June 23, 2017

Pivotal Day Tomorrow

Tomorrow brings the always  highly anticipated FOMC announcement. One thing is certain it should be a market mover. Will the news lead to a push above what has been strong overhead resistance at the 1131 area or will the major market index finally take a reprieve after an enormous gain in July and early August.

The broad market indice, S&P 500 (SPY) has pushed near an overbought state with strong overhead resistance overhead. Since gapping up last Monday (gap has yet to close at the $110.86 level) the S&P has tested and failed to push through the June 21st high of $113.20. It came close today, but like every other time, the bulls did not have enough to get the major market index over the hump.

So, where does My Options Portfolio stand at the moment. Well, I am almost 100% short at the moment, but will exit all trades if the market is able to push and hold above the 1131 area on the S&P.  Currently I have losing positions in IWM, SPY and TZA, but a short-term move lower (holding until the gap close from last Monday) will certainly puts most of my positions back in the black.

There is no doubt that the last few weeks have been frustrating as a trader. I have been adding more and more short positions after the gap up and inability to push through resistance. There are so many short-term bearish indicators that are popping up that I can’t help as a high-probability, mean-reversion trader to take a position. Of course, even with Mr. Probability on my side, there will always be the occasion when an outlier occurs and I will certainly take a hit (some bigger than others), but as long as I am able to handle to risk-reward in a disciplined way and understand that in highly-leveraged investments such as options, volatility in My Options Portfolios performance will be high. This is an accepted fact that I am comfortable with in my trading endeavors.

So, with that being said, I hope that tomorrow is to my liking because I certainly enjoy profits rather than losses.

Have a wonderful evening!