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John Mylant
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Residing in Colorado Springs, Colorado. Has been trading and coaching using a self-developed option trading system for 10 years. Philosophically conservative, accurately trades weekly options with a strong risk management approach. Well sought after by investors around the world, he teaches a... More
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OptionsWeekly.Org
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  • ETF SPY: Watch For Info On U.S. Debt Ceiling This Week 0 comments
    Dec 29, 2012 2:07 PM | about stocks: SPY, ETF

    Technically Speaking

    RSI- the RSI indicator has followed the stock's movement and the recent high also mirrors the lower high from September. It has plenty of room to move up but I am not sure if it is ready to do that just yet. Looks like the stock may be in a trading range.

    MACD- the MACD has nothing new to reveal to us either. Like the RSI, it continues to move just as the stock does.(click to enlarge)

    Bollinger Bands- If the stock continues in the bearish pattern I believe it should, we should see the SPY slide down the bottom Bollinger band now for a season. It is hovering between 134-146. I am not sure how low it can go this time around but it has plenty of room to move down.

    Current Events

    Investors fearing a stock market plunge - if the United States tumbles off the "fiscal cliff" next week - may want to relax.

    But they should be scared if a few weeks later, Washington fails to reach a deal to increase the nation's debt ceiling because that raises the threat of a default, another credit downgrade and a panic in the financial markets.

    The White House has said it will not negotiate the debt ceiling as in 2011, when the fight over what was once a procedural matter preceded the first-ever downgrade of the U.S. credit rating. But it may be forced into such a battle again. A repeat of that war is most worrisome for markets.

    Markets posted several days of sharp losses in the period surrounding the debt ceiling fight in 2011. Even after a bill to increase the ceiling passed, stocks plunged in what was seen as a vote of "no confidence" in Washington's ability to function, considering how close lawmakers came to a default.

    Credit ratings agency Standard & Poor's lowered the U.S. sovereign rating to double-A-plus, citing Washington's legislative problems as one reason for the downgrade from triple-A status. The benchmark S&P 500 dropped 16 percent in a four-week period ending August 21, 2011.

    Contracts for U.S. home re-sales hit a 2-1/2-year high in November and factory activity in the Midwest expanded this month, suggesting some strength in the economy despite the threat of tighter fiscal policy.

    The National Association of Realtors said on Friday its Pending Home Sales Index, based on contracts signed last month, increased 1.7 percent to 106.4 - the highest level since April 2010 when the home-buyer tax credit expired.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: SPY, ETF
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