Another Monday and another week of trading unfolds before us! Charts across many sectors have transitioned from steady uptrends into choppier trades retreating from the resistance. That type of behavior often signals a market reassessing its strength. When momentum begins to fade after an extended run, experienced traders tend to pay close attention to the emerging trend structure and trade alongside it. Let see what the $SPX chart is showing us.
When the 21-day Exponential Moving Average crosses above the 63-day Exponential Moving Average a ProfitSurge ‘Buy Signal’ triggers.
For a ‘Sell Signal’, the 21-day EMA crosses below the 63-day EMA.
When the recent ProfitSurge ‘Sell Signal’ formed the $SPX continued the series of lower highs and lower lows. This set up signals for bearish option positions to match the $SPX’s overall trend.
Looking at individual securities in this trend could lead to an in-the-money put debit spread, which defines risk while allowing participation if the trend continues lower. Because the put spread sits In-the-Money the structure provides some cushion in the event of another oversold bounce before the broader move unfolds. For put options In-the-Money, or ITM, options are the strikes higher than the current market price of the underlying. With the strategy rules used these ITM put debit spreads could hold potential returns if the underlying declines, remains, or even rises at option expiration. This builds the margin of error into the trade as it’s developed.
For traders who enjoy seeing how we identify these types of setups directly from the tape, our Options Edge Newsletter goes deeper. Each week we send members multiple actionable trade ideas with full option structures and detailed technical breakdowns. Right now, a one month subscription is available at a substantial discount for readers looking to sharpen their trading edge. Lock in your deal for this newsletter today!
Wishing You the Best in Investing Success,
The Markham Trading Team
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