August 18, 2017

Options Strategies Continue To Shine In This Volatile Market

I am going to keep it rather short tonight. The market moved lower today, but the bears had a rough time pushing the major benchmarks decisively lower. We could still see a push lower, but over the short-term the direction leans towards the bulls. However, there are a few international ETF's that have pushed into an oversold state and a few could be potential plays going forward. Currently EWZ, EWP and TBT are on my radar for short-term plays and as always I will inform all of you (my paid subscribers) in real-time if and when a trade occurs. New Credit Spread Options Strategy – Beta The two week push by the bulls has pushed the value of my credit spread to approximately $.51 which is $.17 higher than my original price. For all … [Read more...]

How did options strategies react to the plunge today?

Yesterday I stated in the blog: Historically, when we see the S&P up over 0.5% and the 10-year Treasury notes up over 1% following a Fed announcement the market has a tendency to struggle over the short-term (1-5) days. Couple the aforementioned historical tendency with the benchmarks we follow nearing overbought territory and you can see why the market could struggle over the next few trading days. The post-Fed decline occurred today and now the indices we follow are nearing an oversold territory. Moreover, futures after hours are pointing to a lower open tomorrow. Of course that could change as we near the open tomorrow but if the market does happen to gap lower tomorrow the market could reach an extreme oversold state which would … [Read more...]

Fedspeak and the Aftermath

For those of you who don't already know the Fed decided to lower rates by a quarter-point to 4.50%. It was the second straight reduction this year. As expected, immediately following the announcement the market experienced several violent whipsaws only to finish the trading day substantially higher. The S&P (SPY), Dow (DIA) and Nasdaq 100 (QQQQ) finished the day higher 1.0%, 0.8%, and 1.4%, respectively. Now What? Did you notice how the bond market responded to the announcement? The benchmark 10-year Treasury note spiked after the news and advanced over 2% by the end of the trading day and 4.4% since late Tuesday. Historically, when we see the S&P up over 0.5% and the 10-year Treasury notes up over 1% following a Fed announcement … [Read more...]

Seasonally Bullish

Before I move into today's price action and what the next few trading days look like I would like to reiterate the overly bullish seasonal conditions that the market has entered. The last three days of October and the first three trading days of November are overwhelmingly bullish. Going back over the entire history of SPY (12 years),  not once did the aforementioned time frame finish lower. Furthermore, the Stock Trader’s Almanac has the six days marked with a bull symbol. This signifies favorable seasonal conditions with the S&P finishing the days higher 66.4%, 81.0%, 61.9%, 71.4%, 66.7%, and 61.9%. It is the longest string of “bull symbol’ days in the must-have reference. The market traded in a fairly tight range today and will … [Read more...]

Strong Seasonal Winds Blowing In

With only four trading days left in October will we see the historically bullish seasonality that occurs during the last three days of October and the first three trading days of November. Going back over the entire history (12 years) of SPY (S&P) not once did the aforementioned timeframe finish lower. Furthermore, the Stock Trader's Almanac has the six days marked with a bull symbol. This signifies favorable seasonal conditions with the S&P finishing the days higher 66.4%, 81.0%, 61.9%, 71.4%, 66.7%, and 61.9%. It is the longest string of "bull symbol' days in the must-have reference. Given the recent price action and the bulls ability to keep the benchmark S&P above its 50-day moving-average I think the seasonal winds could … [Read more...]

Market Neutral, Condors and Diagonals

The short-term bounce that I first spoke about late last week seems to have exhausted itself. The short-term bounce could continue, but the high risk/reward position of the trade seems to have faded as prices have risen.   The market still seems a bit heavy to me here. I know the market has performed exactly as it should have after the new-high correction, but there are a few underlying indicators that are starting to make their way to the forefront, at least over the short-term. The Nasdaq 100 (QQQQ), which is often viewed as a leading indicator, is once again nearing a short-term overbought situation. Moreover, the upside gap in the tech-heavy QQQQ also went unclosed. Couple the two aforementioned situations and I think you can see … [Read more...]

Sell In May Revisited and Indices In A Very Oversold State

Before I delve into the options strategies we follow and how the performed during the October cycle I would like to  touch on a post that I write back in late April/early May of this year. On 5/3  I first spoke about the old Wall Street adage "Sell in May and go away. As many of my loyal readers know, I mentioned it several more times over the course of the next few months. On 5/4, when the market officially moves into the aforementioned adage, the S&P (SPY) was trading at $150.75. Today the S&P (SPY), closed at $149.67 lower -$1.08 or -0.7% since the "sell in May" period began. Once again, the seasonally flat period between May-October proves it merit. Okay, back to today's market action. Whew! More than a handful of options … [Read more...]

Nearing Oversold. Will We Get There?

Three out of the four major indices are bordering on oversold. However, the tech-heavy Nasdaq 100 (QQQQ) conntiues to push higher and is now at the opposite extreme of the other major indices as it is bordering on an overbought state. One note of interest, around this time I usually discuss the post-expiration bearishness that typically occurs the first two trading days following options expiration. Well, not this time. OVer the last 10 years, the trading day following October options expiration has been higher 10 out of 10. Wow! A push into oversold territory coupled with the aforementioned seasonal tendency could present a nice risk/reward setup. Over the last few months I have been battling with bouts of frustration, particularly … [Read more...]

Market Vacillates Wildly/Will Short-Term Bulls Step In?

The market vacillated wildly today which is not out of the ordinary given that it is the week of options expiration. The market gapped substantially higher at the open and then proceeded to decline lower throughout the day until the upside gap was closed. Once the gap closed the market settled down and began another upwards push. By the close the broad market S&P (SPY) and tech heavy Nasdaq 100 (QQQQ) were able to sustain gains of +0.3% and +64.7%. As a result, the indices that we follow remain in an neutral state. According to the next two days the Stock Trader's Almanac, the next two trading days are seasonally bullish with the S&P finishing higher 71.4% and 66.7%, respectively. As I have stated numerous times over the last few days … [Read more...]

October has been kind to all of our options strategies

The overall market has not quite reached an oversold state and by the looks of it I am not so sure that it will. After the closing bell some of the closely watched tech giants came out with postive earnings reports which have led to a substantial push higher in futures. If this holds we could see the typical mid-week, options expiration, positive bias. Going back two years, the S&P (SPY) has a bullish bias during the week of options expiration, particularly if you only include the trading days of Wednesday, Thursday and Friday. As I mentioned a few posts ago, 10 out the last 12 expiration have finished on the positive side of things. While the market has some catching up to do if it wishes to contniue the bullish trend, my guess is that … [Read more...]