United States Stock Advances Lead Declines
by InvestingTips on Apr 02, 2012
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http://www.options-trading-education.com/4437/united-states-stock-advances-lead-declines/ - United States Stock Advances Lead Declines - ...
http://www.options-trading-education.com/4437/united-states-stock-advances-lead-declines/ - United States Stock Advances Lead Declines -
United States stock advances lead declines recently by roughly four to three.
The broad range of United States stocks, as measured by the S&P 500 index, markets have had their best first quarter in 14 years.
A positive approach in trading options on the US economic recovery has worked for many options traders.
The United States manufacturing sector continues to beat expectations and the real estate market may have finally hit bottom.
Meanwhile, gold and copper mining company, Freeport-McMorRan Copper & Gold Inc. - FCX - rose a couple of percent.
The fact that FCX went up may be tied to the same things that are helping the economy in general.
First of all, commodities have benefitted from the slow but sure US economic recovery.
Copper futures respond favorably to a rising economy. Gold, on the other hand, is largely a defensive investment.
As United States stock advances lead declines, how is it that many are buying stocks in a rising market while others are buying gold stocks as a hedge?
Economic stimulus, Printing Money, the Recovery, and Gold
Gold bugs are concerned that while the Bernanke Doctrine may well get the US economy back on track that it will also devalue the dollar.
If you believe that the US will not be able to handle its debt and that it will print money in excess you may well want to buy gold.
An attractive alternative for many is to buy gold stocks such as FCX. Gold mining stocks commonly rise faster than gold in a rising gold market.
Unfortunately, gold mining stocks also tend to fall faster than gold in a falling gold market.
While the S&P 500 has done well of late there is still a lot of concern about the debt situation in Europe as the EU upped its bailout fund limits.
As United States stock advances lead declines the other news is about Europe flirting with a recession and Chinese concern about lower exports as well as a real estate crash.
While manufacturing is expanding in the USA many are considering if Euro Zone austerity or growth is going to be the next factor that drives stock prices.
As United States stock advances lead declines many are still uncertain about the strength and depth of a US market recovery.
The options trader is familiar with this sort of situation and can profitably adapt to the rise and fall of the market.
A savvy options trader learns when to buy puts and when to buy calls on stocks of his choice.
This trader does not let his emotions drive his stock picks.
He does not let the psychology of trading take over from careful fundamental and technical analysis.
Trading options as United States stock advances lead declines gives traders the ability to reduce investment risk and leverage their investment as well.
As always we offer this discourse to stimulate thought with profitable options trading as the aim.
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