SPX at Resistance; USD Oversold?
Not much to say is there. Regardless if economic data is good or bad, the story remains the same. Unbelievably resilient equity markets. Fundamentally, a very slow week of economic data, but we still have earnings reports to deal with and the usual "watch out for international news bombs" opportunities.
Technically, the SPX is just under resistance in the 1400-1425 area. So, with an understadning fundamentally and technically that these markets are strong, but at previous resistance, what strategies are you using? A few bullish strategies are:
**buying stock and selling slightly out of the money covered calls
**selling puts as equities sell off (have to act quickly as the selloffs are small and the buyers come in quickly)
**buying calls on those same dips
I still think that some defense is warranted. Using technical analysis to buy puts at very specific locations can still be used as a trading opportunity.
In forex, we had pretty quiet markets with the USD breaking lower during the US equity session as there was finally a reaction to the strong move higher in equities.
So, 1400 today. Will we break out to the top of the resistance range at 1420-1425? And oh yeah, the VIX is back at support.
And one inter-market relationship for you: is oil and USO overdone? Will the 35 area continue to be resistance in USO? Will the USD/CAD find support around .9980? For more on this inter-market relationship see Friday's post.
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