OVERBOUGHT

The market is still in an overbought condition which makes new bullish trades a bit risky. Based on some Elliott Wave analysis, the market should start to correct within the next few days. This doesn't mean that the bullish trend is over...only that the market could correct a bit. A correction (even a small one) would provide a very good entry point to a lot of these stocks that have moved up over the last 10 days. It would also provide a good point to add to current bullish positions. If you are already in some call option trades, don't get freaked out if they pull back a bit in the near future. This doesn't mean that you ignore your stops...just that make sure that you don't keep your stops too tight. The market just had it's biggest one week move (last week) in two years...at least that's what I think I heard. It is due for at least a mild correction. I still like the trades (SLV, GLD, and HAL) which I recommended two day's ago. Any pull back should provide a second chance to get in...if you missed the first one. It looks like this uptrend will be around for the next few weeks, so you should get many other opportunities to make money. 1400 would be the next logical round number target on the S&P 500, with 1430 being the next big resistance level. Based on Elliott Wave analysis, a move back below 1295 would signal a very bearish outlook...but I'd probably turn bearish if it moved back below its 50 day MA within the next week or two. 1320 to 1330 would be my target area for a short term correction...if it happens within the next few days. I'd have to revise those numbers if the market moves significantly higher in the next few days. I did a somewhat risky counter trend trade on NFLX using a Bear Put Spread (debit spread). This is a strategy taught in the Course 2 Advanced Options course. Although Netflix recently made a big move up on the report of a move into South America, the chart shows it hitting the resistance of its upward channel. This, combined with the bearish candlestick pattern today, caused me to consider this counter trend trade. It also looks to be near a top based on some Elliott Wave analysis we did in one of my Course 3 classes today. If the stock moves above today's high, I will likely stop out of the trade. I only need the stock to move below $285 by the August expiration (August 19th) in order to make a 90% profit. The lower end of the channel is near the 50 day MA which is around $253. The stock is also very expensive from a valuation basis...and you know how much I love fundamental analysis (yes...I am being a bit sarcastic). I'm not recommending this trade to anyone unless you want to take on a riskier trade. If so, you better take responsibility for your decision. If you didn't understand the trade, you should not attempt it. Just make some money with SLV, GLD, and HAL...and plan on taking my Course 2 or Course 3 classes with the profits. Contact me at jerry@myoptionmagic.com if you are interested.