Hi Shoppers,

We have had a very nice three-day rally, with the major indexes up 6%.

The charts are very interesting, as two of the three rallied right up to their 50 day moving averages (the blue line) and stopped yesterday.

Check out the S&P 500 (TIcker: SPX) and SPDR S&P 500 (Ticker: SPY):

The iShares Russell 2000 Index (Ticker: IWM):

And the Invesco QQQ Trust (TIcker: QQQ) missed the 50 DMA by just under five dollars … but it did stop right at my resistance of $284.20:

Bitcoin has also had a nice rally the last three days up 7%:

As I am writing this on Tuesday evening, Microsoft (Ticker: MSFT) and Alphabet (Ticker: GOOGL) have reported their earnings and they aren’t looking so hot.

So a nice way to participate in the QQQ market is to trade the Pro Shares UltraPro Short QQQ ETF (Ticker: SQQQ):

If SQQQ opens and trades higher, which it looks like it is going to, a nice quick shot could be in the Oct28 expiration:

The 50/55 call spread has a nice skew, meaning the out-of-the-money calls can be sold at a higher implied volatility than traders can buy the at-the-money calls.

This gives you a nice edge in your spread.

Trade Review

On Monday, I recommended some cheap calls in Johnson & Johnson (Ticker: JNJ). 

Well, I was right about JNJ trading higher – but it gapped open $2, so it was kind of hard to hop in.

And sure enough it traded right up to its 200 day moving average and backed down.

We will catch it next time.

Thanks for Reading … See You Next Tuesday.

Licia Leslie