POSTED ON November 17, 2021 BY Noah KiedrowskiControlling portfolio beta, which measures overall systemic risk of a portfolio compared to the market, on the whole, is essential as these markets continue to break record high after record high with violent pullbacks. The month of September was a prime example as the markets pushed to new all-time highs early in the month then suffered a deep sell-off to only bounce back to new record highs in October. Controlling beta while generating in-line or superior returns relative to the market is the goal with an options-based portfolio. A beta-controlled portfolio can be achieved via a blended options-based approach where ~50% cash is held in conjunction with long index-based equities and an options component. Options alone cannot be the sole driver of portfolio appreciation; however, options can play a critical component in the overall portfolio construction to control beta.
Generating consistent monthly income while defining risk, leveraging a minimal amount of capital, and maximizing return on capital is the core of an options-based/beta-controlled portfolio strategy. Options can enable smooth and consistent portfolio appreciation without guessing which way the market will move. Options enable the possibility to generate consistent monthly income in a high probability manner in various market scenarios. An options-based portfolio provides durability and resiliency to drive portfolio results with substantially less risk via a beta-controlled manner. Using basic technical indicators and key dates can aid in trade type selection such as covered calls, put spreads, call spreads, or iron condors (Figures 1 and 2). 

CONTINUE READING: "SCREENING KEY TECHNICALS TO SELECT OPTION TRADE TYPES"→

POSTED ON November 15, 2021 BY Wayne Burritt

I don't have to tell you that no matter what economic stat you're interested in, the belle of the ball is inflation. It's the one that everyone loves to talk about. It's the one that politicians and talking heads like to worry you about. And it's the one that is responsible for a ton of real-world economic horror stories.
And right now, it stands a mind-boggling 5.4% annual rate, way above the Federal Reserve's target rate of 2%. So, as a Bitcoin and blockchain enthusiast, is there something that maybe crypto can do for us as we navigate through increasing inflation?
You bet. And I'm about to tell you why.

Yes, Inflation Is Too High

If you're a fan of moderate inflation, you're probably not feeling great right now. Prices are at levels that haven't been seen in decades.
In fact, right now, inflation stands at an annual rate of 5.4% in September, up from 5.3% in August. And we haven't seen these kinds of levels in a long time. See for yourself... 

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POSTED ON November 11, 2021 BY Matt Thalman

Shares of the electric car manufacturer Tesla (TSLA) have undergone a meteoritical rise over the past few years, a move that very few investors have ever seen or experienced. Since late October 2019, Tesla has been up more than 1,680%, compared to the Vanguard S&P 500 ETF (VOO), which is up just 59% over the same timeframe. The move Tesla has made is nothing but incredible, and congratulations to all those investors who had the foresight and fortune to have owned Tesla stock, either directly or through, and some sort of fund and have benefited from the move.

However, as with all investments, what goes up, can come down. And Tesla has undoubtedly seen this story play out over time as a publicly-traded company. Several times throughout its time, including this week, it has seen massive pullbacks and corrections, of course only to go even higher longer term. But that doesn't mean another move lower, like the 36% drop during a six-week period earlier in 2021, should be dismissed by investors.
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Both long and short-term focused investors need to understand that stocks of even the best companies move higher and then lower, only to move higher again. And understanding this movement and knowing what the risk of an investment is and the potential return an investment has, is extremely important can help you invest smarter. 

CONTINUE READING "ETF INVESTORS SHOULD KNOW THEIR TESLA EXPOSURE"→

POSTED ON November 4, 2021 BY Chris Vermeulen

In part one of this article, we discussed how the recent decline in Zillow, Redfin, and Opendoor share prices could reflect a concern that the risks involved in holding large home inventories while attempting to "flip houses" could present for these Real Estate firms. The recent 50% price drop in the share price levels should send a fairly strong warning to investors that these "flipping" processes contain a moderate degree of underlying risk and extended costs in a super-heated and potentially peaking Real Estate trend.
It has been reported that Zillow increased the purchase of homes for their Ibuyer program, from 86 homes in Q2:2020 to 808 homes in Q3:2020, to 3805 homes in Q2:2021. We’ll learn more about their Q3:2021 home buying efforts when Zillow announced earnings.
It has also been reported that Zillow sold more than $1 billion in bonds to investors to fund this operation that includes using their Zestimate algorithm to buy homes quickly, renovate/flip them, and put them back on the market. The super-heated Real Estate market has driven these firms into speculative trading of houses in an open and often hostile market environment. Taking a bigger leap is Opendoor, which purchased 8,494 homes in Q2:2021. This is a massive inventory of homes that may require many months or years to renovate/sell.

Continue Reading...

POSTED ON November 2, 2021 BY Chris Vermeulen

Watching Zillow (ZG) move from over $200 per share to recent levels below $90, reflecting a more than 55% collapse in price, while the housing market continues to rally may be an indication that traders/investors have already discounted the future peak in the U.S. capital markets and Real Estate assets related to the current market environment. Zillow is not the only symbol experiencing this broad price decline. Redfin (RDFN) has also declined more than 54% over the past 7+ months.

Is the peak in real estate flippers prices sending a strong warning for traders/investors?
The peak in these stocks happened near February 16-22, 2021. This date, interestingly enough, aligns with a peak in global capital markets using my proprietary Smart Cash Index and a very clear peak in the Chinese Hang Seng Index.

This week we have seen a lot of conflict between the bears and bulls, and when we look at the weekly chart above. It seems the bulls have won this week as a small green candlestick seems to "confirm" the bullish breakout.
To understand this better and get a more precise view of supply and demand pressures...
Continue Reading...

POSTED ON October 28, 2021 BY Noah Kiedrowski

Stellar Earnings
The big bank cohort reported stellar earnings across the board and set the stage for earnings season while sparking a broad rally across the indices. The big banks have benefited from a confluence of impending rising rates, post-pandemic economic rebound, financially strong balance sheets, a robust housing market, and the easy passage of annual stress tests. The most recent earnings reports confirm this secular thesis as Bank of America (BAC), JPMorgan Chase (JPM), and Goldman Sachs (GS) all reported very strong quarters, with stock prices nearing all-time highs. The big bank cohort is in a sweet spot of a post-pandemic consumer, rising rates and balance sheets to support expanded share buybacks and dividend increases. These stocks are inexpensive and stand to capitalize on all these tailwinds over the long term.
A Healthy Consumer
The big banks are already transitioning beyond the pandemic based on the results and commentary from the collective companies’ top executives during their respective Q3 earnings. The six biggest banks by assets posted profit and revenue that beat expectations. These results came on the heels of booming Wall Street deals and the release of funds previously earmarked for pandemic-related defaults.

Bank of America CEO Brian Moynihan stated that whether it was a return to loan growth, credit-card signups, or economic indicators like unemployment levels, the company was back in expansion mode. “The pre-pandemic, organic growth machine has kicked back in,” “You see that this quarter, and it’s evident across all our lines of business.” The company said that loan balances at BAC increased 9% on an annualized basis from the second quarter, driven by strength in commercial loans.
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POSTED ON October 22, 2021 By Jeremy Lutz

All three of the major averages finished the week higher, marking three straight weeks of gains, with the DOW being the only one to post a daily gain on Friday, hitting a record close. The DOW was able to post a weekly gain of +1.08%, while the S&P 500 gained +1.64% and the NASDAQ gained +1.29%, triggering a new green weekly Trade Triangle, indicating it’s now in a strong uptrend.

The DOW climbed 74 points or +0.21%, hitting a record close of 35,677.02, its first since August 16. The S&P 500 fell -0.11% to close at 4,544.90 a day after closing at a record, and the NASDAQ shed -0.82% to the week at 15,090.20.

On a monthly level, the S&P and DOW are up about +5%, while the NASDAQ is up +4%.
This week's other big news is Bitcoin and...Continue Reading...

POSTED ON April 17, 2021 BY INO.com Team
This week we have a stock market forecast for the week of 4/18/21 from our friend Bo Yoder of the Market Forecasting Academy. Be sure to leave a comment and let us know what you think!

The S&P 500 (SPY)

If you were not clear about how directly the impact of the Fed’s expansion of the money supply affects the S&P 500 (analyzed here using SPY), this daily chart will fix that.
The market is levitating into what appears to be...Continue Reading...

POSTED ON April 7, 2021 BY Noah Kiedrowski
Annualizing the pandemic with an agile options-based approach has demonstrated superior returns while mitigating risk. Over the past 12 months, generating consistent monthly income while defining risk, leveraging a minimal amount of capital, and maximizing return on capital has been the core of this options-based strategy. Options enable smooth and consistent portfolio appreciation without guessing which way the market will move. Options allow one to generate consistent monthly income in a high probability manner in all market scenarios. Over the past 12 months (April 2020 – March 2021), 249 trades were placed and closed. A win rate of 98% was achieved with an average ROI per winning trade of 8.0% and an overall premium capture of 85% while outperforming the S&P 500. An options-based portfolio's performance demonstrates the durability and resiliency of options trading to drive portfolio results with substantially less risk. The options-based approach circumvented September 2020, October 2020, and January 2021 sell-offs while outperforming the S&P 500 over the post-pandemic bull run, posting returns of 55.0% and 53.7%, respectively (Figures 1, 2, and 3).