Options on the Radar

A couple of times last week I posted what I though were likely "Minimum" upside targets based on a full "W" base and what a cycle set-up like this would have to hi to accomplish its goals as Wall St. rarely does anything without a reason.

Tuesday I posted them in this Quick Update and the most recent, which is the exact same concept (just different areas because of the trendlines moving) on Friday in this post, Market Update.

While I'm initially looking to capture upside momentum, I'm also interested in some positions that can capture more of a swing, I don't usually like options for a move like that and I'll post some ideas, although a decently timed leveraged ETF of any of the averages would work fine (I prefer to use a broader asset like a proxy of the averages as we are in earnings season and I wouldn't want to be right on the move and wrong on a specific asset because of an earnings surprise going against me, unless I see something that's really standing out).

I just wanted to give you some idea of what the 4 major averages are looking like and I'm posting them in order of my favorite first (as of right now). For options (Calls), I prefer to be in the money slightly and at least out to May monthly expiration.

QQQ

 I'm leaning toward the QQ for a call option position, I don't see the need for redundancy with multiple calls in multiple averages. The QQQ has a 15 min positive that's well formed and there's an interesting positive to the far left I assume has been all used up, but it still looks interesting.

I also wanted to show you where these are capped on the upside, typically it's the very next timeframe. in this case 30 min.

 QQQ showing the 30 min chart which happens to show the entire February cycle from stage 1 to stage 4 which has retraced just about the entire cycle.

3C is in line here meaning it's confirming the stage 4 downtrend, the 15 min chart suggests the bounce I  posted targets for above, but this tells us which way the market/QQQ should continue to move once that is over.

The SPY and DIA are both close seconds, I probably prefer the DIA because of its timeframe at 15 min, this is a 10 min chart of SPY, it doesn't have the same kind of positive at 15 min as the QQQ does, thus the reason the Q's are my favorite as of now.

 As far as a cap, the next timeframe, 15 min shows a leading negative divegrence that is doing more than confirming the recent downside, it's leading it which is a big difference between the SPY and QQQ. I assume this has something to do with a deeply "oversold" condition in certain areas of the Q's like biotechs and probably relative weakness in banking which the SPY has more exposure to.

 The DIS as I said is about neck and neck with the SPY, this is a 15 min chart that looks pretty good so I'd probably have to give a slight edge to the DIA, but we have to see what these look like when the process is mature which should be soon, possibly today.

 The cap on the Dow is at 30 min with a clear leading negative divegrence through the February cycle, even though it hasn't retraced all of it like the Q's or the IWM.

There's a very small relative positive within the leading negative at both bottoms of the "W".

IWM 5 min chart looks impressive, but this is only 5 min, this is a bit surprising, I thought the IWM would lead as it usually does in a risk on move.

At 10 min the chart is almost unremarkable.

At 30 min it is actually leading negative which means it should easily retrace all of the Feb. rally, in reality after any bounce the market will be set up with a stronger bull trap and a much larger chance of stronger downside momentum which means the Feb cycle lows should be easily sliced through.

For now the Q's are my first choice for any call/option based trades at the right time.

I'll post some others that are not options and are more suitable for a longer term hold without having to do a lot of trading around losses of momentum.