Trading SPY during the Santa Rally

The market continues to melt higher but with low volume this week. Not necessarily in a way that is has been helpful for our options. By that, I mean not making dramatic moves to capture quick profits.

This was the case yesterday and with it being Christmas eve, maybe the case today as well.  Though low volume often leads to rising prices and it certainly seems the path of least resistance for this market is up given recent history, we are looking for a decisive move which may not come with volume as I typically look for.

The positive buying after the close yesterday was more significant than any during the day. Yet yesterday we traded in a tight range and I hope to play that range for profits if possible today.

So this morning Wall Street will look for a clear move up by the SPY supported by market indicators that we’ve discussed excluding volume as I don’t expect much. If I see this it will trigger a buy to open followed by sell to close call option move today.

However, if like yesterday the SPY fades down at the open I’ll be patient and look for a bounce or a support line, specifically 321.20. Additionally, I’ll be looking for deeper in the money options with a higher Delta so we can get bigger moved In order for this trading plan to be in play, SPY must remain trading above a support level near $321.

There is a strong possibility today, with low volume that the SPY just moves sideways which will eat away any potential profit if held for too long. I will be looking for a profit in an hour or two and will plan to cut it loose after that most likely. Resistance:  321.60, 321.80, 322.35 Support: 321, 321.21, 321.35 Today’s Trade of The Day is SPY December 30 322 Calls