The last couple of weeks have been a roller-coaster in the markets. First, the ECB chief Mario Draghi announced “the Euro will be saved at all costs”. The markets got their fix with this one statement and went ballistic. Mario Draghi was “Super Mario”. A few days later, reality struck at the ECB meeting when Germany poured cold water on his grandiose plans to rescue the Euro zone at Germany’s expense. The markets were expecting a serious bond-buying announcement from Draghi. It never came and markets crashed. Super Mario didn’t look quite so Super anymore. Big traders were like….”What a Drag..hi”. Then came the US jobs report, which along with a bunch of seasonal and temporary worker adjustments was better than expected, and the markets are cruising again.
We always maintain that it is just not practical to take a long-term view on the markets anymore and a trading outlook of 4 to 8 weeks is ideal to get in and out of positions profitably. But with Europe still muddling through and most of the continent basking on warm beaches this month, the S&P 500 may have entered into a bullish mode for the rest of the summer. In this video, we analyze the S&P 500 chart. As always, the bullish mode will continue until another spate of bad news from Europe. But for now, it might be a good time for the major indices and all the major stocks for the next few weeks. Long Calls are good strategies, and Bull Put spreads are even better because volatility will reduce as the markets grind higher, and you can get additional profit juice from a negative Vega position. You can also leg into the Call side to convert these spreads into an Iron Condor in stages. Avoid stocks that are yet to report earnings like Priceline (PCLN). And once you move into profits, protect it with “Conditional orders” because things can change anytime. This video breaks down technical patterns and analyzes key support points hit in the last couple of days.