I tend to be an over-thinker and I have learned that over-thinking the markets doesn’t work for my P&L. If you can relate to this let me say it as simply as I can….GET OUT OF YOUR HEAD! Until we have evidence of a shift taking place in this market continue to do what is working: buy dips, sell on the way up, rinse and repeat. If you are a longer term trader than just ride the trend. Two great trend followers that I like to follow are @SJosephBurns and @JBoorman.
If you are holding onto any of the below statements, give yourself a break and let them go.
– But everyone is bullish
– But we have already gone up so much
– But QE is creating a bubble
– But we are due for a crash
– But the PE is so high
Where are we going next?
I had a bullish outlook last week as many of you know based on my 1793 before 1740 bet. I also sent out this tweet on Tuesday evening, which you can view here.
On Wednesday morning we hit 176.09. That was an amazing buying opportunity. This week I feel more neutral about the S&P, but see a ton of great looking stocks (many of our favorite momentum ones) that look like they are ready to burst at the seams. I also like the look of the small caps (IWM), biotechs (IBB) and finacials (XLF). SPX closed Friday at 1798.22 and a bit outside of its upper BB band. It can definitely still go higher, but grinding sideways would be healthier while other sectors and stocks play catch up. I wouldn’t be surprised to see a small pull back as well next week to shake out some people before Thanksgiving and months end. If we pullback I would look for support around 1782, then 1770, and 1746-1750. On the upside we are in free air.
Open Interest: The following graphs are for November 22nd expiration.
SPY: Highest open interest is the 176 puts. If we do get a decent sized pullback, that is where I would look to get long.
AAPL: Still trying to go higher. Those calls always seem to get in the way. For next week highest call open interest is 535 and 515 for puts.
AMZN: Chart looks bullish. Price currently above the highest open interest 360 calls.
BIDU: Staging its come back. Chart looks bullish and price is currently above highest open interest of 160 for calls and puts.