© Copyright 2022 eOption, a division of Regal Securities, Inc., Member
FINRA/
SIPC |
Important Disclosures
950 Milwaukee Ave., Ste. 102 | Glenview, IL 60025
The information on this web site is for discussion and information purposes only. All accounts accepted at the discretion of eOption which accepts customer orders only on an unsolicited basis, and does not make any recommendations regarding any security or securities product with the possible exception of orders executed by our full service bond desk. Nothing contained herein should be considered as an offer to buy or sell any security or securities product. Online trading has inherent risks due to loss of online services or delays from system performance, risk parameters, market conditions, and erroneous or unavailable market data.
FINRA BrokerCheck reports for Regal Securities and its investment professionals are available at www.finra.org/brokercheck.
Options Disclosure: Options involve risk and are not suitable for all investors. Prior to trading options, you must be approved for options trading and read the Characteristics and Risks of Standardized Options. A copy may also be requested via email at support@eoption.com or via mail to eOption, 950 Milwaukee Ave., Ste. 102, Glenview, IL 60025. Online trading has inherent risks due to loss of online services or delays from system performance, risk parameters, market conditions, and erroneous or unavailable market data.
eOption Commissions: Broker-assisted orders are an additional $6. Option strategies involve multiple purchases; therefore your transaction costs may be significant for option strategy trades. A commission rate of $2.00 for equities and $3.99 + $.10/contract for options, per execution, applies to orders entered and filled by eOption's Auto Trade Desk and does not apply to customers who enter their trades directly into the eOption platform and are not utilizing the Auto Trade desk.
Broker Comparison: The competitor rates from published websites were verified on 3/1/2022 and are believed to be accurate, but not guaranteed. Commissions are subject to change without notice. At some firms, commissions may not reflect broker-assisted fees, orders over 1,000 shares, penny stock trades, OTCBB, pink sheet stocks or foreign stock orders. Firms may offer reduced commissions if additional criteria are met.
Blog & Commentary: eOption is neither affiliated with, sponsored by, nor endorses commentary and the opinions expressed are solely their own. Content is provided for educational and informational purposes only and eOption cannot attest to its accuracy or completeness. No information provided has been endorsed by eOption.com and does not constitute a recommendation by eOption to buy or sell a particular investment. You are solely responsible for your own investment decisions, and eOption makes no investment recommendations and does not provide financial, tax or legal advice.
Eliminate the Temptation To Force Trades In This Dull Market – Take Time Off
www.1option.com
The S&P 500 for all intents and purposes is at the all-time high. Resistance is stiff and the market lacks a catalyst to push it through. The news cycle is light and that favors the current momentum. Know that light volume rallies can easily be stripped away.
My comments will be brief this week. We are in the “dog days” of summer and traders are taking time off. Earnings season is behind us and the economic releases will be minor for a couple of weeks. Politicians are busy with their respective conventions and a stimulus bill is unlikely before Labor Day. The market had priced in a $1.5 trillion aid package and we could see profit taking if businesses start to lay off workers.
The S&P 500 is trading at a current P/E of 23 and that is rich by historical standards. Stocks need time to grow into current valuations. The second wave of the Coronavirus will delay the economic recovery and Q3 earnings will not impress. It’s possible that the market treads water the rest of the year, but a more likely scenario is a 10% correction and a post-election rally. The upside reward is smaller than the downside risk.
Swing traders who can’t watch the market intraday should be in cash. If the market treads water and the macro backdrop improves, we will have clarity in a few weeks that we didn’t have now. At that time we can decide if we want to take new positions. If the market drops we will be able to gauge the selling pressure and we will be able to enter bullish put spreads at a much better level. Both scenarios favor a cash position for the next few weeks.
Day traders need to be cautious. The five-day average true range (ATR) for the S&P 500 has declined from 67 points a month ago to 20 points now. Intraday volatility is tanking and that makes it more difficult to day trade. Expect tight ranges and moves to both extremes during the day. Be patient and trade reversals at those extremes for the highest probability set ups. Given that the intraday range is so tight you can also trade stocks with strong upward momentum early in the day without worrying too much about a big market drop. I am trading half of my normal size in the morning and a quarter of my normal size in the afternoon.
I won’t be trading or posting market comments Thursday or Friday. Take time off and eliminate the temptation to force trades in this low probability environment.
Content is provided by OneOption, LLC, which has no affiliation with Regal Securities, Inc. (“Regal”) This commentary is provided for information purposes only, and is not a recommendation, offer or solicitation by Regal to buy or sell securities or to adopt any investment strategy. Regal has not participated in the creation of the OneOption content and does not directly or indirectly endorse the content. Any reliance on this material is at the sole discretion of the reader.