50 Point SPX Pullback Next Week?
by: Arthur Eckart
The SPX one-year daily chart shows the daily NYMO (above price chart) closed at 79 1/2 Friday, which is a multi-year high. The last two times NYMO rose to about 80, SPX pulled-back roughly 50 points within a week. However, the daily MACD (below price chart) is bullish, which suggests if SPX pulls-back, over the next week or two, e.g. to 1,350 or 1,360, that may be a short-term buying opportunity, e.g. for SPY Mar calls.
If the market opens high Monday, or continues to rise early next week, that may be an excellent opportunity to buy heavy positions of SPY Mar puts. It seems likely, SPX will trade in a range short-term. So, puts may be traded taking advantage of volatility, i.e. buying some puts on market bounces and selling some on market pullbacks, e.g. to lower average cost, and remain in position with some puts for a further pullback.
The SPX one-year daily chart shows the daily NYMO (above price chart) closed at 79 1/2 Friday, which is a multi-year high. The last two times NYMO rose to about 80, SPX pulled-back roughly 50 points within a week. However, the daily MACD (below price chart) is bullish, which suggests if SPX pulls-back, over the next week or two, e.g. to 1,350 or 1,360, that may be a short-term buying opportunity, e.g. for SPY Mar calls.
If the market opens high Monday, or continues to rise early next week, that may be an excellent opportunity to buy heavy positions of SPY Mar puts. It seems likely, SPX will trade in a range short-term. So, puts may be traded taking advantage of volatility, i.e. buying some puts on market bounces and selling some on market pullbacks, e.g. to lower average cost, and remain in position with some puts for a further pullback.
Chart courtesy of StockCharts.com
Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.
Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time and over time. This methodology has resulted in excellent returns with low risk over the past four years.
source:searchwarp.com
Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time and over time. This methodology has resulted in excellent returns with low risk over the past four years.
source:searchwarp.com
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