© 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 12/22/2022 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.
If You See This Pattern Buy Early – Market Rally Today Likely
Bull markets die hard when the Fed is printing money. With interest rates at historic lows, bond yields do not keep up with inflation and they generate negative real returns. Stocks are deemed to be the best investment alternative and all of that money is sloshing around looking for a home. This is an incredibly powerful market force and we won’t see a sustained market decline unless there is a credit crisis.
The FOMC said that they are considering tapering and the table seems set for a formal schedule in November. Most analysts believe that it will start in 2022 and end mid-year. Rate hikes are still not being priced in until 2023.
China said that they will provide liquidity to the banking system and they added $17B overnight. They need to get ahead of the curve on this and investors are wondering if the issue is widespread. China’s market has been retreating most of the year and that is a warning sign. I suspect that this goes well beyond Evergrande.
Evergrande will make the coupon payment. That has everyone breathing easier. I went back to 2007 and I started reading articles on Countrywide. They were the canary in the coalmine for the 2008-2009 financial crisis in the US. The news was completely discounted and it took another year for the full extent of the crisis to surface and for the market to react. When it did, the selling was fast and furious. I don’t know if Evergrande is a sign of things to come, but I do know that we need to be watchful.
The debt ceiling needs to be raised in September and politicians will take this down to the wire.
Swing traders with a 3-4 week time frame can start selling some OTM bullish put spreads. Focus on stocks with relative strength that have major technical support close by and sell the spreads below that support. If that support is breached, buy the spread back. I would not go overboard and I would not use a more bullish strategy. This strategy is neutral to slightly bullish. I still suspect that the SPY will probe for support in the next two weeks and make a higher low. Upon that successful retest you can get more aggressive with longs. I am expecting the 100-day MA to hold.
Day traders should watch for a possible gap and go today. The market found support and it is in the gap from Monday. I do not like to chase on the open. If you see consecutive long green candles closing on the high with little to no overlap on an SPY M5 chart in the first 30 minutes you will need to enter your longs early (trade smaller size). I would prefer a compression on the open that holds the overnight gains. That would give me time to find the best stocks and to scale in. It is important that the compression holds for at least 30 minutes and that it does not retrace at all. That is a sign that buyers are lined up. If we see selling in the first 30 minutes, be patient and wait for some of the overnight gap to fill. This is actually the best scenario for us because relative strength will be easier to spot as the market dips. This will also provide us with excellent entry points. The scenarios on the open are listed in order from least aggressive to the most aggressive set up for us. The storm cloud has passed and buyers will be fairly aggressive now that major support has been tested, the Evergrande coupon has been paid and the FOMC statement has passed.
Support is at the 100-day MA and resistance is at the 50-day MA.
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.