We said this morning today would be an important test for the bulls as the Dow and S&P 500 try to halt a 3-session slide. The Nasdaq and Russell 2000 are also trying to avoid a 3-day skid and as we head towards the second half of trading the market is up but has been mixed.
The bulls were looking good ahead of the start of trading but the opening pop and drop wasn’t a good technical setup. The talking heads are pushing the panic button but we have given you specific downside targets to watch and confirm before pulling the trigger on short positions.
We have also given you bullish target that would signal the next leg higher and while today could have some “negative” headline if the bears win again, as long as support holds there is no need to throw the baby out with the bathwater.
We listed several index option trades on our Watch List this morning inside the Members Area to play the market’s next breakout or breakdown. If you did not write then down or put them on your Watch List then do so now. All of the call and put options we listed were around a buck ($1) or less and they have the potential for gains of 100+% on the market’s next major move.
These will be the easiest way to play the next major move and if volatility picks up like we believe it will, these option trades could also be perfect setups to use as strangle option trades as. The returns could have mid to high double-digits but because the positions are hedged, your gains (and losses) would be less compared to a directional trade. However, if we remain in a trading range, a good possibility, this strategy could also be a double-edge sword.
This is why it is important to be patient and let the market come to you. Trust us, we are so ready to take a trade today but the mixed action isn’t given us the clues we need.
We have closed some monster trades this week for gains up to 175% so while we can be a little aggressive, we don’t need to push the envelope. There are also a few earnings trades we are watching for next week and with our index plays, we have plenty of ammo for when we do pull the trigger on new trades.
We are still winding down some of our trades from July and we should be in great position to play the next major move by using September and October options.
As we head to press, the Dow is up 49 points to 15,520 while the S&P 500 is up 7 to 1,698. The Nasdaq is higher by 20 points to 3,674 and is just a point away from 3,675 while the Russell 2000 is higher by 4 points to 1,048.
Again, get these trades ready in your cue by posting them on your desktop or in your Watch List for your brokerage accounts. We have updated them again along with our current trades in our midday update so let’s go see how things look. Subscribers, hit the Members Area.