Articles

The markets moved higher – “move” being something of a slightly dull term. The markets showed that maybe from here it is going to be something of a crawl to the top wherever that might be, but increasingly the experts are saying that is not far away. Who knows? Although the number of pundits who claim the market is overvalued is now gaining in number. And this is confirmed technically as many markets start off the day with energy only to fade as the day closes – a sure sign of caution and indecision.

One of the keys to successful ABC Trading is to work a strongly trending market. Markets only trend for about 30% of the time, which means 70% of the time they are in a sideways movement. These sideways movements are not the times that big profits are to be made. The trick is when the trend is on to stick with it and make hay while the sun shines.

The Starter Pack software is an ideal tool for analysing the market and finding opportunities to trade. The ABC trading system that is used by the Safety in the Market students identifies trades and ensures that you are always trading with the trend.

The CBOE put-to-call ratio is among the more widely watched barometers of market sentiment. The ratio measures the daily trading of puts verses calls on the first and largest US options exchange, Chicago Board Options Exchange [CBOE]. Using the ratio requires a bit of contrarian thinking and a general belief that the crowd (in this case, options traders) is often wrong regarding the direction of the market. In addition, in order to get the most use out of the ratio, it is sometimes helpful to break the ratio down into smaller pieces and focus in on the trading of stock, rather than index, options. Let us see how this is done.

The Nikkei 225, the Japanese stock market key index, has risen almost 40% since its low of 2003 compared with the Australian market which has risen over 20% - a somewhat more cautious increase. The Nikkei started its run up over a month later - in April when it sat at its all time low of 7670 – compared to a high of almost 40,000 in the late 80’s!