With the Federal Open Market Committee (FOMC) meeting this afternoon, I think there is a high probability that the market could have some good moves today.
Looking at the E-mini S&P 500 Futures (Ticker: ES) chart, I think we could have a pull back.
The S&P 500 has marched straight up every day since March 9. It moved from 3820 to a high of 3970 and closed at 3957 on Tuesday.
That created one of my favorite candlestick indicators — the doji.
Remember: with a very small or nonexistent body, dojis show buyers and sellers are in equilibrium. Dojis can be found at the end of a trend.
We’ve seen an uptrend of late and this doji could be signaling a pullback.
Also, there was heavy, heavy volume Tuesday as buyers and sellers battled it out.
I’m predicting a down move will happen today, so I will be looking at the SPY puts expiring on Friday, Mar19.
I like buying the 395 puts with an implied volatility (IV) of 16.36 and selling the 390 puts with an IV of 18.28.
I’ll pay $1.36 for this five point spread. It only has three days to work, so it will decay quickly if the SPY doesn’t move in my direction — down.
I will cut my losses when the spread trades down to $.80.
With the FOMC meeting and the chart looking as it does, I think the SPY could dip down today and I will be able to sell my spread at $2.00 and higher.
- My AMC Entertainment (Ticker: AMC) Apr15 10/15 call spread traded up to $2.05 on Monday, for an 86% win!
I called AMC to trade $15 and it traded $14.59 on the same day!
With profits of that size that quickly, I sold my spread.
- In Applied Micro Devices (Ticker: AMD) my Apr16 82.50/97.50 call spread traded up to $4.40 on Monday — that’s up 41%. It closed with a $3.75 bid on Tuesday and I am still in this spread.
Enjoy your green beer tonight … but remember it’s only Wednesday!
Thanks for Reading … See You Next Tuesday!