Markets have started off with a bang. The Dow hit a new record high on its first day of trading and the market optimism seems to know no end. But we are due for a pullback based on the very consistent patterns we have seen in the S&P. We see the SPY (the ETF that tracks the S&P) leveling off and setting up for the type of run down to the 50 day moving average that we have see so many times in the last couple years.

You’ll also notice that the MACD is creeping into the overbought territory. We will keep a close eye on a sign that this flat pattern is breaking down. Another key indicator to watch is the VIX.

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The VIX is close to its one year low and indicates that traders are not expecting any wild moves at this point. We may see a spike when the next pullback in the S&P is starting to happen.

There are great ways to trade this expected drop that allow you to benefit handsomely when it happens and also manage your risk if things don’t follow the often repeated pattern we have been watching. If you want to see the best strategy to set that up, grab Don Fishback’s Quick Start Guide to Option Trading Success. It helps match the perfect options strategy with the best odds of winning with the current market conditions.

Keep learning and trade wisely,

John Boyer


Market Wealth Daily