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February, 2017 Archives

How High?

By Jon S. Strebler

 

We’re long past “Is the stock market bullish or bearish?”, and well into the “How high can it go?” phase. More people are weighing in on that question, and surely we’ll be reading more and more on the topic.  

 

Our own Dow Theory Team wrote about the very important psychological stages of markets last Friday, and also on the value of keeping an eye on market breadth, e.g. the A/D line, which we would do well to keep in mind going forward. Richard Russell often reminded us of the folly of trying to guess how far a bull (or bear) market could go. It was, he believed, an exercise in futility; instead, stay with the primary trend until it changes, he advised. That is the reason Richard created the Primary Trend Index (PTI) decades ago, and it has served readers well.

 

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Introduction to Calls and Puts (Part 4)

By Matthew Kerkhoff

 

Welcome back for the 4th installment of our new monthly series on options. The goal of this series is to provide a basic overview on how options can be used to help protect and manage a portfolio.

 

Today we’re going to wrap up the introductory portion of this series by taking a look at the various factors that affect option pricing. After today’s article, you should have a basic framework for how calls and puts work, under what conditions an investor may want to trade calls and puts, and how factors in the marketplace affect the pricing of options.

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Oblivious

By Benjamin J. Butler

 

South China Sea

 

Since last writing this column, I've had meetings with an eminent economics professor from Tsinghua University who is connected with government, my geopolitical advisors in Seoul,  Parag Khanna who wrote Connectography and Technocracy in America, the Chairman of a shipping company, the dean of China’s top design school, and the Bank of Korea, amongst others.

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Financial Deregulation

by Jon S. Strebler

The FDIC shows the following national average rates paid to depositors as of last Friday, who are the major source of funds for banks. These rates are essentially the same as rates shown by the FDIC for November 6, 2016 – before the election and the beginning of a spike in interest rates. In other words, banks have not had to pay depositors significantly more today than they did in early November. And by the way, these rates for jumbo deposits aren’t much different than what people get on smaller deposits; either way, just about nothing!

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Global LEIs and Technicals Point Up

By Matthew Kerkhoff

 

This post-election stock market rally has been exciting and profitable, but it has also become long in the tooth. After going nowhere for almost two years, the Industrials shot from 18,000 to 19,000 in about a two-week period, took out the 20,000 mark roughly two months later, and now we’re closing in on 21,000.

 

You can see the entirety of this move in the chart below, which also contains indications that more gains may lie ahead.

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