Analysis for Short Term Option Trading!
Technically Speaking-
Trade Recommendations- we continue to be bullish, but are cautious as the market moves ever so slowly and Europe looms always!
Bollinger Bands- the SPY did not move at all yesterday. So the bands remain very tight. This is going to give way eventually because when the bands contract like that, usually we see a breakout soon. When is the real question?
RSI- the RSI still is in a healthy position for the SPY to continue inching its way back up. We will watch the resistance level and if it pushes through there see what it does to the RSI level and how close to 70.
MACD- We want to see the MACD turn bullish again. If this occurs on a slow growth move, then the MACD will see a prolonged move up. Notice the MA’s are still in bullish territory.
Outside Market Influences-
World News
Europe's debt crisis will never be too far from investors' minds though despite recent signs of easing.
The news overnight that Spain's euro partners have allowed the country to run a deficit of 5.3 percent of gross domestic product this year, above the original 4.4 percent target, has generated some concerns that the hoped-for goal of more budgetary discipline within the eurozone may not be as stringent as hoped.
"The problem with Spain missing its targets on debt reduction is the fear of contagion," said Simon Furlong, a trader at Spreadex. "Europe simply cannot afford to bail out Spain, and with investors as skittish as they are over Europe, demand could easily flow away from Spanish debt if it is perceived that they cannot get to grips with their debt."
US Markets
Optimism over the U.S. helped shore up global markets Tuesday ahead of the latest policy statement from the U.S. Federal Reserve. And with Greece cleared to get its next round of bailout cash, thereby avoiding imminent bankruptcy, investors are confident that the latest acute phase in Europe's two-year debt crisis has abated.Most interest later will center on the Fed. Though no policy changes are anticipated, investors will be closely monitoring the accompanying statement to see if U.S. rate-setters are a bit more confident about the state of the recovery following a run of upbeat economic data, particularly on the jobs front. February retail sales figures later, which are expected to rise by a monthly rate of 1.1 percent, will be assessed in that context.
Small business confidence rose to a one year high in February as more owners reported plans to rebuild stocks after 56 months of inventory liquidation, hinting at a pick-up in domestic demand. The National Federation of Independent Business said on Tuesday its optimism index increased to 94.3 last month - the highest reading since February 2011 - from 93.9 in January. It was the sixth consecutive month of gains.
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