Friday's market drop was a sudden change in direction that leaves unanswered questions. Was it the start of a bigger market decline or just a one-day wonder to be followed by an equally ferocious rebound? Unfortunately, we do not have the answer this weekend. There is a strong potential for margin call selling on Monday and with three Fed speakers early in the day, they could accelerate the crash or they could reverse it.
With the margin call selling there should be weakness at the open and then depending on Lael Brainard's speech at 1:PM there would be another rush of selling at 2:PM. Those are the two periods where margin call selling occurs. If by chance Brainard contradicts Rosengren and continues her dovish tone, we could see some dip buying.
However, this is the third week in the six most volatile weeks of the year and it is a quadruple witching option expiration week. Anything is possible. I recommend we pass on new plays for Monday's open and reevaluate on Monday evening. Jumping into new positions at the open on Tuesday is a suicide play. It is simply a coin toss for direction and we are better off waiting for a better read on market direction.
If you just have to have something to trade, I would pick the QQQ. This is not an official trade, just a suggestion. The October $115 calls are $1.84 and the $112 puts are $1.89. If you feel you know which way the market is headed then jump right in and pick a side. The entry fee is cheap and IF you pick the right direction, you can make some money.
NEW DIRECTIONAL CALL PLAYS
No New Bullish Plays
NEW DIRECTIONAL PUT PLAYS
No New Bearish Plays