Bias is still to the long side

Everyone has, or at least should have, a proprietary indicator that they track. It’s more of a hobby for me and quite honestly it’s not that special of an indicator but I like it. As you can see from the chart, the secret sauce indicator is still above the 20 EMA. It wasn’t too long ago that the 20 EMA crossed under the 50 EMA but the time spent there was rather ephemeral as the moving averages are still suggesting an uptrend is in place.

I’m not suggesting that I do nothing but trade to the long side as I use the secret sauce to help me with my overall bias. In other words, I’m not getting short the market here yet I’m not all in long either. There was a pullback recently and now it looks to test the high and that will either be resistance or a new buying opportunity. I think the pullback couldn’t have come at a better time as we are a few weeks into earnings season and the market is starting to give some clues here.

As a premium seller I’d look to initiate smaller short positions by selling $call spreads (with occasional put buys) when the 20 EMA is broken and would add to them with a break of the 50 EMA. If we make higher highs this week I’ll stick with selling premium with $put spreads and buying the occasional call.