The S&P 500 - Volatility has Returned!
If you are active in the market then you're probably excited of late as volatility has kicked back in. The question is - where will it take us?
A Predictable Bounce
After the market sold off hard last week things got a bit over sold. The uptrend the market was in the past 6 months got violated and then prices collapsed.
Generally when that happens we will either get a snap back or a consolidation to at least let the short-term moving averages catch up.
I like to use the 10 period average (blue line on chart) and as you can see the market basically rallied right too it before moving lower today.
Near Term Price Targets
Looking back at the chart you can see a horizontal line drawn in the 2,700 area. That was a major reversal bottom in late June and could act as our next downside support/target.
As for the upside the 2,800-2,825 area has a ton of prior price action where it acted as a top as it did on this latest bounce. Attacking that and establishing above will be needed for any continued upside action.
Action action action
Either way, the daily average true range for the S&P 500 has risen a bunch the past couple weeks, providing plenty of action for active traders.
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I am looking to sell covered calls as the volatility is given then some good premiums and if they are called, you can benefit from the short term gains if they do happen. If not, you generate some income along the way...
Heck yeah, I love the covered call strategy and now that there is finally some risk premium pumped into the market there is a little money there.
Agree, great environment for day traders...I'm personally loving it...more exciting than Bitcoin last Fall.