Here Comes 2017

December 29, 2016 @ 10:49 am

Here Comes 2017

The Trump rally continues….but for how much longer? A rallying stock market, rising bond yields and the return of inflationary pressures are creating new challenges for the Federal Reserve.

Investors are going to be looking past an expected increase in the benchmark rate and focusing on any signals about a more aggressive policy in the months and years ahead.

No surprise the FOMC came out and raised the Fed Funds rate by 25 basis points. Rates continue to move up too much and too fast. The market is hyperbolic in its bullishness, which has no basis in anything tangible other than optimism that Trump’s presidency will bring GDP growth and reignite corporate profit growth. It’s natural to want to be optimistic, but this rally is too powerful. At some point, early in Trump’s term, speculators will recognize the obvious: Trump isn’t a miracle worker.

Perhaps there is too much Christmas cheer and we need to take a look of Christmas past. Last January we saw the same scenario play out. Rate hike in December and the Markets went for a tumble.

Our technical indicators are in overbought conditions.

Nearly 50% of Stocks are in State 1(Bullish). Anything over 45% is overbought VIX is in State 8(Bearish) and has reached our profit target, meaning the market is ready to reverse.

Everyone is a great stock picker in a bull market. Key2options allows you to backtest different models to see how you would perform under different market conditions.

If you have enjoyed the run up in the market, how will you lock in profits? Which option strategy is best to use to secure gains in the stock market? How do you know when a stock has reached its profit potential? Check out our proprietary State modeling. We classify stocks and indexes and project target prices based on our algorithm. We use mathematics to make investment decisions. We trade systematically. Once you know which way a stock is headed, you can build a model and backtest it to find out how profitable it has been in the past.

While backtesting doesn’t guarantee you anything, (by the way, what does?) I want to have an idea on the actual percentage that it is profitable.

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