Short and sweet today as we have two setups in place, one for you penny stock traders, and the other for the options traders.
RCPI shares came down exactly as expected and it’s now game time. In the last three trading sessions, $1.47M (69.375M shares) have traded and RCPI has printed as high as .032 over that period. It was May 5 when RCPI last traded over a dime (.10) and April 22 when it last traded over a quarter (.25). The chasers have been forced to do one of two things over the course of this month: 1) throw in the towel, or 2) average down consistently to try and get to a lower base price.
The entries at the end of yesterday’s session, ranging from .0151 – .018 were good ones to begin with based on they are at or near the lowest lows of the session and/or at the 52Wk Lo (.015). The game begins now to see if we’ve caught the falling knife at the very bottom and can see a push back up to .03 – .04, or if the selling continues and we get to see a chance of adding at .01. Whichever the case may be, those in should wait to see if .01 can or does show before attempting to average down and those not in will want to look closely at the level 2 when the bell rings to see where the bids are stacked.
Going after those SPY 209 CALLS on Monday was a godsend of a trade as we came within .25 of the 208.50 rejection target which SPY had in store based on the chart above. The mistake was selling to early as, not only did we get to within .25 of that target late in the session making those 209 CALLS worth as much as .44 (+500%), but due to open at .752 as of the current premarket – +900%.
The good news is Europe really ate up the technical rally from the inverted head and shoulders set up and we’ve gapped to 2084.5 on the ES overnight which translates to roughly nearly 209 on SPY. The catalyst really was from late on Tuesday night and into Wednesday morning, representatives from Greece, the International Monetary Fund, and the Eurogroup agreed upon a series of loose measures to help restructure Greek debt when the country’s current bailout deal concludes in 2018. As it stands, that bailout is worth €86 billion (£65.4 billion, $95.8 billion.)
Many took advantage of the Tuesday run up to grab some PUTS which were extremely active on the volume meter and now have a true opportunity being we’re about to enter into the Wednesday trading session. Those in should consider to STRADDLE on PUTS in a way that, rather than thinking to average down on positions already taken, taking a position closer to the current SPY price at the same or near the dame price yesterday’s were taken.
A great strategy to consider would be to go a week out on the STRADDLE with those for this week already in hand and the ones to be taken for next week, adding some additional padding for the drop due to come. When the further out of the two starts to show profits, you look to get out of that one first and ride the NTM or ITM for the ride down.
The next rejection area is SPY 209.72 which, hopefully, we see just prior to 10:30AM today. News wise we have:
6:00 EU Finance Ministers Meeting
8:30 Goods Trade Balance
9:00 FOMC Member Harker Speaks
9:45 Services PMI
10:00 Canadian Interest Rate Decision
10:30 Crude Oil Inventories
10:30 Cushing Crude Oil Inventories
11:40 FOMC Member Kashkari Speaks
14:00 FOMC Member Kaplan Speaks
For stocks, note well that NFLX has seen a $10 move since Friday of last week, FB a $2+ move from their close on Monday, and AAPL a $5 move from this time last week. BAC, one month ago, was trading at and above $15 and has been on a nice run since the alert went out for the June 3 and June 10 $15 CALLS. As BAC this rally has helped BAC significantly, those in should be tracking it closely for an opportunity to take profits.
Before getting shook out of those SPY PUTS, note that we still have Initial Jobless Claims due to come out tomorrow premarket and we get the fat lady to sing on Friday, Janet Yellen, when she speaks at 10:30AM. Few, very few, scenarios could push this market to new highs this week (or even to 210) so I’ll be sitting tight on my 204 PUTS entered into yesterday and looking to see if I can get a good deal on some 206 or 207 PUTS before the oil inventory numbers come out.