End of Year Tax Loss Selling
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End of Year Tax Loss Selling

John F. Carter 12/31/2013

Hey everybody, this is John. Welcome to the free video for simpler options. Tomorrow on the 31st, the last trading day of the year, and the stock market is open the entire day on the 31st -- I think the bond market might close earlier, kind of weird. But there's a unique moment in time where you get tax loss selling. And what happens and what this means is -- now my artistic skills they peaked out in 3rd grade -- but this is a market maker. OK. Typically what happens is throughout the rest of the year they offer support in the form of bids in a market. And that can, a lot of times, offer support in the market and then you know bounces from there. What happens is on this last trading day of the year there are specific situations in specific stocks -- not a lot of them -- where the market makers literally turn their backs on the bids. Why? Because there's a lot of people that wait in specific situations, for that last day of the year when they have to sell that stock, and take that tax loss sale.

What the market makers do is they turn around, close their eyes you know literally or figuratively and walk away. And what happens is you're going to get a situation where's there's specific stocks out there that have no bids. And these people who are trapped in these stocks and need to get out start doing market orders. You'll see stocks fall from like $3.00 down to like a $1.80, OK. Or from you know $30.00 you know, down to like $25.00, and then what happens is once the tax loss selling is over they just pop back up for the beginning of the year.

A good example of a stock that met the criteria last year is Netflix. And you can see there's a combination of things. First of all this pattern and the volume show that this is one of those stocks that actually met the criteria and then you can see that once 2011 was over and 2012 hit, the thing went straight up and rallied $50.00 you know over the course of a month and didn't even look back. So that's the kind of stuff we're looking for tomorrow. And so we've got a list, we created a list today and then tomorrow -- so right now we've got 51 candidates. So those are the last three candidates we have. But we have 51 candidates and these are the ones we're going to be looking at tomorrow and we'll be placing bids for all 51-- well not all 51 stocks. But we're going to look for...at the open for the first half hour we look for specific action to say like, yes, this is one of them. So we'll be looking at these three and then the 40 or the 46, 47 before that, and going through and seeing which of the candidates meet the criteria that we're looking for that happened in Netflix last year and those are the ones we'll be placing bids on, all right.

All right, so if you are interested and participating in this, we've got the 51 stocks that we're going to be reviewing tomorrow morning starting at 9:30 east coast time, that's 8:30 central that the market opens. So today what we did, is we talked about, from 2 to 4, we talked about the theory and we went through and we scanned all the stocks.

Tomorrow morning we're actually going to go through and start looking at all of these stocks, seeing which ones meet the morning gap criteria and then starting to place bids on all those. So if you're actually interested in participating in these tax loss selling candidates, you can do this. Now there's three different categories. There were four stocks that were at 52 week lows, OK. And then there were about -- gosh there were four of those -- the bulk from there -- I mean there's a specific pattern that you're for. But we did that scan in Fin Viz where we found about 30 of them. The other one was the IBD scan where we found the remaining 20 or so. You're just looking again for specific criteria. And so anyway, we've got the stocks now, we'll be doing this tomorrow morning. If you would like to join us and go over these picks live, and you know, try to do any of these in your own portfolio, you can sign on for $297.00 and we'll see you here in the morning. All right. Have a good night. Once again...well you have the link here, but just simpleroption.com/tls for tax loss selling.