Today I wanted to be conservative and I was fully prepared to not take any trades due to the FOMC announcement tomorrow. Basically tomorrow is when the so called "Federal Reserve" will release the minutes of the two day meeting where they are discussing the direction of their monetary policy. This can often have an effect on the market and it can also be a non-event. It's hard to know, but just to be sure, I wanted to trade light today. I had two trades I put orders in for, only one was filled.
My only trade was in SSYS, which is a 3D printer company. It's sort of a gap fill trade, which means it recently took a big hit but I'm looking for it to come back up and 'fill the gap'. As part of my trading plan, I will watch a stock that has a big gap down, and if after a couple of days it breaks above the high of the previous day's low, that is a candidate for this trade.
You can see that the stock is currently in an uptrend, and that the move down that it had did nothing to change the fact that it is in an uptrend. It also held the 89 exponential moving average and looks like it's bouncing, as it has done multiple times before.
What I'm doing with this trade is simply placing a 90/85 put credit spread for a credit of 140 dollars. The stock is currently around 96 dollars. That means that as long as the stock remains above 90 dollars in the next couple of weeks, I will be able to keep that credit. If there is a catastrophe and the stock tanks, I potentially could lose 360 dollars, but usually you can get out of trades before taking the max loss. My plan is if it breaks below 92 then I will get out. The reason I picked 92 is because that was it's lowest point of this dip, and if it breaks that level, the downtrend will likely continue.
The other trade I wanted to place was Priceline (PCLN). It's in a great uptrend at the moment, and it has taken some time to pause before it likely continues the trend. It's also resting on a snow line (which I don't have time to talk about right now). I tried to get a fill with a credit of 60 dollars going into the close and wasn't able to get it. Perhaps it's for the better as it is FOMC day tomorrow.
