Liz here, home from the hospital on drugs.
Let me tell you a secret about drugs: they are horrifying. While we were in the hospital, we got an ultrasound of little Pip yawning, and right now, anyway, it’s like gazing into a black void of terror.
His mouth goes all the way back into his neck. I HAVE CREATED A MONSTER.
Is this drugs? Or is this legitimately nightmare fuel? You tell me.
While I was in the hospital, a whole bunch of stuff happened – for one, Tom sent me over an explanation of why he doesn’t have a Money Calendar Friday trade today, which is very much worth reading…
Also, a couple of our spreads appear (at least, to my outdated software) to be up a major amount. I emailed Morgan, the Eye of Sauron, to see what the actual numbers are – but you might want to take a look at these…
And finally, we got more information about Voz’s secret project.
On Thursday, May 26, 2022, at 1:00 p.m. (ET), something really big, and really cool, is happening….
Voz and all five of the guys (A.K.A. all six of the real experts) will go head to head to show you how you can find the best, biggest, fastest trade of the day – EVERY DAY.
It’s a competition, and you can see how to watch right here.
As for me, I will not be part of this initiative because I am a fake expert…on drugs. (This will be the title of my own upcoming trading product.) I’m going to fall back asleep now, and I hope you have a wonderful weekend.
Also, read Tom’s thing.
Why Tom is Doing Nothing
We’re looking at our online options analysis software, www.tomsoptiontools.com, to take a look at the S&P 500 current price to its 52-week high closing price.
Here is the data:
The high price on the S&P 500 52- week High is shown as 4796.56 and the close price is shown as 3900.79.
The differential is 895.77.
Divide the High price by the differential of 895.77 and the result is a decline of 18.675%. That is showing the S%P is less than a 2% drop in price to be classified as it being in a Bear Market.
That doesn’t mean we should expect the 20% decline becoming the line in the sand support for the S&P 500 and we don’t expect to see it bounce and fully recover.
It just means people can now label it as a Bear Market, and you know the financial news networks will be all over it and bringing this to everyone’s attention.
What that means to me is I keep looking at more bearish opportunities than bullish.
There are no trades of the Money Calendar variety setting up that we would want to highlight. There are only two bearish patterns and they are 7 days or less, not the 20-30 day patterns we like. Nor are the price moves for a directional options trade more than the 3-point / $3.00 avg price move we like.
There aren’t any Credit Spread opportunities (Call Credit Spread where we would like to see th stock stay where its at or lower by expiration. Trying to find an old support level that could be knew resistance, where we would place the call credit spread above that price area is tough too.
Why? The stocks have gapped or run so far down and away from that old support level that there isn’t enough premium to be gained by opening a position or trade of this ilk.
And it is tough to have too much conviction for bullish patterns in this bearish environment.
Sometimes the best trade is NO trade and we felt explaining the rationale for not forcing a trade would be just as important for learning.
(P.S. This is Liz again. I have nothing else of any importance to add.)
May 20 2022