Daily Market Newsletter
November 1, 2016Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
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November Expiration
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Market Commentary
A little bit of “uncertainty” crossed the market today which caused more of a “buyer’s strike” than anything else; the selling was persistent but not frantic. Eventually in the last 90 minutes we saw the requisite bounce and the S&P was only down a modest 16 points.
Tomorrow we have the FOMC meeting but this might be the most low-drama meeting in recent history, being so close to the election and not wanted to be perceived as “rocking the boat.” That will occur in December.
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Offensive Actions
Offensive Actions for the next trading day:
- No trades for tomorrow..
Defensive Actions
Defensive actions for the next trading day:
- Any vertical debit spreads that we set up are risk-managed from day one, and no defense is really required.
- If the GILD earnings condor is profitable tomorrow, I will remove it. If not, then I will let it remain and wait for the price to revert back to the range and take the position off.
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 above average today. Breadth was weak with -286 advancers minus decliners.
SPX Market Timer : The Intermediate line turned down above the Lower Reversal Zone, showing a bearish bias. No leading signals at this time, however all timeframes are very close to showing a bullish cluster.
DOW Theory: The SPX is in a long term uptrend, an intermediate uptrend, and a short-term downtrend. The RUT is in a long-term downtrend, an intermediate downtrend, and a short-term downtrend. The Dow is in an intermediate uptrend and short-term downtrend.
VIX: The VIX rose 8.79% to 18.56, outside the bollinger bands. The RVX gained 7.11% to 23.20 and is back inside the bollinger bands.
Fibonacci Retracements: No retracements in play at this time..
Support/Resistance: For the SPX, support is at 2100 … with overhead resistance near 2200. The RUT has support at RUT 1090 with overhead resistance at about 1300. All three major index charts that we follow are now showing a Golden Cross with the 50 day moving average crossing above the 200 day average.
Fractal Energies: The major timeframe (Monthly) is still highly-charged with a reading of 52. The Weekly chart is now fully-charged showing an energy reading of 62, due to the recent chop. The Daily chart is showing a level of 51 which is starting to reflect the move to the downside.
Other Technicals: The SPX Stochastics indicator fell to 47, mid-scale. The RUT Stochastics indicator fell to 18, oversold. The SPX MACD histogram fell below the signal line, showing a loss of upside momentum. The SPX is outside the Bollinger Bands with Bollinger Band support at 2115 and resistance at the upper band at 2166 and is below the lower band. The RUT is outside the Bollinger Bands with its boundaries at 1178 to 1257 and price is at the lower band.
If Central Banks go “all-in” to save each sovereign economy, this will not be sustainable in the long run. We will continue to monitor price action that will show us if the character of the market is moving towards a change in character to a Quiet/Trending Bull again. For now, we’re seeing necessary corrective action come in to “shock-start” markets and volatility again. Markets have become complacent to all of the central bank monetary policy and that’s not a good thing..
Position Management – NonDirectional Trades
Offense: If this dip in price hits the 2050-2100 level on the S&P, we are game on for back month put spreads.
I have the following position:
- GILD 4NOV 70/71*76/77 Iron Condor (11/1) was entered for a $.50 credit.
In today’s video I discussed how I will close this position. If the price holds then I should be able to remove it for a profit first thing:
- SDS Stock – I still own 100 shares of this stock from 2011 and will continue to write calls against this position with every correction/pullback.
- VXX Stock – I own 12 shares of this stock and will hold until Armageddon occurs.
- SLV Stock – I have 1000 shares of the SLV that was assigned at the $15 level, and will continue to write time against these shares on every rally. I will look to sell more calls in the next bounce higher in SLV.
- SSO – Waiting for the next pullback to sell puts against the SSO, preferably at the 50 level or lower. .
Nothing to do at this time with current positions.
Position Management – Directional Trades
- 8/21 EMA Crossover -We’ll look for the next crossover.
- RSI(2) CounterTrend – Looking for the next signal.
- Daily S&P Advancers – if I see the number of daily S&P500 advancers drop into single digits near the close of any trading day, I will go long shares of the SSO.
- QQQ 11NOV 116/118 debit put spread (10/17) – I entered this trade by buying the 118 put and simultaneously selling the 116 put, for an .84 debit, and I will look for about a 50% return from this trade.
- GILD 4NOV 73/74 long put spread (10/31) entered for $.50 debit. I will look to exit this position possibly by Wednesday as an earnings trade.
To remove the current series of puts, I will look for a move down to and below the SPX 2100 level.
I never got the upside “burst” to allow me to sell call spreads above SPY 230 that I wanted; now I can concentrate on selling put spreads at some level below SPY 200.
We currently have the following positions in play with this strategy:
- SPY NOV 197 Long Puts – I entered this position (8/22) for a $1.56 debit.
- SPY JAN17 193 Long Puts – I entered this position (10/24) for a $1.33 debit.