Saber rattling with North Korea has dominated the headlines, but really, it’s still mostly about the earnings as peak earnings season nears its completion. The reason we are still in a bull market is that both earnings and economic reports have been generally very positive.  However, bearish seasonality and an over-extended Dow (scoring 10 straight winning sessions before taking a break) has left a bearish pullback largely anticipated in the next few weeks.  Market sentiment has gone from slightly bullish to slightly bearish, as there is nervousness in the ranks, especially as regards to more speculative sectors:



The CBOE Volatility Index (VIX) is rallying as uneasiness in the market increases.  The VIX is now above 12 for the first time in several weeks.  Also, the Russell 2000 small cap index has slipped below its 50 day moving average and its 20 day low point, once again confirming investors desire for lower risk.  Defensive areas such as large cap, Gold, and Utilities are strengthening.  Would you like to trade more, but don’t have the time?  Check out our new course series, “Trading for Busy People”.  Go here:


OPTIONS INSIGHTS:  Last time we discussed hedging by buying CALL options on the VIX (which has now spiked 20%).  Another way to approach a tentative market is to employ a strategy called a “collar”.  The idea is that you combine a Covered Call with a protective PUT option in case there is a significant correction.  The short calls you sell should more than pay for the protective PUT, and allow you to profit within a tighter range, but with less risk.  This is also a fantastic strategy for busy people who can’t watch the markets all the time.  To learn more, see our course series, “Trading for Busy People” at:

OVERSEAS:  Both Asian and European markets are broadly soft in the wake of North Korean tensions.  Most markets are down only fractionally, but the FTSE is off more than 1%.

OIL:  Oil inventories have come down once again, though gasoline inventories increased.  OPEC pullbacks in production have also contributed to a firming of oil prices, taking crude above $50 per barrel.

JOBS:   The labor market is firming up, but the Jobless claims came in just slightly higher than expected at 244K new claims versus a 241K consensus.  This is also just slightly higher than the previous week.

BIOTECH INSIDER: Shares of ACADIA Pharmaceuticals (ACAD) may have taken a nasty dive on first quarter results, but it’s getting itself back on track in a big way.  In fact, after reported second quarter results that easily beat revenue estimates by $10 million with a better than expected net loss, the stock soared $5 this week.  Better yet, sales of its Parkinson’s disease Psychosis (PDP) drug grew to $30 million, well ahead of estimates, too.  Better yet, the company guided full-year revenue to $110 million, nearly $20 million above estimates for the year.  Typically, this company doesn’t provide revenue guidance, but it is now, especially as it gains confidence in PDP drug sales.  This is a stock our resident biotech expert, Ian Cooper has been talking about for months.  For similar opportunities in one of the hottest sectors to own today, click here.

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