Market Above the 100-Day MA – I Am Taking Profits On Calls Today

October 22, 2015
Author: Peter Stolcers, Founder of OneOption

TAKE THE 1 WEEK FREE TRIAL FOR INVESTORS AND FOLLOW OUR CALL TRADES Posted 11:10 AM ET - Yesterday, the market tried to rally and the move failed to gain traction. The volume was very light and that is unusual for the start of earnings season. Asset Managers pulled bids in the afternoon and the SPY slipped below $202. The price action was bearish, but the tone has changed this morning. There were a ton of earnings releases before the open. The results were generally good and buyers have returned. Stocks have been in a steady grind higher and this is the kind of price action we needed to see. Earnings are the only thing that can breathe life into this rally. The SPY is above the 100-day moving average and it could challenge the 200-Day MA ($206) in the next few days. Amazon, Microsoft and Google will post after the close today so I was expecting strong performance today ahead of the releases. Flash PMI's will be posted tomorrow morning. Conditions in China have stabilized and the release should be market friendly. Apple will post earnings next Tuesday after the close and the FOMC statement will be released Wednesday. The price action should be bullish until the Fed. They will not raise rates and they will not show their hand. I don't believe we will see a rate hike until 2016. If the Fed hints that liftoff will be postponed, the market will shoot higher. If they keep the market guessing the SPY will stay below the 200-Day MA. Trading volumes are extremely light and that is a sign that the level of conviction is low. Asset Managers do not feel that they will miss a year-end rally so there is no panic buying. If that were the case, yesterday's dip would never have happened. I will be taking profits today on half of my call positions. We are approaching major resistance levels and I want to sell into strength. I will still have half of my positions on and I will take profits on a quarter of my calls tomorrow. I plan to be out of all of my call positions before the FOMC. The market might have another 1% of upside and I can catch the rest of the move day trading. I want to keep my overnight risk exposure to a minimum. I'm not feeling any pent-up demand for stocks. One bad news release could spark a round of selling. That could come from the Fed, it could be the debt ceiling, it could be a round of bad earnings releases or a bad economic release from China. I have nice profits and I don't want to see them slip away. Stay long throughout the day and take some profits near the close. Scale out of long positions and try to be out completely before the FOMC statement next Wednesday. . . image

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