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Our current view on the market

Updating our earnings surprise data

Advisors might notice that we had a company in our IAS equity portfolio announce earnings today. It was Thor (THO) which is a Recreational Vehicle company. Yep –they make RVs! We also own WGO (Winnebago) in the portfolio. We have these occasional later reporters in our cycles. It happens.

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HIPOS Weekly Update: Volatility Resumes its Low Posture

With only 13 calendar days left until expiration on June 16th, the underlying S&P 500 Index on our HIPOS spread has broken out to new highs. With the market 15% away from our short strike and nicely above our curved purple exit curve, your clients are currently getting what they wanted in market movement thus far. Currently, the trade has an unrealized profit. As we get closer to expiration, we’ll update you on what to expect. It’s worth noting that if the Index does not move much from its current levels, the market movement in the value of your spreads should stay around where they are now until expiration or an opportunistic early exit by our traders.

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HIPOS Weekly Update: The Window Opened and Closed on Volatility

Volatility is once again showing a familiar pattern: spiking quickly then fading just the same. Last week, after essentially trading in a tight range, markets broke to the downside on Wednesday. You probably remember the S&P 500, Dow Jones, Nasdaq, and Russell 2000 all off somewhere between 1.5% and 2.5%. The follow through to the downside didn’t materialize. The entry for this trade once again was a very small window.

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Money Flows Often a Contrarian Signal

Last week some US equity funds experienced large redemptions that corresponded with the down day in the markets. If you remember, the major indices were off between -1.5% and- 2.5%. Some commentators mentioned that it was the largest outflows since right before the election. Curious, I went back through the archives and found the corresponding chart and article on Bloomberg highlighting the massive outflows from emerging market ETFs around the election period.

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HIPOS Weekly Update: Volatility Holiday Over? New Position Entered.

After a seemingly endless amount of news stories and CNBC prognosticators opining about how low volatility has been, today was a surprise to some. Volatility spiked and the major averages were off 1.5% to 2.5% across the board as of late trading. Long time advisors utilizing our HIPOS (High Probability Options Strategy) know that since we are net sellers of option premium, we often wait for short term spikes to capitalize on. While we don’t try and time the market, the result of being patient often leads to entries after sell offs.

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