We are, at the moment, staying the course but we do need to make progress back over our Big Chart levels in order to maintain our bullish stance (which we flipped to yesterday morning). We still expect a string of announcements from the G7 nations in the form of stimulus and bailouts to mark the second half of the month and it's just one week until the Fed Meeting where it will literally be QE3 or bust! This week we have August PPI and Retail Sales tomorrow, followed by August CPI and the usual job losses on Thursday. We also have Empire Manufacturing, where anything better than negative will be an upside surprise as well as CPI, Industrial Production, Capacity Utilization and the Philly Fed (also with negative expectations) - all on Thursday morning! Friday will seem anti-climatic with TIC Flows and Michigan Sentiment.
Data trumps rumors and QE3 or whatever stimulus we get trumps everything else so we'll simply keep our eye on the Big Chart and hopefully we can hold those -5% lines on the Dow (11,011) and the Nasdaq (2,473) while waiting for the S&P to hit 1,173. As for the NYSE - we'll be thrilled to see a 50-point gain to take the -10% line at 7,079 and the same goes for the Russell, which needs 697 and deserves it if the Dollar is strong as that's good for smaller companies so no reason for them to be lagging like they are.
If the S&P breaks over 1,173, then the TNA Sept $40/43 bull call spread at $1.30 becomes an interesting play and that can be offset by the sale of the RUT Sept $610 puts at $1.22 for net .08 on the $3 spread. The Russell is currently at 680 so it would take a 10% drop in the RUT by Friday for those puts to take a loss so that's the bet with a massive upside bonus. We'll discuss other potential offsets in Member Chat but it's time to get to work.
Be careful out there!
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