1. We keep hearing about more spikes in coronavirus cases popping up around the country. While this could be happening, the market was already overbought and needed to pullback. In fact, last week, the put call ratio was giving me a very bearish reading. Even today, it is 0.80 which is still a very bearish reading. This means that there are a lot more calls in the market than puts. Remember, the put/call ratio is a contrarian indicator. (Lots of rumors and down grades) Stay neutral. It’s a traders market.
2. This Friday is quadruple witching options expiration. That means that 4 different asset classes are going to expire this week. There will be a lot of game playing by the institutional traders. Think about it, game playing happens during a regular monthly options expiration. How much more will you see during a quad witching options expiration. Put call ratio has been extremely low for the past two weeks. The goal is to make retail options expire worthless. Sometimes it’s better to buy the stock than the option because the premium is too.
3. Stay nimble this week and short term. The market still has a bit more excess to work off right now. Hotels, energy these stocks are pulling back. Tech could lead, but money is coming out of tech names which could lead to a broader advance.
4. Gold silver pullback. We’re basically in a sideways market. We could see 1650 gold. Silver could pullback to $15.50, the price where it broke out, as Nick calls it – the scene of the crime.
5. Five Trading Rules
Don’t chase markets at highs
Don’t use more than 10% of your account on any one trade
Never take more than a 10% loss on a swing trade.
You don’t always have to be in a position (Never trade for the sake of trading. Only trade when you have an edge.
** Nick will only be in 6-7 trades at any given time. That way you still have ammo.