Papale on Trading the Talking Heads

What a strange last week.  First, the CEO of Citigroup abruptly resigns the day after the announce earnings.  No hints no clues.  Just “By the way Vikram is not coming in today…or ever.  Now let us introduce you to Mike”.  Interesting way to handle the departure of the head of a publicly traded company.  And then Google somehow released earnings what appears by accident and the stock dropped 60 dollars.  I guess someone missed the memo that earnings are supposed to come out after the close.  Maybe the person in charge of releasing the earnings for Google just got hired and didn’t fully understand how that works.  Maybe he came from Knight Capital and was in charge of stock order routing until a couple months ago.

The talking heads are at it.  As we head into an event driven last two months of the year, understandably, the dialogue is increasing.  Earlier last week, during a weak moment, I was watching CNBC and Steve Liesman and Rick Santelli were about ready to take each others’ head off during an on-camera disagreement (my money would be on Santelli. He came from the bond pits.  Those guys are tough).  There is simply a lot of news and data being released, analyzed and interpreted right now.   Based on my own high level NASA sponsored super sophisticated analysis, it appears that 50% of the heads are bullish and 50% are bearish heading into the election and beyond.

The point is the market is in a tug of war of opinions right now (what else is new).   My suggestion, as in nearly all market environments, is to continue to trade according to your preset trading plan.  Waiting for markets to settle down or develop some kind on “clarity” will have us sitting around for the rest of the decade probably.  If you do have concerns, cutting down on trade size is a good way to stay in the market with less risk.  I am not a huge fan of changing stops or adjustment points, at least on the strategies we teach at DiscoverOptions, as you are effectively tweaking your trading model.  These strategies operate successfully based on time and consistency.  Remember, only after we are looking back three or six months from now will everything seem obvious.  For now though, stay focused on the rules.

Steve Papale is a mentor with DiscoverOptions, the educational arm of OptionVue Systems.  Inquiries should call 847-816-6610 or email

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