SPY at All-Time Highs and Trading Styles to Consider

Tom Gentile

Posted in
Big Picture

By: Tom Gentile
January 19th, 2024

3 mins read

We are truly just starting out the trading year, beings we’ve only had 14 trading days thus far, but so far the bullishness that some could say started back in October of 2023, could still be intact.

Figure 1: 90-day Candle Chart on SPY
Figure 1: 90-day Candle Chart on SPY

Last week we had economic reports, the CPI and PPI along with jobless claim numbers and the overall numbers gave a signal to many that the Fed may not have to be as aggressive with their expected rate cuts as originally thought. The CME Fed Watch tool still said there was a 65% chance for a cut.

The first full week of 2023 had the SPY trading at what has now become a pivot low in the price area of 468 yet climbed higher for the week closing at or near all-time highs.

This week we had US Retail Sales numbers and Housing starts and Existing home sales numbers come out.

The SPY dipped Monday-Wednesday this week only to the bulls push things higher Thursday and thus far today.

Should the SPY close at its current price or higher the SPY would then be at an all-time closing price. Consumer sentiment is at its highest level since July of 2021. This validates to me why markets prices are at these levels.

And the reported number? Up to 78.8 from 69.7 in December.

What is an Options Trader to Do?

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If you were already bullish consider staying bullish.

If you are bullish yet concerned a pullback may ensue due to profit taking consider taking profits if your gains are where your plans for those trades are at your price or profit targets. It is wise to have these levels decided ahead of time with your brokers so you can make a decisive call to close out all or part of your options  trade when it happens according to that agreed ahead of time plan.

Another way to go is to maintain your trades and continue to run your scans to find new opportunities that coincide with your directional expectations for the markets.

If you are considering adding on more options trades, remember my three-step approach to options trading.

  1. Spot the opportunity.
  2. Build an acceptable risk option trade.
  3. Manage the option trade.

Also note I have 5 styles of options trading.

  1. Volatility
  2. Statistical
  3. Contrarian (if you feel the markets are at a top and are due to pull back)
  4. Seasonal
  5. Momentum

If one feels confident the markets will continue higher versus lower I would consider scanning for securities that fall in to the camp of bullish seasonal patterns and bullish momentum trading.

Tom Gentile
C1P: Chief 1-Percenter

App: Toms Option Tools

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