S&P 500 Trading Plan: Gravity Points + Expected Move ($62)
Updated
Our first expansion of Implied Volatility in 3 weeks. Last week was $47 Expected Move, this week's Expected Move is $62.
I'm not sure what this next week will bring us, my bias short term is to the upside. There's a confluence of support right below us at $2,600. But at the same time I don't like the long trade unless we see some extreme capitulation-esk move early next week with substantial volume.
Last week we saw a 3 sigma move that actually closed OUTSIDE of the Expected Move which means that the options market isn't adequately pricing risk in the marketplace. 9 times out of 10 it closes inside of the Expected Move. We saw this in the 3 prior weeks of trade.
Watching JNK closely, Need to see it turn around.
Watching the Financials closely at this level. Really need to see them above $26.50.
Watching Boeing closely, Boeing needs to stabilize if the Dow is going to rally. (UNH (Up 20% YTD) is the 2nd largest constituent of the Dow, and I will be watching this closely as well).
Watching Rotation of sectors, specifically Defensive names for downside continuation; KO, JNJ, PG, MRK, PEP, VZ, MCD, Healthcare/Retail/Discretionary/Real Estate. I haven't been able to form any theories on where money will rotate into yet.
Last Week's Trading Plan:
Goodluck out there Gentlemen,
-RH
I'm not sure what this next week will bring us, my bias short term is to the upside. There's a confluence of support right below us at $2,600. But at the same time I don't like the long trade unless we see some extreme capitulation-esk move early next week with substantial volume.
Last week we saw a 3 sigma move that actually closed OUTSIDE of the Expected Move which means that the options market isn't adequately pricing risk in the marketplace. 9 times out of 10 it closes inside of the Expected Move. We saw this in the 3 prior weeks of trade.
Watching JNK closely, Need to see it turn around.
Watching the Financials closely at this level. Really need to see them above $26.50.
Watching Boeing closely, Boeing needs to stabilize if the Dow is going to rally. (UNH (Up 20% YTD) is the 2nd largest constituent of the Dow, and I will be watching this closely as well).
Watching Rotation of sectors, specifically Defensive names for downside continuation; KO, JNJ, PG, MRK, PEP, VZ, MCD, Healthcare/Retail/Discretionary/Real Estate. I haven't been able to form any theories on where money will rotate into yet.
Last Week's Trading Plan:
Goodluck out there Gentlemen,
-RH
Note
Update:Gravity Point Hit
Note
Update:2nd Gravity Point has been Hit
We are also substantially above the Expected Move
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