Ok...Ok...Ok, so the tape says the market wants to go higher. SPX recently drove above 1400. Now the market is resting just below this important level, but recent selling has been rather light. Many traders looking at the SPX charts see bottoming formations such as a double bottom or inverted head and shoulders. Either one is bullish. If we consider ourselves tape followers we must assume prices will go higher..... Here's a chart on the SPX so you can see what I mean.

Thinking positive delta on strong stocks in industries that are leadings is a smart way to go. Energy, transportation and basic materials are just a few strong sectors that jump to mind. Don't fight the tape.

If you are contrarian, well, that's another story. You are likely thinking this market needs to let off some more steam. To scratch the downside itch, using an ETF like SPY acting as proxy for the S&P 500, one might use a trade that only requires minimal capital. It'd be nice if this trade could provide some larger rewards for only a small risk. Hmm what type of trade would that be I ask? The answer resonates: OTM put calendar spreads. Risk is only the debit paid and that risk, with every roll out, becomes reduced. If the market decides to make a move down or sideways, a small amount of capital can amount to a lot.....and the contrarians itch has been scratched.

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