The market got a nice pop on the delay of a pending Syria strike and the first wave of resistance we outlined in the Weekly Wrap and in this morning’s Daily Report are in play. Of course, it is too early to tell if the bulls have staying power or if the bears continue to push new lows but today’s action is encouraging as Wall Street waits on Washington.
There are a number of important events the market will digest in September, for better or worse, but let’s not forget October will also be a big month as 3Q earnings start to roll in. We talked about the possibility of a trading range continuing for a few more weeks but the headlines over the next 2 months should be enough to establish the next longer-term trend.
We still believe this is a great time to be playing the volatility and as we wind down the rest of our September plays, we are starting to look into October, November and January plays. The September options expire in less than 3 weeks so by going further out, it will allow us more time for the trades to play out. We often say options with less than 3 weeks to expiration are a “danger zone” as premiums start to get whacked. They are also great for playing near-term moves in a stock but expiring option positions need to be watched carefully so that you can maximize profits and minimize losses.
Trading ranges are always hard to manage but we have been nimble enough and have taken advantage of the wild price swings to close 12 out of our last 13 trades as winners since mid-July. While we could take a hit or 2 over the next few weeks we are having an incredible year with nearly a 70% win rate for all our trades so we don’t need to push the action. We have been pinpoint accurate in calling the market action but we still see some choppiness ahead and why we haven’t loaded up on new trades. Instead, we are taking 1 or 2 trades a week and cashing out when we can once our price targets are hit. Today’s action is bullish but we want to see some staying power and how’s today’s close looks before getting too giddy. But we do have a New Trade today.
The Dow is up 14 points to 14,825 while the S&P 500 is higher by 7 points to 1,640. The Nasdaq is gaining 24 points to 3,614. The Russell 2000 is advancing 7 points to 1,018.
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