S&P 500 2,614.45 +32.57 (+1.26%) Dow 30 24,033.36 +389.17 (+1.65%) Nasdaq 6,941.28 +71.16 (+1.04%)
After a selloff on Monday the markets eased the rout a bit today. The whole day was calm and nothing much has been happening. The last trading hour the markets spiked up and reclaimed the 200 DMA support. It is said that “smart money” usually enter the Market at the end of the trading session. If this was the case, we are probably finding the ground and we may turn up for a recovery.
But do not be too fast. Trump and his big mouth will make sure he screws it all up again. He announced a new list of goods with new tariffs against China. The only positive thing with this new 50 billion tariffs plan is that futures didn’t react on the news much and remained flat. Although it may change during the day it still looks like a good sign that the tariffs war is being priced in.
Tuesday’s trading was encouraging as we re-captured 200 DMA and closed above it. On Monday we closed below 200 DMA which was expected that we probably break below this average before we resume recovery from this minor correction. Closing above it is a good and bullish sign. However, the markets are still making new lower highs and new lower lows and that is not good. This closure above 200 DMA may still be only a bounce before we resume downtrend.
However, it seems that we may be witnessing the market pricing in all the negative news. All weak hands who freaked out are most likely already sold out (since the selling stopped progressing).
What should you do in this market?
Still be cautious and wait for the market to show its direction. If you have open trades, manage them according to your plan. I still stay aside with new trades. I only trade an ultra short trades against SPX (0 to 1 DTE trades) and rather keep closing old trades as much as possible and raising cash for new purchases once this market shows its direction.
If on a day to day basis I see the market tanking, I take quick bearish trades which expire the same or next day. If I see the opposite and market rallies, I day trade the bullish side.
But understand that this trading is not for everybody so if you are not confident, stay aside and wait.
As a dividend investor I have some cash saved to buy more high quality Dividend Stocks. I still think we may see more selling and then I may add new positions. I use 50% of all our options trading proceeds and invest them into high quality dividend stocks (preferably aristocrats). I keep holding open positions to collect dividends and plan on adding more shares later on.
· Trading activity today
A summary of opening and closing trades.
(premiums received / paid: + $685.00)
Note: This is a cash flow of credits, not profits!
Today we opened only a few trades against SPX. Monitoring the remaining trades ready to roll them as needed.
· Dividend stocks to buy
Out of our watch list of 37 dividend stocks the following ones are a good buy at today’s prices (04/03/2018):
Disclaimer: The list above is based on calculated fair value and 52wk high offset valuation. The values are subjective to our calculations and opinion and may differ from your own. If you decide to trade or buy these stocks, do so on your own risk and do your own homework. The list is not our recommendation to you.