Yesterday my intraday comments were not too supportive of the market direction being able to recover before moving below 1700 on the S&P 500. The only bright spots yesterday were the IWM ETF which I discussed in last night’s market direction outlook and the NASDAQ Index which really did not have much of a bad day. Let’s take a look at the market direction as of 2:00 and get an idea what we may see moving into the last couple of hours of trading.
Market Direction Action S&P 500 – 2 Day 1 Minute Chart
The two day 1 minute chart below shows the market direction for both yesterday (Monday Sep 23) and today (Tuesday Sep 24). The biggest concern this morning was the drop right from the opening bell. The drop pushed the S&P 500 even lower than yesterday’s low and again easily broke the 1700 level on the S&P 500. I have marked both yesterday and today’s low points with a red circle. Today though the S&P 500 has pushed higher than yesterday’s mid-afternoon rally which is just a bit better sign for the market.
Market Direction Down Odds
Yesterday I indicated that the odds of the S&P breaking 1700 were probably better than 60%. I would now place that at probably better than 55% as the recovery from today’s low was quick and sharp whereas yesterday’s low saw the market grind its way back above 1700 and then it was all the market could do to hold above 1700 by the close. I am not expecting the same market direction action at the close today. Overall though the market direction up is not much better.
Market Direction Outlook Intraday
Intraday the market direction is looking a bit better. I am expecting the market direction to drift sideways for the remainder of the afternoon and probably there will be some selling toward toward the close and even a slip into the red here and there but by the close I am looking for a bit of green in the S&P, even if just a point.
Gold and Barrick Gold Stock (ABX)
Gold, silver and oil continued their declines today. There are a lot of gold analysts pushing gold like this is the best opportunity to get into gold in years. I am not so sure. I still like stocks like ABX Stock better. The gold miners have been hammered and volatility is high. I can tell just looking at the volume since ABX Stock fell in mid-April that I am far from alone in trading in ABX Stock. For Put Selling I look each day at the $16 and under strikes and see how low I can go for 1% a month and often even the weeklies are worth trading for anywhere from a quarter of a percent and up. With the weeklies a quarter of a percent is not bad as it still brings in 1% a month or 12% for the year but also it keeps my capital in ABX Stock for only a week and then I get to review the stock direction again. It’s great because weekly I can adjust the trade as well as take advantage of days of higher volatility. I will do up an article on trading the weeklies on ABX Stock shortly. I still like the idea of earning income consistently rather than buying into gold and hoping it moves higher.
Oil Decline and Exxon Stock (XOM)
The decline in oil prices can be directly linked to tensions in Syria and Iran. The speech today by President Obama in which he reiterated his stance that a peaceful method should be sought for Iranian issues but that military force was still on the table, is helping to keep oil drifting only slowly lower. Without Iran and Syria oil would be a lot lower in my opinion. Exxon Stock (XOM) is my way of trading within oil. Again I like Put Selling and the odd stock buy and sell, as it brings real capital into my portfolio. Once a put trade ends, the profits are not paper but actual cash in my portfolio.
For XOM Stock I have been trading the $85 regularly. You can review the XOM Stock trades here. I have a lot of confidence Put Selling the $85 strike as you can see from the chart, but probably even the $87.50 at times would be fine. However anywhere above $90 is overvalued. $90 would be the last strike I would ever consider selling whenever this stock turns back and trends higher.
At present the stock is flirting with the $87.50 level which has decent support. If oil keeps falling though, so will XOM Stock which is why $85 is still my favored choice and I am holding $85 naked puts for Oct 19 expiry.
Budget Battle Looms
The next obstacle for the market direction up is the budget battle. Republicans are demanding that any increase must result in expenditure cuts of an equal amount. President Barack Obama is insisting on a debt limit increase without conditions attached and the government will reach its borrowing limit by Oct 1. This is definitely going to keep a lid on the market direction.
The close today should be interesting. I am not looking for much but I am looking for a green close even if just by a point on the S&P 500.
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