© Copyright 2023 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.
The Last Leg of the Rally Can Be Very Profitable – But Conditions Can Change Instantly
www.1option.com
The market is priced for perfection as we head into earnings season. Dark clouds are being ignored and we could see a buying climax in the next week or two. The SPY has poked through the upper end of a trading channel and the bid remains strong. These moves typically play out very quickly and I suggest scaling out of long positions on any big breakouts.
Big banks will start reporting this week (JPM Friday). They ran up on the notion that the $2000 stimulus checks will be cut. Historically low interest rates and a weak employment backdrop will weigh on future earnings and I believe any upside from here is limited. Buyers tend to be engaged ahead of mega cap tech earnings and I believe they could be the catalyst for the breakout. Tech giants have largely been unaffected by the Coronavirus. At a current P/E of 40, stocks are rich.
The new variant of the virus is spreading rapidly through Europe. Coronavirus cases continue to rise in the US and experts agree that vaccinations won’t have a material impact in the first half of 2021. That means that the anticipated economic rebound will be impeded.
Democrats are trying to impeach Trump again and this has no market impact.
Swing traders who are not able to watch the market during the day should be passive. Sell out of the money bullish put spreads that expire in three weeks or less on strong stocks. We currently have four bullish put spreads on and this is a way for us to play the last leg of this rally while maintaining some distance. Accelerated time premium decay is constantly working in our favor. Stock selection is critical at this juncture and I would avoid any stock that has gone parabolic. Clean energy stocks, pot stocks, crypto stocks, human genome stocks and electric car stocks are over-extended. We are focusing on stocks that are about to announce earnings and that have a history of rallying into the number. This gives us an additional statistical edge.
When I say that swing traders should be passive, it does not mean that I am not participating in the rally. Day trading conditions have been excellent with large intraday moves. I am favoring the long side, but I am patiently waiting for entry points. We’ve seen many gaps higher and most of them have been a “fade” (shorting opportunity). Experienced traders don’t chase, they wait for a pause or a pullback. This retracement allows us to identify relative strength and we start lining up the best candidates so that when market support is established we are ready to buy. This morning the market will open flat. The SPY closed near its low of the day yesterday and that is also near the low from Friday. If support and $377.50 holds during the first hour we are likely to rally. If the market makes a new low after two hours of trading, favor the short side. Be patient and spend the first 30 minutes finding your stocks.
Support is at SPY $377.50 and resistance is at $381.50.
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.