Long the S&P 500?

March 1, 2018 11:27 AM

It looks like the S&P 500 Index may be on or near its weekly lows, although above my projected range. I want to explore the trade idea of going long the S&P 500 here at 10:45 a.m. Central on Thursday. Reasons I contend this is on the price lows, including that price being supported at the daily 20-period simple moving average (SMA) and weekly camarilla pivots, as well as transient intraday signals.

Gapping upthrusts and price level pass-throughs can be found on the five-minute $TICK chart (market internals) and the one-minute from 9:12 a.m.-to 9:13 a.m. TICK broke out of its 9 a.m. to 9:30 a.m. range on the 9:15 a.m. The one-minute candle, before collapsing back down into the range, making this a short-term trade. The VIX also has gaps down on the one-minute chart during the 9:00 a.m. to 9:30 a.m. Central time frame. Bonds did not go down much during this time, however. Additional major supports below at 2691and 2780 include the daily 80-SMA and weekly 20-SMA, in the event I am wrong and it goes lower. Ways to play this include a long call at the 2725 strike with one-day expiration or next Friday’s, if you want to give the bullish idea more time to be right, except options have time decay.

A long call spread could be less than $500 for either one-day or next week’s expiration. A similar trade is shorting a put spread of 2725/2720 strikes for the bullish side of an iron condor, as the pivots are trending for this week. Finally, a bullish-skewed or imbalanced iron condor with 2690, 2685 strikes on the put spread and 2750/2745 strikes on the calls gives some room to be wrong on the downside, taking in over 35% premium and offering a halfway point of about 2730 for a sweet spot fair value price for a scalp buyback if price stops/hovers there.

Notes: No advice rendered, and seek a professional before enjoying my rally idea.  

About the Author

Trevor Smith is a registered commodity trading advisor who holds four degrees across multiple disciplines. His study of financial markets led to his beliefs that investors can be self-directed and that market moves could be predicted using a variety of technical indicators and mathematics. His website is www.trevorsmithfnp.com. @TrevorSmithCTA