Markets added to recent gains on Wednesday but something was clearly absent – good volume. Recall we follow the time-tested tenets of strong volume and follow-through, along with good price action. These are the primary signals we look for in playing both bull and bear trends. There is no denying stocks have been on a roll for a week – advancing nearly 140 spx points in that time. Simply amazing run in a short time, but as we know bull moves within a bear rally are bold. Breadth was solid and sector strength was broad with commodities, financials and techs taking the lead. A late day selloff triggered some stops and it occurred right at the top of the range (see chart below as this was the area I expected to reach before a pullback occurred).
Today we added a few plays: gold, silver, an index put and a netflix risk reversal.
GG Nov 47 call at 3.4 – this is really a combo gold/silver play and one of the best performers this spring when both metals were rising sharply.
SLW Nov 31 call at 3.5 – best silver play out there, looking for a move to 40 or so here and on the metal, too.
SPY Oct 125 put at 3.85 – some insurance against a drop, after all the market has had an incredible run.
If you need more details on the trades or an update, let me know via email, email@example.com. See you all on the twitter stream tomorrow!