I’d like to point out a recent statistic that shows just how extraordinary these markets are.
Normally, when we hear the word “extra-ordinary” in the context of the markets, it’s due to some kind of large volatility.
8 down days in a row. Up 5% in 3 days. Those kinds of things.
Instead this statistic just shows how quiet the markets have been this year.
Here goes: the S&P 500 has not seen a 1% intraday move in 37 trading days.
Remember, 40 trading days is two months of real time, so that shows just how quiet the market has been.
Since 1970, there’s only been 4 cases where this streak has been over 30. We’re in the middle of one, the other three were in the early 90’s.
That’s why this market feels like we’re squeezing water out of a stone… there just hasn’t been much movement on the broad indexes.
Eventually, that will shift. Probably soon.
In the meantime we just need to focus on the setups hidden underneath the surface… and don’t force trades! Let them come to you.
Trade #1: DIS
The stock came out with eaernings and had a disappointing “day 1” action. Look for the stock to pull into previous pivot levels. The rising 50 day moving average is at 106 and there are pivot levels just underneath that.
Trade Setup
Expected Price: 105
Sell to Open DIS Apr 100/97.50 Put Spread
Tier 1: Enter at 0.45, Exit at 0.15
Tier 2: Enter at 0.65, Exit at 0.45
No Tier 3
Extra risk management: Stop out on a close under 100
Trade #2: V
The stock is fading a bit post earnings. The key pivot level is 84, which is a 50% retracement of the gap along with prior resistance becoming support.
After Feb opex this friday, we’ll look at an April put spread, but right now the best bet is to go all the way out to Jun.
Trade Setup
Expected Price: 84
Sell to Open V Jun 77.50/75 Put Spread
Tier 1: Enter at 0.45, Exit at 0.15
Tier 2: Enter at 0.65, Exit at 0.45
Tier 2: Enter at 0.80, Exit at 0.65