Traders Corner   13 comments

Bear

The S&P 500’s Bollinger Bands keep tightening, as it seems to be trading in a tighter range between the 20 day moving average and the all-time high. Unfortunately, a rising wedge is generally a bearish chart pattern. You can see it more clearly on the SPY chart (from Finviz):

SPY

At this point, I have to turn bearish and quit buying. In addition, I plan to start selling some of my profitable trades here.

The S&P 500 levels to watch today:

UPSIDE: 1849-1850 (January 21st’s high, December’s high and the all-time high), and 1852 (top of the Bollinger Bands).
LAST CLOSE: 1844, inside the 1843-1847 (7 data points) range.
DOWNSIDE: 1837-1840 (7 data points and the 20 day moving average), 1835 (January 17th’s low), 1827-1832 (7 data points), and 1823 (January 6th’s low and the bottom of the Bollinger Bands).

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13 responses to “Traders Corner

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  1. Wow, chinese stocks are tanking.. once again, my ctrp is taking a beating.

  2. Bought PRAN this morning at 8.31. Not for the faint of heart. Feb call premiums are huge. Not selling calls yet but tempted.

    • Decided not to get greedy. Sold Feb 9 calls on PRAN for 1.50 reducing my basis to 6.81. If I’m called out my profit will be 2.19 32.2%. If not, I’ve reduced my cost by 18.1%. This is a small position. I’ll keep my fingers crossed that it doesn’t tank. May add more later.

  3. Marshall,

    Thinking of adding to INTC? Down almost 7.5% since last week. I’m personally getting real close to adding some $27 calls and selling some $23 puts for the July expiration.

    • Md – it is tempting, but I will not be adding. It is more a function of my total invested position being as large as I want right now. Until I pare back some recent adds like fgl and riom, I will stand pat.

  4. I added a small position of SPXU at $15.56. My only concern with this play right now is if the S&P 500 bounces back above the 20 day MA before the end of the day. Otherwise, I think we are seeing a correction starting here.

  5. Curious what people do to determine how correlated a given investment is to say the S&P 500?

    • John,

      Just check the Beta. Almost every online brokerage provides it, and Yahoo Finance provides it for free. It’s almost always calculated against the S&P 500 unless otherwise stated.

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