The US market has experienced 3 consecutive days of gain since last Friday. With Alphabet’s fantastic earnings report and stock split, it is likely that the rally will continue for today (2 Feb 2022).
In this article, I wish to share 2 analysis from 2 of my favourite YouTubers, Tom Nash and Adam Khoo. They explained using Fundamental Analysis and Technical Analysis respectively on why the market is about to turn bullish again.
Fundamental Analysis (FA)
Tom has been warning his audience about the market correction since a couple of months ago and he was bearish and felt that market would be going down further but he changed his forecast after a certain observation: 3 Fed officials came out and said the same thing that they felt that they do not need to raise interest rates so many times this year.
Those statements, coupled with rising bond interest rate in the past 6 months (60%), led Tom to believe the Federal Reserves is going to “kick the can down the road” and raise interest rate at a later date. Also, when market rallies, the short sellers will need to cover their short positions and that cause prices to go up even more, leading to a bullish uptrend.
Tom however believe that the bull run will come to an end after 6 months and inflation woes will come back to haunt the market. It could be worse than raising the rates now.
Technical Analysis (TA)
Adam Khoo also believes that the market has bottomed out and will continue to rebound from here onwards, based on technical analysis. You can view the full analysis in the below video.
What I Plan To Do If There Is A Rally?
If the bull run is indeed coming and the market is going to rally from here onwards, I will first be taking profits on my LEAPS positions and clearing those that are expiring the soonest (see the blue circle).
With the funds available after selling my LEAPS postions, I will be allocating the funds into selling cash-secured PUT or covered CALL (Wheel Strategy). My ideal fund allocation between Wheel vs LEAPS is around 70% Wheel vs 30% LEAPS. My current allocation is 45% Wheel vs 55% LEAPS.
I intend to own 100 shares of all my favourite stocks, which includes Apple, Alphabet (Google), Microsoft, AMD, Nvidia, Tesla, Meta (Facebook), to hold for the long run, while selling covered call on them or cash-secured puts if they get called away. The stocks that are already on my Wheel strategy are AMD, Apple, Tesla, Nvidia, BAC, Pinterest, Nio and Palantir.
Lastly, if I do have spare funds, I may buy LEAPS that are expiring in Jan 2024 and beyond, on my favourite companies that I have listed above. But with interest rate coming, I am taking a cautious approach and safeguarding my portfolio, just in the worst case the market stays sideway for more than 2 years. If that happens, all my LEAPS will become worthless and I will lose all my capital that I use to buy the LEAPS.
Keen to learn about options trading but do not wish to pay for expensive courses, this newbie guide will help gain the knowledge and fundamentals to understand options better. And it’s totally free!
The Newbie’s Guide To Options Trading
The LEAPS Strategy has helped me make more than USD120,000 in 2021. Here’s all you need to know about this strategy that can help you increase your wealth exponentially:
The Ultimate LEAPS Options Thread
Looking for ideas on what stocks to invest in or which stocks to trade? You can take reference from what I have been buying or selling. I try to update them as soon as I can in this section, as well as share my thoughts behind executing these trades:
Excited to start your trading journey or perhaps try out with a paper trading account to build your confidence in trading? Check out this step-by-step to help you get started:
How To Buy Options on Interactive Brokers (Step-By-Step)
If the bear market in 2022 is making feel depressed as your stocks come tumbling down, read this article to find out how you can use options trading to help you claw back some of your losses as you await market recovery:
How I Do Earn Even When The Stock Market Is Bearish?
I watched tons of videos on YouTube since 2020 and if you are wondering if there are any useful channels that you can subscribe to for learning market trends, TA, FA, check out this compilation here:
My Secret Weapons For Options Trading: I Watch These YouTube Financial Channels Every Day
I concluded my first year of options trading with more than USD160k of gain, see how I do it and the capital I use for every month to give you a sensing of the percentage yield I get out of my gains:
1st Year Options Trading Recap: The Journey Towards SGD$217,509 Profits In 2021
This blog is as authentic and as transparent as I can share, I do not just show the wins and hide the loss. I have made some very bad decisions in the first 8 years of investing and paid a huge price for them. Here is the loss I have accumulated during these years. I hope you learn some lessons from my mistakes.
I Cut $135,715 Worth Of Losses In The Last 1.5 Months
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