Market Testing 100-Day MA – Buyers Are Not Interested and Bid Is Weak

November 13, 2015
Author: Peter Stolcers, Founder of OneOption

TAKE THE 1 WEEK FREE TRIAL FOR INVESTORS AND FOLLOW OUR TRADES Posted 11:45 ET - This week the market tested the downside on the notion that the Fed will hike in December. Statements by Fed officials this week have been hawkish. The SPY traded below the 200-day moving average yesterday and it closed on the low. As I described in yesterday's comments, I bought puts and I added near the closing bell. This morning, the 100-day moving average has been tested. Asset Managers are no longer worried that they will miss a year-end rally and the bid has weakened. Cisco missed its number and Nordstrom is getting punished after earnings. The announcements from this point on will be lackluster. EU GDP was light and the ECB is likely to ease. Monetary policies are heading in opposite directions and that is creating uncertainty. Retail sales came in at .2% and although they were in line, the number was dismal. The momentum has been set and there is nothing to stand in the way of this market decline. I bought more puts this morning and I will use the 200-day moving average as my stop. If we close below the 100-day moving average today, I will add. The selling is broad-based and it won't end until we hit an air pocket and reverse sharply intraday. When the market gets back above the 200-day moving average, we can consider taking long positions. That reversal could come off of the 100-Day MA today, but it does not feel like it right now. Until then, stay short and keep your size relatively small. Bearish trades in November rarely make money. One dovish statement from the Fed would spark a nasty round of short covering. If the selling pressure is heavy next week, they will save their statement for Thursday so that they can get maximum impact (the eve of option expiration). . . image

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