Monday, February 13, 2017
Powering higher to begin expiration week as the Dow was up 142 points on lighter volume. The advance/declines were positive. The summation index is moving higher. Overbought on all time frames now and the next logical trade would be the SPY puts. The timing is the issue as usual because things can stay overbought for quite a while. That is the dilemma we face at the moment. My thinking is that the SPY February puts will be a winning trade at some point this week. Trying to determine when will be the task. GE was up 1/3 on good volume and it appears that the call trade here has been missed. Maybe we could try it if we get a retest of the recent low. But I think the opportune time has passed. Gold fell $10 on the futures as the US dollar was a bit higher. The XAU and GDX had fractional losses on light volume. Mentally I'm feeling OK. Stocks are in rally mode as there is no overhead resistance. The questions that remain is just how high will they go and how long can this last. Usually higher and longer than you think. Only 4 days to go in the February option cycle but I do think that pursuing an option trade on the put side will work at some point this week. Every time frame is overextended to the upside for the S&P. I may leave an open order in overnight. This would be an extremely short term trade and that is usually not my best scenario. Not to mention that I just left an awful lot of money on the table with my last trade. I have got to make sure that the SPY February put trade is actually worth taking the risk and not just something to try and get back the missed money. I don't expect the market to just turn around and start to head convincingly lower but I do expect some kind of short term weakness going forward. Could we just keep moving higher for the remainder of the week? We could but the odds suggest something lower at some point this week. Europe and Asia were higher in overnight trade. We'll see what tomorrow brings.