The collision of global markets and social mood

Friday, May 3, 2013

The Spike

The reaction to the NFP numbers today had me looking at two levels: the 1607 upper target and the most recent swing point, 1581.28 which I used as a stop yesterday. A positive reaction could reach the upper number, while obviously a spooked market could test lower.

As this is being written, the NFP number has come out and the market has reacted quite positively, spiking higher in a parabolic fashion. I like it. I will dump the majority of SPY 160 calls at the open and add a bit of put delta. It would've been a bigger score if I'd kept the 158 calls but they were expiring today. Couldn't risk a bad reaction.

The pre-market futures action might well leave a gap. There is a strong chance it may be an exhaustion gap given the run since November. The market should sort it out by around 10 am ET. Otherwise, a trend day could materialize. Whatever happens, buying a parabolic spike is generally not a high odds play. Better would be a retracement or re-test of the breakout level to prove support.

No comments:

Post a Comment