Consolidation took place last Friday on JPMorgan's massively good earnings not hitting expectations, the trigger to allow a 144 decline by 1.30 p.m right back to the Fib 10,550 line.
Study these number carefully. They are the theoretical Dow tops and bottoms on Friday: 10,750 to 10,521 low
As you study our Dow projections we are trading within a "Fibonnaci range" with the bears swearing the end is near, but slowing their pace, and the bulls insistent that this historic run up is simply the sign of economics working, and that "the worst is over."
For traders that owned puts we finally hit profitability, but hit stop loss on the call. It was a very hard week to make money last week, as the volatility range was even tighter.
So, what's next? Option premium prices are overpriced. The steadiness of the market within these ranges reflects historically on what will be a "large move," and it's a cat's game on whether up or down.
We'll open the week very cautiously, following the count of the market, with an OTM put play. We will also show as a buy a more ATM call, and note to traders that how futures open will help define the tenure of the market. There are many earnings reports coming out. Unless we see a grand slam sell off, it's very likely we'll have the opportunity for fast trades on both issues.
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