Wow will you look at that – SPY is down .74% in 1 day. I think this is the turnaround but there are several ways this could go:
Option 1: The low of the day was $165.17 if SPY breaks that support and heads lower then yes it is heading down.
Option 2: If it goes higher but fails to CLOSE higher then $169.07 then it’s going to head down but a little bit more slowly.
Option 3: It breaks past $169.07 resistance and heads higher, maybe even opening higher then it will continue to head higher. (go figure!)
Who knows where the markets will go. Stay tuned!
The last time I posted on here SPY was trading at $153 and that day it had zoomed past $154. My recommendation then was to buy it. I hope you listened because since then it is up an astonishing 8.3% in a span of 2 months!
So whats next?
The market very rarely does what it’s doing now which is basically making new highs without barely a pullback. Will it keep making those new highs. Probably. BUT there are a few signs to be weary of:
- Bernanke testifies on Wednesday May 22.
- There was a recent article on the Wall Street Journal that mentioned “Fed Maps Exit From Stimulus”. Will this happen? Who knows. BUT if it does and when the announcement hits it will definitely impact the markets.
So stay positive but be ready for the negative (news that is)
It looks like SPY finally broke through the resistance at $153 and zoomed past it. Right now it’s trading at $154.58. If you don’t have SPY then now would be a great time to buy it.
Keep in mind our stop loss in this case would be at $152.
If you’re holding then keep holding SPY, if you haven’t bought it then do not buy it yet. Within the next week or two we’ll be running up against a very uncertain market with the Sequestration cuts approaching. Current position: Wait / Hold.
You Could Sell
If you’re holding SPY then now might be a good time to sell. If you want you can wait until tomorrow BUT right now SPY is over bought and it’s probably looking to go take a break (head down!) before it goes higher.
OR you could also HOLD it until it reaches $147 but that will depend on how the “Fiscal Cliff” talks in Washington go.
There are 2 main ways to profit from these stock picks.
Investing Strategy 1
First there’s the the usual BUY the shares and then SELL. EX: Buy SPY at $139 and if you sold it right now it would be $142. Which would be about 2.15% profit on each share that you bought. Don’t forget the trading fees which can be anywhere from $14 to $40 total. ($7 when buying / $7 when selling)
Investing Strategy 2
The second method is to buy a CALL option. For those of you that are familiar with options they are a great way leverage profits and limit losses. With options if the underlying stock goes higher then your options can actually double or triple in value. IF the option goes down though and closes lower then you’re out the full amount that you invested.
What’s The Difference?
The main difference here is that if you bought 100 shares of SPY at $139 then you would have to invest $13,900 but if you bought 1 option then, depending on which option, it could cost anywhere from $80 to $200.
IF SPY heads up then for stocks you would make profit depending on how high it goes and you can hold your stock forever. With options you would still make profit, almost same amount or more, BUT you can only hold that option until it expires. There are different types of options so they can expire in a week, a month, next month, in a year and so on.
Now IF SPY heads down then you would lose about $100 or more for each dollar that that it goes down. With options the price would decrease in value BUT your loss would be never more then what you originally paid for that option ($80 to $200).
Clearly I’m a little bit biased towards options but that doesn’t mean that you should be too. I tried stocks for a long time before I finally moved into options. So try stocks and then when you’re more comfortable trading them you can try basic call & put options.
We’re on a roll everyone! To those of you who traded — one of the recommendations was either buy yesterday or try your luck and wait. If you waited then today SPY dipped all the way down to $139 and now it is trading at $140.33!
Recommendation 1: Hold / Buy
Recommendation 2: Due to the upcoming tax cut expiration and other financial cliff related political events surrounding it, we could see SPY go even lower.
So if SPY goes below $139 then I recommend selling for time being. This is a good spot to enter a stop loss somewhere BELOW $139. Don’t try to set it at $139 exactly because it may bounce off there like it did today. Instead find a spot below $139 that you’re comfortable with.
It looks like SPY zoomed past $141 as was one of our 2 recommendations.
Nov 21, 2012 Recommendation 2: IF it breaks past the previous support which was at $141 then I would consider getting in.
So now it’s time to either buy it NOW since it’s down to $140 right now OR you could wait and see if it goes down even more to close that gap between $140 & $139.
Either way it looks like it’s headed up. The question now is how fast will it go. If it breaks past $142 then the next resistance will be between $143 – $144.
Thanksgiving Day Football was a lot of fun. Don’t forget to get some rest since those stores will be opening early (understatement) for Black Friday. Have a good one!
I know i’ve been away but I’m back!
A lot of other things that I’ve been working on that needed my undivided attention but I think that’s worked out for the best since the market’s just continued to rise since then.
SPY’s been down from a high of around 147 to a low last week of $134.
Recommendation 1: It might test that $136 to $135 support again and if it holds then I’d recommend buying it. For time being it’s a waiting game.
Recommendation 2: IF it breaks past the previous support which was at $141 then I would consider getting in.
Have a great thanksgiving everyone!