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May 9th 2023
Come Join Me For Free Trade Day!
This week will be about the Consumer Price Index on Wednesday and once again, like a rubber band, the market will be building up in anticipation and likely to snap in one direction or another. Until then, the rubber band is pulling back and the trading is likely to be choppy.
The last swing high in the S&P 500 (SPY) was right around $420 (red, horizontal line). I’ve mentioned that as a key level to get over and so far, no amount of positive earnings or job numbers have been able to get us over the hump.
If you zoom out to a weekly chart, you can see that for two weeks the market has opened, traded lower, and then closed near the top of the range. That’s normally a bullish pattern and even with a 1.85% gain on Friday, it wasn’t enough to push the market significantly higher.
That could change with the CPI number this Wednesday.
So, how should you trade a choppy market before a key CPI report? Come join me and my co-host, Dave Durham as we open up a live trading room this Wednesday for everyone to watch what we’re looking for in the market.
Go Here For The Details. This event is free to attend.
I just may reveal my conversation with the AI chatbot, Chat GPT, and show you what it said to trade in this type of environment. Can we out-trade the AI chatbot? What trades does Dave have up his sleeve to trade in a 0-days-to-expiration market? You’ll have to join us and find out!
Microsoft (MSFT) is one of those companies that is involved in all sorts of facets of life, whether you know it or not. Their cloud storage and business applications continue to take market share away from companies like Zoom (ZM) and now they’ve entered the AI craze, with an investment into Open AI, the makers of Chat GPT.
Their earnings-per-share and Sales charts are exactly what I look for in a company – going from the lower left of the chart to upper-right in a nice stair-stepping pattern.
I would love to see another pullback to the 50-day moving average (orange line in the chart above).
If you just can’t wait for that to happen, here’s a trade you can try out. It’s a credit spread on MSFT.
Sell to open 18 AUG 265 put
Buy to open 18 AUG 230 put
Credit of around 2.50 – 2.70
Margin required: $3231
The goal of this trade is to have MSFT trade above $265 by the 18th of August. That’s a level well under the 50-day moving average.
My profit goal is 25% of the credit received, so, in this case, it’s about $62. While $62 doesn’t seem like much, it’s about a 2% return on risk in about two weeks. That’s a 52% annual return.
If you have any questions, comments, or anything we can help with, reach us at any time.
Email: [email protected]
Phone: (866) 257-3008
Editor, Filthy Rich Dirt Poor
Coach, Options Testing Lab
Any trade or trade idea discussed is for educational purposes only. They will not be tracked as an official trade recommendation.
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