© Copyright 2025 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.
Bond Traders Don’t Believe the Fed – Rising Yields Continue To Weigh On the Market
www.1option.com
Yesterday the Fed gave traders every reassurance that it would not raise rates until 2023. The initial reaction was market friendly and stocks rallied on the news. Unfortunately, that rally was short-lived and the S&P 500 is giving all of those gains back this morning. Bonds continue to drop overnight and they are not giving the FOMC statement much credence.
Economic growth projections by the Fed were raised to 6.5% this year. They believe that inflation will hit 2.4% this year, but that the spike will be temporary. Supply disruptions will lead to higher prices. Their forecast for inflation in 2022 is 2% and that is within their target. This tells me that they will not tighten just because prices are moving higher. This helps to explain why short term yields are jumping.
I still believe that the bigger story is time. Stock valuations are rich and profits will surge in Q2. When that happens valuations will normalize and the market will be able to move higher and we will be able to gauge the magnitude of the economic rebound. Until then, buyers and sellers are paired off and the market is trapped in a range.
I do believe that the bid is growing as states reopen and some of the $1.9 trillion stimulus money will find its way into stocks. We are closer to a breakout than we are to a drop.
Swing traders should remain long SPY and you should look for opportunities to sell out of the money bullish put spreads. Bond prices will continue to drop and the market will wait for signs of support. I will be watching for a capitulation low. As long as TLT is dropping, avoid the tech sector and focus on cyclical stocks for your bullish put spreads. When bonds bounce and there is follow through you can start selling bullish put spreads in tech.
Day traders should watch for support at yesterday’s low. The selling pressure this morning has been brisk and it may take a while for us to form support. Quadruple witching could have an impact if directional momentum is established. Program trading kicks in as positions are “rolled”. This could happen on a sustained decline or it could happen off of a snapback bounce early in the day. Go with the flow. If the market is making a new low for the day after two hours, favor the short side. If the market is making a new high after two hours, favor the long side. I believe that we will see excellent two-sided action and a nice intraday range.
You might think I’m joking, but I’m not. Watch for trading activity to decline more than normal in the middle of the day. Traders love to watch March Madness and I see this every year during the first two days or the tournament
Support is at the low from yesterday and resistance is at the high from yesterday.
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.