Stock Markets Today's Drop (05.12.2020)

Today the markets open gap up and I was planning to close out an overnight hold that I bought yesterday on Boeing stock. I regrettably did not execute the order since once markets open they were selling off. Within less than 10 mins Boeing was flat from where I bought it and within the next hour if was fighting to hold itself above $130. I held and stock fail to hold and progressively drop further where in the final hour of trading the market as a whole cratered. Boeing stock ended under $125 after hours and continues lower while the same with overall markets. <br.>

The final hour drop has was a great short but due to my focus on being stuck with Boeing I was unable to execute any type of short on SPY. Furthermore my liquidity was locked up in Boeing hence not much I could do.

Today's SPY green to red day is the most points drop since the initial bull run that started in March. From open at 293.75 down to a close of 286.67 for a little more than 9 point drop during trading session. The RSI and MACD are beginning to curl down so momentum to the downside is visible. Bears have control and need to pull SPY down to 280 for continuation of drop. Another down day would do the trick.

For bulls the current level is hitting a support line that started back in the March uptrend so it is an important level to defend and bounce off from.

If unable to defend the likelihood of further drop in price is immanent.

What's the plan

Since prices have continued to drop in the after hours but recovering now, it is important to know where we open. If markets open gap up I will be in wait and see mode to see if there is a swift sell off similar to what I saw today. My difficulty here is maintaining my Boeing position since I am in it. I intend to sell cover calls at best bid price while limit the downside price risk. I am focused on this week's monthly calls expiring this Friday and if price decays to quickly I will move to the following week. Trouble with next week is I would be holding Boeing longer than what I have anticipated. Ideally I want to get out of the position with the least amount of damage as possible. So cover calls around the range of 125-130 depending on where BA plays out tomorrow. With three days left to May's monthly expiration the calls will likely decay very quickly.

Overall markets have to hold its price or more drop to come. TA in my opinion is to go short on any bounce we have for tomorrow unless proven otherwise. Banks and Real Estate have been very weak. So has been small caps therefore those are in play on the short side.