The grind continues.
After some sideways consolidation that worked off overbought conditions, the markets are trending back up towards all time highs.
The psychological anchor that currently dominates the markets is at Dow 20,000.
You may think that this doesn’t actually matter, but it does. If we hit that, then mainstream media starts making headlines, which causes more investors to pay attention, and it starts to snowball further.
We need to be very, very careful right now. We are headed into the holiday trading sessions, the VIX is under 12, and liquidity will start to dry up.
That doesn’t mean to be bearish… it means don’t force your way into trades.
Because what I see happen is that traders get bored. If you’re not at work and want to escape your family, then you’ll head to your home office to “check on the markets.” All of a sudden you’re loaded to the teeth with 5 new positions that you wouldn’t have made except there was nothingi else to do.
So don’t force it. There’s going to be plenty of new setups headed into the new year, and we can start planning for them.
Trade #1: MA
This is a breakout setup.
The volatility that happened over the past few months was directly related to Fed rate hikes.
Credit companies like V and MA are affected by rates more negatively compared to DFS or AXP.
Now that the Fed is out of the way, this looks like it will play catchup with the rest of the financials.
Going to use only 2 tiers and place a stop here.
Expected Stock Price: 104
Sell to open MA Feb 97.5/95 put spread
Tier 1: Enter at 0.40, exit at .15
Tier 2: Enter at 0.60, exit at .40
Stop out for a loss on a close under 100.
Trade #2: AAPL
AAPL is running hard into resistance, and while it may breakout, odds are the initial breakout will fail and will see a stoprun to test previous levels.
We have a rising trendline coupled with a pivot level between 115-112. That’s where support will come into play.
Expected Stock Price: 114
Sell to open AAPL Feb 105/100 Put Spread
Tier 1: Enter at 0.65, exit at .25
Tier 2: Enter at 0.90, exit at .60
Tier 3: Enter at 1.20, exit at .90