Market Update

[DarterBlue]

Current Situation: The stock market faces an important test today. Most of the major averages closed yesterday at or just below their 50 day moving averages. One, the Russell 2000, is actually slightly above its 50 day moving average. But it is the exception. Should all the major averages (DOW, two NASDAQ indices, S&P 500, NYSE and S&P Mid Cap) reclaim the 50 day, I would regard that as a trigger. A trigger in trading terminology, is a signal to go long or short as the case may be. On the other hand, if the major averages get repulsed at the 50 day, that would also be a trigger. To sum up, reclaim the 50 day conclusively (by a half a percent or more) = trigger to go long. Get repulsed (a down day of .75% or more) = trigger to go short. If the market has a quiet day with movement of less than a half a percent either way, then, it would be inconclusive.

Long Scenario: Should I be faced with a long trigger, I will most likely enter two kinds of position. The first would be long option positions on the following indices: S&P 500, NASDAQ 100 and Russell 2000. The options would most likely be at or just out of the money with expiration dates in July (three months out). I would combine that with long positions in the following stocks/industry groups:

• Grubhub, Adobe Systems, Amazon
• Select financial stocks such as JP Morgan Chase or Sun Trust
• Select energy stocks such as Conoco/Phillips

The logic for combining short dated options with select individual stocks lies in the fact that even if we go on to new highs, I view this market as old. In old markets, profit potential in the averages is limited. Thus, options give the best bang for the buck. With respect to individual stocks, even if we are near a bear market, in the final run up, good profits can still be garnered in carefully selected stocks in strong industry groups. If we get the long trigger, about 75% of what I deploy will be in individual issues, with the remaining 25% in the index options.

Short Scenario: If the averages get turned back decisively at the 50 day averages, I will go short using LEAP Put Options on the same Indices as on my last short position. The only possible difference is that I may use the June 2019 series instead of the January 2020 series this time. I would use long dated options as if we are in a bear market (this is yet to be determined) we are still in its relatively early phase.

Timing: If I go short, it will most likely be before the close of trade today (between 2:30 and 3:10). Why? I already know exactly which vehicles I will be using and it would be a trade in the same intermediate, primary direction established at the January 26, 2018 market top. If I go long, these positions will probably be initiated mid morning, Monday. Why? I need to determine exactly what vehicles would best suit this trade both from a duration and potential standpoint, given my belief that we are in the late stages of an old bull market. 

[BUFORDGAWOLVES]

24 minutes ago, DarterBlue said:

Current Situation: The stock market faces an important test today. Most of the major averages closed yesterday at or just below their 50 day moving averages. One, the Russell 2000, is actually slightly above its 50 day moving average. But it is the exception. Should all the major averages (DOW, two NASDAQ indices, S&P 500, NYSE and S&P Mid Cap) reclaim the 50 day, I would regard that as a trigger. A trigger in trading terminology, is a signal to go long or short as the case may be. On the other hand, if the major averages get repulsed at the 50 day, that would also be a trigger. To sum up, reclaim the 50 day conclusively (by a half a percent or more) = trigger to go long. Get repulsed (a down day of .75% or more) = trigger to go short. If the market has a quiet day with movement of less than a half a percent either way, then, it would be inconclusive.

Long Scenario: Should I be faced with a long trigger, I will most likely enter two kinds of position. The first would be long option positions on the following indices: S&P 500, NASDAQ 100 and Russell 2000. The options would most likely be at or just out of the money with expiration dates in July (three months out). I would combine that with long positions in the following stocks/industry groups:

• Grubhub, Adobe Systems, Amazon
• Select financial stocks such as JP Morgan Chase or Sun Trust
• Select energy stocks such as Conoco/Phillips

The logic for combining short dated options with select individual stocks lies in the fact that even if we go on to new highs, I view this market as old. In old markets, profit potential in the averages is limited. Thus, options give the best bang for the buck. With respect to individual stocks, even if we are near a bear market, in the final run up, good profits can still be garnered in carefully selected stocks in strong industry groups. If we get the long trigger, about 75% of what I deploy will be in individual issues, with the remaining 25% in the index options.

Short Scenario: If the averages get turned back decisively at the 50 day averages, I will go short using LEAP Put Options on the same Indices as on my last short position. The only possible difference is that I may use the June 2019 series instead of the January 2020 series this time. I would use long dated options as if we are in a bear market (this is yet to be determined) we are still in its relatively early phase.

Timing: If I go short, it will most likely be before the close of trade today (between 2:30 and 3:10). Why? I already know exactly which vehicles I will be using and it would be a trade in the same intermediate, primary direction established at the January 26, 2018 market top. If I go long, these positions will probably be initiated mid morning, Monday. Why? I need to determine exactly what vehicles would best suit this trade both from a duration and potential standpoint, given my belief that we are in the late stages of an old bull market. 

Thanks, I'm keeping up..... maybe learn a thing or two

[BUFORDGAWOLVES]

I like walking around in a state of befuddlement.

Legal intoxication.

[DarterBlue]

35 minutes ago, BUFORDGAWOLVES said:

I like walking around in a state of befuddlement.

Legal intoxication.

Financial markets befuddle. Even when you have traded them for a long time and feel fairly comfortable with them, they will still up and shock you. It's because they reflect the sum of human emotions (even the computer driven trades) of all participants in the game. And it's a game that never ends, which is both scary and liberating. For traders, the only timeouts allowed are either: 1. You voluntarily close out your positions, taking your profits or losses or, 2. You are forced out due to diminution in your equity forcing a margin call. In my time, I have faced both scenarios. The latter is very scary and is one I have faced once, and never intend to face again. 

Although we like to think of ourselves as belonging to a logical species, in truth, much of what we do, much more than we like to admit, is driven by emotions, which at critical points override logic. It is why I try and plot out all my courses of action in response to different market events before they occur. That way, I already have the response, win or lose, decided on.  It reduces the likelihood I will let my emotions hold sway. 

[BUFORDGAWOLVES]

2 hours ago, DarterBlue said:

Financial markets befuddle. Even when you have traded them for a long time and feel fairly comfortable with them, they will still up and shock you. It's because they reflect the sum of human emotions (even the computer driven trades) of all participants in the game. And it's a game that never ends, which is both scary and liberating. For traders, the only timeouts allowed are either: 1. You voluntarily close out your positions, taking your profits or losses or, 2. You are forced out due to diminution in your equity forcing a margin call. In my time, I have faced both scenarios. The latter is very scary and is one I have faced once, and never intend to face again. 

Although we like to think of ourselves as belonging to a logical species, in truth, much of what we do, much more than we like to admit, is driven by emotions, which at critical points override logic. It is why I try and plot out all my courses of action in response to different market events before they occur. That way, I already have the response, win or lose, decided on.  It reduces the likelihood I will let my emotions hold sway. 

Like.

 

[BUFORDGAWOLVES]

www.investopedia.com/terms/m/margincall.asp

Figured I'll put this out there....

[DarterBlue]

8 hours ago, DarterBlue said:

Short Scenario: If the averages get turned back decisively at the 50 day averages, I will go short using LEAP Put Options on the same Indices as on my last short position. The only possible difference is that I may use the June 2019 series instead of the January 2020 series this time. I would use long dated options as if we are in a bear market (this is yet to be determined) we are still in its relatively early phase.

Timing: If I go short, it will most likely be before the close of trade today (between 2:30 and 3:10). Why? I already know exactly which vehicles I will be using and it would be a trade in the same intermediate, primary direction established at the January 26, 2018 market top. If I go long, these positions will probably be initiated mid morning, Monday. Why? I need to determine exactly what vehicles would best suit this trade both from a duration and potential standpoint, given my belief that we are in the late stages of an old bull market. 

I went short via limit orders placed at 3:10. I did not get my final fill until 3:45. The averages barely met my criterion for placing this trade. Most of the day, although slightly down, the indices were not down enough to justify making it. 

The positions purchased were:

16 Contracts of the LEAP June 2019, Put Options on the QQQ, strike 160. Filled at 12.75 (100x12.75x16)

21 Contracts of the LEAP June 2019, Put Options on the IWM, strike 150. Filled at 10.10 (100x10.10x21)

13 Contracts of the LEAP June 2019 Put Options on the SPY,  strike 250. Filled at 13.80 (100x13.80x13)

Total Cost approximately $59,657 including commissions. 

Not the clearest signal. However, at day lows my criteria were met. So I made it. We will see how it plays out. At the close, I was down $868 on the  trade as the market rallied into the final half hour. 

[DarterBlue]

A very good interview with a former Hedge Fund Manager, Tom Basso.

For anyone interested in some of the key requirements of trading, this is worth the half hour.

http://talkingtrading.com.au/mr-serenity-tom-basso/

[DarterBlue]

On 4/13/2018 at 4:12 PM, DarterBlue said:

I went short via limit orders placed at 3:10. I did not get my final fill until 3:45. The averages barely met my criterion for placing this trade. Most of the day, although slightly down, the indices were not down enough to justify making it. 

The positions purchased were:

16 Contracts of the LEAP June 2019, Put Options on the QQQ, strike 160. Filled at 12.75 (100x12.75x16)

21 Contracts of the LEAP June 2019, Put Options on the IWM, strike 150. Filled at 10.10 (100x10.10x21)

13 Contracts of the LEAP June 2019 Put Options on the SPY,  strike 250. Filled at 13.80 (100x13.80x13)

Total Cost approximately $59,657 including commissions. 

Not the clearest signal. However, at day lows my criteria were met. So I made it. We will see how it plays out. At the close, I was down $868 on the  trade as the market rallied into the final half hour. 

As I type this, I anticipate closing out the above trade at a loss this morning. I will post the final results after I close them. As is my practice, I will wait till after 10 am to do so. As things stand now, with the futures up by about 2/3rds of a percent, all major indices will be comfortably above their 50 day moving averages assuming there is no change in direction. As such, both from a technical and financial standpoint, staying in these positions no longer make sense.

Back to the sidelines till I get my next entry. 

[DarterBlue]

On 4/13/2018 at 4:12 PM, DarterBlue said:

I went short via limit orders placed at 3:10. I did not get my final fill until 3:45. The averages barely met my criterion for placing this trade. Most of the day, although slightly down, the indices were not down enough to justify making it. 

The positions purchased were:

16 Contracts of the LEAP June 2019, Put Options on the QQQ, strike 160. Filled at 12.75 (100x12.75x16)

21 Contracts of the LEAP June 2019, Put Options on the IWM, strike 150. Filled at 10.10 (100x10.10x21)

13 Contracts of the LEAP June 2019 Put Options on the SPY,  strike 250. Filled at 13.80 (100x13.80x13)

Total Cost approximately $59,657 including commissions. 

Not the clearest signal. However, at day lows my criteria were met. So I made it. We will see how it plays out. At the close, I was down $868 on the  trade as the market rallied into the final half hour. 

All positions closed out between 10:07 and 11:11. Net loss on the trades including both way commissions amounted to $9,671 or 15.7%. Obviously not the way I wanted it to end. However, all the major indices have now reclaimed their 50 day moving averages in convincing fashion. Thus, at least for the intermediate term (the next several days), the path of least resistance is to the upside and the reason for the trade has been proven wrong. 

[DarterBlue]

The market is facing a critical test over the next few trading days. It will either break to the downside or rebound toward the middle or upper end of the trading range its been in since the end of January. If today ends up being as bad as Tuesday, then a number of the indexes will be right at the February 8 lows. Break those conclusively and we have another significant leg down. 

Obviously had I kept the LEAP positions I closed on April 17, I would be much better off. My mistake was two fold. I opened the positions a bit too early and exited them much too soon. Such is life. When the averages conclusively broke above their 50 day moving averages, I assessed that the odds favored them getting at least near the top of the trading range if not beyond to new highs. I was wrong. 

This time I am agnostic as to whether the lows hold. Overall, I would assess the odds of holding at slightly less than 50/50. These are not good enough odds to enter a trade in advance of the event. However, if we do break the lows, I will once again go short when this happens. If we hold today through Friday and do so in good fashion (rally at least 2% above) I may go long late Friday or early Monday. 

[DarterBlue]

On 4/25/2018 at 10:07 AM, DarterBlue said:

This time I am agnostic as to whether the lows hold. Overall, I would assess the odds of holding at slightly less than 50/50. These are not good enough odds to enter a trade in advance of the event. However, if we do break the lows, I will once again go short when this happens. If we hold today through Friday and do so in good fashion (rally at least 2% above) I may go long late Friday or early Monday. 

Purchased 371 shares of GRUB (Grubhub) at $97. Cost including commissions = $36,002. The averages never got down to the prior lows; they approached them yesterday, but quickly rallied to close mixed. Today the NASDAQ in particular is strong and we are again more than 2% above prior February lows. 

I may also go long 17 of the SPY, July 267, Calls if today's strength holds into the early afternoon. 

[DarterBlue]

3 hours ago, DarterBlue said:

I may also go long 17 of the SPY, July 267, Calls if today's strength holds into the early afternoon. 

Purchased 16 contracts of the above at prices ranging from 7.01 to 7.08 between 1:15 and 1:35. Note that when I purchase options, I always use limit orders which I may adjust depending on market action. Total cost just over $11,300. Coupled with the GRUB purchase, I have just over $47,300 at risk. We will see how this goes.

For the record, GRUB reports earnings before the bell on Tuesday, May 1. Most recently, they have beaten four quarters in a row and the stock has reacted well. Of course, with the exception of the last, the market has been far more accommodating.  

[HSFBfan]

Mpx almost regained its losses from yesterday

[DarterBlue]

1 minute ago, HSFBfan said:

Mpx almost regained its losses from yesterday

Good. It is doing what it's supposed to on a good day for stocks. 

[DarterBlue]

3 hours ago, DarterBlue said:

Purchased 16 contracts of the above at prices ranging from 7.01 to 7.08 between 1:15 and 1:35. Note that when I purchase options, I always use limit orders which I may adjust depending on market action. Total cost just over $11,300. Coupled with the GRUB purchase, I have just over $47,300 at risk. We will see how this goes.

Closed the day up $1,079 on the stock and option positions, as the options were marked to market after the 15 minute post close period, which was bullish due to Amazon and Intel, among others, reporting earnings beats. Of course, had I been more patient, I could have purchased the options for about 25 cents per contract ($25x16=400) cheaper. But all in all, not a bad beginning. 

Most of my winning trades have been profitable either from the beginning or at the latest after two days. So, this is encouraging!

[dan in daytona]

Darter, who you like at Santa Anita Park today in the 5th ?  All this speculative market action has me feeling a little lucky. My ship just came in... monthly social security check. I like the 4-7-8 Trifecta of Pie-In-The-Sky, Heat Lightning, and Limping Louie. Any advice for your novice paisan ?

[DarterBlue]

4 hours ago, dan in daytona said:

Darter, who you like at Santa Anita Park today in the 5th ?  All this speculative market action has me feeling a little lucky. My ship just came in... monthly social security check. I like the 4-7-8 Trifecta of Pie-In-The-Sky, Heat Lightning, and Limping Louie. Any advice for your novice paisan ?

I think you should replace Limping Louie with Slippery Sam. Pie in the Sky and Heat Lightening are Gucci!

[golfaddict1]

6 hours ago, dan in daytona said:

Darter, who you like at Santa Anita Park today in the 5th ?  All this speculative market action has me feeling a little lucky. My ship just came in... monthly social security check. I like the 4-7-8 Trifecta of Pie-In-The-Sky, Heat Lightning, and Limping Louie. Any advice for your novice paisan ?

Put it all on Pie-O-Mine   (Sopranos).  

[DarterBlue]

On 4/25/2018 at 10:07 AM, DarterBlue said:

The market is facing a critical test over the next few trading days. It will either break to the downside or rebound toward the middle or upper end of the trading range its been in since the end of January. If today ends up being as bad as Tuesday, then a number of the indexes will be right at the February 8 lows. Break those conclusively and we have another significant leg down. 

So the market closed the week on a quiet note Friday. However, given the good earnings from: Amazon, Microsoft, Intel and others that either reported after the bell Thursday or before the open Friday, many would view the day as disappointing. With the except of the Russell 2000 which trades above its 50 day moving average and the S&P Mid Cap index which is just above its 50 day moving average, the other broad based indexes are mired between their 50 and 100 day moving averages. This week all the averages held a bit above their February and early April lows. However, after holding nicely Thursday they clearly stalled on Friday.

What seems to be happening is that the fairly broad trading range established in February when the market sold off and then quickly recovered (that range was about 11% plus or minus depending on the index), seems to be narrowing. Thus, this latest rally which began this week seems to have stalled already barely 3-5%, depending on the index from their February lows. Such a narrowing after a market tops does not usually last long. It generally resolves itself either to the upside (end of a correction), or to the downside (next leg of a bear market). We seem to be heading quickly to this day of reckoning. Whether the market will be like a coiled spring ready to leap higher like a world class jumper or whether it will dive off the board into the pool is up in the air at this moment.

Perhaps because I am currently partially long, I have a bias toward the bullish case. While I don't like to make predictions on longer term movement, my feeling is that we advance modestly through the spring and most of the summer, in the process taking out the January, and in the case of the NASDAQ indexes March, highs. However, I also feel that this advance will be the final of the Obama/Trump bull market. Sometime in September or the fall, we will probably see the final top and the beginning, in earnest, of a long overdue bear market. As such, I would view the February through the current period weakness as a warning of what's to come later this year. 

[HSFBfan]

From -400 today to +30 and we still have 2 hours left of trading

[noonereal]

56 minutes ago, HSFBfan said:

From -400 today to +30 and we still have 2 hours left of trading

 a real crap shoot

a game of chance disguised as business

[HSFBfan]

1 minute ago, noonereal said:

 a real crap shoot

a game of chance disguised as business

life in general is a game of chance. do your homework and you have a chance. The market is a fun ride

[noonereal]

13 minutes ago, HSFBfan said:

life in general is a game of chance. do your homework and you have a chance. The market is a fun ride

if you want to gamble go to a casino where you know the odds

 

 

[HSFBfan]

Just now, noonereal said:

if you want to gamble go to a casino where you know the odds

 

 

i bet the horses