SPX Weekly Credit Spread for May 4; waiting on sidelines until a clearer market direction is defined.
Who is going to win the battle, bulls or bears? SPX made a push up through 1900 yesterday, but sellers were waiting in the wings. The trading range has been very tight since then (between 1891 and 1897 today as of this writing), and my crystal ball is at the repair shop. However, I still see a great amount of uncertainty between buyers and sellers.
It may take some "news" event to make that determination. Janet Yellen is speaking tomorrow evening; perhaps that speech could be the catalyst for a strong breakout above 1900, or a significant pullback.
SPX 6 month chart:
Because of all the uncertainty, I am not recommending a new weekly trade entry for Thursday. With the VIX at its five month lows it is difficult to get any premium when selling spreads without getting too close to the fire.
VIX 6 month chart:
I will evaluate market conditions on Friday, and may open a new position IF there is enough premium to warrant the weekend risk. I am being very cautious until the market picks a direction. I will post an update Friday morning.
As always, stay keen on your risk management and trade carefully.