Bullish Specs Are Getting Flushed Out – NO OVERNIGHT SHORTS – Get Ready To Buy

June 29, 2015
Author: Peter Stolcers, Founder of OneOption

LEARN HOW TO GET THE PLATFORM FREE and get my market comments before the open. Posted 11:30 AM ET - Greece was not able to strike a deal and their banks did not open today. Global markets are trading lower on the news and the S&P 500 is down 25 points. The 100-day moving average has been breached and the 200-day moving average is in reach (SPY $205.40). Last week I mentioned that I would not sell bull put spreads because there was still a chance that Greece could screw up. I hope you took my advice. With option IVs near historic lows, the risk/reward profile for this trade was horrible. This decline will catch many traders off-guard and we could hit an air pocket today. If the selling accelerates, we will test the 200-day moving average. That could set up an excellent buying opportunity and even without a deal, I will sell out of the money bullish put spreads in small size. China was down 3.5% overnight and that comes on the heels of a 7.5% decline Friday. The PBOC eased, but buyers stayed on the sidelines. I have been trading from the short side this morning and I will NOT take any overnight short positions. The momentum has been set and this could be an ugly day. Greece will try to strike a deal and they might realize that the tail is not going to wag the dog. Any positive news/rhetoric will spark a massive rally. If not for Greece, we would have had a very quiet week. If you are a swing trader, keep your focus. You should be lining up bullish stock plays. When the selling ends, the bounce will be fast and furious. I believe that they will kick down the road and a piecemeal deal is likely. I plan to buy stocks that are breaking out and I will place buy stops above the current price. It will take me a while to enter these trades each day, but if we get a deal, these orders will be ready to execute if we get an instant relief rally. For today, I will trade from the short side. I am looking for a washout and support. From that point on, I will line up my longs and I will wait for the move. Grexit (less than a 20% probability) would spark selling and the market would correct to SPY $190. Asset Managers would pull bids and that type of move would set up the best buying opportunity of the year. Let this wave of selling pass and get ready to buy. . . image

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