Daily Newsletter
December 9, 2019Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
Bitcoin/Crypto
View Doc's New Book
December Expiration
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Market Commentary
The SPX Weekly chart is now in exhaustion; this does not necessarily mean that the price will “drop anchor” at this level and retrace, however it does increase the probability that we’ll see more “non-linear” price action. In today’s video I’ll examine the S&P500 over the last 10 years on the Weekly chart for:
- Does weekly exhaustion matter?
- In strong years, how often do we see the strength continue into year-end?
I’ll make one more try tomorrow to grab the FB call spread.
Short-Term Outlook: Prices are breaking from a massive consolidation pattern in play since early 2018, or almost another “horizontal bear market” like we had in 2015-2016. All that energy that’s been coiled up has to go somewhere, the policy and odds favor it to go higher, and the first weekly trend is playing out in that direction..
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Offensive Actions
Offensive Actions for the next trading day:
- I’ll try once again to enter debit call spreads on FB. See “Whale” section below.
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.
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, with the advancers minus decliners coming in at a mixed -81.
SPX Market Timer : The Intermediate line has flattened in the Upper Reversal Zone and is still “Bullish.” There is another Strong Bearish Cluster with the two strongest timeframes clustered in the Upper Reversal Zone.This can be a leading signal for a pause.
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 sideways trend, and a short-term uptrend. The Dow is in an intermediate uptrend and short-term uptrend.
VIX: The VIX rose to 15.82, back outside the Bollinger bands. The RVX rose to 17.75 and is still inside the Bollinger bands. There has been a pretty extreme bollinger squeeze happening on the VIX and RVX that we’ve pointed out for weeks.
Fibonacci Retracements: The price has bounced at the 23.6% fib of the October swing.
Support/Resistance: For the SPX, support is at 2825 with overhead resistance at 3154. The DOW has support at 25500 and overhead resistance at 28175. The RUT has support at 1450 and resistance around 1635.
Fractal Energies: The major timeframe (Monthly) is charged again with a reading of 43, but is starting to reflect the very linear trend from late 2018. The Weekly chart has an energy reading of 37, into exhaustion. The Daily chart is showing 48, recharging. The weekly chart being into exhaustion might paralyze this trend temporarily.
Other Technicals: SPX Stochastics flattened at 69, mid-scale. RUT Stochastics rose to 69, mid-scale. The SPX MACD rose below the signal line, showing an increase in positive momentum. The SPX is below the upper bollinger band with the range 3079 to 3155. The RUT is at the upper bollinger bands with the range 1574 and 1639.
Position Management – NonDirectional Trades
I have the following positions in play at this time:
- SPY 20DEC 296/297*319/320 Long Iron Condor (11/4) was entered for a $.17 debit on the puts and a $.16 debit on the calls. We need to grab an exit on this position if the price grinds higher.
No additional positions now. We’ll need to see the SPY price approach the 320 level which is still quite a distance away.
I have the following positions in play:
- SPX 23DEC 3015/3020*3150/3155 Iron Condor (12/3) was entered for a $2.50 credit. I have a $1.80 GTC debit exit order placed. The weekly SPX chart is in exhaustion so the odds do favor a sideways chop even though seasonality might override that.
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; if we see the daily chart go into exhaustion I’ll set up a back week calendar.
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. Looking for the next rally to sell calls against.
No other trades at this time. A lot of stocks in our price range ($50 and lower) look very poor right now. This is in line with the general divergence that we’ve seen lately.
Position Management – Directional Trades
Thoughts on current swing strategies:
- 8/21 EMA Crossover – The long cross has fired and is gone. The next entry would be off of the 21ema which occurred the week of Dec 2.
- RSI(2) CounterTrend – I’ll look for the next setup.
- Daily S&P Advancers – Looking for the next signal to go long with single-digit advancers to close the day.
- Swing – None at this time..
BTC and other top-ten coins are once again in a downtrend; could this be the final capitulation after slipping into a Bear almost two years ago?
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 314.87 there is a +/-4.194 EM into this coming Friday; this is slightly larger than the 3.869 EM from last week. The EM targets for this Friday’s close are 319.06 to the upside, and 310.68 to the downside.
We will continue to look for downside tests of the weekly EM. We got one entry last week but it was a difficult entry and I whiffed.
I have no positions in play:
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:
- SLV 20DEC 15.5/16.5 debit call spread (11/18) entered for $.42 debit. I will seek a 50% return.
- BAC 27DEC 33/34 debit call spread (11/25) was entered for $.50 debit. I will seek a 50% return.
- PYPL 3JAN 108/109 debit call spread (12/2) was entered for $.50 debit. I will seek 50%.
I will enter the 10JAN FB debit call spreads with a $2.5-wide vertical; I missed this one this morning by a couple of pennies and it ran away. I will try again tomorrow. I would also like to enter a DIS call spread but we have ex-dividend later this week so the earliest I would enter it would be Friday..
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 the following open positions at this time:
- SPY 21FEB 279 long puts (11/15) entered for $2.21 debit. I will look to clear half of the position on any test of the 200 sma, and the other half upon a 10% haircut in price.