Weakness Ahead – Negative News Will Push the SPY Down To the $195

September 30, 2014
Author: Peter Stolcers, Founder of OneOption

Posted 10:00 AM ET - Yesterday, the market gapped down 20 S&P points on the open and it recovered throughout the day. This price action demonstrates that the bid is strong. I still believe we will test the 100-day moving average. Today I posted a video. CLICK HERE to watch it. It shows you an effective way to short this market. The protests in Hong Kong were huge. China is celebrating a holiday this week and that could attract big crowds because people have time off. This is a significant speed bump. Rumors are circulating that the ECB's QE will be approximately €200 billion. That is on the light side of expectations and if the rumors hold true, we could see a decline on the announcement Thursday. ADP and ISM manufacturing will be released tomorrow. Strong economic news could spook bond vigilantes. Traders are wondering if the Fed will remove "considerable time" from their statement in October and the numbers this week could push interest rates higher. Analysts are expecting 215,000 new jobs when the Unemployment Report is posted Friday. If the unemployment rate falls below 6%, the Fed's target will be met. We will be looking over our shoulders every time a Fed official speaks - good news will be bad news. The price action has been very choppy the last week. We've seen the Dow move triple digits each of the last five days. There is enough negative news to push the SPY down to the 100-day moving average. Bullish sentiment was extremely high and call buyers are hanging on by their fingernails. They will get flushed out this week. I am day trading momentum. If the market makes a new intraday high after the first hour, I will trade from the long side. If the market makes a new intraday low after the first hour, I will trade from the short side. Given the recent volatility, I don't want to carry overnight positions. Swing traders, be patient. Ideally we will test the 100-day moving average. Once support is established, we will briefly test it a second time. That will be our opportunity to get long and we can trade larger size. If we never get the dip, we can buy the breakout at SPY $199 in smaller size. I am expecting choppy price action with a negative bias this week. . . image

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