Just a few weeks removed from the end of the Federal Reserve’s quantitative easing program, the equity markets are holding their own. As the markets have enjoyed a tremendous upside move over the last 20 months, many observers wondered if the rally could continue without the free-flowing money press of the Federal Reserve. Right now, it appears the answer is “yes.”
In the last week, we have seen new contract highs along with record closes in the S&P 500. The latest employment numbers are pointing to continued growth, albeit at a slow steady pace. The jobs picture, along with an improving GDP number, seems to be giving investor’s confidence that the equity markets might be standing without assistance from the Fed.
I am joining the trend, looking at a bullish play. I like buying the December E-Mini S&P 500 2070-2100 call spread at 9 points ($450.00) or better. Risk is defined to the cost of entry plus fees and commissions. I am setting an early exit target of 19 points. Expiration is on December 19. If we do not see the rally continue, I would look to get out with a limited loss in the prior week.
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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.
