[Dear Readers: This will be my last blog update as I’ve figured that I was no longer serving any purpose in writing here. My original plan to attractive a pool of like-minded traders to exchange trading ideas is not forthcoming after almost 8 months blogging. If you wish to ask any question and share information privately, do send me an email to keong@celestialoptions.com. I shall reply. Thank you for putting up with me so far.]
MARKET COMMENTARY
The market has rebounded nicely. This can be an optimistic expectation of a further rally arising for the US election. The mood is quite good and less fear. Hence, you can see the rather orderly pattern in Monday’s trading.
Chart wise, the Dow has broken its 20-days moving average which I consider a healthy rebound. Due to the bearish sentiment earlier, I actually expected a reversal there. Now, it looks set to rise to 50-days moving average in just a few days ahead. I will expect a reverse from this rebound and a return to bearish trend. Anyway, don’t be surprised if the reversal occurs earlier than that.
Overall, the market is more calm and stabilized. This will dampen the volatility. I expect to see more dip in the volatility index ($VIX). Therefore, this will not be a good time to buy any options, be it call or put. I would prefer to wait for the turnaround later.
In the medium term, I would expect the market to drift sideways. This may last up to three months. We options traders will have good opportunity to gain from sideways strategies such as Iron Condors, Butterfly, etc. Make sure you mark your support and resistance wisely. Now, we have a great opportunity to sell Bear Calls on all indexes when the current rally ends. Take your pick.
DJIA Daily Chart
The Russell will fall short of making it to the 50-day moving average in this rally. It will stop at the high of last bullish wave. Furthermore, it has also ran up much faster than the Dow and S&P. It is only natural for it stop earlier.
RUT Daily Chart
The Nasdaq, too, will not rally very much higher comparing to the Dow. I have come up with the following support and resistance lines.
NDX Daily Chart
STOCKS TO WATCH:
NA
doing my own analysis and picks…
Sad to know that this is your last blog post… I have been following it ever since I attended your course. Anyway, thanks for all the guidance so far. I hope you will be still posting something here, if not every day but at least every few weeks or so… Once again, thanks alot and happy trading!