Analysis for Short Term Option Trading!
Trade Recommendations- we are still bullish long term, but we would not be surprised at a sideways market. We are coming up against strong resistance soon.
Bollinger Bands- the SPY is now going to be challenging the middle band for support as is the custom on these types of moves. It is typical to touch the bottom band before mobbing back up again. We do not call this a total sign of a bearish move yet. Let’s see what the SPY can do now.
RSI- the SPY is in safer territory on this move down. Coming in about63, it still has not moved down that far. It would be safer, if the SPY wanted to move back up, to move into the high 50’s.This would give it room to move backup safely for an extended period of time.
MACD- the SPY finally moved below the ‘0’ mark yesterday in the MACD Histogam. We have been waiting for this, seeing the signs for quite a while. Now, want to see if the momentum will continue to carry us south or will it start to move itself upward.
Outside Market Influences-
Euro zone unemployment has risen to its highest level since before the euro was introduced; data showed on Tuesday, a day after EU leaders promised to focus on creating millions of new jobs to try to kickstart Europe's floundering economy. Joblessness among the 17 countries sharing the single currency rose to 10.4 percent in December, on a par with an upwardly revised November figure, the EU's statistics office Eurostat said in its release of seasonally-adjusted data.
Twenty-five of 27 EU member states will sign off on the €500B permanent European Stability Mechanism rescue fund. The U.K. and the Czech Republic are not supporting the vehicle, which will replace the temporary European Financial Stability Fund.
An NPR-ProPublica report reveals that Freddie Mac's (FMCC.OB) investment division placed billions of dollars of bets against homeowners who were trying to refinance their mortgages at lower rates - the very homeowners it is supposed to help. The report raises the question of conflict of interest amid concerns Freddie has been turning down refinancing requests in order to benefit its prop trades.
A bill giving regulators the power to prosecute members of Congress for insider trading has cleared a procedural hurdle, setting the stage for a Senate vote this week or next. A study released last year noting the abnormally high returns posted by House members on their personal stock trades led to calls for greater regulatory oversight.
Analysts estimate profits in the Standard & Poor's 500 Index will reach a record $104.78 this year after increasing 125 percent since the end of 2009, the fastest expansion in a quarter century, according to data compiled by Bloomberg. American companies are boosting income so much that even after stocks doubled, theS&P 500 hasn't traded above its 16.4 mean ratio for 446 days, the longest stretch since the 13 years beginning in 1973.