Options Outlook for Friday - Morning Update
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Options Outlook for Friday - Morning Update

John F. Carter 4/5/2013

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Friday, April 5th
10:15 AM CST


The world is right again.  That is, stocks are selling off on bad news.  But how long can this last?  And that is the real question.  Yes, we are overdue for a 4 to 6 week correction - but every time selling has kicked in this year, it's only been able to last about 2 days before buyers stormed the gates and reloaded their boats.  Is this time going to be any different?  The funny thing is, I'm getting skeptical about a down move EVER happening - which to me is a sign that this is the real thing.  As I'm writing this, we are currently at 1539 on the ES.  If we can rally up to 1543 to 1545ish, hold, then roll over and die into the close - it would bode well for a legit sell off.  Bonds know all, and they've been setting up as bullish and today they exploded higher.  Let's see where we are into the close - but so far, so good, for a correction to take place.  This means be careful about BTFD!  Make the switch to STFR!  (sell the freaking rallies!)


My primary focus this week was selling put credit spreads in AAPL and trying to pull for the technical support in stock indexes. Using correlated assets to help determine trend changes is great when it works, but deciphering these moves isn't always easy. One simple way to help determine when a trend change is coming is to watch the 5 EMA against the 13 EMA. It's pretty basic, but that coupled with the dual closes below the 21 EMA can help and that's what we're starting to see from stock indexes today.

For AAPL I think the argument can still be made for high volatility spread sales, but I'm not as excited about it as I was on Monday. The close should be very telling and hopefully give us a bit more information to go off into the weekend.

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