S&P 500 futures gave traders an indecisive “Doji candlestick on highs” on Thursday. This means neither buyers pushing it upwards nor sellers pushing it downwards, looking like a spinning top toy. The Cboe Volatility Index (VIX), Trader’s Index ($TRIN) and Advancers-Decliners ($ADD or $ADVN-$DECN) are mixed directionally but slightly bearish.
Total World Market ETFs such as the Vanguard Total World Stock Index Fund (VT) may be the predictive market tell. In its daily chart, volume-surged, it produced an inverted hammer selling candle and it failed to take out 2018 highs on the yearly chart when other US indices made new highs.
So, let’s buy lightly monthly put spreads on cash indices, indices’ futures, index ETFs in swing tops. Let’s also accept that the coming week may have wide ranges, false breakouts while finding true directions.
Last week, all option spread trades worked and markets hit 7/10 projected range extrema as of midnight Thursday. The bullish crude oil trade last Friday would have worked into Monday before prices reversed back down into a gap-fill attempt zone. If upside is the “Crazy Crude Breakout” direction, then much higher prices ensue. If Crude hovers inside the range again, then a downside range test repeat follows.
Next Week’s Predicted Ranges
E-mini S&P 500
High Range 3036-3018; Low Range 2983-2967 (outlier events=2870. 3055 Monthly Camarilla resistance)
Buy 3020/3015 put spread weekly, monthly expirations.
Rationale: buying the volatility possibility, trending pivots, bear candles on multiple higher time frames & symbols
Japanese Yen
High Range 9380-9358; Low Range 9280-9250
Sell 9350/9325 put spread weeklies:
Rationale: Support up to lower Fibonacci retracement levels, sell volatility as it collapses over weekly pivot
Euro FX
High Range 1.125-1.120; Low Range 1.108-1.104
Buy 1.112/1.115 weekly call spread if price under 1.109 Mon-Tue; Keep 1.10/1.105, 1.115/1.117 Monthly call spreads into next rally:
Rationale: Weekly chart bull candle, early week lows = 3 days for reversal rally
Gold
High Range $1533-$1521; Low Range $1498-$1488
Sell weekly call spreads $1515/$1520;
Rationale: weekly pivot zone, range midpoints below, sell tail candles
Crude Oil
High Range $6300-$6000; Low Range $5700-$5500
Buy call spreads weeklies 5900/5850 Rationale: test weekly pivot zone overhead early
Last Week’s Projected Ranges Versus Actuals As of midnight, Thu., Sep. 19.
E-mini S&P 500
High Range 3055-3031; Low Range: 2987-2971 (outlier events=2870. 3055 Monthly Camarilla Reversal Resistance)
Actual: 3025-2980
Buy 3030/3025 put spread weekly expiration on Sep 20.
Rationale: weekly pivots zone, week’s midrange below current high price in decreasing daily volume
Japanese Yen
High Range 9360-9340: Low Range 9272-9228
Actual: 9359-9273
Sell 9275/9300 put spread weeklies; Exit “Buy 9400/9350 put spread monthly”.
Rationale: Weekly 20-day moving average support, 9305 fair value range midpoint
Euro FX
High Range 1.121-1.117; Low Range 1.109-1.106
Actual: 1.115-1.106
Sell 1.112/1.115 weekly call spread; Keep Bought 1.10/1.105 Monthly call spread, Buy 1.115/1.117 Monthly call spread:
Rationale: Weekly 20-day moving average 1.121 above; short call spread to 1.112 midrange, daily 20MAretest
Gold
High Range $1545-$1528; Low Range $1493-$1478
Actual: $1519-$1490
Sell weekly put spreads $1510/$1505; exit short monthly call spreads on down moves
Rationale: weekly pivot zone, range midpoints $1511-15 overhead to current price
Crude Oil
High Range $5750-$5630; Low Range $5354-$5294
Actual: $5758-$5338
Sell put spreads 5550/5500: Rationale, countertrend bounce off moving average support up to weekly pivot, range midpoints; For larger range breakout overhead buy $60/61.50 call spread monthly Nov expiration as example of upside breakout trade (if breaks upside) or long calendar, diagonal spreads.
Buy weekly put spreads near 5650/5700 during Sept. 6 rally up inverted hammer candle’s green tail;(5625 is range midpoint below); For larger range breakout overhead buy $60/61.50 call spread monthly November expiration as example of upside breakout trade (if breaks upside) or use long calendar, diagonal spreads.
See More analysis from Trevor here
Note: Nothing herein shall be construed to be specific financial advice. While reflecting my best good-faith efforts to forecast markets, no guarantees of accuracy are made from my range statistics, aggregate statistics, frequentist interpretations, and pivot math from hand calculations. I am a registered newsletter CTA, and all required disclaimers apply. Trade at your own risk with money you could discard/not miss.
