Daily Market Newsletter
April 22, 2019Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
Bitcoin/Crypto
View Doc's New Book
May Expiration
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Market Commentary
A very quiet day as the carry-over from the Easter holiday weekend was seen through lower volume. Most of the catalysts this week will be due to the large tech earnings, starting tomorrow. Otherwise, also watch out for New Home Sales tomorrow at 10am ET, as well as the first look at 1Q GDP on Friday at 0830a ET.
The Russell 2000 is still showing relative weakness and must be respected; if we see a breakdown on this index it can be a leading signal for the rest of the market. .
Strategies to play? 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, however give a listen to Alex’s video below and see if Pairs are something that you want to consider.
We have a FULL earnings plate this week with a huge chunk of the S&P coming forth.
Earnings Updates – the following companies of note will be reporting over the next few days:
- Tuesday: EBAY, KO, SNAP, VZ
- Wednesday: BA, FB, MSFT, T, V
- Thursday: AMZN, BIDU, F
- Friday: AAL, ADM, XOM
- Next Monday: GOOGL, WDC
Here are the big earnings of note this cycle:
- SNAP: April 23
- FB: April 24
- AMZN: April 25
- MSFT: April 24
- GOOGL: April 29
- AAPL: April 30
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 has started to do some guest videos below so that you get used to his voice and style.
Please sign up for our free daily crypto report here.
Offensive Actions
Offensive Actions for the next trading day:
- No trades 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 below-average today and breadth ended the day somewhat negative at -128 advancers minus decliners.
SPX Market Timer : The Intermediate line flattened in the Upper Reversal Zone, now showing a bullish bias. No leading signals but one positive day away from a bearish cluster again.
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 fell to 12.42, inside the bollinger bands. The RVX rose to 16.56 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 35, in exhaustion from the uptrend but recharging quickly. The Daily chart is showing a level of 51 which is almost recharged and ready to move. These readings say that we should expect maybe one more week of choppy price behavior but will see sharp moves during this chop.
Other Technicals: The SPX Stochastics indicator flattened at 87, overbought. The RUT Stochastics indicator fell to 75, below overbought. SPX MACD histogram fell below the signal line, showing a loss of upside momentum. The SPX is inside the Bollinger Bands with Bollinger Band support at 2800 and resistance at the upper band at 2944 with price is below the upper band. The RUT is inside the Bollinger Bands with its boundaries at 1517 to 1603 and price is below the upper band.
Position Management – NonDirectional Trades
I have the following position in play:
- SPY 17MAY 282.5/283.5*297/298 Long Iron Condor (4/22) entered for $.16 on the put side and $.17 on the calls. I will look for a 200% return on either side as a closing order GTC.
I legged into the long condor today per this weekend’s report. We’ll see if the price runs to an 8 point EM by mid-May.
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 10MAY 2860/2865*2950/2955 Iron Condor (4/15) entered for $2.50 credit. My goal is to secure a 25% return on risk. As long as the price continues to coil in this area underneath the all-time highs, I think that the odds are very good for a target profit return. If we see the weekly energy returning faster than expected, I might reduce my target profit before this this busts a move again.
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 need to sell the next series of calls and I might have to go all the way out to the JUL monthly series if we don’t see a quick pop in price soon.
- 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 will have to hold onto this one through earnings this 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 – None at this time.
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 Thursday’s close at SPY 290.02, there is a +/-3.268 EM into this coming Friday; this is about normal based on recent weeks. The EM targets for this Friday’s close are 293.29 to the upside, and 286.75 to the downside.
A test of the lower EM should be a signal to fade that test to the upside. Upside EM fades might continue to be difficult or be blown through as long as the market is in accumulation mode.
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)