This upcoming Wednesday at 8pm eastern time, Option Workbench creator Craig Hilsenrath will be giving a complimentary webinar titled "What's Wrong With Put Credit Spreads." The session will discuss the problems with this popular strategy and detail how to discover suitable alternatives in the powerful Option Workbench software. For more information, or to sign up today, visit the link below:
This will be my last option challenge. Each month over the last year, I have published challenge question. Our company has provided valuable prizes totaling thousands of dollars for those who have responded correctly and timely. More importantly, we hope the challenges have been fun and have helped you learn about trading.
The rally has been a straight-up affair, leaving a "V" bottom in its wake. Fortunately, our indicators have generated a strong series of buy signals along the way.
Since $SPX has sliced through virtually every conceivable resistance area, it makes it difficult to identify either support and resistance at this point. However, the overbought conditions that now exist have -- in the past -- caused the market to stop rising.
The stock market has rocketed back from a sharp selloff last week. At first, this appeared to be an oversold rally, but now it is picking up steam. Thus, it appears that it could be another intermediate-term bullish move, if one final thing falls into place: the $SPX chart must clearly turn positive.
The stock market’s rally yesterday was beyond strong; it was downright Herculean. The shorts have been crushed, just a week after they seemed to be in control of things. But are the bulls on safe ground here, or is the market poised to lurch downward again? That’s a tough question to answer, but it certainly does seem that things are a bit overdone on the upside and some backing a filling is needed – at a minimum.
Stocks have had a rocky week, but some buy signals are beginning to appear. $SPX broke down through support at 1925 this week, and immediately plunged to 1820, which is also the area of the April lows. That is support for now. If that should give way, then the February lows at 1740 would be the next support area.
As for resistance, there is plenty of overhead resistance from 1925 all the way up to 1960 and beyond.
The feature article outlines several potential trading signals that are setting up in this volatile, bearish market. In fact, most of the articles discuss current market conditions, because those conditions are quite interesting at the current time.
On page 4, there is a day-trading recommendation, based on the daily Total put-call ratio
The stock market has become extremely volatile, trading up and down hundreds of Dow Jones points in a day. But our indicators have remained steadfastly bearish throughout the last few weeks. For example, despite several big rally days, $SPX never broke the downtrend line that connects its series of lower highs. Until that downtrend is broken, the $SPX chart will be bearish.
Not every October is a bearish market (at least for a while), but many of them are. Last year, there was an 80-point decline in $SPX from late September into the early part of October; and in 2012, there was a 120-point decline. In 2011, there was plenty of bearish action, but it occurred in August and September, with the actual lows being made on October 1st. In 2010, the market rallied through October.
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