Originally posted by Michael Hodges.
S&P 500 Offering Up A Nice Buying Opportunity
The S&P 500
Call/Put = Call
Entry = Below 1550
Expiration = End of the Month
The S&P 500 followed the lead of other world indexes and began the week in negative territory. This knee jerk reaction to the Cyprus bail out scheme should provide a good entry point for weekly and monthly trades. The U.S. market has been expecting a dip for a couple of months now. Many of those looking to get in on that expected dip missed the chance in late February and could be looking to get into this one.
Our own economy is showing more and more signs of strength. Housing and employment data has been improving steadily over the last few months and this week should not be any different. We get a full load of U.S. housing sector data this plus an FOMC meeting, rate decision and statement. The general expectation is for more good economic data, statements from the FOMC supporting that data and a continuing recovery led by housing. I am in agreement with this sentiment and still bullish on the S&P, at least until it gets above 1565-1572, then we’ll have to see. I am trading calls with an entry below 1550 with an end of the month expiration which gives the trade two weeks to unfold. It may be possible to get an entry well below 1550.
Euro Succumbs To Selling
Call/Put = Put
Entry = Above 1.295
Expiration = End of the week
The euro fell to heavy selling pressure as investor fear of a plan similar to Cyprus being applied to other EU nations. The drop brought the pair below the support and down trend lines I have been working off of (1.3000 and tops from late Jan into Feb). I’m still bearish on this pair, at least for this week. There are some signs of a possible support zone though it is yet to have any kind of confirmation. There is also chance that some good news could emerge from Cyprus and other ailing EU nations that could support some euro buying. This week I am trading a put with a target entry above 1.2950 and an end of the month expiration.
Yen To Move Up
Call/Put = Call
Entry = below 95.50
Expiration = End of the month
I am bullish on the USD/JPY pair. My reasons are Prime Minister Shinzo Abe’s plans and policies, BOJ Governor Kuroda’s support of aggressive easing, a current up trend and a bounce from my 94.50 support line. I am trading calls with a weekly expiration and a target entry below 95.50. Higher entries will likely pay off but for a weekly trade I want to keep it below this level.