Well, the candyman gave everyone candy yesterday, and the little children got fat really fast and blasted the major indexes northward from about 3:00 PM on. At first the children were confused about the candyman’s intentions, and began to cry. But suddenly they realized that the candyman was giving them a nice two year low interest rate present, and a great rallying cry was heard!
So what happened this morning? Did the children have a bad tummy ache from all that candy? The Dow opened down, and at its worst has been over 400 points lower today.
So why did I buy the September 17th calls on SPY (the ETF that mimics the S&P 500) this morning right around the trough of the morning? Because I can’t resist a good bargain, and right now I am playing the candyman bounce. See chart below:
Chart courtesy of stockcharts.com
I’m no sucker for the candy, but I’ll take a stochastic buy signal and an RSI at 27 any day of the week on a five week option trade.
So now everybody sing:
“Who can make the market rise? Dow and Nasdaq tooooo. Cover it with interest at ground zero for a year or two. The candy man can, oh the candy man can. The candy man can, ’cause he mixes it with love and makes the ‘conomy look good!”
Ok, with apologies to Sammy Davis, Jr., my little version of The Candyman” song. And of course, if you haven’t guessed by now, I’m talking about Fed Chairman Bernanke, and his two year extension of zero interest rates.
I don’t think it’s the answer to this crummy market long term, but I’m thinking we get a good enough bounce here to lock in a nice option profit on my SPY calls.
1 Comment to SPY is “Calling” Me on the Candyman Bounce!
Leave a comment
You must be logged in to post a comment.