• EDITOR'S CORNER: First Trading Day of the New Year
Happy New Year! The first trading day of 2017 has the markets slightly positive. We finished last year with a little weakness on the last day, perhaps due to selling pressure for tax purposes.

• THIS WEEK'S TRADE IDEA: Trading ArcelorMittal (MT)
Buy the February 8 calls for $0.35 or less.

• MARKET OVERVIEW: Stocks rising in the New Year with gains
U.S. equities got off to a positive start on the first trading day of 2017, though it closed well off the session's best levels.

• OPTIONS ACADEMY: From the AP Archives: If It's Not There...
I have talked at great length about the fact that as an individual investor, you do not have to be in the market at all times.

EDITOR'S CORNER

First Trading Day of the New Year
By Todd Rich

Happy New Year! The first trading day of 2017 has the markets slightly positive. We finished last year with a little weakness on the last day, perhaps due to selling pressure for tax purposes.

Last year's big stories involved elections; namely, Brexit and the U.S. presidential election. This year we will begin to see actual ramifications from those votes. Europe will start to feel tangible implications of the U.K. leaving the E.U., and an indication of how quickly the U.K. intends to execute its exit should become more clear. On the other side of the Atlantic, markets will be reacting to a new barometer of economic activity: an active-Twitter president. President-elect Trump has modified the traditional venues to leveraging the power of the presidency into 140 character sound bites. These have already been shown to be quite powerful in moving the markets. I think we should all get used to the new standard quo.

Due to the holidays, there will not be a webinar this week.  Webinars will resume next week.

Trade Smart,

Todd Rich
President, OptionMonster

THIS WEEK'S TRADE IDEA

Trading ArcelorMittal (MT)
By David Russell

The Trade: ArcelorMittal (MT) - Buy the February 8 calls for $0.35 or less.

Outlook: Steelmakers have been the market's strongest major group for the last year, thanks to value hunting and improved business conditions. MT is now at a favorable level for momentum traders looking for its bullish trend to continue.

Technicals: Shares have pulled back to their 50DMA and mid-November peak around $7.30 after a streak of higher highs and higher lows. There was also an engulfing candle on Friday, which suggests the near-term slide that began in early December is at an end.

Fundamentals: MT has doubled since February but remains a bargain trading for less than book value. Sentiment has been very positive in the industry group as investors look for higher prices and stronger economic growth in the U.S. and Europe. Given positive data points like yesterday's Institute for Supply Management's manufacturing index and better-than-expected construction spending, odds favor continued buying in the sector. The incoming Trump Administration's plans for increased infrastructure spending is another plus.

(Editor's note: This trade idea may be updated periodically, in keeping with market conditions. It is intended solely for educational purposes.)

MARKET OVERVIEW

Stocks ring in New Year with gains
By David Russell and Mike Yamamoto

U.S. equities got off to a positive start on the first trading day of 2017, though it closed well off the session's best levels.

The S&P 500 rose 0.85 percent to close at 2257.83 following strong readings in the ISM Manufacturing Index and construction spending before the market opened. The Nasdaq was also up 0.85 percent to finish at 5429.08. The Dow Jones Industrial Average gained 0.6 percent to 19,881.76 but remained below the elusive 20,000 mark.

Our proprietary ResearchLab market scanner showed strength among silver miners and gold miners, which dropped sharply in the second half of 2016 along with precious metals. Other leaders included shipping companies, Argentina stocks, 3-D printers, and telecom carriers.

The worst group of the day was consumer video chips, which is interesting given that a major consumer-technology conference begins this week. Fiber optics was also among the biggest losers, along with office furniture, railroads, and apartment REITs, as shown in the screen shot above.

The SPX gapped up at Tuesday's open and peaked at 2263.88 about 40 minutes into the session, but a reversal in the price of oil apparently sent stocks lower. Although OPEC production cuts began as scheduled over the long New Year weekend, crude pulled back from an 18-month high as the dollar rebounded.

The move underscores the importance of this week's EIA inventory report, which will come out a day later than usual on Thursday morning because of the holiday. The economic calendar features several other important releases, including auto sales Wednesday morning.

Much of the data will involve employment, starting with ADP employment numbers and weekly jobless claims on Thursday. That will be followed by the government's monthly non-farm payroll report Friday morning.

In addition, the annual Consumer Electronics Show will be held Thursday through Sunday. (See ResearchLab's interactive calendar)

OPTIONS ACADEMY

From the AP Archives: If It's Not There...
By Todd Rich

I have talked at great length about the fact that as an individual investor, you do not have to be in the market at all times. When we apply that to taking on trades based on triggers being activated, it means that even though the trigger is telling you that a trade is potentially being activated, it does not mean that you have to take on the trade! You still have to like it! And like it at that moment! If not, you can simply not take the trade and wait for another time or another opportunity outright.

I kind of liken it to a situation a batter faces in baseball. Many times a coach will tell a hitter to "wait for your pitch!" Notice how the coach did not tell the hitter to swing at the next strike or the next good pitch. He said to wait for YOUR pitch. It does not matter whether the next pitch is a strike or not. It does not matter if it was a pitch that one of the other players would have swung at or a pitch that even the coach liked... it needs to be a pitch that YOU like! You are ready for the pitch. You want to hit the pitch. But if it is not YOUR pitch, then just watch it go by!

It is the same thing here when trading. You can be ready to make the trade. Everything can be set to go. You can have your stops already set. You can have your targets identified and you know what to look at when you get there. You are ready! But, if the planets do not align at the time and the clouds are blocking the stars, or your lucky rabbit's foot got destroyed when you did the wash last night, you can back out!

Just like the hitter in baseball, if things are not perfect and you are not feeling it, just skip it and move on to the next opportunity. There are so many good opportunities out there to be had that you can skip several and still have other potential trades to do. If it does not set up for you the way you want it to then just move on to something else! This is why we step away from trades that gap through our trigger and toward the target taking away a big part of the movement we wanted to trade. If a good portion of our trade is encompassed by (eaten up by) the gap, then it is probably best to do what we do and just step away and look for something else!

So, to make a long story short, no matter who likes what or who would have, should have, or could have, it MUST BE YOU who is confident in the trade you make and no one else! You can't trade through someone else's head! So if it does not feel right to you, just don't do it! Remember, you do not HAVE TO BE in the market at all times!