© 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.
No News Is Bad News For Traders
www.oneoption.com
The market is searching for a catalyst and we are in a news vacuum.
PRE-OPEN MARKET COMMENTS – Wait for the dip and buy the dip. These should be your primary trading thoughts for the next two weeks.
The market has been floating higher on light volume and it is likely to continue that pattern. Traders who have patiently been waiting for a pullback will fret that they have “missed the move” when they see the market moving higher. Some will buy reluctantly. If they ready to exit all trades intraday at the first sign of selling, they will regret this decision. Days worth of gains can easily be stripped away in one session. Then we are likely to see follow through selling for a few more days. The depth and duration of the dip will tell us how aggressive buyers are and we need that information.
Some traders will have a “buy the dip” mentality until they actually see it. Once the selling starts, they will start to believe that a market top has formed. When it comes time to act, they will balk.
Don’t force trades. Wait for the dip and watch for a bullish engulfing candle or a bullish hammer during the pullback. At minimum we need to pullback to $537, but $533 is more likely. We need to test that breakout. If the pullback features mixed overlapping candles, we know that the selling pressure is not that heavy and that a buy will set up quickly. If the dip features long red consecutive candles, we know that the selling pressure is heavy and that we need to be more patient. That would be a sign that the dip will be a bit deeper and last longer.
Once support is established, be ready to buy. This is not a move you want to be super aggressive with so don’t load up. The move higher has come on light volume so there is not a lot of buying conviction. The bounce should be able to recapture the all-time high and that timeline takes us to earnings season. As we get closer to August, we have to proceed with caution. That is the start of seasonal weakness. The Fed will be in recess and we will be closer to the election.
Those are your marching orders for the summer. It sounds easy, but many of you will screw this up. You will buy here and try to squeeze water out of a rock. You will take a beating on those longs. When you finally puke your positions, you will not be ready to buy. You will miss that bounce. This is the best case scenario. Some of you will consider shorting. Then the market will rally and you will lose money on your shorts. I’ve been doing this a very long time, I know this is going to happen to many traders – don’t be one of them.
This week we have durable goods orders and the final look at GDP. Neither will move the market. I doubt the Presidential debate will have any impact either. Plan for light action this week.
Next week we have the 4th of July holiday on Thursday. That means many traders will take Friday off to extend the weekend. We have the jobs report that Friday so some traders will stick around. Weekly jobless claims have been ticking higher so we could see a soft employment number.
Day traders are always able to find opportunity. Just know that you have to be super selective and error on the side of not trading. If you can find a couple of high volume stocks that are breaking out, those will be your best prospects. We need nice consistent price action in the stock and we can expect the market to be choppy. This is a time to grind it out and you might find one or two trades that you feel comfortable with overnight.
The big money is not chasing stocks at an all-time high. A handful of stocks have accounted for this move up. We will see some end of quarter window dressing. That will exaggerate the volume for the rest of the week. The intraday price action is largely driven by institutional programs.
You are your greatest trading enemy. This is how you should approach the next two months. Can you resist temptation and wait for the set-up?
Support is the low from Friday and SPY $540. Resistance is the all-time high.
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.