The momentum down in this market in my opinion is so strong that it has been oversold for a long period of time. So for those of you who are waiting for "the bounce" to go short, good luck to you. I mean according t my technicals we have been oversold for 9 straigt trading days and I mean big time oversold. The reason for this is because we have had a market that has closed on or below the bottom line of the Bollinger Bands (BB's, light blue shaded area) for 9 straight days. My technical view is that the bottom line of the BB's is the support here and the 9-day sma (red line) is the resistance. Well the support is not really holding and the market hasn’t tested the resistance. So as I have said many times imy commentary, markets can remain oversold or overbought for long periods of time.
I figured this out by going back and forth from a daily to a weekly chart by the click of a mouse which I found here, which is a web application that we have developed for our clients called MARKETHEAD where I get about 80-85% of all my research from. That means I get both technical and fundamental research from this web app and I am a veteran series 3 Broker of 15 years. So if I'm using it then maybe my reader's should check it out. Yes?
Some good plays I think could be to buy puts or put spreads with a call for a hedge or "insurance" in case the trend changes to up dramatically. I would recommend this in a 3 to 1 ratio as always. Puts or put spreads give a limited risk and an in the case of outright put options, unlimited profit potential to zero for the price of the underlying future or commodity.
I believe this could be an opportunity, of course not without commensurate risk, to sell deep out of the money call options and collect premium. This is due to the current downward action or maybe the potential for future consolidation.
For exact details on strategies, months, expiration dates, strike prices, and number of positions feel free to contact me at 312-277-0115 or firstname.lastname@example.org.
It is also important to note that I am not married to a market, but to trends. So I make recommendations with options on futures and commodities like the energies, metals, currencies, softs, financials and more.