The Arena
The market looks to be stabilizing as I write this with news from Russia and Ukraine having less of an impact than it did just a week ago. That said, the US is far from “favorable economic territory” and several factors are facing the equity markets going forward. Not the least of which is the Federal Reserves hawkish intentions for the remainder of the year. If 2018 holds any clues as to the outcome of 2022 then longer term bullish sentiment is certainly in question. Does this bull have what it takes to keep the bear away? Stay tuned.
The Coach
The Q’s (Ticker: QQQ) have been beaten up pretty good this year and were down nearly 100 points from their late November high. The Q’s have rallied above the second standard deviation channel and have held above the 9 EMA line for 3 consecutive trading sessions.
Alternatively, price may be at a resistance level and failure to push higher next week will support a more bearish sentiment. That said, the market does look to have found some rare solid ground at this point in 2022 and as a result I’m considering a short term bullish position in the Q’s.
Curious? Here is an article from SeekingAlpha to discuss what could be ahead for QQQ.
The Attack
If you agree the chart above is bullish consider a QQQ bull put spread to capitalize on an upcoming move higher. If you believe this is simply a relief rally to the upside then a QQQ bear call spread may do the trick. Only time will tell which hypothesis is correct.
Bullish assumption
| Buy To Open | Sell To Open | Entry Order | Total Risk | Prob. of Profit |
| 20 May 22 326 PUT | 20 May 222 328 PUT | $50.00 | $150.00 | 77.7% |
Bearish assumption
| Buy To Open | Sell To Open | Entry Order | Total Risk | Prob. of Profit |
| 20 May 22 370 Call | 20 May 22 368 Call | $75.00 | $125 | 73.1% |
God Bless,
Jeff
