What Captain Jack Sparrow can teach us about trading

When I found today’s quote, my mind went back to one of my favorite movies: Pirates of the Caribbean: Dead Man’s Chest.

There’s a scene where the protagonist, Captain Jack Sparrow, has to renegotiate his deal with the devil (that is, Davy Jones). Here’s the scene:

As so often happens in negotiations, Jack isn’t actually looking for a better price deal. He’s buying something else that’s a little hidden. In this case, he’s buying time.

When it comes to trading, we use price to gauge everything else.

Buyers swoop in when they believe the price of a security is undervalued. In fact, something I’ve learned in the business world is that we always look to make purchases when we believe -- whether consciously or unconsciously -- that the value of an item is greater than its price.

All the candles on the charts are derived from price action throughout a trading day.

Most of the technical indicators that exist are based around price action, too.

Trading math truly does rely a ton on price (also Volume, but that’s a story for another day).

CNBC News

Why it matters …

With inflation in check and jobless claims going up, the Fed is much more likely to lower interest rates a couple more times this year. Clearly the tariffs have not caused the sky to fall (Chicken Little will be most disappointed! 🐔).

This government funding face-off isn't like those of the past. The reason: Both sides are OK with it.

Yahoo Finance

Why it matters …

From the article…

“Markets, … have grown accustomed to tuning out Washington's regular displays of brinksmanship. But Wall Street may turn to the issue in earnest starting Monday, when lawmakers return with less than 48 hours before a partial government shutdown could take effect on Oct. 1 at 12:01 a.m. ET.”

I found this statement interesting. The gamemanship and showmanship of Congress has become mundane to the market (and, quite frankly, everyone else!) The sabres seem to be rattling in silence to everyone except the actors in suits. We won’t likely look up from our video screens to take a peek until it actually happens and then for just a bit.

Moral: Crying wolf only works if there is eventually a real wolf!

Comments: The pre-market is decidedly green after the inflation report was released showing inflation in check for last month. The almanac indicates a “Bull” day historically and it is shaping up to mirror history at this point. 

... Remember that this is an expiration Friday, so if you’ve got 0 DTE options (especially if they are close to ITM) then you’ll want to take care of them before the markets close.

Another Alpha scan trade idea for around 1.25% return on risk into next Friday’s expiration.