Analysis for Short Term Option Trading!
Technically Speaking-
Trade Recommendations- we are bullish but it looks like we are very slowly weakening.
Bollinger Bands- the bands are trading tighter around the SPY. This last dip this week radically pushed through the middle band, almost to the bottom. An increase in the tightening of the bands also has added to this dip. Usually when the bands tighten like this, it is not long before there is a breakout occurring.
RSI- the gap down the RSI proved to be healthy because it did not fall below the ‘50’ line much at all before it recovered. Presently, it is sitting at a healthy 62 level with plenty of room to move up. Continues to look bullish.
MACD- We want to see the MACD turn bullish again. With the big move down, if the MACD Histogram can push through the ‘0’ barrier, it may mean a sustained upward move.
Outside Market Influences-
World News
If inflation is a dragon that must be slain, China's Premier Wen Jiabao has shown he is willing to sacrifice a part of the country's most vital asset to do so -- growth.
Cutting China's 2012 economic growth target to 7.5 percent at the start of the annual meeting of parliament last week says clearly that too rapid an expansion makes inflation too tough to contain, given the reforms needed to create widespread wealth.
Greek Finance Minister Evangelos Venizelos formally submitted his candidacy to lead the Socialist PASOK party on Saturday, as the focus in Athens shifted to elections expected once an international bailout deal is cleared.
Greece averted the immediate threat of an uncontrolled default on Thursday when it successfully concluded a bond swap deal under which private sector creditors agreed to accept deep cuts in the value of their holdings.
US Markets
For a moment, stocks looked like they were headed for a long-awaited pullback this week.
But that didn't happen. After more signs of a healthier economy, stocks may have room to run higher in the week ahead.
The benchmark Standard & Poor's 500 Index (MXP:SPX) registered another week of gains on Friday, its fifth in six weeks, once again defying calls for a reversal in its five-month rally.
Friday also marked the three-year anniversary of the S&P 500's plunge to a 12-year low, a move that was followed by a sharp rally. The S&P 500 still is up 102 percent from that low.
"Everyone's looking for a correction here, which just tells me we're probably going to have another little run up before we get that correction," said Scott Billeaudeau, portfolio manager at Fifth Third Asset Management in Minneapolis.
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