Futures are down again this morning. The SPY is currently sitting at 291.01 in the premarket which is at the bottom of the Bollinger band. We are looking at a potential 7 full points gap down. In the premarket charts at the moment we see that the 10 moving average line is below the 20 moving average line on the 5 but above it on the 10 and the 15 minute charts. We also continue to see high volume this morning.
Our momentum indicators are mixed at the moment and there is volume coming in. Because the VIX is on the rise this morning and now into the 40s the fear in the market is growing and with the current trend, I am going with PUTS again. I’ll watch closely at the open and the alert may come quick. If the SPY moves up at the open I would wait for a reversal off a resistance line of 293.50 or 297.50. A few other ways to play a reversal for puts is off the top of the Bollinger band on the 10 minute chart or if you see the ticks start rolling over. I’ll also look for the vix moving back up or I’ll look for selling volume to confirm my decision. Both of those happened yesterday.
So In order for this trading plan to be in play SPY must remain trading below $300. If I see this it would trigger a buy to open followed by sell to close PUT option move today. If I see a move with enough conviction, I will text you that the trade plan has been triggered followed by an email before 1030 am.
Two important things to continually keep in mind. Volatility will make the price options expensive and may whip the price around to places that may be beyond your risk tolerance. You have to trade what is right for you. As a reminder, I encourage you, if you do jump in, manage your stop loss according to your tolerance.
Resistance: 291.10, 291.60, 292.65
Support: 290.12, 289.41, 288.80
Today’s Trade of The Day is SPY March 4 280 PUTS