Daily Market Newsletter
March 12, 2019Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
Bitcoin/Crypto
View Doc's New Book
March Expiration
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Market Commentary
Today’s report comes to you from LaGuardia airport; after a few days at the Trader’s Expo, I’ve seen that some things have changed in the options world, while others have not. I pretty much summed up these thoughts, however the one message that resonated with me the most was Tom Sosnoff’s admonition that edge is best found with individual innovation, and not being part of the investing herd. The rest of the show was all about vendors claiming to have the best predictive software, the best scanners, the best strategies, etc. Few people talked about helping individuals learn how to achieve freedom. .
My thinkorswim charts are not booting up here on my tether connection; please ignore the technical analysis section below. I’ll be back to the normal setup tomorrow. I do believe that we should pursue CSCO as per my video below.
Here is the current scorecard – up and down – for the correction from the September 2018 highs:
- S&P was down ~594 points or 20.20%, now up 470 points or 20.03% from the bottom.
- Dow was down 5239 points or 19.44%, now up 4528 points or 20.85% from the bottom.
- /NQ is down 1908 points or 24.69%, now up 1391 points or 23.90% from the bottom.
- RUT is down 475 points or 27.27%, now up 335 points or 26.44% from the bottom.
The majority of the market-moving earnings heavyweights have already reported (FB, AAPL, AMZN, GOOGL). The FOMC meeting and most of the important economic numbers have been printed. The Market’s on its own from this point, perhaps with the help of a little FedSpeak. Anything can happen, but as long as the FOMC is operating with the “implied put” to backstop this market (even though there is LITTLE that they can do!) then I believe that the price is showing us higher in the near term. The Bear will not re-appear as long as the Fed is market-friendly.
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No embedded video today.
Offensive Actions
Offensive Actions for the next trading day:
- Please see the CSCO trade in the Whale section below, as well as on today’s video .
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.
- Closing orders have been entered for all new spreads.
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 and breadth ended the day super-high at +434 advancers minus decliners, with a high-water mark at +437 in the last hour.
SPX Market Timer : The Intermediate line fell below the Upper Reversal Zone, now showing a neutral bias. This chart is very close to a full bearish cluster again.
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 uptrend, and a short-term uptrend. The Dow is in an intermediate uptrend and short-term uptrend.
VIX: The VIX fell to 14.33 after peaking at 50.3 a year ago, inside the bollinger bands. The RVX fell to 17.13 and is back inside the bollinger bands.
Fibonacci Retracements: The price has moved through several important Fib levels and is not caring about any confluence levels that these present. At some point we might have a significant fib retracement on the swing from bottom-top, however I don’t believe in this market character that it will be to a deeper fib level.
Support/Resistance: For the SPX, support is at 2700 … with overhead resistance at 2815 and 2941. The RUT has support at RUT 1500 with overhead resistance at 1742. The S&P500, Russell 2000, Dow, and Nasdaq 100 have all printed a Death Cross with the 50ma crossing below the 200ma; this can be a leading signal for a true Bearish move. It can also signal “false” and create a massive swing higher. We might be seeing the latter scenario.
Fractal Energies: The major timeframe (Monthly) is charged again, with a reading of 58. The Weekly chart has an energy reading of 36, at exhaustion from the uptrend. The Daily chart is showing a level of 47 which is recharging very quickly due to the chop over the past week.
Other Technicals: The SPX Stochastics indicator fell to 55, mid-scale. The RUT Stochastics indicator fell to 43, mid-scale. SPX MACD histogram rose below the signal line, showing a return of upside momentum. The SPX is inside the Bollinger Bands with Bollinger Band support at 2726 and resistance at the upper band at 2820 with price is below the upper band. The RUT is inside the Bollinger Bands with its boundaries at 1514 to 1608 and price is below the upper band.
Position Management – NonDirectional Trades
I have the following positions in play:
- SPY 27MAR 271/272*287/288 Long Iron Condor (2/25) entered for $.18 debit on the call spreads and $.16 debit on the put spreads. I will look for a 200% return on each side individually and may the best side win.
No additional trades for now.
I have no positions in play.
Waiting for the next condition to sell options again; realized vol is out-pacing implied vol again. The rebound off of the bottom has been violent and traders are chasing after the move.
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. I would like to see how the price handles the first pullback before I jump into this style again. It does not work well when realized vol out-races implied vol.
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 currently have the SLV 18APR $15.5 calls (2/11) for a $.17 credit.
- EBAY 26APR $34 puts (3/11) sold for $.73 credit.
Finally got the pullback that we wanted. I was not able to sell the HPE puts because of no open interest on that strike.
Position Management – Directional Trades
Thoughts on current swing strategies:
- 8/21 EMA Crossover – Looking for the next signal.
- RSI(2) CounterTrend – None at this time. The GLD trade smoked it and gapped well above my limit order on Friday.
- Daily S&P Advancers – Looking for the next signal to go long when we have single-digit advancers on the ADSPD.
- Swing – I have no positions at this time.
Crypto has gotten a little bump in the last few days; heads are poking up to see if this rally is “real.”
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.”
The EM targets for this Friday’s close are 279.08 to the upside, and 269.84 to the downside.
The price has closed above the upper EM and the fade play is off. Also be careful as the SPY goes ex-div on Friday so careful with any short call options.
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 the following positions in play:
- DE 15MAR 165/167.5 Debit Call spread (2/25) entered for $1.27 debit. I will look for a 50% return.
- UPS 29MAR 112/113 Debit Call Spread (3/4) entered for $.50 debit.
- SBUX 29MAR 71/72 Debit Call Spread (3/4) entered for $.50 debit.
I will look to enter the CSCO 26APR ATM debit call spread $1 wide tomorrow, for about $.50 or so. This is a momentum play based on our OEXMOMO scan.
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 positions at this time. I cleared out the most recent set of puts on the drop to the 200ma back in October. I will “reload” again soon, if/when the weekly chart goes into upside exhaustion. The three-month puts are coming down in price closer to what I’d prefer to pay. (3 months out/90% of current value)