Market Hitting Resistance – Too Early To Aggressively Buy Puts

April 14, 2015
Author: Peter Stolcers, Founder of OneOption

I am offering a FREE TRIAL and you can see every new trade signal for every stock. Use the tactic I describe below to find trades. CLICK HERE TO REGISTER Posted 10:10 AM ET - Last week, the market rallied on light volume from the low end of the range. Now that is challenging the upper end of the range we can expect resistance. Stocks sold off yesterday and they are weak this morning. The news is light and this could be a boring options expiration. China posted weak economic results yesterday and industrial production/retail sales will probably come in light tomorrow. The market won't care because analysts are expecting the PBOC to ease. J.P. Morgan and Wells Fargo announced this morning. One stock traded higher and the other traded lower. They did not have much of a market impact. After the close, Intel will post results. They warned a few weeks ago and bad news is priced in. I sold out of the money put credit spreads last week and those positions are in nice shape. I've pretty much maxed out my profit so I will be buying them back today and tomorrow. We should still get one nice push higher. Ideally, we will run back above SPY $210 and poke through the all-time high. If that happens, I will buy puts when we close below SPY $212 and I will add below $210. If the market does not make a new high, I'm still prepared to buy puts if we rally above $210 and then close below it. I am not overly bearish right now and I'm not anxious to take bearish positions. First, I want to see an attempt to take out the high and I want the rally to fail quickly. That would be a sign of exhaustion. If we poke through $210 and fall back in the next few days, I'm not overly interested. Some of the mega cap tech stocks need to announce (AAPL, FB, GOOG) before I get aggressive with my shorts. Once the transports/industrials/energy start reporting, the news will weigh on the market. In short, I believe we are a couple of weeks away from profit taking. Many analysts claim that bad news is priced in. I don't know how they can say that when stocks are trading any rich forward P/E of 18. The strong dollar, minimum wage hikes, low oil prices and bad weather will impact profits. The market will try to discount these events and it should be able to in the early stages of Q1 earnings season. Greece is in constant need of money and they are living "hand to mouth". They are not helping their own cause and the rhetoric remains harsh. I would not be surprised if the EU boots them out this summer. That would be bearish short-term and bullish long-term. If it happens in the next month, the timing will coincide with dismal Q1 earnings and we could decline to the 200-day moving average. The market is trapped in a six-month trading range and I don't see any catalysts. We are at the top of the range and that should set us up for a nice shorting opportunity. Trade individual stocks. The market is not going anywhere, but there is nice sector rotation. If you have not taken the free trial, you should. It will give you access to every stock at every current trade signal. Use it to find trading opportunities. Prepare for a choppy week. . . image

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