As of 11:15 a.m., the market is tumbling and the VIX “Fear Index” is up 15.79% to 22.22. My January 26 VIX Call Options with a strike at 20 (VIXW220126C00020000) have soared 61.11% to sell at $290 a contract. With the expiration date of January 26 approaching I’m selling this position today.
Today, the People’s Bank of China cut its key interest rate for the first time in almost two years to help support China’s economy. The People’s Bank of China lowered the rate at which it provides one-year loans to banks by 10 basis points. Not a huge move–100 basis points equals one percentage point–but earlier than many economists–and I–had anticipated.
When I bought shares of Apple (AAPL) in my Jubak Picks and Volatility Portfolios, I was looking for gains from the end of the year rally (which kind of fizzed out) and the traditional Santa Claus rally (which came through as expected) to drive shares higher in the short term. Since that November 23, 2021 pick, shares of Apple, as of the close today January 4, were up 12% to $179.70, just above my $179 target price for this short-term trade.
This earnings season looks so tricky that I’m going to sit it out rather than attempt to leverage moves in the shares of reporting companies by purchasing either Call (a bet that the stock will go up) or Put (a bet that the stock will go down) options.
The CBOE S&P 500 Volatility Index (VIX) hasn’t moved much so far in today’s session. The so-called “fear index” is down just 0.23% to 17.26 as of 3:20 p.m. New York time. But there’s been strong action in the options market with risk hedges for the end of January and the middle of February showing losses. I’m going to use today’s selling to buy two VIX Call positions in the Volatility Portfolio.
At the close today, the VIX–the CBOE S&P 500 Volatility Index–had gained 2.24% to 17.33. During the day it had dropped as much a 1.53% to 16.69. That’s a level that I find interesting, again, as a play on potential volatility in January.
On Wednesday stocks were up as technology shares soared after the Federal Reserve announced that it would cut its bond purchases more quickly than expected and (may) raise interest rates three times before the end of 2022. The logic, I think, to the tech share rally was that these stocks would, again, be able to grow even if the economy as a whole faltered. So that day saw Apple (AAPL) gain 2.85%; Nvidia(NVDA) soared 7.49%, and Palo Alto Network(PANW) climbed 5.42%, to name just three tech stars for the day. Thursday, December 16, the market seemed to have second thoughts.
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. My eighty-first YouTube video “Why the Fed is bluffing on interest rates” went up today.
I’m starting up my videos on JubakAM.com again–this time using YouTube as a platform. My seventy-eighth YouTube video “Look Out for Earnings Season” went up today.
But 2021 has been very, very good to the iPath B Bloomberg Coffee Total Return ETN (JO). A series of disruptions–weather in Brazil and Colombia, a shortage of shipping containers that curbed exports from Vietnam, a civil war in Ethiopia–sent coffee prices to a 10-year high on November 30. Despite the global Pandemic depressing demand from consumers who didn’t venture out of coffee shops during the worst of the virus outbreak. Now after a 73% gain for 2021 to date the question for investors after the is how much higher can coffee prices and this coffee ETF go?
The trend for the next year or two looks positive.
After a huge rally like we’re had this year, it’s easy to fall into one of the most common buy on the dip traps. Just because a stock is cheaper than it was, it’s not necessarily a bargain. There’s nothing that says a stock has to return to its previous price after a dip. And especially that it has to return to that former price on your schedule. Let me use Disney (DIS), one of the stocks I’m tracking in my Dip-O-Meter, as an example.
Even as losses accelerate for almost all stocks as we head into the close today–the Standard & Poor’s 500, which was down 1.31% at 2:30 In New York had moved to a loss of 1.74% as of 3:30–shares of Apple (AAPL) continue to hang onto the green.
