I very much think so. Nearly 12% increase in 3 weeks is a big move. Also, if we look at both the weekly and the daily charts, we can see a pretty solid resistance line around the $416.
Here is the weekly chart:
SPY Weekly Chart
Here is the daily chart:
SPY Daily Chart
Are we going to see a big fall?
I don't think so, unless the geopolitical tensions get out of control.
There is a solid argument that the VIX (volatility) movement is the lead indicator and the VIX has fallen further today.
What I am hoping for is a few weeks of sideways action so that I can get the chance to exit some of my positions that I don't like.
So what's my trade for today?
#WDC (#WesternDigital). I like to trade options on this stock as it doesn't move too much too quickly. Earnings is coming up tomorrow before market open so I took a shot at it with a wide strangle. The expected move is $5.82 so my legs are more or less 2x the expected move with a bit of skew towards the call side.
WDC Weekly Chart
Trade Type: Short Strangle
Strike: $40 / 62.5
Expiry: 16 Sep
IV Rank: 53.1
Cap Req: $500
Annualised Prof at Expiry: 136%
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