OptionSpreadTrades.com Weekly Forecast
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Last Week's Trades- We closed the JP Morgan Bear Call Credit Spread from October 23rd last Tuesday the 18th. We entered at $1.25 and exited at .15 for a profit of $110 per contract. On Friday 21st we closed our DELL Straddle that we opened on Nov. 12th. We entered at $2.95 and exited for $3.40 for a $45 per contract profit or a 15% ROI in 8 trading days. We entered Home Depot (HD) Puts and Bank of New York Mellon (BK) Puts, which have both moved in our favor. However we may get some bullish days coming into next week so be prepared for a rocky ride.
Market Trend- The market trend is still down with a sell signal on the weekly chart from September 4th. We got a nice sized end of day rally on Friday after they announced nominations for cabinet postions, and we may have some additional bullishness coming into the Thanksgiving week. This is starting to sound like a broken record but, the S&P is still technically oversold on the weekly charts. To get a technical buy signal the S&P needs to breach 1008.50. This isn't likely to happen next week unless we get some sort of catalyst, but in this market anything is possible. The daily charts are also getting oversold now so the likelihood of a continued bounce is good.
Commercial Traders- The commercials are still sellers, although they have backed off some they have not become substantial buyers, and until this happens we are going to keep following the trend, which is down.
Seasonal Tendencies- This week we have 3 bullish days coming into Thanksgiving with Monday-Wednesday all being up more than 62% of the time. This probably has to do with the holiday effect which leads to bullish markets in the days immediately preceding a holiday.
Forecast- The markets are still out of sync and thus we want to take a cautious approach in this mess meaning keeping our risk low and waiting for high probablility non-directional trades like earnings Straddles and the occasional credit spread.
Trades to Take- We're going to hold onto our BK and HD Puts and let them move more in our favor before we put on any new trades.
Happy Thanksgiving and Happy Trading,