Use SPY $209 As Your Guide – Another Round of Late Day Selling Would Be Bearish

March 25, 2015
Author: Peter Stolcers, Founder of OneOption

I just launched my new website and you can get trade signals for individual stocks for just $20 per symbol per quarter. You can also change the symbols. CLICK HERE FOR MORE INFORMATION Posted 9:45 AM - The news is very light this week and we are trapped in a directionless market. We've seen late day selling the last two days and that is slightly bearish. Stocks tried to rally yesterday and we saw a wave of profit-taking in the last hour of trading. This pattern was a repeat of Monday's action and the selling pressure is building. The SPY is below $209. That was the breakout in February and it represents support. Flash PMI's were better-than-expected in Europe and they were weaker than expected in Asia. GDP will be released Friday, but it should not be in market moving event. A week from Friday the Unemployment Report will be released and soon after, earnings season will kick off. I'm not looking for a big decline, but we could hit a soft patch the rest of the week. I sold bullish put spreads on strong stocks last week and I added to the position Monday. I will be hedging this position intraday by shorting S&P futures now that we are below SPY $209. My stop and re-entry point for the e-minis is $209. This is a low probability trading environment so I am keeping my size small. A round of late day selling today would be bearish. If we make a new low after two hours of trading, I will buy back some of my put credit spreads. This will give my position a slightly bearish tone. I still expect to see a decent bid to the market since the strongest companies announce early in the earnings cycle. I also believe that February's employment numbers will be revised down and that will give the Fed little breathing room. Consequently, I don’t want to get too short. My final point is to keep your size small. The market is choppy and we are in the middle of the range. Prices could swing either way and this is not a time to spread your wings. . image

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