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Market Should Be Stable Until Nov 3 – Use This Options Strategy Now
The market has been able to break through the 50-day moving average and it has been able to hold that support. Investors are expecting a stimulus bill and they won’t have to wait more than a few weeks. Both parties want the stimulus and it will be the first item on the agenda after the election.
There hasn’t been any incremental news over the weekend. There are a few large IPOs coming to market. China’s GDP came in a little light (4.9%) and industrial production was 6.9% (5.8% expected).
Earnings season will start to crank up this week and that will keep buyers engaged. Amazon’s Prime Day was a hit and revenues increased 49%. Apple believes that iPhone sales will increase 15% in 2021.
Coronavirus cases are increasing domestically and most of Europe is shut down. This will impact economic growth. AstraZeneca believes it will start mass distribution of its vaccine shortly after Christmas.
Brexit talks have ended and it looks like England could be headed for a “hard exit”.
Swing traders should sell out of the money bullish put spreads that expire on October 30th. We’ve been able to enter some nice trades (7) and we will try to enter one more this morning. This will be our last opportunity to generate income before the election. I plan to be flat on November 3rd. I feel that the opposing market forces on both sides are great and the S&P 500 could go either way. My greatest fear is that the election results are not known for weeks. That would result in domestic unrest and the market does not like uncertainty.
Day traders should go with the flow. We’ve seen nice intraday ranges and we have visited the extremes with frequency. I still prefer to day trade from the long side because I’m finding better price action for stocks that are moving higher. I also believe that the market will continue to float higher ahead of the election. Chinese stocks should do better in general because their economy is making steady progress. Tech stocks will also be in favor.
Support is at SPY $343 and resistance is at $354.
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