Still Bearish But Sidelined – Next Big Market Move Is Down – Buy Puts Below SPY $198

ARE YOU WORRIED THAT THE MARKET WILL ROLL OVER? ARE YOU WONDERING WHAT YOU WILL DO IF THE FED'S HOUSE OF CARDS CRUMBLES? IF THE ANSWER IS YES - WE SHARE SOMETHING IN COMMON ATTEND MY WEBINAR WED AND I WILL REVEAL MY INVESTMENT APPROACH. IT DOES NOT INVOLVE OPTIONS, BUT IT CAN IF YOU WANT. CUT AND PASTE THIS URL INTO A BROWSER TO REGISTER CLICK HERE TO REGISTER Today's Options Trading Strategy - My options trading strategy today is straightforward - I won’t be trading options. I will be day trading the S&P futures and I will not buy put options until one of two things happens. The SPY needs to close below the 100-day moving average for three straight days or it needs to close below SPY $198. If either of these two conditions is met, I will buy put options. Posted 10:45 AM ET - The S&P 500 has moved 20+ points in the final hour of trading the last two days and we can expect plenty of volatility. Global economic conditions are slipping, but central banks are keeping buyers engaged. The SPY has been waffling above and below the 100-day moving average and support at $198 has become much more important. Last week durable goods orders were light and GDP missed expectations. Yesterday, official PMI's were disappointing and ISM Manufacturing missed estimates. We have to start wondering if domestic conditions are starting to wane. A strong dollar will weigh on exports. The ECB fired its bazooka two weeks ago and last week, the FOMC statement was dovish. Rumors are circulating today that the PBOC will ease. Quantitative easing has not stimulated economic growth and these monetary moves have lost their luster. I stopped out of my put positions yesterday when the market rallied above the 100-Day MA. I got in below that point and I lost a little money. I don't want to get chopped up while the market searches for direction. I will be day trading the S&P futures until one of two things happens. The SPY needs to close below the 100-day moving average for three straight days or it needs to close below SPY $198. If either of these two conditions is met, I will buy put options. My options trading strategy today is straightforward - I won’t be trading options. I will wait for the one-hour range and if we are above it, I will go long and if we are below it, I will go short. My stops will be tight. I still feel that the next big move is down and this rally will simply provide me with a better entry point. Greece has toned down its rhetoric and that is helping. They need their next tranche of financing in a few weeks and it would be stupid for the new leadership to alienate the ECB. Once they get their money, the tone will change and this problem will fester the rest of the year. Conditions in the Ukraine are fragile and conflicts are on the rise. The US plans to send defensive weapons and there could be additional sanctions imposed on Russia. Earnings season has been fair, but guidance is cautious. Retailers will start reporting soon and we know that auto sales hit their highest level in January (ever). ADP will be released tomorrow and 235,000 new jobs are expected. This is been a fairly constant number over the last few months and it should be in line. ISM Services will be posted 30 minutes after the open on Wednesday and that number could disappoint. The market has a tendency of rallying into Unemployment Reports. I am waiting patiently on the sidelines for a shorting opportunity. As I mentioned in my comments, five-year bull markets die hard. The bid is still fairly strong and major support needs to fail before we buy put options. Once SPY $198 is breached, buyers will pull their bids and we will hit an air pocket. It will take a major breakout on the upside to get me to change my sentiment. We are testing support with greater frequency (lower highs) and the rallies have come on light volume. I don't often sit on the sidelines, but this I am encouraging you to wait for technical support to be breached. This volatility around the 100-day MA will grind us up and we need to lower our entry point. Let's see what the last hour of trading has in store for us today. If you see big momentum one way or the other, trade it. . .

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