Good evening traders,
Everything you should know about this week as a Professional Options Trader is listed below;
Well this week should be VERY interesting. We had a BIG move up Friday, back to $1766.75 on the S&P 500, which puts us back into no-mans land. No mans-land, being the range of $1774 and $1747 which was the high and low from The Federal Reserve day when they last spoke we have been playing this range for some time. In my opinion, I believe Fridays bounce was mostly lighter volume before the Holiday Monday & short covering into the long weekend. I wouldn't be surprised if we finally have a breakdown this week of the S&P 500, but I'm giving my bias to a breakaway to the UPSIDE because of the economic data that comes out this week.
Going forward, we really don't have much to go on, until this range is broken. Next week there isnt any news until Wednesday at 9:30am when we have Crude Oil Inventories released at 9:30AM. This is the change in the number of barrels of crude oil held in inventory by commercial firms. This has inflationary and growth implications and will effect your Crude Oil trade. Crude Oil is still bouncing higher, even thou the trades Thursday and Friday didn't go our way. The problem with Oil trading futures is that the contract prices are $0.50 ranges---I recommend if your going to trade this futures contract, that you also trade a weekly Bull Spread on the contract. This will not only protect you, but I take weekly Option expirations on most everything to hedge against my daily trading.
Crude Oil inventory has been steadily declining and is now at 1.6M last count which is probably as low as it will get so I expect this number to be higher. It correlates with the chart too, which gives me good confidence that Oil Inventory will start increasing; however, the important statistic to watch for here is that Crude Oil inventory has been constantly higher than expected; however, this time, it should come in closer to expected, which should drive prices higher on Oil. Im rating OIL a BUY still.
Later Wednesday we have at 1PM we have the Federal Budget Balance which is the difference in value between the federal government's income and spending during the previous month. These numbers have been on par for the last 6 months; however, with the Federal Government shutdown I expect these numbers to be skewed and for the number to come in MUCH lower than expected which will give the economy a false boost. Because of this, Im going to position some S&P 500 contracts LONG because of this. I'll probably hold both contracts HIGHER and LOWER on the S&P this week, at different price levels. Ill look to obtain contracts for close at or above $1790 and contracts for close at or below 1736. You can hold both contracts, just not at the same price level.
Thursday is trade balance data that comes out at 7:30AM, before the market opens which really wont effect your options directly, but GREAT for currency trades. I'll post some currency trade ideas in email next week. The most important data then is the number of Unemployment Claims which also is at 7:30am, this is the number of individuals who filed for unemployment insurance for the first time during the past week. I expect this number to be significantly lower because of the government shutdown also which could definitely BOOST the economy as well. This data was delayed 9 days because of the government shutdown.
Those are the biggest news events this week. It could definitely push the S&P 500 higher, and since we had such support Friday, and because your odds of the market going HIGHER after a holiday are something like 80% I am looking to trade this weeks market to the UPSIDE. It should be fun, and Im thinking of doing a $200 trade challenge this week just because we had such a great week 2 weeks ago with a 600% return. I'll email everyone if I decide to.