August 22, 2017

8/11 Gap Fill in the S&P

The holiday shortened week and lack of volume (due to the Jewish New Year) has the market in a bit of a stand still this week. Yes, the market has continued the push higher, but overhead resistance coupled with short-term overbought levels in all of the major indices seems to have put a damper on the bulls latest attempts to push he market higher.

Yesterday, was wonderful (in my opinion) and telling if you are a bear. The gap fill (8/11) in the S&P (SPY) seems to have happened at the perfect time. Couple all of the aforementioned with a move into one of the seasonally weakest times of the year for the market and a move down to close the 9/1 gap in the S&P seems plausible. Remember, I am a high-probability, mean-reversion trader so when I see a rally on weak volume into overhead resistance that leads to a short-term overbought state right before one of the weakest times of the year I tend to get excited (boy that was a mouthful).

However, just because the probability of a trade looks inviting doesn’t mean that it is a guarantee for success. Remember, it is only a probability. There are no guarantees in trading.

As for my current trade, so far so good. I could have taken a 5% -7% profit yesterday on the trade, but I have decided to wait until the short-term overbought state has worn off before I begin to think of closing out the position.

Also, I just wanted to let all of you know that I will not be posting my trades (directly from my ThinkorSwim account) on the blog until after I have closed the trade. This would not be fair for all of my loyal paying subscribers. However, once the trade is closed I will post the trade. Furthermore, I will continue to post my trades at the end of each month on the My Options Portfolio page just like I have in the past. Transparency is king and I hope this is what separates me from all of the other newsletters out there touting outlandish gains with no proof to back up their claims. I post everything!

Please do no hesitate to email me if you have any questions or comments about options, my service, etc..