Much to the dismay of financial reporters who are watching their viewership drift away now that its past May first, the stocks look to be range bound. If you are looking for volatility, you are not going to find in in S&P’s or Dow futures. 12,650 to 13,200 equals a 550 point trading range.. That’s a 4% valuation drop or gain, depending on how the market is trading. We may have a day or a week where we explore that entire trading range somewhere along the line.
In the mean time, I’d look at putting on a straddle or a strangle to take advantage of this trading range.
In the S&P, we have a definite wall of resistance at 1400, with support at 13.40. The broader market index looked like it might be on a new leg higher, possibly to test last May’s high at 1440. I am bullish the S&P reaching that target.. On breaks, I’d look to get long or at least buy calls around that target of 1440. Perhaps even finance the purchase of those calls with a sale of the 1500 or1550 calls.
So that’s my opinion about stocks. Everyone and their brother, it seems, has been repeating to me “sell in May and Go a way”… The fact that I am hearing it so often suggests to me that its outlived its significance as a strategy. However, I am sure that won’t stop you from looking for highs to sell.
If we do get a negative surprise from Europe on top of Greece, with their issues, and now France, with a socialist president…then we could get a move down.
But honestly, If you are faced with the choice of investing in USA or France? its a no brain er.. No one will ever invest in France again as long as you have that socialist tenor running through the streets of Paris. All things run its course. France’s pendulum is about to swing hard and left. It won’t stay there forever, but the journey will most definitely be full of pot holes and tank traps for anyone looking for business growth.
Think more along the lines of Soviet USSR before the collapse in 1990.
It seems that Europeans have just as short a memory as those of us in North America.
I like being long cattle. I like being short new crop corn. You have to watch the funds long position in beans. However, just because they are massively long, and have seen a 2.60 cent rally since January, with nary a correction, doesn’t mean they can’t stay long for another 2.60… Its getting to the point where we are over due for a major correction. But continuing to sell into rallies has punished those of us who were counter trend traders… Eventually we’ll get the break. But along the way, we’ve lost some skin in the grinder.
That’s about it for today… We have a USDA on Thursday morning at 730 AM. I am buying beans on a spec. Argentina is over sold on their crop and have to replace those sales with buys somewhere. Spend 20 cents and try to make a dollar.
CER