Last night I discussed what I was expecting today and how I would be trading to the downside. That said it is important to stay focused and that means until the market corrects beyond the 200 day exponential moving average (EMA), this remains a strong bull market. Bull markets can fool investors in more ways than any of us can imagine. This is why I tend to keep a good eye on the various warning signals. For example, if by this Thursday the Weekly Initial Unemployment Insurance Claims come in above 350,000 and the Ukrainian Crisis has escalated, the market will definitely push even lower. That is just another signal that I can use to continue to add profits to my portfolio while at the same time stay aware of the overall general trend which is still up.
Market Direction S&P 500 1 minute morning chart
Anyone who is trading the trend short-term only needs to look at the one minute chart this morning and you can see that the general trend is to take the S&P down to at least the 1840 level. There is not enough support at this level and in my opinion it will break today simply because of that fact and investor mood.
I am holding Spy Put Options which I bought this morning shortly after 10:00 AM. I have no reason to not continue to hold them until this afternoon when we could see a bounce back. However the overall mood of investors is fearful which is not yet panic but an escalation of events can create that panic among investors.
1750 Is The Most Important Level
Remember that the 1750 level in the S&P is the most important level at present. Once the 1840 level breaks the next level is 1820, then 1800 and then 1770. None of these levels have strong support. That means with light support the market could try to bounce back a bit so investors might see trade opportunities at those level.
Outlook Into The Afternoon
I am not expecting much in the way of a recovery today. One the 1840 level breaks I believe the market will move lower and then try to push back to the 1840 level. I don’t think we will close above 1840 but into the afternoon I do think the market will try to retake 1840 and then fail to move down to perhaps 1836 to 1837. But once 1840 is gone as short-term support, the S&P could drift lower into the close.
1840 Is Still There
Remember how support and resistance works. 1840 was just starting to see some support built up. That often means that if the Ukrainian Crisis does not escalate but is resolved the S&P will race back to 1840, test resistance which could be quite light if the crisis does not last long, and then push back above it. This is why when trading the downside in an event like the Ukrainian Crisis it is important to use tight stop-losses. It is better to earn profits and leave some profits behind because the stop-loss was too tight, than it is to lose profits by having a wider stop-loss or no stop-loss at all (which many investors do) in a run back up in the S&P 500.
Internal Stock and Option Trades Links
Put Selling Strategies For Members
Covered Calls Strategies For Members
Profit And Income Strategies Index
Stock and Option Strategies For Members
Stock And Option Trades Explained For Members