Record High for the S&P500

Twitter@LoneStarQuant 

Today the S&P500 broke to new highs - advancing nearly 1% this morning. Many momentum traders are stepping into positions as stock prices continue higher. Funds are also implementing new strategies based on recent news and data points released this morning. In this environment it is advantageous to be net-long, because there is no question that the markets can lift another 10% in a short amount of time. It is also smart to identify short candidates in the event that equities slide. It is better to buy insurance when you do not need it, especially if you can purchase it at a decent price. If implied volatility levels continue to fall, purchasing VIX call options can work as great insurance for a long portfolio. 

We will look at one short trade and one long trade.

The short candidate we are looking at is a pure seasonal play with a duration that is optimal for a swing trader.

The long candidate is XRAY, which is 10% off its all time highs. Here are the seasonal statistics:

Both of these equities are worthy of a glance. Most of the seasonal trades opened within the last quarter have been closed profitably, allowing for a cascade into positions like XRAY. Right now, there are a lot of really interesting statistics, both long and short, so I encourage you to dig through the database and find the trade pattern that meets your specifications. Stay smart and trade safe!