Here are my morning investing strategy notes before the markets open for Wednesday Oct 8 2014. We have seen two big sell-off days in the present pullback, but Tuesday decline was large and pronounced with stocks jumping to oversold in a matter of minutes as so many investors bailed on stocks. The belief is growing that the market has put in a top. No one can know for sure but the decline on Tuesday was enough to push the SPX back below the 100 day EMA. In the chart below you can see that the market is back at the Lower Bollinger Band and continuing to grow in strength. The next move down will be to break through the 1930 level and then fall lower. The 1930 and then 1900 levels are next for the SPX to fall through.
Outlook at present is negative
Market Direction Portfolio
The market direction portfolio is holding the SDOW ETF with a stop-loss of between 20 to 30 cents. I am expecting a spike back and then more selling to emerge. I have no plans to unload any shares or portion of shares today. I believe the market is heading lower and holding the SDOW shares is prudent.
VIX Index Call Strategy
I have no VIX Index Index call options left at this stage and no plans to add to my positions.
IWM ETF Calls Stopped Out
I was stopped out of my IWM ETF call options on Monday. I am not buying any call options today but may consider them if the Russell continues to fall lower on Wednesday.
Spy Put Options -Watch For Bounces
For the Spy Put Options, watch for a bounce up or early morning spike in an attempt to retake the support level at 1956 before buying spy put options. I will be posting my SPY Put Options trades during the day to twitter again.
Summary
I will be updated throughout the day on Wednesday. I am expecting lot of volatility in YUM Stock and in Alcoa stock. If Alcoa meets analysts expectations the stock should do well. However I am not anticipating that will happen as I believe sales will be softer than analysts like. That will lead to more selling on Wednesday.
Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.