MTM Options Newsletter - How to Use Pivot Points in Your Trading

This Week in the Market It was another choppy week as stocks moved lower, but buyers would not completely step aside until late in the week when things fell apart. The S&P 500 tested its 200-day moving average as Nasdaq fell from its all-time highs set earlier in the week, but it is still far away from even its 50-day moving average. The Dow is situated between both moving averages as implied volatility and option prices rose a fair amount to close out the week. As has been the case, a non-bearish bias based on technical analysis still needs to be considered, but some weakness is possible, particularly if the spread of the coronavirus shuts things down again. It is a short week of trading for market participants as the market is closed on Friday due to the Fourth of July holiday. There are several economic reports expected this week, with a bulk coming toward the end, including the June jobs report on Thursday before the open. In addition, the notes from the last Federal Reserve meeting will be released Wednesday afternoon. As mentioned above, the threat of news breaking at any moment could swing the market on an hour-to-hour basis. Proceed with caution. Enjoy the long weekend because I am sure you have earned it.

Jun 29: Pending Home Sales Index Jun 30: Consumer Confidence Jul 1: Construction Spending Jul 1: FOMC Minutes Jul 2: Jobless Claims Jul 2: Unemployment Jul 2: Factory Orders Read Our Blog

How to Use Pivot Points in Your Trading Moving averages are the most popular directional gauges. They are typically the first technical indicator in the novice trader's toolbox. Many professional traders rely on them as well. Typically, the directional signals come when a short-term MA crosses a long-term MA. The problem with this method is that by the time the averages converge and cross the directional move is already well on its way. Thus, entering a trade using this method usually leads to late entry and poor trade location. Bad trade location increases risk and reduces profits. Continue Reading ... MTM Watchlist Here are several items we will be watching in group coaching class this trade-shortened week: AAPL – Clearly a lot is dependent on how the market trades this week. AAPL has been strong, so if the market does not take a dive lower, bull call spreads will be looked at again. FB – After a huge drop on Friday, potential calendar spreads will be modeled with expected IV skews. COST – The stock closed below its 200-day moving average and some potential resistance around $305. Call credit spreads at that level will be considered.

Happy 4th! As a reminder, the market is closed this Friday, July 3, in observation of Independence Day. The Market Taker Mentoring team wishes you a safe and happy holiday!

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