Dear Momentum Options Subscriber,
I wanted to briefly share some of my thoughts on today’s market action.
There is always a headline — good or bad — that tries to explain why the market traded higher or lower on any given session. Today’s excuse was weakness in the biotech stocks, as they are getting squeezed to a pulp. On a technical level, the pullback is presenting either another great buying opportunity or the opportunity to short the market with put options going into April.
The Dow and S&P 500 made backtests to their 50- and 100-day moving averages earlier this month before rebounding to nearly push new all-time highs. Given the current action, however, we can’t rule out a test to the 200-day moving averages.
The Russell 2000 and the Nasdaq still have wiggle before their 50-day moving averages even come into play.
Today’s pullback looks bad on the surface, but this is exactly how I wanted to see the action play out. It is possible for emotions to get the best of traders in times like these, so don’t fall prey to the headlines.
Thanks for reading. I’ll be back tomorrow morning with a look at all of our trades in the Pre-Market Update.
Trade on!
Rick Rouse
Editor and Chief Options Strategist
Momentum Options