Expect Choppy Action In the Range – Next Wave of Selling After Apple On July 26th

July 5, 2016
Author: Peter Stolcers, Founder of OneOption

Posted 9:50 AM ET - The market over-reacted to Brexit. It sold off and rebounded. End of month window dressing helped to fuel the bounce and we are a little over-extended. Some of those gains will be given back today and the S&P 500 is down 12 points. I am very market neutral. I believe we will chop back and forth in the range ($204 - $213). China's services PMI hit an 11 month high, but manufacturing was weak. A mutual fund heavily invested in British real-estate stopped redemptions. This is only a $3B fund and it is a knee jerk reaction to Brexit. This is not a big deal. Italian banks are raising credit concerns. The 3rd largest bank has been asked to cut bad debt by 40% over the next 3 years by the ECB. On a longer term basis, credit issues could be a concern as the EU is starting to show signs of strain. The FOMC min will be released Wed and they should be dovish. Earnings season starts next week and that is bullish. We should see an upward revision to the May jobs number and June should be ok. The strategy remains the same. Stocks are up one day and down the next. Great for day trading, tough for swing trading Down opens have been good for us. I will be lining up longs and waiting for market support. Last week you had a nice opportunity to sell out of the money put spreads. That was a great opportunity to use this strategy. I am not expecting any big market moves before July option expiration. We could be off to a slow start this week, but the action will pick up each day Favor the long side and wait for support today. . . image

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