The dips are increasing but dip buyers are alive and well. I propose we buy a potential dip between now and the inauguration.
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SPY - S&P-500 ETF - ETF Profile
The SPDR S&P 500 ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500 Index.
The SPY dipped to $225 intraday before the dip buyers rushed into the market. Initial support is $223 and I believe we have a chance to test that level before the inauguration. There are only four trading days left. If the bank earnings disappoint on Friday we could see a decline in low volume. With the three-day weekend ahead we could see traders move to the sidelines to avoid weekend event risk while the U.S. markets are closed.
We could also see a pre inauguration decline as traders worry about event risk surrounding the event.
Whatever the reason we could see the ETF test that level over the next four days. Assuming there is no disaster surrounding the inauguration, we could see a real rally begin afterwards.
This is a short term position using February options just in case any potential dip turns into a crash. The estimated option premium should be less than $2.
With a SPY trade at $223.25
Buy Feb $225 call, estimated to be $2.00 or less, no initial stop loss.
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