Daily Market Newsletter
April 17, 2019Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
Bitcoin/Crypto
View Doc's New Book
April Expiration
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Market Commentary
Healthcare stocks got crushed today with MRK down 4.69%, PFE down 2.54%, and UNH down 1.86%. This could be interesting as both MRK and PFE report next week, but bad news could be priced into the stocks after today. The net result was a bearish engulfing candlestick on the S&P500, and we need to continue watching the RUT as it’s showing a weekly “lower high” right now. If a re-test of the December lows is in the cards, it will start with the RUT first. I still view this as a low probability
We should be looking for pullbacks to sell puts against assets that we want. We should be looking for momentum breakouts. Nothing else will work in this environment.
Earnings Updates – the following companies of note will be reporting over the next few days:
- Thursday: AXP
- Monday: HAL
- Tuesday: EBAY, KO, SNAP, VZ
Here are the big earnings of note this cycle:
- SNAP: April 23
- FB: April 24
- AMZN/MSFT: April 25
- GOOGL: April 29
- AAPL: April 30
Subscriber Update for This Week: This Friday is Good Friday and a Market Holiday; since there’s no point in me producing a report on both Thursday night and Saturday as well, I will skip the Thursday report and just produce the normal Weekend Edition on Saturday.
Subscriber Update: I will be out of the country and not producing the report from Monday May 20th until Thursday June 6th; in my stead will be a very talented guy by the name of Alex who I will have do some guest videos in the near future so that you get used to his voice and style.
Please sign up for our free daily crypto report here.
Here is Alex’ video on EMs and Straddles from this weekend, if you didn’t catch it before.
Offensive Actions
Offensive Actions for the next trading day:
- No trade entries tomorrow.
Defensive Actions
Defensive actions for the next trading day:
- Any vertical, butterfly, or diagonal debit spreads that we set up are risk-managed from day one, and no defense is really required.
- Closing orders have been entered for all new spreads.
Strategy Summary Graphs
Each graph below represents a summary of the current performance of a strategy category. For an explanation of what the graphs mean, watch this video.
Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
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Technical Analysis Section
Market Internals: Volume was average today and breadth ended the day slightly negative with -110 advancers minus decliners.
SPX Market Timer : The Intermediate line flattened in the Upper Reversal Zone, now showing a bullish bias. No leading signals.
DOW Theory: The SPX is in a long term uptrend, an intermediate uptrend, and a short-term uptrend. The RUT is in a long-term uptrend, an intermediate uptrend, and a short-term uptrend. The Dow is in an intermediate uptrend and short-term uptrend.
VIX: The VIX rose to 12.60 after peaking at 50.3 a year ago, inside the bollinger bands. The RVX rose to 16.43 and is inside the bollinger bands.
Fibonacci Retracements: The price has moved through several important Fib levels and is not caring about any confluence levels that these present. The recent retracement did not even get to the 23.6% fib retracement on the latest pullback. We’ll see if fibs start to matter again.
Support/Resistance: For the SPX, support is at 2700 … with overhead resistance at 2941. The RUT has support at RUT 1500 with overhead resistance at 1600 and 1742. All indices that we track recently showed a Death Cross with the 50ma crossing below the 200ma; this can be a leading signal for a true Bearish move. It can also signal “false” and create a massive swing higher. We might be seeing the latter scenario as the Dow ,S&P500, and /NQ have now printed a Golden Cross. Only the Russell 2000 remains in a death cross and it will signal a Golden Cross within days.
Fractal Energies: The major timeframe (Monthly) is charged again, with a reading of 55, yet is starting to reflect the reversion to the larger uptrend again. The Weekly chart has an energy reading of 34, in exhaustion from the uptrend. The Daily chart is showing a level of 34 which is well into exhaustion. These readings say that we should expect at least a couple of weeks of choppy price behavior but will see sharp moves during this chop.
Other Technicals: The SPX Stochastics indicator flattened at 91, overbought. The RUT Stochastics indicator fell to 87, overbought. SPX MACD histogram fell above the signal line, showing a loss of upside momentum. The SPX is inside the Bollinger Bands with Bollinger Band support at 2790 and resistance at the upper band at 2938 with price is below the upper band. The RUT is inside the Bollinger Bands with its boundaries at 1508 to 1606 and price is below the upper band.
Position Management – NonDirectional Trades
I have no positions in play:
No additional entries at this time. I’m not in favor of setting up HP Iron Condors in this environment as we don’t have much IV edge these days.
I have the following positions in play:
- SPX 18APR 2725/2730*2860/2865 Iron Condor (3/25) entered for $2.60 credit. I closed the call spreads (4/17) for $4.95.
- SPX 10MAY 2860/2865*2950/2955 Iron Condor (4/15) entered for $2.50 credit. My goal is to secure a 25% return on risk.
No additional trades at this time.
I have no current positions:
Calendar spreads are good for markets in quiet/trending character. If the market reverts back to quiet/trending, then I’ll look to continue this method.
The calendar spread tracking sheet is available for your download here. Yes, if you follow the math in the sheet, all of the numbers account for commissions in and out of the trade. Please note: If you trade these positions please keep the size small, to the point where you “do not care” about the success or failure of this position.
I have the following positions in play:
- SLV Stock – I have 1000 shares of the SLV that was assigned at the $15 level. I currently have the SLV 18APR $15.5 calls (2/11) for a $.17 credit. I will let these expire.
- PFE 17MAY $39 puts (3/18) sold for $.39 credit. It would be a good idea to clear this one prior to 4/30 earnings, but the recent crash in XLV has made this impossible and I might have to hold onto this one through earnings next week.
No additional trades at this time. We need to be patient to wait on the next pullback. We are “green light” again because the death cross has cleared on most of the indices that we track.
Position Management – Directional Trades
Thoughts on current swing strategies:
- 8/21 EMA Crossover – Looking for the next signal.
- RSI(2) CounterTrend – None at this time.
- Daily S&P Advancers – Looking for the next signal to go long when we have single-digit advancers on the ADSPD.
- Swing – I placed a SPY 17APR 282/283 debit put spread (3/29) for $.42 debit, and this trade expired. I said at the time that this was a low-probability, highly-aggressive trade and I guess that was the correct read.
Crypto has had relative strength over the last few weeks and no one believes this rally. The Bear appears to be over and I’m looking for one last shake-out to signal this.
Investors should currently be looking to find technical entries to warehouse BTC/ETH/LTC assets for eventual trades on Alt-coins. You should also be looking to devices like “trezor” or other cold-storage devices to keep your assets off of the network, or other secure wallet such as Navcoin. Relying on the security of your broker is no longer good enough; no one can log into your ETrade account and “steal” your stock assets, but the whole nature of Cryptocurrencies and their portability means that someone can grab your assets and transfer them elsewhere. I will continue to discuss the tradingview platform in daily videos as I think that it is currently the best way to chart the “big three.”
From Friday’s close at SPY 290.16, there is a +/-2.791 EM into this coming Friday; this is about the same as last week’s 3.11 EM because there is one fewer day this week. The EM targets for this Friday’s close are 292.95 to the upside, and 287.37 to the downside.
A test of the lower EM should be a signal to fade that test to the upside
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I will start playing directional bear spreads once we see upside exhaustion on more than one timeframe.
The scan that I discussed in the 8/4/2018 video is available to download for thinkorswim here: http://tos.mx/OvdVnz I will also be adding a second Larry Connors scan to this section as well; here is the Connors Crash scan: http://tos.mx/BhHuKL
I have the following positions in play at this time:
- TGT 17MAY 80/82.5 debit call spread (4/9) entered for $1.25 debit. We will look for a 50% return on this trade. Earnings have already passed for TGT.
Several candidates look really good but we are too close to earnings to take them.
We are also keeping an eye on the Momentum stocks in this section.
No other entries at this point.
The “Hindenburg Strategy” is meant to capture “value” from successive corrections that lead up to the final “death spiral” with a Bear Market. The basic principle is to buy 3-month out long puts on the SPY, and to finance those puts by the sale of credit spreads.
I have no positions at this time. I cleared out the most recent set of puts on the drop to the 200ma back in October. I will “reload” again soon, if/when the weekly chart goes into upside exhaustion. The three-month puts are coming down in price closer to what I’d prefer to pay. (3 months out/90% of current value)