MomentumOptionsTrading.com Midday Update for 7/15/2014
Another Back Test to Support
The zombies are gathered on the hill today to quiz Fed Head Janet Yellen on a variety of topics. Much of the rhetoric is stuff the market has already heard but it was interesting to hear the knuckleheads say biotech and social media stocks were a bit stretched.
This clearly shows the Fed has there eyes on the market as Yellen continues to walk a fine line in balancing the economy and Wall Street’s expectations.
When Yellen speaks, the market has seen some nice pops higher but today’s dog-and-poney show has favored the bears.
The Dow is down 21 points to 17,034 while the S&P 500 is off 6 points to 1,971. The Nasdaq is lower by 26 points to 4,414 but fell below 4,400 earlier in the session. The Russell 2K is getting punished for 11 points to 1,154 while the S&P Volatility Index ($VIX, 11.94, up 0.12) is holding 12.50.
The current action is mixed but I mentioned last week’s divergence could continue. Although the bulls pushed fresh highs yesterday, they still need to hold the first and second waves of support on any pullbacks.
I have been careful to limit new positions since the July 3rd run to all-time highs as my December fluff targets finally triggered. The indexes came close to reaching them in March and I have higher year-end targets but it is important to play tight during trading ranges.
Trading options or the market is like playing poker and I mentioned some of this last week with my Kenny Rogers comments. Right now, I am relaxing until certain support and resistance targets are cleared or triggered. With options being time sensitive, it is important to avoid trading ranges and signs of divergence as the options premiums decay during these types of environments.
I recommended 15 new trades in June for the Daily. All but one of the positions were call options as I predicted my December fluff targets would finally trigger on the push to all-time highs. I have only recommended 2 new trades in July.
The good news is that while we wait for clearer signals for directional plays, the Weekly Wrap continues to shine like a dime as trading ranges are good for writing covered calls.
Remember, I aim for triple-digit gains for all of the trades for the Daily. For the Weekly wrap, I try to make subscribers double-digit monthly returns. I also recommend stocks that are undiscovered by Wall Street with little to no analyst coverage that shoot for triple-digit returns.
The Weekly Wrap also focuses on stock under $20 that trade options and have solid fundamentals. Covered call writing has been bashed by the so called experts but I have shown that theory is hogwash as the portfolio has over a 90% win rate. The notion the stock market is rigged is also a joke.
It takes chart work and an incredible amount of homework to be successful in the market. I do both.
I mentioned this week or next could shape the next major market trend so while the clock ticks, my Watch List is building.
Meanwhile, the current trades are holding up well as 2 are showing triple-digit profits with the others having big potential to join the club once earnings are released.
Subscribers, check the Members Area for the updates.