Put two traders in a room, and one might scream to sell while the other puts in orders to buy. So who’s right? Well, they both could be—depending on the indicators they’re looking at and the kind of trading you want to do.
We’ve rounded up our InvestorPlace advisors to give you their read of the market.
Let’s get to the analysis:
John Jagerson and Wade Hansen, Slingshot Trader
The market is riding the razor’s edge right now, and it won’t take much to push it over. If we continue to get disappointing earnings announcements, the S&P 500 could easily drop back down to 1,500, or lower. Two weeks ago, we wrote about the potential to “Sell in May, and go away,” and it looks more and more like that may be a possible course of action for long stock traders.
Jon Markman, Trader’s Advantage and CounterPoint Options
My sense from reading the price and volume trends, and seeing investors’ reactions, is that stocks are ready to continue to roll over for the remainder of the month and possibly well into May. But first there should be a snapback rally that fools everyone into thinking that everything is just fine. That rally could come very quickly — and then dissipate just as quickly.
So my plan at this time is to leave our current long positions in place, be ready to close them out on the snapback rally, and then prepare to put on some short positions in tech, selected health care, and possibly even in the vaunted housing sector.
John Lansing, Parabolic Options, Trending123 and Power Trading at the Open
Increased volatility has meant big swings up and down in this market, and I think until earnings seasons gets underway a bit more, we’ll continue to alternate between big up days and big down days until the whole thing falls apart. In the meantime, traders should be flexible on picking their positions. I’m favoring index ETF options, playing both calls and puts for quick, overnight hits.
Ken Trester, Maximum Options
Our indicators are giving bullish to neutral readings, a downgrade from last week, as we have seen several key trend changes. Primarily, the Nasdaq has fallen below its 50-day moving average and looks like it will continue heading lower. And the S&P 500 has traded down to its 50-day average.
With our indicators reversing course, options traders should begin moving toward more bearish positions. This means balancing your call and put buying. Be careful not to overpay, and also be careful not to chase prices, especially with puts. With central bank printing presses operating full throttle, recent pullbacks have been met with investors “buying the dips.” There is no reason that can’t be the case again this time.