Set-ups and Game Plan for 3/28/16 – open

This was one of two premium posts  for members posted before week starting 3/28/16.

One of the hardest things to do as an options trader is not chase breakups that technically look great. Often traders concentrate just on making money and forget that not losing money is more important to survival; and as we know, options have no mercy. In some regard, even though last week was only minimally profitable, I consider it a more successful week than some more profitable ones. Practicing control and patience is harder in my opinion than chasing a market that is very bullish and rewarding pretty much everyone. I say this because I want to reinforce for you and me, that patience is in fact rewarded over the long run even if that means missing out on some moves.

Next week is a bit of a mixed bag. In general, the fact that breadth has kept up well with price and every dip is quickly bought is considered more bullish in the intermediate. And as I mentioned, given that many funds are underperforming a flat market there may be some chasing at the start of the week (or at least very little weakness) before the quarter ends. What happens after that may be more telling. As of now I do believe over the next few weeks there is a good chance we see at least 2000 SPX if not a bit lower. However, until earnings season gets under way I don’t think there will be any type of crash. In general, the bigger picture is currently up in the air.

On a short time frame (just next week), for right now I give edge to the bulls as long as price can remain above 2022. Under 2022 and I think there is the likelihood of getting to 2000 or 1980’ish. Over 2036 and there is a good chance of getting back to 2056 and possibly 2070 plus. In fact, if there is a large move to 2070 or over, there might be a set-up for a short term blow off top that results in a decent pullback for a few weeks. In all honestly, I’m really not sure about next week and will let price dictate us as the week unfolds.

In general let’s keep in mind:

• SPX over 2022 and bulls have the edge.
• SPX between 2022 and 2056 bulls have the edge but short term is neutral.
• SPX under 2022 bears have short term edge with support at 2007, 2000, 1995, and 1980.
• SPX over 2056 bulls have the edge with 2077 and 2090 as possible targets.

Finally, should we see a major rip higher next week that holds well going into Friday, the jobs number could result in a final push that results in a few weeks of back testing.

Set-ups: There isn’t much I’m super excited about until the market either gets a successful pullback, a consolidation, or a mini-blow off to short into. Hopefully once quarter ends we get a little more clarity. These however present good opportunities and I will be looking into index (SPY, IWM, QQQ) opportunities if they present next week.