Useful tools you can use are the OnDemand feature in thinkorswim from TD Ameritrade and the yield curve. OnDemand gives allows you to watch a replay of price action so you can better analyze price action. Keeping an eye on the yield curve to see if it is flattening or steepening.
Say you pull up a price chart of a stock you want to trade and see that price came close to a support level and has started moving up (Figure 1). But price is stalling, and you’re not sure if the uptrend will continue. You look back on the chart and see price hit that support level on July 31, 2018.
What was the price action in the options at that time? Here’s how you can watch a replay of that price action using the OnDemand feature on thinkorswim (Figure 2).
From the Charts tab, type 2*/ZN-/ZB in the symbol box. The chart in Figure 3 is a line chart of the NoB spread. The 2 in front of the symbol is the weighting on the contracts, which depends on the ratio of the spread. This information can be found on the CME Group website. The yield curve steepens if economic conditions are looking strong. If the reverse happens, the yield curve starts flattening.
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