Start Your Option Trading In 2015 On a Strong Note – Wait For Trading Volume To Return
Posted 10:15 AM ET - Happy New Year - I believe 2015 will provide us with some huge options trading opportunities. Volatility will increase and there will be plenty of action.
You know from my comments that I do not trust light volume rallies and I hope you took my advice and closed your option trades on Tuesday. The S&P 500 declined 25 points on the last trading day of the year and it finished on the low of the day. I'm not too worried about the decline. Mild profit-taking and an absence of buyers created an air pocket.
This morning, stocks are rebounding. If the market can grind higher after an hour of trading, we will recover most of Wednesday's losses. If the market makes a new low for the day after two hours of trading, we will probe deeper.
I am prepared to buy a breakout above SPY $209 as long as the trading volume is brisk. I am also prepared to buy on technical support. I believe the $202 - $203 level will hold. I would prefer to buy a dip.
Domestic economic releases (ISM services, ADP and the Unemployment Report) should be market friendly this week.
Official PMI's were posted overnight. The EU and China were a touch light, but not enough to impact global markets.
I was like to start the year off on a positive note and I don't feel compelled to enter any options trades yet. Trading volumes should return towards the middle of next week.
Earnings season should be excellent and low gasoline prices should boost consumption.
I suggest staying on the sidelines until we have something we can sink our teeth are into.
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