October 25, 2009

Bull or Bear?
by Jay DeVincentis

10/25/2009 9:40:01 AM

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The obvious may not be the best path to take...

SOS Timing Indicator

I think the most interestingobservation here is how the advancers have consolidated lower into a buy signal. And while the market can thrust lower here, it would be a terminal move, not the initiation of a large move lower. At least that's my bet. So I would purchase CALLS here ahead of a potentially larger move higher.

Purchasing ahead of the move with options makes sense because as soon as the move is accepted, the price spectrum will change and it won't be so cheap too purchase your CALL Options.

Stock Options Speculator uses the above indicator in the establishing of various options trades and strategies. The indicator has two frames. The top frame shows the Nasdaq Composite and the Nasdaq Advances and Declines. The lower frame shows volatility (candles), the equity put call ratio (red line) and the Trading Index (blue line). The height of the indicators determines if call or put buying strategies are recommended.

Options Trading Ideas

Based on the SOS Timing Indicator or other special market conditions, the above 10 trades are recommended for consideration in your trading plan.

Risk Graphs

The following risk graphs show stock price plotted against potential profitability. They're listed alphabetically.

Closing Bell

We may be a bit premature with our buy signal here, but given the energy built in the market, I would have to take the position that the next magnitude move will be higher, even though in the short term we may get a brief frequency move lower first - I'd use weakness to establish any bullish positions.

What would change my mind? I think this is a critical week ahead in the markets. What happens this week should set up the move for the next month. We do have a 9 month cycle low coming in around the end of November - but I've seen 9 month cycle lows muted in these strong liquidity periods in the past and it looks to be setting up similar again!

For those who want a few more ideas - here are the next 10call option plays to consider:

Regards,

Jay DeVincentis
Dynamic Trading

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