Volatility Anyone?
Friday was a fun day. Not. My last day in Greece, and just before I left the hotel to go to dinner, I checked one of my accounts: up $48k for the day. Nice! I decided to treat myself to a negroni before dinner. Later, after dinner, I decided to check the account again. Big mistake. It was now DOWN $28k for the day. $76k difference in a couple of hours. The average yearly wage in the US. Not happy!
Emotional reponses
You could wail and gnash your teeth – but what’s the point? The only thing to do is shrug your shoulders and say: ‘such is life’. As a trader you have to, otherwise you will be an emotional wreck every other day. We have looked at peoples’ responses to losses and know from studies that we react more to losses than wins. In fact, we have to win twice as much as we lose to have the same emotional response.
Why the volatility?
Financial commentators always have an explanation of why volatility occurs, but is it the right one? The explanations put forward for Friday’s volatility were the inflation data looking a bit ‘sticky’ (the latest descriptor) and the presidential debate. Which one was it? No-one knows. The market does what the market does.
JPMorgan
JP Morgan is hedging its bets – compare the headline below with the advice to clients.
To the markets
Last week was relatively uneventful – until Friday Let’s see what happened.
SPY Charts
Friday’s volatility can be seen in the candle: opened higher, then a long upper shadow, closing lower but off the daily low. Not a nice-looing candle ata all. It looks as though we may be hitting resistance at 550. This would be normal behaviour, lots of people will be taking profits ahead of the election. However, we haven’t got an out signal yet, so ITM is sticking to its positions, knowing that we are already substantially in profit. I wouldn’t be surprised if we see some consolitation in the 540 – 550 range.
The weekly chart shows that the uptrend is continuing and that the price will have to drop to around $520 before it is broken.
SPYG Charts
SPYG is showing the same pattern as SPY, with possible consolidation in the range 79 – 81.5.
The weekly chart shows the uptrend in place with a slight flattening at the top showing consolidation.
QQQ Charts
Friday’s candle whows QQQ finishing on its lows. Possible resistance being created at 487.
The uptrend is still intact, with a flattening out at 480.
VIX Chart (Volatility)
The VIX has barely moved, which is expecte as the volatility was within previous trading ranges.
ITMeter
The week ahead
Its a short trding week due to the holiday on Thursday. Some commentators are attributing the current lack of volume to the holday season, so I decided to check. Here’s the volume chart since before Covid:
Does that look like it usually drops during July / August? Not really. What is noticeable is that volume increases during bear markets. You can clearly see the volume increase during the Covid bear and the Biden bear.
Powell is due to speak on Tuesday, and the minutes of the June meeting are out on Wednesday, so its possible there will be some volatility around that. Friday sees the non-farm payrolls, so people will be watching that for clues about interest rates.
Goodbye to Greece
I am now in Italy after 5 weeks in Greece. I don’t speak Italian (apart from menus and nusic) but it is a relief to be able to read the script. Although familiar with the Greek alphabet from abstract algebra, (where everything was Greek letters and arcane symbols) I still have to go through a mental process of recognizing the individual letters, working out what sounds they made, then trying to work out what the road sign said, by which time I was usually way past it, and on the wrong road!
When travelling, sometimes you come up against the reality of your ideal vision. Not always; sometimes places are beautiful than you imagined. But often. Take Florence (Firenze) for example. The beautiful city I remembered from some years ago was a hideous tourist trap, absolutely awful – and it wasn’t even high season!
Why am I musing on this? Probably because of Friday’s experience. Successful traders are supposed to have wins, not losses, yet the actual experience is of just as many losses as wins. Of course, we have to win bigger than our losses otherwise we wouldn’t still be in the game but not many books prepare you for the reality of losing. It’s a part of a trader’s life; just make sure that your wins are bigger than your losses!
Moving on . .
It has been almost 4 years since I published my first book and after 6 books, I think it is time to move on. I haven’t finally decided (I will decide when I am back in Australia in August) but I am planning on unpublishing (yes, it’s a thing) the books and stopping the blog. It has been fun, but I think I need some new challenges. Not rushing the decision, but that’s the plan.
Futures
Right now the futures are up slightly, but it is 4 hours to market open.
Fingers crossed for a good week!
Heather
48 thoughts on “Volatility”
Great community and brand you have with the ITM Strategy. Do what make you happy in the end.
Veeron
Thank you Veeron – I am really feeling for the fist time that we really have a community!
h
Thank you Heather for the wonderful DITM strategy. I just read it a few days ago and am wondering if this is still a good time to enter the market to implement this considering that the golden cross happened a while back. Also is there an alternative to SPYG because the expirations there are only till December? Thank you!
Hi Raj, yes, the golden cross happened last November (?) and it has been in force since then. The ITM results are based on getting in at the golden cross and out at the death cross – but that doesn’t mean that you have to wiat for a death cross before you get a golden cross to act on.
You may be waiting for years – se some fof the previous blog posts. Sometimes they are in force for several years, and you don’t want to wait for years to get started.
Whether now is a good time – well, who knows? But if you have decided to getinto the market then get in, don’t wait for the ‘right time’.
Re SPYG – yes they are taking a long time to announce the 2025 options, but it should be any day now.
As long as you get a low time value a close (5 – 6 months) expiry date doesn’t matter too much – just remember to roll.
Hope this helps
h
Thank you so much! 🙂
Glad it was helpful!
h
Hi, Heather!
Do you know why SPYG only has expirations through December, 2024 right now? I did some quick googling and couldn’t find anything, so figured I would check with you!
HI Eric, I’ve just checked and you are right. I can’t seem to find any ino about when the 2025 expiries will be available, but no luck.
I know they don’t go out as far as SPY, but they should be out soon.
h
Thank you for your great book. I was looking for the prices of the calls for Jan 2026, very expensive with the strike prices close to the actual stock price. For example, the call SP 490 @107.02. with the price of SPY@ 551.46. for 7/3/2024 490+107.02=597.02 That is 45.56 above the current price. If I only have $10,000 to invest than that is the Strike Price I should buy? regards, Willie
Hi Willie, I thin you may have an old copy of the book? In the second edition (2021) I updated it with a new strategy ITMS which was ITM for small accounts.
As SPY had increased, so had the price of options so it was not possible to do it any more with an account of 10k.
Instead, I backtested on SPYG, the SPY growth fund, and recommended that for people with smaller accounts that couldn’t get into the SPY options market, but with a long term view of moving into SPY optioins when the account grew big enough.
If you have an eBook you should be able to get the 2024 update, otherwise either splurge on a new copy, or just take everything about ITM and apply it to SPYG.
Hope this helps.
h
Hi, Heather!
Just want to throw another comment in here that I appreciate everything that you have done SO much and would hate to see this all discontinued. That said, I would totally understand want to pursue new endeavors. Your strategy is already working fantastically for me and I would be clueless with options without your books. I sincerely appreciate all that you have done and always look forward to your blog posts. I own the Kindle versions, but am now even more inclined to pick up the hard copies if there is a chance that they will be unpublished!
Again, thank you for everything and I wish you all the best one way or another.
-Eric
HI Eric – thank you, I so much appreciate the lovely comments I have been getting, and I am starting to reconsider throwing it all up.
Whatever I decide, I will give plenty of warning in the blog, so don’t worry about that.
Thank you again.
h
Kudos for the lesson in the 3 sets of 2 pictures. They clearly demonstrate the advantages of proper timing. [If you didn’t catch it, the difference between a successful picture and a nothing picture clearly demonstrated the importance of proper timing] Do you have any written comments, or is that the topic for next week?
Hi Gary, I was thinking about how experts always seem to show trades that worked out beautifully, and never show the disastrous ones.A bit like the photos – yu can make everything look wonderful, but in reality it is often (not always) quite a different story.
Re timing – yes that is everything – you have to make sure that you give the market leeway and don’t act on natural variations, but catch all the major moves. And I am thinking about next week’s topic – it will probably include timing!
Thank you!
h
Heather,
I have read your books and follow your blog. Is the best, most honest advice I have found anywhere, with proven data to support it. Thank you for all you have done and is my hope that you keep this blog going.
Hi Pedro – thank you!
I have been so touched by all the emails and comments that I am reconsidering. But it will not be sudden, I will give plenty of warning.
Thank you again.
h
Heather, I’m joining the hoard who don’t want you to go.
You might propose a yearly or monthly fee to keep the blog going, I suspect many of us would sign up if it’s reasonable, for the comfort of looking here and not missing a signal. Maybe do a value-add, e.g. backtest QQQ, for an add-on fee?
Or let us know if you want us to add books of yours to Kindle unlimited (though not 2024 ITM or ITMB as noted below, for me anyway) which would imply leaving those Kindle books up.
Even if you stop the blog…I bought the Kindle versions of ITM 2024 and ITMB so in any event, please do not “unpublish” those (bought the purchased versions, not Kindle unlimited) as those e-books would disappear from my devices if you remove them from Amazon. Or at least give us advanced notice so we can buy the paperbacks or something…I do refer to them when doing the trades.
Hi Bob – don’t worry, ‘unpublishing’ doesn’t delete anything it just stops new sales. I will cover why I have been thinking of doing it in the next blog.
Re the monthly fee – one of the things I like is being absolutely free to do what I want, no obligations, so I don’t want to charge for anything.
In any case, ITM and the market has been very kind to me, and although I will keep on trading because I love it, I don’t HAVE to. I have enough money to do whatever I want. I don’t have to earn anything more which is a lovely position to be in – and I guess I just wanted to share my good fortune with others.
But I have been so touched by the lovely comments and emails I am reconsidering – but don’t worry, I will give plenty of notice, not just disappear!
Thank you
h
Hi Heather,
You are my favourite financial author and blogger. I really hope you keep doing this. You are a voice of reason and intelligence in a world of chaos and misinformation.
It is a labour of love, but know that your work is appreciated!
Ben
Thank you Ben – am really humbled by comments like yours, and want you to know how much they are appreciated.
And I am reconsidering giving it all up!
h
I can understand your desire to sometimes leave publishing and the blog behind, as I know it is a lot of work. We truly appreciate everything you do. Though we can still used ITM based on the books, it would not be the same without you on the blog. May I suggest, before you do so, maybe post every other week, or once a month. If you do leave I can fully understand, but life and ITM would just not be the same without your posts and books.
Hey Jeff – thank you!
There have been so many lovely comments and emails, I am reconsidering. It seems wrong just to step away when you have built up a rapport with people.
In anycase, it won’t be sudden I will let everyone know in plenty of time.
Thank you for your lovely comment.
h
I just stumbled onto your ITM book and now reading ITMB. Two of the best stock market books I have ever read. Don’t leave me now!
Hi David – that made me laugh! AS I have said in some other replies, I am so touched by all the lovely comments and emails that I am reconsidering – but in any case it won’t be sudden, I will give plenty of notice.
Thank you!
h
Heather, Say it’s NOT so Don’t go!
Hi Andrew – two comments in a row that have made me laugh out loud.
As I have been explaining in some of the other replies, the comments and emails have been so lovely I am reconsidering giving it all up – and in any case it won’t be sudden, I will gove plenty of warning!
thank you!
h
Heather, I just want to say how much I enjoy this blog. I have purchased several of your books and have been using the ITM strategy since late last year. It has been the most successful trading strategy I’ve ever used. I look forward to each Monday when I can read your newest blog entry. As a person working a 9-to-5, I love your musings on your travels as well as market analysis. If you decide to discontinue, know that you will be missed. Thank you for all you do.
Hi Jeff – thank you for your kind and lovely words – I have been very humbled by the lovely comments and emails, so am reconsidering.
Thank you, so much appreciated.
h
It’s interesting that I discovered you and read ITM just in time to make the November crossover. I’ve been in since November and committed increasingly more capital in January when I saw that your methods work. I look forward to the blog and am a regular Monday morning reader. I hope you decide to continue the blog, even if it is just to get us through one cycle with the SPY. Maybe it would help if you extend your vacation and simple not publish for a few weeks! I know you read your email, so I want you to know that many, many people appreciate what you do for us. Thanks. Bill
If you decide to go… you’ve been the right method that I needed at the right time… Do you consider yourself an investor or a trader – Spy & QQQ are investments and of course they go up and down but longer term they keep moving up. If we all pooled our money and gave it to you to invest for us we would be investing in Heather Cullen mutual fund … just thinking.
Randy
Hey Randy, don’t give me delusions of grandeur! I would be terrified of managing anyone else’s money – I don’t do it for friends or family, too much stress!
I am happy to share what I do and when I am doing it, but always make it clear that it is THEIR decision, I’m not recommending or advising them to do anythin.
Re investor / trader – I consider myself a trader, not because I trade very frequently but because I check in on my positions every single day, and monitor the market constantly, so I guess that takes me out of the ‘set and forget’ investors.
And I have been very touched by some of the messages I have been getting about stopping the books / blog so I am seriously reconsidering.
Thanks!
h
HI Bill, glad going all good for you, just monitoring the market right now, very nice, SPY $553 so you should be up even more?
Re the SPY cycle – bull markets can go on for years – I did a blog post about that a few months ago. So lets hope this one does – we have had a bad run recently with the Covid bear then the Biden bear, so we deserve a nice bull run.
And all the lovely comments and emails are making me reconsider – in any case it won’t be sudden, I will give plenty of warning.
Thank nyou again!
h
“Don’t Leave Us Now, Lucille”. (Just when a turnaround South seems likely.) Seriously, whatever you decide to do, the ride has been bumpy, but smoothed out by your wisdom. Best to you in your endeavors. Buck
Hi Buck, don’t be too sure of a turn-around. There may be, but it’s not showing itself just yet.
Bull runs can go on for quite a long time – I think I did a blog on it a few months ago?
But thank you for your kind and lovely words.
h
Curious, what is the benefit of un-publishing the books? (I can understand the blog)
Hi Allan – I will address that in this week’s blog. But it doesn’t mean that people are going to come around and confiscate or delete your books! Just that they are no longer available for purchse.
h
Hi Heather,
I enjoy reading your weekly blog. I really do like to see what your insights are on the market. I’m thankful for all the knowledge you share with us and for teaching us your method. I hope you enjoy your holiday in Italy. I hope you don’t stop your weekly blog but will understand if you do. Not everyone is supportive or appreciative of all you do for us. I will be forever grateful for you taking your own time to answer all our questions and guide us on a good trading path!
Thankyou Charity – you have said some very kind things in the past and I have always appreciated them.
Am rethinking, so many lovely emails. But it won’t be sudden, I will give plenty of warning.
Thank you again.
h
Are you concluding the ITM method doesn’t work? Is that why you are planning on unpublishing? Can you elaborate a bit on your current opinion of the approaches detailed in your books? Thanks
Hi Peri, no I am NOT concluding that ITM doesn’t work. In fact I am going to use your query as the basis for the next blog, so will answer there.
h
No, don’t leave us!
Hey Matthew – funny, made me laugh!
I am reconsidering, so many lovely emails and comments.
Thank you for yours!
h
Hi Heather, great photos! I just wanted to share that I would very much miss your blog if you stop posting! I have a hard copy ITM and re-read it when I need to, but I will truly miss your blog. Hope you keep at it!
Take care and be well!
-Lucy, Connecticut USA
I just stumbled across your ITM book and now reading ITMB. The best stock market books I have ever read. Don’t leave now!
HI David – I think this is in here twice? BUt very much appreciated!
h
Hi Lucille, thank you for your lovely comment.
As I mention above, I have had so many lovely emails and comments I am reconsidering – but whatever I do I will give planty of warning.
Thank you again!
h
Heather,
I’m disappointed to hear that you are considering stopping the blog, but I understand your need for something new. Your writing is delightful and I will miss it if you stop. Perhaps going back to less frequent blog posts would be a possibility. Whatever you decide, Thank You for sharing your fabulous investment wisdom with all of us through your books and blog. Best Wishes.
Scott
Hi Scott – thank you, I amy truly humbled and incredibly appreciative of all the lovely comments and emails.
I am reconsidering stepping away – maybe working out a way to keep it going but the time I spend on it more bounded. But whatever, it won’t be in a hurry.
Thank you for your lovely comment.
h
Comments are closed.