Option Investor
Market Updates

Equity futures mixed to lower

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Equity futures are mixed to lower this morning and we're currently seeing S&P futures trade lower by 4 points, NASDAQ futures are up 1 point and Dow futures are off 70 points. Fair value for the S&P 500 is $6.76. Buy programs are set for buying at $8.76 and sell programs are set at $5.06.

What to do if you're short

I don't care what stock a traders is short. If the stock is moving against you and you did not have a stopping point in your original trading plan DO IT NOW! A couple of years ago, I had shorted Amazon.com (NASDAQ:AMZN) near the $20 level. Five day's later the trade had gotten away from me (and some of my clients.) All but one of my clients admitted our mistake at $25 and then finally at $60. Today AMZN trades $16. I was right two years ago that AMZN would trade lower, but oh the pain that would have been endured when the stock ran to $115. MAKE A PROMISE TO YOURSELF TO NEVER SHORT A STOCK WITHOUT PLACEING A FIRM STOP IMMEDIATELY AFTER YOU ENTER THE TRADE.

S&P 500 at top of regression

Yesterday I placed a regression bracket (not a retracement brackets) on the S&P 500 and yesterday this index closed right at the upper end of this channel. Yesterday we also bought two SPX puts (SZPQJ) when the S&P500 was trading near 1,235. We did this not only because some bullish percent charts were getting indicating overbought conditions, but to help hedge some of our long positions on PremierMarkets.com. Our downside target for the SPX put contracts is the 1,200 level from our retracement bracket that we've been using for the past several sessions. We bought the May puts for this hedge.

Jeff Bailey
Senior Market Technician

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