Thursday, August 16, 2012

SPX resistance

After a quick dip into the 1402ish level on S&P futures, the bulls got to work and finally made a run towards 1417 today. The HOD was 1415.50.... so they are getting closer. Futures closed just a few points off the highs. 

SPX Daily
The daily chart of the cash index looks like the bulls are going for a breakout above that high volume zone. That little red line is the high from earlier in the year (1422ish). The high from the first part of May is 1415ish... which is where we closed today. I'm not convinced this is going to break out above the 1425 level. There are certainly a lot of folks in that camp though, so I'm trying to keep an open mind. I'm currently positioned short in Naz futures... so it's a little tough to stay open minded.

If we close under 1410 tomorrow, we could be right back into that boring range again. Short term indicators are looking ripe for selling. There are a few intermediate term indicators that look ripe for selling too. I think the risk is pretty high on the long side here.

Relax :)

Intraday update

S&P Futures 30min
S&P futures bulls are pushing up towards the highs from a few days ago (1409ish). Gold and the Euro are back on the move. Gold is having some trouble at 1620 again. Treasury futures sold down in the night session and have bounced back up to about break even on the day. I just started 1/4th of a swing short position in Naz futures at 2758 and will be building out the rest of that position today and tomorrow. I'm looking for tech to take a breather over the next few weeks. Intraday volume on S&P futures is suggesting an 8-10point range today. The low of the day session is about 1402... so that puts a high target area of 1410-1412 (1412-1414 on SPX). As I am typing the bulls are pushing into the high target area here at 1410.

Gimme MO

Gator's Chart of the Day: MO
It's not a rocket stock but it is low maintenance and pays a good dividend.  Yield is currently 4.67% (2.5x the US 10 Year Note) and the company just reported earnings July 24th.  If you bought every time price touched the 50 day simple moving average you would be doing just fine.

The Trade
This section should be called The Buy because there isn't much of a trade as we usually think of it.  Buy what you want and put a stop a couple of points under the 50 day sma for capital preservation in flash crash purposes and wait for the dividend check.

If that's just too boring then sell upside covered calls against the stock you buy to juice your return.  You could sell a Dec37 for .30 ($30 for each 100 shares you own) and effectively double your return.  Just do it again when they expire.