Monday Outlook

Monday Outlook Hello Smart Option Sellers! After last week's big drop, it's typical to see the market churn for a bit, as everyone is digesting what really happened. We've seen this scenario play out many times. The markets will consolidate near an area, especially when it's an extreme magnet point like the 200-day moving average. If you pull up a chart of any of the major indexes (Dow, S&P 500, Nasdaq), you'll see all of them hovering near that important level at the moment. It's also typical to get a one-day snap-back rally, with not much follow-through. And it's also typical to see more selling. Bottom-line, the next few days will see high volatility and lots of quick moves either way. This can definitely cause tension and stress, as no one wants to be the last to the exit door, while at the same time, no one wants to miss buying the lows. This is all part of the bottoming process. The same thing happened in early February this year. Back then, it really did look like the end of the bull market. Stocks sold off violently, volatility spiked (VIX), and everyone panicked. And then it stopped. Level heads prevailed, the market composed itself, and we began months of sideways trading until we saw all-time new highs just two weeks ago. The same thing will happen again. The markets will go back up. There's always "noise" to deal with, but the U.S. economy is strong. Companies are making profits, unemployment is down, and wages are increasing modestly. Yes, interest rates are ticking back up, but if looked at historically, they are still extremely low. As far as I see it, there's no major catalyst that will completely derail the last ten year's worth of gains and cause another 2008 melt-down. Sure, we'll get pull-backs along the way, and when things get too frothy, we'll have larger pull-backs. Remember, the stock market is made up of actual companies. And if those actual companies are making actual profits, then why should we begin a major bear move? We shouldn't. Trade tariffs and slowly rising interests could be the only things I'm possibly seeing as culprits. But it's too early to tell what that effect will be. Quarterly earnings will start to pick up in earnest this week, so we'll get a glimpse of how the last few months have been, but mor