder of OneOption
Author
Pete

The winter storm is barreling down on the East Coast and many traders will stay home. Volumes will be extremely light today.

In the last five years, Black Friday has been relatively weak. I would not go short, but it might be wise to pare long positions. This is a light volume, low probability trading environment.

The action will pick up next week and we will get the last round of economic news for the year. The results will be good, but not robust enough to justify tapering in December. From a news standpoint, this is the last hoorah for 2013 and the releases will have to fuel us the rest of the way.

Earnings season has been good, global economic growth is moderate and central banks are accommodative. These influences are providing a nice tailwind.

The market has rallied 25% this year and Asset Managers are not worried that they will miss a year-end rally. They will buy dips, but they will not chase. Some Asset Managers might be tempted to take profits.

As we get closer to 2014, the CR, the debt ceiling, tapering and the impact of Obamacare will weigh on the market. Now that I have learned more about Obamacare, I am certain that it will weigh on the market in 2014.

OneOption has a group policy with Blue Cross Blue Shield of Illinois. Fortunately, our plan has not changed in the last five years so we won’t be forced into the exchange. It is not a “substandard” plan and like most Americans, I thought I would be pretty isolated from increases

I just received a notice that fees directly associated with Obamacare will be passed through and my health insurance premiums will increase by $1000 starting Jan 1, 2014. After hearing countless horror stories, I’m convinced that this will hit most Americans in the pocketbook next year. Businesses will ask employees to pick up some of the increased expense. This healthcare plan is law and the wheels are in motion. It will be impossible to stop.

This is a giant tax and the money will come right out of the economy (consumption will decline). We might start seeing the impact this holiday season.

The market will be flat today and there should be a slightly negative bias on Friday. I sold some out of the money put credit spreads last week and those positions are working out nicely. I distanced myself from the action and time decay is working in my favor.

Life tends to get very hectic and it is easy to lose sight of how lucky we are. I’m going to take the rest of the week off to count my blessings – I hope you are able to do the same.

The price action the next two days will be very light. Keep your size small.

May you and your family be blessed this holiday.

Happy Thanksgiving!
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