Major market ETF SPY is sitting almost exactly in the middle of a long-term upward-trending channel. On top of that, it’s just recently bounced off it’s 200-day simple moving average, and is now running up against the bottom of its 50-day simple moving average. We’re setting up for a potentially smaller near-term range while inside a longer-term range, which creates some interesting trading opportunities. 

More to come soon - we may be looking into double diagonals early next week. Until then, enjoy the weekend!

Interesting action on SPY this week… from the look of this chart, we may have a couple more points of drop before we see real support. $134 looks like a pretty good level to start being bullish, or to use as a target for selling premium now. Expiration week is always a little weird, so we’ll be looking closely on Monday morning for new trades for our members. 

We expect to see a general increase in market prices over the next week or two, but we’re not going to put our money where our mouth is until after the weekend. Let’s get into the last options cycle of the year and see if we can’t gain from a little holiday spirit. 

It’s been a little while since we blogged about SPY, so here goes: we’re sitting right on a long-term upward-trending support level, and we’re bumping up against a less-important resistance line (see chart). What does this mean? We’re thinking it’s bad news for bulls, as we’ll probably see sustained sideways movement, or maybe a little break upward followed by a pull-back. We’re definitely thinking this line will get violated sometime soon… particularly with elections coming up, the market may not be willing to take a bullish stand. 

If you’re an iron condor trader, this might be a nice time to jump in and hope actual volatility is lower than implied volatility, and take a little premium home before Thanksgiving break. Good luck! 

Just like the denizens of Edwin A. Abbott’s “Flatland”, two-dimensional shapes surround GLD on this one-year chart. From highs near $186 last September, GLD fell to lows near $148 a number of times, without breaking this support line. Now this ETF is pressing back up to the descending line, which today is at 162, and by Sept expiration will be near 160. We’ll be looking hard at some bull call spreads once the options market opens. 

Also of interest, GLD stuck it’s head above the 200-day simple moving average for the first time since March 27, ending a nearly 5-month run below this important indicator. It’s a safe bet that there are a lot of bulls out there getting ready for a big run, but things rarely run up in a straight line. 

SPY resumed last week’s upward climb today, and is now on the upper end of our previously-defined range and upward-trending channel. We’re getting to the point where we may adjust to a bearish bias - the $140-$142 level looks like a possible stalling point, and the natural place where buyers may chicken out. We’ll be looking closely at some bearish call spreads and other strategies this week, as we wait and see if this rally can be sustained.