Sell Out of the Money Bullish Put Spreads After Strong Earnings Reports

Posted 9:45 AM ET - The market is going to challenge the all-time high this week. Greece signed a deal, China's market found support and earnings season has been decent. The macro backdrop is stable and I don't see any speed bumps until the FOMC meeting next week. IBM missed estimates and it is trading lower. They've been struggling the last few years and this is not a big surprise. Apple will post results after the close. I don't believe the market decline in China will impact demand this quarter so the number should be in line. The stock has not been able to rally above the high in February and it will take a strong number for it to breakout. The economic news is light this week. Flash PMI's will be posted Friday. China is the biggest wildcard and recent numbers (GDP, retail sales and trade balance) were good. I am not expecting a big move off of the Flash PMI. The FOMC statement will be released a week from tomorrow. The Fed is not likely to show their hand. They don't want to spook the market during recess. Most traders feel that a September rate hike is likely and the market has priced in that event. Prepare for the summer doldrums. The market will float higher for the next week as mega cap tech stocks post results. After that, the momentum will stall. There will be individual stock plays. Look for companies that have posted solid results and that generated a positive reaction. Focus on stocks that are breaking through horizontal resistance and sell out of the money put credit spreads below the breakout. If the breakout fails, buy back the put spreads. This is the preferred strategy. I believe the market will have a slight upward bias through August option expiration and I don't see any threats. Distance yourself from the action and let time decay work its magic. The price action has been slow during the day and that pattern will continue. Sell bullish put spreads after strong results have been posted. . .

Daily Bulletin Continues...