Daily Newsletter
November 20, 2019Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
Bitcoin/Crypto
View Doc's New Book
December Expiration
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Market Commentary
A very volatile day today as the S&P500 filled the gap after a soft open, then proceeded to dive 28 handles to the lows of the day, then rallied back about 20 of those points for a 48 point round-trip for the day. The Fed Minutes had very little impact on the price today, most of the volatility was around (again!) the Trade Deal with China. So much of the economy and forward earnings depend on a working flow of trade with China (and that goes both ways for China as well!) that the market continues to be on a razor’s edge, and has been for nearly two years.
Volume should start to lighten up as we get to the end of the week, as traders will look to swivel-chair out early for what might be a light week. Today’s price action cleared the most recent downside gap on the S&P, but there are much deeper ones left. Whether those gaps get filled will tell us the short-term story of this market.
Short-Term Outlook: We’ve been in a massive consolidation pattern 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, but we’ll know which price levels to respect to warn us if that energy’s going lower instead.
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Offensive Actions
Offensive Actions for the next trading day:
- No further positions at this time..
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.
- Let’s look to see if we can secure any kind of return on the NKE spread which will expire on Friday.
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, with advancers minus decliners showing a fairly weak value of -154 at the closing bell. Internals dipped as low as -300 at one point today.
SPX Market Timer : The Intermediate line has turned up into the Upper Reversal Zone and is now “Bullish.” After showing a Strong Bearish Cluster for the second day in a row with the two strongest timeframes overbought, we got a fade today and 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 sideways trend, and a short-term uptrend. The Dow is in an intermediate uptrend and short-term uptrend.
VIX: The VIX fell to 12.78, inside the Bollinger bands. The RVX fell to 16.07 and is back inside the Bollinger bands. There is a pretty extreme bollinger squeeze happening on the VIX and RVX.
Fibonacci Retracements: The price is back to the highs and fibs are not in play.
Support/Resistance: For the SPX, support is at 2825 with no overhead resistance. The DOW has support at 25500 and no overhead resistance. The RUT has support at 1450 and resistance around 1608.
Fractal Energies: The major timeframe (Monthly) is charged again with a reading of 48. The Weekly chart has an energy reading of 44, starting to reflect the recent breakout. The Daily chart is showing 46, quickly recovering from exhaustion. Larger timeframe energies are waiting on a very big move, which will start with the smallest timeframes.
Other Technicals: SPX Stochastics flattened at 90, overbought. RUT Stochastics fell to 65, mid-scale. The SPX MACD fell above the signal line, showing a decrease in positive momentum. The SPX is below the upper bollinger band with the range 3011 to 3140. The RUT is inside the bollinger bands with the range 1557 and 1614.
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. I will look for a 200% return on either side.
No additional positions now.
I have no positions in play:
- SPX 15NOV 3040/3045*3095/3100 Iron Condor (11/6) entered for $2.50 credit and closed (11/13) for $1.85 debit. This gave us a gross per-contract profit of $65, or a 26% return on risk.
No other entries at this time. We’ll need to see the SPX go into severe daily exhaustion again. This trend is too strong to fade for more than a couple of days.
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.
I’m tracking a 29NOV/27DEC Put Calendar, set up for a $24.55 debit and looking for a 10% return.
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 sold the SEP $17.50 calls (8/13) for $.18 credit and closed down this position (9/5) for a $.44 debit. I will let this price chart trend as much as it wants to in the near future before writing against it again.
- CSCO – My cost basis is now $46.18/share after the latest short call trade and dividend payment. I sold the JAN20 $50 calls for $1.94/contract and closed them out for $.15, (11/15) giving me a $177/contract profit. I will look for any kind of a dead cat bounce in the near future to unload CSCO shares into strength.
No other trades at this time.
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.
- 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 consolidation.
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 311.79 there is a +/-3.385 EM into this coming Friday; this is slightly larger than last week’s 3.103 EM. The EM targets for this Friday’s close are 315.18 to the upside, and 308.41 to the downside.
The price got close to, but did not test the lower EM for this week. I’ll continue to look for potential entries on this marker.
In this market we will continue to seek tests against the lower EM marker and not necessarily stand in front of the upper marker, since the trend has appeared to unfurl to the upside again.
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:
- NKE 22NOV 96.5/97.5 debit call spread (10/21) entered for $.50. Less than a week left in this one and this one has recently bounced higher; my job this week is to see if I can harvest anything at all on this trade.
- V 29 NOV 180/182.5 debit call spread (10/29) entered for $1.15 debit and closed for a $1.64 credit. (11/20). This gave me a net profit after commissions of $46.40, or a 40.3% return on capital .
- SLV 20DEC 15.5/16.5 debit call spread (11/18) entered for $.42 debit. I will seek a 50% return.
No further positions at this time.
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.