Video Market Update “Market Rally or Not?”, November 09, 2015
Good afternoon. This is James Cordier of OptionSellers.com with a market update for November 9th. My goodness it’s almost Thanksgiving; just a couple of weeks away. Where did the year go? I think everyone says that and I’m saying that as well.
Last time we chatted, we were talking about precious metals and non-precious metals. They were involved with a rally. The market was pushing up higher. Gold and silver actually reached levels that would have put them net positive for the year of 2015. We speculated that the rally was short lived, and as a matter of fact, it turns out that it was. It seems as though ever time commodities rally just a little bit, high frequency trading, which takes place in stocks and commodities as well, seem to want to push the market higher.
What continues to happen is the fundaments simply aren’t quite there yet. Many investors are looking at the idea that both Asia and Europe will start catching up to the United States, and demand for raw products will start to increase. I think we’re getting close to that. Seasonally, energies of course are very slack in the fourth quarter. We’re well into that with now with November and December not that far off. Energy prices normally hit their yearly low during this time frame. Simple reasons why: Refineries close down for maintenance, and demand for oil, especially in the United States, is at it’s lowest point in October, November and December.
Precious metals aren’t ready to rally just yet. Neither is the copper market. Neither is steel, zinc, or iron ore. But maybe we’re getting a little closer. We’ve been under the influence and the idea that energy prices meandering around $45 per barrel. Interest rates around the world are absolutely on steroids trying to inject more strength into the global economy around the world.
This will take place and this will take effect. It’s anyone’s guess right now whether the global economy starts to strengthen in the first quarter of next year. We’re guessing the first or second quarter of 2016 that we’ll see a turn-around in Europe and in Asia, and we do see a demand for commodities then finally taking place.
We feel the first commodity to take advantage of for this rally will be crude oil. Right now the marketing is trading right below $45. We’ve rallied a couple of times in the last six months only to have supplies knock it back down. That has happened yet again. We will be using weakness in oil over the next six to eight weeks to position ourselves for a bullish move in May, June and July of 2016. We’re looking forward to selling crude oil puts around the $28-32 level. We’re going to waiting into these slowly. We started just recently and we’re going to use weakness in November and December to establish that position…