The rise in market direction continues intraday. The market opened with a jump higher and then selling met the buyers as both the S&P 500 and the Dow are sitting at a big round number. This phenomena is probably not that unusual as investors tend to look upon when both indexes are at big round numbers as milestones and they love taking profits and adjusting their positions at milestones. As well, selling at milestones often leads to opportunities for buying on the dips and traders in particular love that kind of volatility and trade.
Market Direction Outlook Intraday – 1 Minute Time Chart
Today action I felt was predictable with the S&P sitting at 1800. The morning saw the 1800 quickly broken and then selling pushed it back below 1800. The first test of resistance at 1800 resulted in a morning low. The morning selling brings us back to the usual pattern of this bull market where each morning we see the market direction push lower, hold and then push back up. This makes the trading for pennies strategy simply perfect. I did one trade this morning with the Trading For Pennies Strategy which I will post shortly.
The break back above 1800 was met with more selling and two more attempts to break free saw more resistance again. At the time of writing this post around 1:00 PM the market direction is trading sideways. There will be more tests of resistance during the remainder of today I am sure.
Microsoft Stock – UnderPerform
A couple of stocks worth mentioning include Microsoft Stock which was placed on an underperform rating by Bank of America Merrill Lynch. I look upon this as an opportunity. I am already holding a Put Selling ladder on Microsoft Stock which you can view in the trades for 2013.
Potash Stock – Bounce Back
I know a lot of investors love to sell puts and trade within Potash Stock but this is not a stock I trade in. There is support at $30.00 but the put premiums going to Dec 21 are just half a percent on what I still consider a risky product. I prefer a company with a wider product base and multiple streams of revenue. Potash Stock (POT) does not fit that bill. Still though the news that Russian tycoon Mikhail Prokhorov agreed on Monday to buy Suleiman Kerimov’s 21.75 percent stake in Uralkali, the world’s largest potash miner, did send Potash related stocks higher with Potash stock jumping to a high of $33.10 this morning.
Sony Stock (SNE)
On the weekend apparently Sony Corp sold over a million copies of its new Playstation 4. This puts some pressure on Microsoft which is about to release its latest version of XBOX on the 22nd of November. Sony stock though has been terrible for investors reaching a new 6 month low recently at $16.52 and now trying to rally back. There is support at $19.50 but once it broke and broke easily, it will become resistance so the stock which had a nice pop higher this morning on the Playstation news, may have a lot of trouble pushing through and staying above $19.50. Presently it is trading just above its 200 day exponential moving average (EMA). Momentum refuses to confirm the recent little rally which is never a good sign.
This is not a stock I trade in. The put premiums to me should be much higher considering the risk to capital. For example, the $17 put for Dec 21 expiry is trading at 15 cents which I believe is too low to be attractive for my Put Selling strategies.
Market Direction Into The Close for November 18
Overall the market direction into the close looks choppy as stocks hit those big round numbers but I do think the close may see them right around the 1800 on the S&P and around 16000 on the Dow. Investors remain happy with Yellen if she is confirmed as the new Federal reserve chairman. Investors look upon her as a suitable Bernanke replacement to continue the Quantitative Easing that has driven stocks higher. As long as the Quantitative Easing programs remain in place investors are going to keep their love affair with stocks. While that will end some day, for now I am continuing to engage in Put Selling and watching the market direction carefully for any signs of trouble.
Market Direction Internal Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades (Members)