«And why you should be optimistic.»

Traders,

Coach Tyler here.

If you’re a bear, look away. You might find the following commentary unsettling. This week’s price action gave us three reasons for optimism.

Reason #1

Historical precedent. The S&P 500 just rallied over 1% for three consecutive sessions. It may not sound all that impressive, but it is. You’ll see just how well stocks have performed following previous episodes of such strength in the chart below.

Reason #2

Fear has left the building. The CBOE Volatility Index (VIX) finally (finally!) cratered. And it’s about time. We spent over two weeks above 30, signaling heightened fear and uncertainty. But the terror of a high VIX is over. This week’s rug-pull has the Index plunging.

Reason #3

China stocks finally bottomed. Panic seized Chinese stocks in recent weeks sending FXI into freefall. The panic seeped into emerging market funds and weighed on market sentiment. And then, on Thursday, FXI soared 24% in a short squeeze for the ages.

These three dynamics make this market rally different than the previous ones.

Video of the Day: Fundamental Focus: Price-to-Book Ratio (P/B Ratio) Explained

Coach Greg explains what P/B Ratio is and how traders and investors can use this important fundamental concept to create an edge in the stock market.

Chart of the Day: 3 Consecutive 1% Gains is Supremely Bullish

Today’s chart comes from LPL Research and shows the forward returns after the S&P 500 has scored 3 consecutive 1% gains.

Today’s Blogs

Options Theory: Put Butterfly Spreads

Last week’s video walked through the basics of building call butterfly spreads when bullish. Today we’re tackling how to use put flies when bearish.

Women in Trading: Stay the course

Look at your trading the same way you would a business.

Today’s line up

Traders Lounge 11 AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

Cash Flow Club Replay

If you missed last night’s episode when Coach Gino Poore talked about Different ways to think about the credit spread or would like to watch it again, check it out here.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.

Women in Trading MasterMind Group 8:30 PM EST

Once a month we’ll be hosting a live webinar featuring Women In Trading with Coach Emily. Get in the game!

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