Daily Newsletter
September 26, 2019Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
Bitcoin/Crypto
View Doc's New Book
October Expiration
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Market Commentary
What a range-bound, crummy day to trade. Indices gave back most of yesterday’s gains as traders remain on edge about the “general state of things” as well as other risk events coming from Washington. It’s like 1973 again, without the inflation. Interest rates continue on their downward spiral. If things continue to get more negative, that only bolsters my view that markets will break to the upside in the 4Q.
This is the sort of price action that prefaces a big overnight gap that leaves Retail in the dust.
Bitcoin and the overall Crypto market might be seeing a final “flush” before institutions jump on.
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 entries for 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.
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 with advancers minus decliners showing a mixed value of -46.
SPX Market Timer : The Intermediate line has flattened inside the Upper Reversal Zone and is still bullish. No leading signals at this time.
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 uptrend, an intermediate sideways trend, and a short-term downtrend. The Dow is in an intermediate uptrend and short-term downtrend.
VIX: The VIX rose to 16.07, inside the Bollinger bands. The RVX rose to 20.42, and is inside the Bollinger bands.
Fibonacci Retracements: The S&P is showing a >23.6% retracement from the recent breakout.
Support/Resistance: For the SPX, support is at 2730 and overhead resistance at 3028. The DOW has support at 24800 and overhead resistance at 28399. The RUT has support at 1450 and resistance at 1618.
Fractal Energies: The major timeframe (Monthly) is charged again with a reading of 52. The Weekly chart has an energy reading of 61, now fully-charged. The Daily chart is showing 60, fully charged again . Larger timeframe energies are waiting on a very big move, which will start with the smallest timeframes.
Other Technicals: SPX Stochastics fell to 67, mid-scale. RUT Stochastics fell to 67, mid-scale. The SPX MACD faded below the signal line, showing a loss in positive momentum. The SPX is below the upper bollinger band with the range 2918 to 3038. The RUT is inside the bollinger bands with the range 1471 and 1608.
Position Management – NonDirectional Trades
I have the following positions in play at this time:
- SPY 30SEP 271/272*299/300 Long Iron Condor (8/26) was entered for $.18 debits on both the put and call side. I closed the call spreads (9/5) for $.54 credit and effectively locked in a minimum 50% gross return on this position. Unlikely that we’ll see a massive drop by Monday to put the put spreads in play
- SPY 18OCT 289/290*308/309 Long Iron Condor (9/16) was entered for a $.16 debit on the put spreads and an $.18 debit on the call spreads. I will look for about a 200% gain on either side to close that position.
No additional trades at this time.
I have no positions in play:
This is not the right character of market for this strategy at this point.
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. 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 for the stock was $49.36/share after the AUG19 assignment. I sold the 27SEP $50 calls (8/19) for $.62 credit and bought them back (9/26) for $.05, creating a net $56/contract profit. My cost basis is now $48.80/share. I talked yesterday about closing/rolling the calls back to $50 again using the first available series paying $1/contract, however I made a human error when I traded this position this morning and sold the JAN20 $50 calls for $1.94/contract. (I thought I was selling the NOV19 series!) It pays to double-check before pushing the “execute” button on your broker! I don’t want to see this trade below $46/share.
No other trades at this time.
Position Management – Directional Trades
Thoughts on current swing strategies:
- 8/21 EMA Crossover – The next signal has fired; we’ll see if a re-entry is available;
- RSI(2) CounterTrend – None at this time.
- 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..
The Bear appears to be over. In the near term I expect to see large consolidation swings, which might provide “value” entries for these coins on a dip.
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 298.28, there is a +/-4.822 EM into this coming Friday; this is similar to last week’s 4.724 EM. The EM targets for this Friday’s close are 303.1 to the upside, and 293.46 to the downside.
The price came close to the lower EM today but no test/entry.
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 no positions in play at this time:
- MSFT 11OCT 139/140 Debit Call Spread (9/9) entered for $.48 debit and looking for a 50% return.
- WMT 25OCT 118/119 Debit Call Spread (9/23) entered for $.50 debit and looking for a 50% return.
No other entries 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 no open positions at this time. Skew is making OTM puts really expensive now.
If we see a decent bounce back up I might consider reloading.