© Copyright 2024 eOption, a division of Regal Securities, Inc., Member
FINRA/
SIPC |
Important Disclosures
950 Milwaukee Ave., Ste. 102 | Glenview, IL 60025
The information on this web site is for discussion and information purposes only. All accounts accepted at the discretion of eOption which accepts customer orders only on an unsolicited basis, and does not make any recommendations regarding any security or securities product with the possible exception of orders executed by our full service bond desk. Nothing contained herein should be considered as an offer to buy or sell any security or securities product. Online trading has inherent risks due to loss of online services or delays from system performance, risk parameters, market conditions, and erroneous or unavailable market data.
FINRA BrokerCheck reports for Regal Securities and its investment professionals are available at www.finra.org/brokercheck.
Options Disclosure: Options involve risk and are not suitable for all investors. Prior to trading options, you must be approved for options trading and read the Characteristics and Risks of Standardized Options. A copy may also be requested via email at support@eoption.com or via mail to eOption, 950 Milwaukee Ave., Ste. 102, Glenview, IL 60025. Online trading has inherent risks due to loss of online services or delays from system performance, risk parameters, market conditions, and erroneous or unavailable market data.
eOption Commissions: Broker-assisted orders are an additional $15. Option strategies involve multiple purchases; therefore your transaction costs may be significant for option strategy trades. A commission rate of $2.00 for equities and $3.99 + $.10/contract for options, per execution, applies to orders entered and filled by eOption's Auto Trade Desk and does not apply to customers who enter their trades directly into the eOption platform and are not utilizing the Auto Trade desk.
Broker Comparison: The competitor rates from published websites were verified on 05/25/2023 and are believed to be accurate, but not guaranteed. Commissions are subject to change without notice. At some firms, commissions may not reflect broker-assisted fees, orders over 1,000 shares, penny stock trades, OTCBB, pink sheet stocks or foreign stock orders. Firms may offer reduced commissions if additional criteria are met.
Blog & Commentary: eOption is neither affiliated with, sponsored by, nor endorses commentary and the opinions expressed are solely their own. Content is provided for educational and informational purposes only and eOption cannot attest to its accuracy or completeness. No information provided has been endorsed by eOption.com and does not constitute a recommendation by eOption to buy or sell a particular investment. You are solely responsible for your own investment decisions, and eOption makes no investment recommendations and does not provide financial, tax or legal advice.
Market Testing Psych Level – Use Care
www.oneoption.com
If the market surges higher we could see a buying climax next week. We need to compress or have a small dip to prevent that. Here’s the game plan.
PRE-OPEN MARKET COMMENTS FRIDAY – The SPY traded above $500 before the open. That is a psychological resistance level and it will act as a magnet. After a big rally the market is due for a pause. If the market does not pause here, I feel that anything above $SPY $507 gets us into buying climax territory on a short-term basis if it comes quickly. That could spark a swift round of profit taking.
I am bullish, I just feel that I can capture the rest of the remaining upside day trading. I don’t feel we have much farther to run before the market compresses or dips. Not loading up on swing trades provides me with flexibility and clarity. When I see the compression or the dip, I will know how aggressive buyers are and then I will form a game plan.
Gaps up from this point will be risky. The market has run far and the odds of a gap reversal are high at this level after a big move. Make triple sure the gap holds before trying longs.
Another clue that the market is close to resistance is the number and quality of shorts that are showing up in Option Stalker Pro searches. The bearish searches have a decent number of candidates and they are making sustained moves during the day. A month ago it was hard to find a good short.
The news next week is fairly light. CPI and PPI have not produced the moves they did a year ago. A week from next Monday we have an exchange holiday so the action could die down towards the end of next week as earnings season winds down.
So here’s what happens on a buying climax like this. Traders are prudent and they are mostly in cash. They are expecting a dip that never comes and they see the next leg higher is continuing without them. Some fools even start shorting. The next leg higher forces shorts to cover and “FOMO Joe” is frothing at the mouth. The market lifts off and everything looks great… for a day. Then out of no where sellers (profit takers) are aggressive. They don’t sell all of their holdings, just some with the intentions of buying at a lower level. That sparks a nasty reversal off of the high and this damage can take a while to run its course.
Have one foot on the gas and one foot on the brake. Stay nimble.
Support is at SPY $498.50 and $497. Resistance is at $500.
Content is provided by OneOption, LLC, which has no affiliation with Regal Securities, Inc. (“Regal”) This commentary is provided for information purposes only, and is not a recommendation, offer or solicitation by Regal to buy or sell securities or to adopt any investment strategy. Regal has not participated in the creation of the OneOption content and does not directly or indirectly endorse the content. Any reliance on this material is at the sole discretion of the reader.