Daily Market Newsletter
April 9, 2019Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
Bitcoin/Crypto
View Doc's New Book
April Expiration
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Market Commentary
Some light profit-taking prior to the bulk of 1Q earnings which come in a flood over the next few weeks, with the big ones being:
- NFLX: April 16
- SNAP: April 23
- FB: April 24
- AMZN/MSFT: April 25
- GOOGL: April 29
- AAPL: April 30.
The big banks really get things kicked off on Friday morning, but as discussed yesterday we have a pile of FedSpeak to navigate this week, with Jerome Powell speaking three times and other major Fed players grabbing the podium as well. This might be a week where we see indecision for a while as markets try to digest these gains before the next move on to all-time highs..
We should be looking for pullbacks to sell puts against assets that we want. We should be looking for momentum breakouts. Nothing else will work in this environment.
Earnings Updates – the following companies of note will be reporting this week:
- Wednesday: BBBY, DAL
- Thursday: No one of note
- Friday: JPM, PNC, WFC
- Monday: C, GS
- Tuesday: BAC, IBM, JNJ, UAL, UNH
Subscriber Update: I will be out of the country and not producing the report from Monday May 20th until Thursday June 6th; in my stead will be a very talented guy by the name of Alex who I will have do some guest videos in the near future so that you get used to his voice and style.
Please sign up for our free daily crypto report here.
Offensive Actions
Offensive Actions for the next trading day:
- No trade 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.
- 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 average today and breadth ended the day fairly weak at -296 advancers minus decliners.
SPX Market Timer : The Intermediate line rose into the Upper Reversal Zone, now showing a bullish bias. After showing a Strong Bearish Cluster for two days in a row, this chart faded today and is showing 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 uptrend, and a short-term uptrend. The Dow is in an intermediate uptrend and short-term uptrend.
VIX: The VIX rose to 14.28 after peaking at 50.3 a year ago, inside the bollinger bands. The RVX rose to 17.61 and is 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. The recent retracement did not even get to the 23.6% fib retracement on the latest pullback. We’ll see if fibs start to matter again.
Support/Resistance: For the SPX, support is at 2700 … with overhead resistance at 2941. The RUT has support at RUT 1500 with overhead resistance at 1600 and 1742. All indices that we track recently showed 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 as the Dow ,S&P500, and /NQ have now printed a Golden Cross. Only the Russell 2000 remains in a death cross and it will signal a Golden Cross within days.
Fractal Energies: The major timeframe (Monthly) is charged again, with a reading of 55, yet is starting to reflect the reversion to the larger uptrend again. The Weekly chart has an energy reading of 34, in exhaustion from the uptrend. The Daily chart is showing a level of 45 which is just below fully recharged. These readings say that we should expect at least a couple of weeks of choppy price behavior but will see sharp moves during this chop due to the charged nature of the daily chart.
Other Technicals: The SPX Stochastics indicator rose to 74, below overbought. The RUT Stochastics indicator rose to 72, mid-scale. SPX MACD histogram fell above the signal line, showing a loss of upside momentum. The SPX is inside the Bollinger Bands with Bollinger Band support at 2778 and resistance at the upper band at 2904 with price is below the upper band. The RUT is inside the Bollinger Bands with its boundaries at 1510 to 1589 and price is below the upper band.
Position Management – NonDirectional Trades
I have the following positions in play:
- SPY 12APR 285 Long Straddle entered (4/1) for $4.68 debit.I will immediately look for a 40% return on the entire position and will not look to leg in nor leg out. This trade really favors a downside move as it’s a long-vega trade. Max risk on this trade is limited to what we pay for it but we want to avoid letting this one circle the drain. If we don’t see some movement by Wednesday, I’ll close this trade for what I can. The EM on this series was 5.678 for 12APR, and the price has already moved 6.31 points…but it’s the IV crush that kills straddles on upside moves.
No further trades.
I have the following positions in play:
- SPX 18APR 2725/2730*2860/2865 Iron Condor (3/25) entered for $2.60 credit. My goal is to remove this trade for a 25% return on risk. This would be a closing debit of $2.00 or less. The price is currently outside the profitable zone of this trade as the price has rallied almost 100 points in the time since entry.
No additional trades at this time.
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.
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. I will let these expire.
- EBAY 26APR $34 puts (3/11) sold for $.73 credit, and were closed (4/4) for $.10 debit.
- PFE 17MAY $39 puts (3/18) sold for $.39 credit. I will look for a $.10 debit to remove.
No additional trades at this time. We need to be patient to wait on the next pullback. We are “green light” again because the death cross has cleared on most of the indices that we track.
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.
- Daily S&P Advancers – Looking for the next signal to go long when we have single-digit advancers on the ADSPD.
- Swing – I placed a SPY 17APR 282/283 debit put spread (3/29) for $.42 debit, and will look for a 50% return from this trade. This is counter-trend but looking for a quick move lower.
Crypto has had relative strength over the last few weeks and no one believes this rally. The Bear appears to be over and I’m looking for one last shake-out to signal this.
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 288.57, there is a +/-3.11 EM into this coming Friday; this is significantly smaller than last week’s 3.79 EM and is more in-line with the norms. The EM targets for this Friday’s close are 291.68 to the upside, and 285.46 to the downside.
A test of the lower EM should be a signal to fade that test to the upside.
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 at this time:
- TGT 17MAY 80/82.5 debit call spread (4/9) entered for $1.25 debit. We will look for a 50% return on this trade. Earnings have already passed for TGT.
I was not able to secure the SWKS trade entry. No other entries at this point.
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)