Founder's Trading Journal
by 0 Comment

Two critical concepts got you an awesome long trade this morning. Note them, if they are not already part of your toolbox: (i) the CBOE Put/Call Ratio, and (ii) the Weekly Expected Move low.

CBOE Put/Call Ratio

Before the turn higher this morning, and with a sense of panic in the air, the Put/Call ratio not only spiked – it gapped open to .89. That was the highest level since last October, in the range of last Thursday, and an indication that short-term fear was so overdone that a long trade was low risk. In other words, it was your first clue that the market would likely survive here.

Then, you have billions of dollars at stake if the market makers cannot keep the S&P 500 above 4105 by Friday’s weekly options expiration. Even after the first dip last week, deep as it was, the market makers brought the market all the way back to close at the WEM low by the close Friday. You simply cannot underestimate the power of these forces.

You have these two concepts, plus the traditional support of two trendlines and the 50-day line on the S&P 500. Moreover, sellers were unable to push the market back into last Thursday’s low, much less through it.

For day traders doing multiple contracts, I would take profits on half here at 4093, and keep the runners with a rising stop. For the Navigator swing strategy, we are holding our intermediate positions.

A.F. Thornton 

Related Posts

Website:

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe!

Free Blog content and videos delivered to your email.

Health and Wealth Podcast Coming Soon!

We value your privacy, never sell your information, and detest spam!