Futures are down big this morning. The SPY is currently sitting at 306.10 in the premarket and it’s right above the pre-market low of $306.06. We are looking at a potential 5 full points gap down. In the premarket charts at the moment we see that the 10 moving average line is below the 20 moving average line on the 5 and the 10 and the 15 minute charts. We also continue to see high volume this morning.
The SPY is sitting right below an important support line of 306.06. Our momentum indicators are all pointing lower at the moment and there is volume coming in. Because the VIX is on the rise this morning, the fear in the market is growing and with the current trend, I am going with PUTS again. If the SPY moves up at the open I would wait for a reversal off a resistance line 307 or 307.70 or a red bar off the top of the bollinger band. Or I’ll look for the vix moving back up or I’ll look for selling volume to confirm my decision.
Two important things to keep in mind. Volatility will make the price options expensive and may whip the price around to places that may be beyond your risk tolerance. You have to trade what is right for you. As a reminder, I encourage you, if you do jump in, manage your stop loss according to your tolerance. Current SPY Resistance: 306.64, 306.84, 307, Support: 306.02, 305.89, 305.75
Today’s Trade of The Day is SPY March 4 300 PUTS