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Originaly posted by Michael Hodges.

S&P 500 Still Bouncing From The Long Term Trend

SPX
Call/Put = Call
Entry = Below 1640
Expiration = One week.


I am a technical trader and I have to do what the charts tell me. The S&P 500 is still in a long term up trend with bullish signals. On the long term charts the index has retreated to my long term trend line, the line created by joining the low of November ’12 with the low of June ’13. This is a 7 month trend in line with the primary trend and the current secular trend. The new secular trend started with the break above the previous all-time highs in April and is now in it’s second correction. Even if you are a longer term bear we can still expect at least one more up leg, based on Dow Theory, before any reversal. I say this because most trends, especially in the S&P, will have 3-5 up legs before reversing.

In addition to the long term trend analysis the shorter term analysis, daily charts, is looking good as well. MACD and stochastic are both indicating support at the current level. The bearish MACD wave we saw in August is subsiding while the index trades along the up trend line, stochastic is extremely oversold and showing a bullish crossover. The huge jump in index prices going into the open of trading on Monday only helps to confirm my bullish opinion. I am trading a call on the S&P this week with one week until expiration.


German Market Just As Crazy As Anyone

DAX
Call/Put = Call
Entry = Below 8250
Expiration = One Week



The German markets showed that they are just as crazy as anyone else last week. The DAX fell sharply on lack of volume and short term fear to provide another buying opportunity. The EU and Germany are in recovery. The region and the country are growing again, helping to support the global economy and being supported by it as well. There could be some volatility in this market over the first part of the week with the ECB meeting happening Thursday but I expect the DAX to move higher. I am trading the DAX with a target entry below 8250 and one week until expiration.


Yen Slide Starting

USD/JPY
Call/Put= Call
Entry = Below 99.50
Expiration = One week



As I said earlier, I am a technical trader and I trade how the charts tell me. The USD/JPY is breaking out of a 5 month triangle trading range to the upside with bullish technicals. If I were a spot trader this breakout would have a target 6 handles higher than the current prices just under the 100 level. The breakout comes with long and short bullish indicators. I am trading a call on the USD/JPY with one week of expiration and a target entry below 99.50.