Buying the dip or….

[Mr._Graybeard]

I've heard arguments that the price of crude oil is the tipping point of the global economy, and it has been rising significantly as tensions have grown between Russia (a big oil producer) and the Ukraine. Not that Russia would stopp pumping oil if it were economically sanctioned, but the production would have to go through some graymarket transactions before it emerged, squeaky clean, on the world market.

It's reassuring that crude has fallen in recent days with the rest of the markets. Anyone who went through the inflation days of the '70s knows that oil was the primary driver. As long as crude moves as it has been, I think we'll be OK.

An interesting sidelight is the way the major bond indexes have taken a hit along with equities. The idea that bonds act as a buffer for stocks seems to be losing credibility.

 

[rkser]

I try!

 

[corn18]

What dip?

 

[Dtail]

What dip?

Just saw the final results for today.
What moved the markets up in the last hour?

 

[latexman]

Stocks bounced back, no correction today.

 

[aja8888]

Just saw the final results for today.
What moved the markets up in the last hour?

FED Plunge Protection Team! LOL

 

[corn18]

International still tanked.

 

[Car-Guy]

1200+ point swing today on the DOW.... I loved it. Almost as exciting as playing at a real casino and I didn't even have to drive there and risk bringing something home that I shouldn't. (e.g. covid)... I did miss the market bottoms and tops (as usual) but still not a bad day at all.

 

[NW-Bound]

NW...do not sell any put options today!

Well, I could not help myself and sold another put early in the morning.

Heck, after having to buy more than $300K worth of stock last Friday due to the puts that I sold, what's another $3.5K?

And I also bought a little bit outright, about $4300 worth of stocks, just so that in case the market bounced back, I could say that I bought at the bottom.

Then, drove my wife on a grocery errand, came back and saw that the market recovered some, 2 hours before close.

Put in an order for another put, but it did not hit.

Went take a nap, and just now woke up to see that I am now up about $10K total, instead of down a 6 figure early in the day.

Crazy market!

 

[aja8888]

Well, I could not help myself and sold another put early in the morning.

Heck, after having to buy more than $300K worth of stock last Friday due to the puts that I sold, what's another $3.5K?

And I also bought a little bit outright, about $4300 worth of stocks, just so that in case the market bounced back, I could say that I bought at the bottom.

Then, drove my wife on a grocery errand, came back and saw that the market recovered some, 2 hours before close.

Put in an order for another put, but it did not hit.

Went take a nap, and just now woke up to see that I am now up about $10K total, instead of down a 6 figure early in the day.

Crazy market!

I didn't take my own advice and sold a ten contract Ford $18.50 put expiring on the 28th for a net of $380.00. I want some Ford stock and figured I'd go for this. Then the market headed north.

 

[NW-Bound]

Well, at some point you have to buy the stock outright so that you have something to sell covered calls on.

I am looking forward to sell calls on the stocks I were forced to buy last Friday.

Yes, that's me. Stocks go down, I sell puts. Stocks go up, I sell calls. I just love to sell out-of-the-money options. Sell, sell, sell...

Only on good, good stocks, mind you. There are stocks I don't touch, no matter what price.

 

[Dtail]

International still tanked.

Finished up way before the US comeback. Might come back tomorrow.

 

[Lsbcal]

Just saw the final results for today.
What moved the markets up in the last hour?

I guess it was more eager buyers then sellers. My brilliant analysis.

 

[aja8888]

Well, at some point you have to buy the stock outright so that you have something to sell covered calls on.

I am looking forward to sell calls on the stocks I were forced to buy last Friday.

Yes, that's me. Stocks go down, I sell puts. Stocks go up, I sell calls. I just love to sell out-of-the-money options. Sell, sell, sell...

Only on good, good stocks, mind you. There are stocks I don't touch, no matter what price.

My price point on ford is $19.00. then I will buy. I missed that today so I sold the put. On covered calls, I have bad luck as they get taken and then zoom higher. That drives me crazy!

 

[NW-Bound]

Maybe the moment the decline of the S&P hit the magic 10% correction mark, the trading computers decided that it was time to buy.

And both selling and buying are contagious.

 

[Dtail]

I guess it was more eager buyers then sellers. My brilliant analysis.

Well technically correct, but I am not paying the 1% fee.

 

[NW-Bound]

My price point on ford is $19.00. then I will buy. I missed that today so I sold the put. On covered calls, I have bad luck as they get taken and then zoom higher. That drives me crazy!

On stocks that I like, I buy extra shares so that if I lose some due to covered calls getting assigned, I still have some.

And then, some keep go up and I sell some more calls and end up losing the whole position. Oh man, that's when I suffer a serious bout of FOMO, and had to buy the stock back outright at the higher price. Then, the stock dropped. ARGHH!

So, what I have learned is that right after buying the stock back, immediately sell a covered call just outside of the current price. That softens the blow when the stock pulls back.

 

[athena53]

I'm keep looking.... Have 2 different chunks of cash I would like to put to work...
one's our grandson's savings account.

I find myself thinking that way with my grandchildren's 529 accounts and then I remind myself that the oldest is only 7! The 529s are fully invested.

I do have to chuckle at the timing of Dad's departure from this world in October. Dad started investing back when you had to go downtown to the full-service broker and pay high commissions and he really nurtured my interest in investing (for which I thanked him many times). My brothers had been handling his investments, everything was in order, and less than a month later most of the $$ was transferred from his Fidelity accounts to ours (I have 4 siblings). There seemed to be no rhyme nor reason in what was transferred over in kind (a few shares of GOOG, a few hundred $$ of a couple of mutual funds) vs. in cash. I reinvested a little but have over $100K sitting around waiting for opportunities.

 

[GenXguy]

I used some of my dry powder late Friday near the low of the day on both large and small caps, so with today's close, I'm already up. But, I was prepared to use some more dry powder if the market continued downward further. It didn't go low enough today before it recovered. So, I'll sit on my dry power and wait to see what happens next.

 

[Car-Guy]

Well I couldn't resist, I'm out again. ~2 and 1/2 point swing in ~4 hours on 2000 shares of GE....Not bad for a down day.

Absolutely 100% pure luck... Glad I bailed yesterday at a nice profit.... Now I'm tempted to get back in since it's down ~8% this morning. Maybe I will but I'll only nibble at it or DCA my way back in.

 

[ShokWaveRider]

Folks are winning in this market by buying an ETF when the S&P is down XXX hundred points, then selling it at the end of the day when it is back again. It is crazy. Not in it myself, don't need to be.

 

[Car-Guy]

Folks are winning in this market by buying an ETF when the S&P is down XXX hundred points, then selling it at the end of the day when it is back again. It is crazy. Not in it myself, don't need to be.

Works with single stocks too, in many cases. I don't "need it" either but it's fun to "play". I certainly would not recommend using money that's needed to support a lifestyle/retirement... And yes it's really crazy right now... I guess in a small way, I'm contributing to the madness.

 

[NW-Bound]

Works with single stocks too, in many cases. I don't "need it" either but it's fun to "play". I certainly would not recommend using money that's needed to support a lifestyle/retirement... And yes it's really crazy right now... I guess in a small way, I'm contributing to the madness.

If you buy low then sell high, you counteract the madness and reduce the volatility.

Imagine what happens if there are no buyers and investors are clamoring to get out of stocks. How low the price would go?

By the same token, it's really the lack of sellers that propelled meme stocks "to the moon", as the reddit mob wanted to see.

You need both buyers and sellers in any market in order for the price to seek a rational pricing level.

PS. I am not a day trader, mainly because I am not good at it. I prefer to hold a stock forever, but will buy or sell if I think the pricing is not reasonable.

 

[Car-Guy]

If you buy low then sell high, you counteract the madness and reduce the volatility.

So I guess I'm actually counteracting the madness since I'm certainly trying to buy low and sell high with my swing trades. Works "most" of the time if I follow the rules I've set for myself... In full disclosure/truth, I would have made more money in 2021 if I would have just bought and held but it wouldn't have been nearly as much fun.

 

[NW-Bound]

Absolutely do not buy high/sell low. You are really adding to the madness then.

It's better to hold still if you can't do it right.

.. In full disclosure/truth, I would have made more money in 2021 if I would have just bought and held but it wouldn't have been nearly as much fun.

In hindsight, the market might have been touching bubble territory in 2021. So, your selling was not harmful even if you did not make as much money.

Any time I bought back at a lower price than I sold at, I called it a success, even if I then lost money after buying back.