A Rally On Heavy Volume

Strong economic data, mergers and acquisitions and lower oil prices sent the market on another rally. Volume was heavy on both the Nasdaq and NYSE. Tomorrow, should we open long positions? Wait and re-evaluate your strategy after the FOMC announcement. Click here to get today's free options advice; have A.J. explain option trading to you in everyday language.

Hey trading team,

This is A.J. on Monday, October 31st with your Trading Trainer web log. We are your home of market insights for the serious options trader. This web log will cover the events in the market from today as well as prepare you for watching the market tomorrow.

Well team, oil prices are dropping. Today we got some fairly favorable economic data with consumer spending coming in at forecast and at the same time personal incomes came in well above expectation. Also, the Chicago Production Management Index came in higher than expected. All the positive news sent the market higher on higher volume.

If you have a bullish tendency towards you then you like what happened today because when you get a price increase on heavy volume you have price movement with validation. If you rewind to the price gains that were made last Monday, volume is what lacked. And you saw what happened on Tuesday, Wednesday and Thursday.

We are now above those miles stone levels in each of our three indexes. The Dow is above 10,400. The Nasdaq is above 2,100. And, the S&P 500 is above 1,200. The question of the day is… can we sustain that for the week. Time will tell, but that would be monumental. In the meantime, we’re sticking with our neutral / bullish trading bias. Still more neutral than bullish.

Tomorrow the Fed announces another position on interest rates. Team, their actions matched with their words can make or brake tomorrow’s market.

My Techne January 55 Calls closed down with a bid price of $2.50 per option. I’m drawn down by 58% into my initial investment after 27 days. My Apple January 55 Calls closed up with a bid price of $6.00 per option. My return on invested capital is 22% after 11 days. My Google January 350 Calls closed up with a bid price of $38.00 per option. My return on invested capital is 43% after 5 days.

Here is my recommendations team. First, the big news tomorrow is the Fed verbiage that will accompany their rate hike. Only after that announcement is made and the market digests it, which will be in minutes after, will I consider opening any trades.

In the meantime on options in my portfolio I am placing tight trailing stop loss alerts – like around 15%. Even on those that are under water. And, in addition for those under water, I’m placing sell alerts at break even. The idea is to holistically come out above water if you have to irradicate your whole portfolio because the market takes a dive.

Okay, team. I'm done.

Till tomorrow, happy market watching, trading and money making. Trading Trainer is here helping you create your dream lifestyle.

Best regards always,
A.J.

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