Editors Note:

Market sentiment is starting to fade ahead of the Fed. Once the excitement of new highs wore off, investors begin to take some profits. While rate cuts trump bad earnings, they are now priced into the market.



NEW DIRECTIONAL CALL PLAYS

No New Bullish Plays


NEW DIRECTIONAL PUT PLAYS

SPY - S&P SPDR 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 "Index")

The S&P 500 Index is a diversified large cap U.S. index that holds companies across all eleven GICS sectors.

Launched in January 1993, SPY was the very first exchange traded fund listed in the United States.

The market is struggling at the new highs. The Fed rate cut is already priced in and may actually be overpriced since the odds are better for a 25-point cut rather than the hopes for a 50 point cut that stimulated the market over the prior two weeks. With lackluster earnings and the potential for a Fed disappointment, investors are having second thoughts about buying the current highs.

The SPY has short term support at $296 and could decline sharply to $290 if the earnings continue to provide more disappointments than positive surprises.

I am recommending a short term put spread to capture any decline into August.

Buy long Sept $295 put, currently $5.54, no stop loss.
Sell short Sept $285 put, currently $3.27, no stop loss.
Net debit $2.27.