SPY $204 Is A Key Support Level – If We Close Below It Buy Puts and Swing Trade

May 18, 2016
Author: Peter Stolcers, Founder of OneOption

Posted 9:30 AM ET - Yesterday the market probed for support and once the momentum was established, stocks continued to drift lower. We are using the first hour range as our guide for day trading and this approach has worked well. The market is directionless and I am not going to read too much into these moves unless the SPY closes below $204. If that happens I will add to bearish positions. Yesterday I sold my VXX position for a scratch. I've been holding it for more than a week and I believe option implied volatilities will decline heading into Memorial Day. In order for VXX to pop, you need a sharp market decline and follow through. A steady drip lower will not result in a big VXX rally. I can find better bearish trades. Sectors like retail are getting hit hard. If I'm going to take bearish positions I will buy puts on these stocks when they break horizontal support and major moving averages. I am still long BZQ and I plan to hold that position. The Olympics will reveal the dire conditions in Brazil. The FOMC minutes will be released this afternoon. Global risks have subsided and the comments will be a little more hawkish. However, last month's dismal jobs report should keep the Fed sidelined. If the market wants to sell-off on the news, it will. If it wants to bounce and rally on the news, it will. The FOMC minutes will be cited as the reason, but in reality this report will not be the true reason for the move (just an excuse). The market lacks a catalyst. If we don't breach $204, the SPY will float back into the range and the trading volumes will decline. I believe $204 will be tested today and I hope we close below it. I just released my new day trading algorithm. It rates stocks on a multitude of variables I use for entering day trades. The stocks with the highest score are displayed at the top of the table and they are ready to trade immediately. I've been working on this for a couple of months and the results are astounding. Yesterday morning I had 12 winners and no losers. If you are a day trader, take the one-week trial. This system is a game changer. Look for early weakness. If we make a new low after one hour of trading and if the SPY is clearly below $204 we will drift lower this afternoon. Take some bearish overnight positions if this scenario plays out. If the market probes for support and it bounces, prepare for a choppy day. . . image

Daily Bulletin Continues...

Want Full Access?

Become a Member

Start Free Trial

No credit card required.


Previous Bulletin

May 17, 2016

Next Bulletin

May 19, 2016