Nearly a week removed from some less than stellar job numbers, the equity markets seem to be back to where the left off in the summer. Before the big sell off in August the SP 500 looked like it was on track to get back to 2150. Then some concerns coming out of China put that move to an end. A pretty big wash out had us trending towards 1800 as we headed into September.
A few days seems to have given traders time to look again at what the jobs data means. It seems like déjà vu all over again as bad news equals good new for the equity markets. Since last Thursday the S&P has closed higher four out of the last five sessions. With not many traders looking for an interest rate hike anytime soon, the market appears to like the near zero interest rate environment again.
In a near term bullish play I like buying the October E-Mini S&P 500 2000-2025 bull call spread at 8 points ($400.00) or better. Risk is limited to the cost of entry plus fees and commissions. The max value of the spread with both strikes in the money at expiration (10/16/15) is 25 points ($1250.00). I am setting an initial target exit of 20 points. If the market seems like it does not want to push higher, I would try to limit a loss to four points.
For those interested Walsh Trading is holding our weekly grain webinar Thursday October 8th, at 3:00 pm Central time hosted by our Senior Grain analyst Tim Hannagan. Tim has been ranked #1 by Reuters and Bloomberg in 2011 and 2012 for his most accurate end of year price predictions for soybeans and corn. Registration is free and if you cannot attend live, a recording will be sent to your email upon signup.
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.
