Market On Open, Thursday 20 February
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Definitely Up, Or Down. One Of Those.
by Alex King, CEO, Cestrian Capital Research, Inc
Markets are sideways and rangebound right now, and have been for some months. Markets don’t do this for very long, mostly because the humans making buy and sell decisions - or the algorithms doing the same which for now are still, in the main, programmed by humans - can’t sit still for very long. The apparently unbearable tension arising from markets not breaking in one direction or another is itself a motive force for a break to the upside or downside.
From a market-maker’s perspective it doesn’t really matter which direction the break is, as long as there is movement. And from a hedged trader’s perspective the same is true. The cries of anguish on the downslope or joy on the upswing are those of amateurs and/or True Believers Of The Cult Of Omaha; the reverse, the doomsayers who wish to visit misery upon said cult members.
Sideways markets are good for only one group of people, being option sellers, skilled ones who can sell both long and short positions just outside of the range with expiries at just the right time, thus to collect the keep that good free money from premium. And since this group of people is a pretty small and skilled group, their desire to lock everyone else into the range can’t last forever. Emotions take over and then the market breaks one way or the other.
By the way - if you want to join a community of skilled folks who can teach you to make money in sideways markets by selling premium? Take a look at our Jay’s Options service, right here. It is nothing like your usual Go Big Or Go Home options service. It’s options as market-makers see them, which is to say, designed to help you take money off of people more emotional than you.
Now, let’s get into it.
Short- And Medium-Term Market Analysis
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