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Stock Market Analysis (video)

Technical analysis providing the near-term outlook for the US stock market via SPY, QQQ & the E-mini futures (ES & NQ).

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2018-05-09T14:45:00+00:00May 9, 2018 2:45pm|Categories: Equity Market Analysis|Tags: , , , , , |4 Comments

4 Comments

  1. stock51 May 9, 2018 3:25 pm at 3:25 pm

    Took some SPY JUNE 270 PUTS
    IWM JUNE 160 PUTS
    Mainly for protection

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    • rsotc May 9, 2018 3:40 pm at 3:40 pm

      $VIX has fallen to what I believe will prove will likely be the new low-end of its range going forward. If so, that is when one wants to be buying options vs. selling them (at the high-end of the range).
      Of course, buying puts should also align with an expectation for a pullback in the market so if that does happen soon as I suspect, you get the added bang on those puts of both the market dropping & the volatility premiums increasing. Regardless, it’s a lot cheaper to hedge with puts now than it was two weeks ago & especially back in early April when the volatility premiums were sky-high.

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  2. GetItRiight May 9, 2018 4:20 pm at 4:20 pm

    Randy, I don’t think you mentioned in the video the unconfirmed negative divergence on the hourly QQQ chart extending from the Apr 18 high. Do you see that?

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    • rsotc May 9, 2018 4:35 pm at 4:35 pm

      Nice spot, I missed that. If the market moves lower starting tomorrow, those divergences would be confirmed. Ideally, to make a solid case for a swing-tradable correction, we’d want to see comparable divergences on the SPY 60-min chart but as this rally has been largely driven by the top-heavily weighted FAAMG stocks in QQQ, SPY close well below its April 18th high today & even if it was to pop above that high soon, the potential divergences in place on SPY (and likely those on QQQ) would be taken out with the MACD, PPO & RSI making higher highs along with prices.

      We’ll see what happens over the next few sessions. It is far from rare to see SPY or QQQ put in a divergence high or low without the other doing so and for those divergences to play out in the form of a trend reversal. Recent case in point; QQQ made a divergent high on the daily chart on March 13th with the SPY falling well shy of new highs on that rally, yet both experienced one of their biggest corrections in years following that March 13th divergent high in QQQ.

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