© Copyright 2023 eOption, a division of Regal Securities, Inc., Member FINRA
| 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 firstname.lastname@example.org 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.
FOMC Bounce Was Only A Bounce – Here’s the “Tell”
Yesterday the market was bracing for the worst possible news from the Fed. Their intentions have been clear and they delivered. The table was set for an oversold bounce off of the lows for 2022 and buyers fueled a nice rally once the press conference started. Unfortunately, some of those gains are being given back and the S&P 500 is down 30 points before the open.
The Fed hiked interest rates by 50 basis points and they a leaning towards another 50 basis point rate hike in June. The one piece of dovish news is that the balance sheet roll-off will happen at a slower pace. They cited supply disruption concerns due to Covid-19 in China and inflation due to the war in Ukraine. They also cited robust domestic job growth.
There are many positive and negative influences and that is creating extreme market volatility. Buyers flex their muscles and buy programs kick in. The next day sellers take control and the bottom drops out.
Swing traders with a 3-4 week time horizon should wait patiently in cash. The overnight price action was the “tell”. If the market held the gains from yesterday and we were opening flat to higher, we would have bought the SPY and I would have encouraged you to sell out of the money bullish put spreads on strong stocks this morning. It would have been a sign of interest on the part of buyers. We are not getting that and the “wallets” are back in the pocket. Given the overnight selling, the bounce yesterday appears to have been nothing more than short covering and buy programs. We need to see an instant reversal this morning and I do NOT believe we are going to get one. This is a substantial drop and if buyers were truly interested, we would not be sinking to these levels. Until the SPY closes above $430 we are going to stay sidelined on a swing basis.
Day traders should expect plenty of volatility today. I plan to watch the first 45 minutes and I suspect big moves both ways. If tech stocks do not participate in the bounces it will be hard for the market to reverse course today. We need leadership from more than just healthcare and basic material stocks.
Support is at SPY $420 and resistance is at $429.
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.