Trading in futures and options on futures involves substantial risk and is not suitable for all investors. Past performance is not necessarily indicative of future results. The views expressed within these videos are strictly the opinions of Kingsview Management. Before investing, read all risk disclosures including those provided in the Disclosure Document.

When the closing bell rang yesterday afternoon, traders watched as the S&P 500 closed up for the eighth consecutive day. This is somewhat of a rare occurrence because including yesterday, it has happened only 12 times since the S&P 500 futures contract began trading 28 years ago in 1982.  If one believes that in the short term markets follow a "random walk," this would be like flipping a coin and watching it land on heads 8 times in a row.  We know plenty of traders and investors who would like to debate the validity of Professor Malkiel's random walk hypothesis, but regardless of your opinion is, we think it’s fair to say this is a rare event.

I have learned the hard way that just because an event is rare doesn’t mean it can't happen. Now I am all for using a trading approach that is based on the probability of events happening, but I believe there always should be a fine balance that you must maintain.  On one hand, we think that high probability events can provide some of the best trading opportunities. On the other hand, we believe that you can never let your risk management slack no matter how great the odds are in your favor.

A great trader once told me that "Opportunities are made up easier than losses."

Philip Silverman
Co-Portfolio Manager / Managing Member

Trading in futures and options on futures involves substantial risk and is not suitable for all investors. Past performance is not necessarily indicative of future results. The views expressed within this document are strictly the opinions of Kingsview Management. Before investing, read all risk disclosures including those provided in the Disclosure Document.

As of the start of today’s trading session, the S&P 500 Volatility Index (VIX) has been down 18 out of the last 20 trading days.  Now I am not sure if this is a record, but I can definitely tell you it is not a common occurrence.  This decrease in volatility as well as the recent rally, which has all but made up for this year’s losses, makes for a tough market to trade.  When volatility comes down significantly, it is potentially a sign that fear in the market is decreasing because a decrease in the demand to buy options as insurance could be the reason for compressed option prices.  We believe that any time a market moves in one direction for many consecutive days, you have to be careful because traders tend to let their emotions flair up.  In our opinion, the fear of missing out on a rally can cause traders to chase the market even though they know it might not be a good idea.  As a great trader once told me “the market will move in a way that causes the greatest pain to the greatest number of people.”

My other concern in this market is the lack of volume.  We believe that volume is a good indicator of how much conviction investors and traders have about what they are doing.  Unless there is volume behind a move, we believe you should be skeptical of whether the move can be sustained.  It is interesting to note that we saw volume increase while the market sold off and decrease while the market rallied.  This is something we will monitor extremely closely in the coming weeks and months.

Philip Silverman
Co-Portfolio Manager / Managing Member

Trading in futures and options on futures involves substantial risk and is not suitable for all investors. Past performance is not necessarily indicative of future results. The views expressed within this document are strictly the opinions of Kingsview Management. Before investing, read all risk disclosures including those provided in the Disclosure Document.

I attended a conference yesterday hosted by the Roosevelt Institute called “Make Markets be Markets.” The conference was held to accompany the release of a report produced by the institute. The report includes writing by some of the preeminent players in the push to reform the markets in response to the financial crisis. Nobel Prize winning economist Joseph Stiglits, hedge fund legends George Soros and Jim Chanos, and TARP Congressional Oversight Panel Chair Elizabeth Warren all spoke at the conference. I thought the report was very informative as it keyed in on the major issues that face the markets while providing ideas about what steps we need to take to make the markets function better. I feel very strongly that these ideas need to be shared. We have an opportunity to improve our financial system so our country can remain at the leading edge of finance, and right now it appears that our politicians are unable to get anything done at all.

Here is a link to the report:

http://makemarketsbemarkets.org

Philip Silverman
Co-Portfolio Manager / Managing Member

Trading in futures and options on futures involves substantial risk and is not suitable for all investors. Past performance is not necessarily indicative of future results. The views expressed within this document are strictly the opinions of Kingsview Management. Before investing, read all risk disclosures including those provided in the Disclosure Document.

As I was watching yesterday’s selloff, I kept thinking about the hour I spent last week as a guest host on Fox Business Channel.  The last segment of the hour is something they call “Your Best Guess.”  In this segment the hosts each give their best guess on what they think will happen in the markets.  I said that day to day, I don’t know if the market is going to go up or down, and I certainly don’t know where the market is going to finish for the year. I told viewers that I believe we could see a very choppy and volatile market, and I think we will continue to see the Dow swing by 100+ points on a regular basis.

Now I was only a guest host, and because my day job involves being responsible for investors money, I can’t rely on guesses. With all of the big moves in the market, global economic issues, and tightening risk premiums, I believe very strongly that everyone with money in the markets needs to be prepared because there could be some tough sledding ahead.

I am by no means trying to scare you. In fact, volatile markets tend to offer excellent opportunities for those who are prepared to take advantage of them. I believe that it is important to be positioned to take advantage of what the market gives you, rather than let volatility knock you off balance.

Philip Silverman
Co-Portfolio Manager / Managing Member

Trading in futures and options on futures involves substantial risk and is not suitable for all investors. Past performance is not necessarily indicative of future results. The views expressed within this document are strictly the opinions of Kingsview Management. Before investing, read all risk disclosures including those provided in the Disclosure Document.