Today was one of those days.
We had network issues today, so I spent most of my day working offline. I haven’t done that in a long, long time. As frustrating as the outage was, it saved me a little bit of cash because I was ready to fire off a few directional trades today. After looking back at the SPY chart I would have most likely entered into a trade around $176.80 so I saved myself roughly $0.40 or about $0.15 to $0.20 per option contract. Hopefully, my good fortune continues tomorrow when I attack this market with a few short-term trades.
All of the major benchmarks are in an overbought state with SPY reading the most extreme. My intent is to add a few credit spread trade as well as some short-term aggressively directional trades. SPY, IWM, DIA, QQQ, XLI, SSO and SDS are just a few of the ETFs I scouring tomorrow for potential trades.
One final word: Esteemed analyst, Jason Goepfert stated the following today, “The S&P has closed at a 52-week high the day before a FOMC interest rate decision 13 times, and it added to those gains the day of the decision 62% of the time. But over the next three days, it showed a positive return only 30% of the time. In addition to what we’ve discussed previously, the VIX “fear gauge” rose yet again, on a day the S&P 500 closed at a 52-week high for the 2nd day in a row. This is very unusual, and has consistently negative implications, at least in the short-term…”
We shall see soon enough…but I have to agree with Jason’s stats. Couple the bearish leanings post-fed with the current overbought state in all of the major benchmarks, plus several unclosed gaps and I can safely say the odds are in the bears favor. Of course, Mr. Market might have something else in mind, but that is why I trade predominantly credit spreads. They allow me a nice margin of error just in case my timing is off. However, as I said earlier tomorrow might bring several types of trades. Let’s just hope we get a nice open so I can take advantage of the current situation.
If you are a believer in a statistical approach towards investing please do not hesitate to try my options strategies. I use simple mean-reversion coupled with probabilities for each and every trade. Give it a try, it’s free for 30 days.