Friday, May 6th, 2016

New September Trades

Market soared 289 points, SPX 2.05% and Nasdaq added 25 point all the while NDX still suffered down -5.28? That’s a divergence among the indexes? Why? Since we trade NDX a lot its important we should know these answers. I have been monitoring the markets and watching, AAPL, GOOG getting killed all day long. It appears that Bill Miller at LeggMason is in trouble as manager, and he maybe unloading AAPL and GOOG at least that is what is written on an article published on Yahoo. Its has to be someone unloading these in a big way that’s keeping NDX down.

NASDAQ and NDX both have formed what appears like a piped bottoms on daily charts. If you look closely you will see two spikes and a close above it. These candles signal that trend has changed and market should reverse from here. At least that’s what Technical Analysis can tell us. NDX is also at 68% Fibonacci retracement and sitting on March support levels, which makes the case even more convincing.

Meanwhile RUT barely budged and bounced off its 720 support levels and stayed that way, not much selling there. The markets are very much oversold. A bounce came today as a result. Given these conditions here are two trades we have entered today:

1/ NDX bull put spread

2/ RUT bull put spread

We will exit the trades should the value of the spread doubles the amount of credit taken in. So if you take in $1 as credit and the spread become $2 use your stop losses to get out. There are 8 trading days left this month.

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