Crazy times ahead = great for Strangles
What do Coronovirus, Trump, DOW record high and election year have in common? The add up to crazy times. And crazy times are great times for TheStrangle cause in these times stocks go crazy. They skyrocket like Tesla or they tank like Exxon Mobile. But let's take a closer look on these 4 events and see how they could influence the stock market.
Black swan - Coronovirus
Many people died, way too many ;-(
But now the number of new coronavirus cases reported in China and worldwide are slowly declining. And many countries have no new cases at all (see the great overview by WorldOmeter here). But what about the economy and the stock markets? Is it really over or are we just watching an overture?
We believe that the Medium article from Faisal Khan sums it up best "This Black Swan event is going to have global economic consequences". The pandemie might be over but the ripple effects will be seen much later. There will be an economic impact and when these numbers arrive, the market will react. It might be a relief-rally because the effect is less than feared or it might be the drop in the bucket which kills the ever lasting rally.
The corona virus was a black swan event and those events can come any day. So if you are investing or speculating on the stock market - you better have a staretegy that can cope with events likes these. TheStrangle is an approach, that can live very well with events like these. Read more here.
Election and then?
"The stock market is starting to worry about Bernie Sanders" - this is what CNBC told their readers on January 27th. And MarketWatch was kind of telling the same story. In an article from late January they wrote, that the stock market will ‘breathe a sigh of relief’ if President Trump is re-elected.
So are we doomed if Bernie wins and are we saved if Trump wins? Who knows, we don't. But at least the media expect heaven or hell if either one of them wins. Our take -> we do not care who wins. If Trump gets relected then maybe the market goes up and a Bernie-relief-rally starts. This will be great for our Calls. If Bernie or some other Democrat wins, the market might tank - great for our Puts.
You know, we just call for big moves to push TheStrangle.
Trump & the FED & the stock market
Election year equals propaganda and pushing the economy (or at least the stock market) to get re-elected. Trum is not better or worse than any other president befor ehim. If you are president you want to have a booming economy and a rising stock market. If things are OK on these fronts than you have a good basis for your next term.
This is why we can expect further pressure on the FED to open the money-floodgates and issue new dollars day by day. And this might push the market higher until the election (good for Calls). What happens if Trump gets re-elected (buy the rumour sell the fact) we do not know. But we have the feeling that stormy times are ahead (Up or down - no idea). But it might become windy which will be great for TheStrangle.
For more about this topic we suggest the great New York Times article "The Election Year Economy Is Everything Trump Could Hope For" by Neil Irwin.
New High everywhere
It looks like 2019 was the best year in the market since 2009 and only rosy times are ahead of us. Will it be rosy times? Hmmmm - many analysts are predicting a stock market crash or at least a recession for 2020. But what do they know? At the end of 2018 economists were predicting a market crash and a recession for 2019 as well. Hell nobody knows anything. If they would they all would be rich and retired. They are just guessing. Of course they are doing their best but the world is a complex place. Only some things are sure (at least for now - as everything can change quickly). In most years, the stock market goes up. But when you least expect it, it plunges.
And now - what is the conclusion?
The four topics are just four out of many. Every second we can have a new Black Swan event. Any day the market can turn around. Any week a war could start or end. The world is an interesting place where nobody knows the tomorrow.
But at least we kind of know that the market can NOT go up forever not go down forever and not go sideways forever. And the four topics alone suggest that 2020 might be a whoppy year. Bubble times end in higher bubbles (great for options) and finally end in popping bubbles (great for options).
In that sense - Strangle ahead !
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