The sun comes up in the morning, the government wants their taxes and the S&P will follow this pattern. About a month ago, we highlighted how the SPY, an ETF that tracks the S&P, has been insanely consistent. (you can read the article here). Since then the same pattern has occurred twice more with a high level of reliability.

Take a look at the chart below:

(Click above for your free copy)

Eight times since the beginning of the year, the SPY has pulled back, found support at the 50 day moving average and then returned to hover above the 10 day moving average. Not only is it giving you a heads up when it pulls below the 10 day that it is making its move again, it is consistently climbing 10 to 20 points after it breaks back above the 10 day.

Of course this kind of consistency is great, until it isn’t. Two key things to remember. First, use a call option to take advantage of this repeating pattern. When you see it hit the 50 day, grab a call with a strike about 5 -10 points above the current level.

The other thing to watch closely is to make sure it finds support at the 50 day. A couple of these examples show the SPY breaking the 50 momentarily before rebounding. Wait for it to get back above that 50 before jumping in. Don’t let the markets rope a dope you and take your money.

To see some of the great ways you can use options to take advantage of these predictable patterns, check out Chuck Hughes excellent guide on option trading. It removes the hurdles that can discourage many and makes it easy to get in on the action.

Keep learning and trade wisely,

John Boyer

Editor

Market Wealth Daily