Investing, Options Trading and Everything Money
This is a new type of post that I will try to make each week (usually weekends, but sometimes during the week) where I share some stocks to watch, or at least that I’ll be watching based on recent Unusual Options Activity as well as some other market factors.
For full disclosure, I will let you know which ones I have positions in already. The names on this list that I don’t have positions in are names that I’ll be eyeing for opening positions in.
Tomorrow, August 21st, 2017, a solar eclipse will occur. The eclipse will be visible as a total eclipse by a band stretching across the USA from Oregon to South Carolina, and as a partial eclipse in the rest of the country and world.
Such an event usually brings me back to elementary school when we would typically get an extra recess to go out and watch it.
I have an insatiable curiosity about things that interest me The simple explanation behind a solar eclipse is fairly easy to grasp, even when you’re young; the moon is at an angle that sets it between the sun, such that the sun seems to blocked out (eclipsed, if you will) by it. Even studying physics in college doesn’t give you much more than that beyond the specific axial angles the occur at.
But after spending over a decade in financial markets and letting that curiosity remain insatiable, I’ve read and continue to read a great deal about the markets and things that influence it.
The vast majority of financial writers and investors are quick to pass off the notion of such events as having any sort of impact on the markets as being ridiculous and purely pseudo-science.
But there are some well-recognized investors that take/have taken financial astrology seriously, with one of the most notable being W.D. Gann (listed as one of Investopedia’s Top 10 Most Famous Traders in the World).
Gann, in-fact had an entire section of his reading list for students that covered financial astrology.
Let’s think of it like this for a minute. The gravitational effects of the sun on the Earth are what keep it in its’ orbit. The power of the moon’s gravitational effects on the Earth are strong enough to create ocean waves.
We, despite our appearances, are composed of individual molecules (in-turn composed of individual atoms). The gravitational impact on atoms is widely accepted amongst the modern scientific community; depending on the size of the atoms and their proximity to each other, the larger body will pull on the smaller atoms.
During a solar eclipse, the gravitational pull from other stellar bodies on every atom on our planet is impacted; if you think about it, there’s really no other alternatives.
Our bodies, including our brains, are therefore impacted by such lunar and solar events in some way. Typically the time leading up to an eclipse guides us towards a great deal of negative energy, which can cause the choices that we, our political leaders, as well as players in the market are making without us (or them) even being cognizant of our thought processes being altered.
Historically, solar eclipses have been correlated with periods of high volatility in the markets (up and down). This correlation is seen the week leading up to and after the week after the eclipse.
Well, last week, $VIX saw the first significant spike it’s seen in a while (roughly a week before tomorrow’s eclipse)..
The last solar eclipse visible from the USA was on May 20th, 2012…
And then before that, May 10th, 1994.
Ok! Ok! Enough charts!
There’s much more to the theory of solar eclipses and their impacts on markets. Not all eclipses are visible from every country and there’s talk about the impact being different based on which countries they are indeed visible from and the how this alters the impact. For an interesting read check out this little blog here.
The same site, in and attempt to prove the sanity of those who would believe such things is where I got the reading list from Gann that I posted above.
Well, we’ve already seen what happens in the week leading up to solar eclipses with regards to $VIX; it ramps up. Typically, we see some chop in volatility the week after the eclipse, with it sometimes rising, but usually, the ramp resolves itself.
If recent history repeats itself, we should see the higher levels of volatility remain as the week starts, but then observe it start to trend downwards with a bit of chop as it resolves itself.
Will it happen? I have no idea, but I love looking at markets from novel ways and seeing what happens. I’ll write a follow-up article next week with what ended up happening.
All questions/comments are welcome here in the comments, Twitter or via StockTwits.
Cheers,
Rish
Eclipse Date Source: https://www.wikiwand.com/en/List_of_solar_eclipses_visible_from_the_United_States
Last week, we saw the markets hit panic mode on Friday (June 9th), particularly in $QQQ (the Powershares Technology ETF, that approximates the value and performance of the Nasdaq 100) and other members of the tech sector. The chart below shows the pain from Friday pretty clearly…
Leading the pain are the next stocks typically abbreviated to “FANG”: Facebook, Apple, NetFlix, Google. They all exhibit explosive growth, that continued beyond the tech bubble crashed. They are so endeared that they’ve got their own abbreviation.
But happened on Friday exactly? Why was the whole market hit so badly and then why were the Qs body-slammed even harder? I mean the Nasdaq 100 hit an all-time high on the very same day…what happened?
Some might point to the geopolitical tensions going on between the US, Russia, China, ISIS and…well…frankly just about everywhere. Even the tension within our country, created by this pseudo-bipartisan government, is at a higher level than it has been for some time now.
The issues with James Comey, et. al. are used to emotionalize people about President Trump in whichever say so best suits them….once they’re mad or at least engaged.
But dros, what about the markets?
I’m getting there.
The whole point of that rant was that when the citizens of the republic, we traders included, it’s easy to create all sorts of misguided anger and crazy chains of thoughts.
The market had withstood worse news in the same week, so why that day? I would have to say that there’s a clear correlation in the 24-year low that $VIX (an indicator of market volatility) hit on Friday as to why.
So what happened Friday? The “house” (the big banks/market makers) were taking home some money, squeezing it out of retail with sellers of the stock on that day, as well as all the bulls who held calls expiring this week (monthly JUN expiries) as a great deal of gains were lost by them not locking in profit.
I think the energy sector and the the financial sector keep us propped up from collapse until later in the week. I’d advise rolling your JUN17 expiry options or selling them at a loss if you no longer have bullish convictions about the stock. Tech should be fine by next week.
Ok I started writing this a bit too late…it’s time for the opening-bell, I’ll be back with more later.
Cheers,
Rish
![Stocks To Watch Early This Week [August 21st, 2017]](http://androstrades.com/wp-content/uploads/2017/08/aerospace-parts-150x150.jpg)
