DailyPlay – Partial Closing Trade (DHR) – October 10, 2022

Partial Closing Trade

DHR -18.11% Loss: Buy to Close 1 Contract Oct. 21st $265/$282.5 Call Vertical @ $7.50 Debit. DailyPlay Portfolio: By Closing 1 of the 2 Contracts, we will be paying $750.

Investment Rationale

Bulls will tell you that last week was a gain of 1.5% and that the bottom is in. I disagree. The SPX gave back ~80% of last week’s early gains, and it still remains in a downward Setup count (coming into this week on a -7). I suspect there are still good odds that we see a move down to the mid-3400s this month, and then we might see a decent trading bounce into elections (and possibly through them depending upon how successful Republicans are at gaining House and Senate seats.

Tactically, the SPX is down into the support area that we were hoping for early last week to get a chance to buy into. Tactical bulls can look to buy now, with a stop under the 2022 low (~2% lower than Friday’s close). It’s not a crazy thing to do from a pure trading stance, but don’t look for last week’s high to be taken out.

This week has both FOMC Minutes (on Wednesday, but with no new rate decision or press conference), and key PPI and CPI figures on Wednesday and Thursday, respectively. Expect them to move markets, along with the kickoff of a new earnings reports from Taiwan Semi and key financial institutions later in the week.

We have a short DHR Oct. 21st $265/$282.5 call spread that closed on Friday at $268ish and should open lower today based upon futures down 36 as I write this Sunday night. Today, let’s take off 1 of the 2 spreads we have on.