Levels to Watch
Our view: One effect of the budget chaos is that the Fed has no choice but to keep rates low. There is no way they can hike rates now or in the near future, and with Janet Yellen taking over, the printing presses will continue printing new money. It's 5:30 am and the S&P is up 13.5 handles. While the crisis is far from over, there does seem to be some movement inch by inch towards a deal. With that in mind and the S&P down 11 out of the last 15 sessions, the PitBull's rule about looking for a low the Thursday or Friday before the October expiration is now in play (see MrTopStep Trading Rules 101) We lean to selling the early rally and buying weakness. Yesterday we started buying some cheap calls, on any 10+ handle dip we will be adding to that idea.
As always, use stops and keep an eye on the 10-handle rule. Don't forget to catch MrTopStep on The Closing Print video found under the OptionsTV page (top bar). We report directly from the SPX pits, wrapping up the day and positioning for trade tomorrow.
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