the earnings season is closing with mixed results. It seems that some IT companies who beated their estimates were actually helped by coronavirus…
But the positive numbers certainly were not shared by all. This article reviews the SPX chart, the state of the uptrend, and how to handle it.
The SPX chart reached 3381,01 yesterday. The market, however, sharply slipped after it came close to retesting the all-time high. In the end, the SPX and DOW closed with a -0,80% and -0,38% respectively while NASDAQ closed with a -1,89%.
What’s happening? Well, hopes of a COVID vaccine development and a slowdown of the coronovirus’s numbers pushed some investors to reduce safe-haven assets. Gold and silver saw the most sharp moves down. Also, “old-economy” activities now seem undervalued in comparison to high-tech stocks.
What could happen next days? SPX futures rebounded after the market closed and now is trading higher after testing the 3320 area (ex resistance has now become support). It’s highly probable that the all-time high will be seriously tested. Barring any bad news in the rest of the trading week, we could then see a new all-time high soon.
What does this imply for options traders?
Well, the VIX (stock market’s expectation of volatility based on S&P 500 index options) is still hanging around lower levels. For the moment, it confirms the continuation of the bull trend.
But remember this: the trend is stretching higher and possibly overbought. At the very least, a correction is highly probable after a new high is confirmed.
Thinking about options but not sure yet? There are a couple of ways to move forward before committing to the course or educational signal service. Here is how you can stay in touch:
If you are ready to move forward, then you can choose from:
Marco Doni – ecs.OPTIONS expert and CNBC contributor
The articles are not intended to give any advice on how to invest money, they are just for educational purposes.