Weekly Wrap-Up Report For 7-22-16

July 22, 2016 | dg

Thursday appeared to be a day to look to the downside. Our traders were short-term bearish earlier in the day yesterday. The selling came, but it was short-lived. Now the S&P 500 has put in a new all-time closing high of 2175.

This is a dangerous market. It certainly could go higher, but by how much? And there is a decent possibility that we could see a substantial pullback, especially as upward momentum stalls and complacency settles in. The range in the $ES was pretty small.

JC voiced concern about this market and is looking to focus on his earnings plays. He did an excellent free webinar introducing his earnings strategies and how he will put them into play over the coming weeks. More on that below…

Tony is looking to sell rallies for the next month, until mid-August.

Chris pointed out the bear wedge in the S&P 500. He was looking at the signs yesterday, but was clear to point out that the Friday action was going to be the important piece to watch – and we didn’t get the downside follow through obviously!

David and Tucker were both looking for a short-term pullback with the action yesterday. Carolyn had short term bear signals, but her 120 minute and daily charts were still bullish.

The VIX closed back below 12 at 11.98. That is the lowest weekly close in a year. The VIX futures are carrying substantial premiums, with the August regular expiration futures closing at 15.50. The Russell 2000 and Nasdaq 100 were both higher, but remain below the 52 week highs. The transports were weak yesterday, but bounced 1.4 percent on Friday, still leaving it lower on the week.

We never know what next week will bring… except it will bring earnings plays!

John’s earnings webinar gave an excellent overview of his strategies. As he pointed out, earnings can be an excellent opportunity for consistent profits – or an opportunity to blow up! It all depends on how you approach it.

The two primary things to understand about earnings are the volatility crush that comes after the announcement and the path of implied volatility into earnings. Understanding those two volatility dynamics sets you up for consistent profits. John covers when to sell premium and when not to around earnings. He also discusses long strangles, short strangles, iron condors and more as ways to take advantage of what stocks tend to do before and after earnings.