Regarding PFG, I was told that accounts were moved to another firm. That is confusing because all the accounts are frozen. I will find out more about this and report next week.

In the case study using the S&P E-mini, the options expired worthless today. That was a 6% return in less than one week.

I had a similar case study in Apple with the same result. Even though the stock was lower, the options expired worthless.

This was an interesting week in the markets. We had the largest selloff that we have had since June 21.

This is the S&P monthly chart. You will notice that the close of the latest bar is still above the close of the previous bar. That tells us that the support created by the bottom of last month’s trading is still support. A break below that support means that we could go lower. The first logical resistance would be the moving average. In this case, I am using the 20 day moving average.

On this weekly chart (above), we can see that the price action is bullish based on the long term, medium-term, and short-term trend lines.

This is a daily chart of the S&P. You will notice on the RSI indicator on the bottom that the S&P has just come off an oversold reading. The Bollinger bands are also indicating that the S&P is oversold. This gives us a low risk entry in a bullish trade.

 

You can see that the trend line shows support at approximately 140 on the SPY.  That means that we can sell options below that point and protect them with the down only algorithm.

It’s just a thought.

This is a chart of the AUDJPY.  On this weekly chart, we can see that the MACD just turned bullish. We are smack dab in the middle of the trading range. This bullish reading means that traders are willing to accept more risk. I wouldn’t be a bit surprised to see this reverse before the election. It would make sense that traders will want to be in a safe harbor until after the election results. I would be leery of taking bullish trades between now and then.

Apple came out with earnings on Thursday. That was a big yawn. I am used to seeing a gap move. At any rate, the stock bounced off of its 200 day moving average. That is significant support. I would look for any reason to get long the stock. They sold more iPads last quarter than other computer companies sold of their entire line up.  The iPhone is also another big seller. Christmas is right around the corner. The PE is lower than the S&P average. There are plenty of reasons to believe that the stock will go higher. I know that most of you will not be able to trade the stock so if you get signals, use options.  Every time I get a buy signal in Apple, I put on a credit spread using weekly options. Even with the stock moving down, all of my options have expired worthless.

Tell me the truth: who else is starting to get excited now that the VIX is going up? Just a few more points and we can start selling straddles again.

That is all for now.

Kind regards,

Melvin

The article was first published by RTT Quant.