Friday's gap-down in most of the major markets, ETFs and individual stocks shows the markets are now pricing in a failure of the fiscal cliff talks. The
well-above-average volume bars on Friday are deceptive, since it was expiration day for December options (one of the ‘quadruple witching' days).
One particular thing to note on the above chart (of the S&P 500's ETF) is the high set a few days ago may turn out to be a lower medium-term high.
Lower-highs can be an early warning sign of an approaching storm. The SPY did find support at the 50-day MA and ended up closing near the high for the day. We'll have to wait to see how this turns out.
Successful trading is all about handling the probabilities and risks appropriately. Market volatility is still low, but is slowly creeping upwards:
One trading strategy that may be justifiable right now is straddles, which if purchased when volatility is low, can become quite profitable from either a
market advance or a major selloff. There are some interesting possibilities with individual stocks as we head into the Q4 earnings announcement season. Do your homework and you will find some good straddle plays to consider.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, type in www.markettamer.com/seasonal-forecaster
By Gregg Harris, MarketTamer Chief Technical Strategist
Copyright (C) 2013 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.
Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.
As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.
Also on Market Tamer…
Follow Us on Facebook