Daily Market Newsletter

I have no positions at this time.

We’ll park this strategy until the next high-probability condition shows. We’ll want to see daily exhaustion on the SPX or RUT after a strong move, at the very least. This strategy works best with a quiet/trending market, and not with a sideways/volatile one.

I have no remaining positions. Calendar spreads are good for markets in quiet/trending character, so we’ll want to wait for that type of price action to show again. 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 am targeting stocks using short puts/covered calls that offer a much lower absolute risk point, where in event of a crash we can almost define our total risk by the price of the underlying. While this is not how I intend to manage risk in these positions, I view this as fundamentally more solid than trying to actively manage risk on assets that are going for $$$hundreds which have also gone parabolic. 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 31DEC $15 SLV calls (10/3) for $.16.
• SSO – I sold SSO 16NOV $109 puts (10/8) for $1.20 credit. I’m still fine with this position and will accept assignment should the price drop from these levels. I will buy back this position for $.05 should I get the opportunity.
• GLW – I sold GLW 21DEC $26 puts (10/22) for $.26 credit; I closed this position (11/7) for a $.05 debit. This gave me a net profit of $19/contract, or a .73% return on capital for the period. 
• CSCO – I sold CSCO 21DEC $40 puts (10/22) for $.40 credit.
• INTC – I sold INTC 21DEC $37 puts (10/22) for $.37 credit. This one is very close to an exit. 

On Monday I will sell the HPE 21DEC $14 puts for at least a 1% return; they are currently showing about a $.20 credit. Should the price gap lower on Monday I’ll move down a strike as long as I can get at least a $.15 credit.

The recent trades were relatively small positions that would create a discount entry should I be assigned. I have entered $.05 GTC exit debits to close out INTC, and CSCO early should we get the opportunity.

The crypto market is just flat-lining lately. So far I am not seeing a lot of correlation between these markets. 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.”

Viewing the SPY from the Friday closing price at 277.76, there is a +/-5.078 EM into this coming Friday.  This is about 20% smaller than last week’s 6.529 EM and reflects the decent bounce that we have seen over the last two weeks to ease some of the tensions, however obviously not all of them since the EM is still well above the normal ~3.0 point SPY Weekly EM. The EM targets for this Friday’s close are 282.84 to the upside, and 272.68 to the downside. The upper EM for last week was blown through on Wednesday but ultimately held by week’s end. 

I would look to fade either level this week.  

We did get some recent experience with this style of trading and quite frankly it’s not as easy as it sounds. Strong bull trends do not give way easily. My conclusion is that this strategy is best reserved for stocks experiencing a snap-back rally in a primary bear trend. If the market starts to print a lower high on the weekly chart then I will become more serious about this strategy.

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 at this time.

No other entries at this point. I would prefer to see the market stabilize first before looking long again. We will see big volatility over the next two+ months. If we are able to secure a “higher low” off of the S&P in the short run, this might be a good environment for a couple of weeks. 

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. Frankly, selling the “financing” trades has been a huge challenge in this low-vol environment. I will only sell put spreads on decent pullbacks that allow me to secure put spreads 10% OTM. We have no positions at the current time. I have no positions at this time. I cleared out the current puts on the drop to the 200ma. I will “reload” again on the next bounce up; I would like to see the price retrace the 61.8% fib and for the VIX to drop below 20 again. 

The entry for FEB19 would be the SPY 15FEB19 250 puts, but they are rather expensive still at $2.70. I’m going to hold off for a little longer to see if a more complex top is created off of a higher high.