Daily Market Newsletter
June 10, 2019Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
Bitcoin/Crypto
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June Expiration
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Market Commentary
Right on target, the SPX brushed the upper bollinger band after seeing a massive short-covering rally rip off 176 points and essentially four standard deviations of price movement from the lower bollinger band to the upper one. This was a true “slingshot” move akin to pulling back a rubber band a little too much, where it snaps out of your hand in the opposite direction. Price movement is similar to many things in the physical world, and an oversold short-covering rally is one of them.
But things are a little stretched and I’d expect to see the price stall out here, even printing a few red candles (below) to get everyone worked up again. Today’s candle ended up as a “shooting star” as it touched the upper bollinger band in the morning and spent the rest of the day in distribution mode. We could see a few days of consolidation but there’s not enough premium to sell and get out in time.
Short-Term Outlook: I’m left to conclude that after some short-term histrionics, which should include some form of “scary higher low,” we’ll ultimately see the market continue higher. 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.
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Offensive Actions
Offensive Actions for the next trading day:
- I still have a GTC order for short calls on SLV by selling the 19JUL $15 calls; see “stocks” section below.
- I will set up a new long call spread trade on PYPL, if possible. See “whale” section below.
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 with advancers versus decliners closed up a modest+130, after a high-water mark of +336 earlier in the day.
SPX Market Timer : The Intermediate line has turned up above the Lower Reversal Zone and is now bullish. No leading signals at this time.
DOW Theory: The SPX is in a long term uptrend, an intermediate downtrend, 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 16.03, inside the Bollinger bands. The RVX rose to 19.17, and is inside the Bollinger bands.
Fibonacci Retracements: We have seen a full 38.2% retracement of the Christmas Eve rally, and now the price has exceeded the 61.8% fib of the May distribution sell-off. .
Support/Resistance: For the SPX, support is at 2730 and resistance at 2954. The DOW has support at 24800 and resistance at 26700. The RUT has support at 1460 and resistance at 1618.
Fractal Energies: The major timeframe (Monthly) is charged again with a reading of 55. The Weekly chart has an energy reading of 55. The Daily chart is at exhaustion from this recent uptrend with a reading of 38. Larger timeframe energies are waiting on a very big move, which will start with the smallest timeframes, but the daily chart needs a rest from the recent bounce.
Other Technicals: The SPX Stochastics indicator rose to 38, mid-scale. The RUT Stochastics rose to 34, above oversold. The SPX MACD histogram rose above the signal line showing positive momentum. The SPX is below the upper Bollinger Bands with support at 2750 and resistance at the upper band at 2904. The RUT remains above the lower Bollinger Bands with its boundaries at 1466 to 1564.
Position Management – NonDirectional Trades
I have no remaining positions in play.
With the S&P500 charts nearly at full energy again across the board, it might be time soon for another long condor. I’d like to see the daily energy restored first.
I have no positions in play at this time.
No additional trades at this time; the timing is absolutely crucial on these trades so we have to find absolutely exhausted conditions prior to taking these entries. There is simply too much weekly chart energy to believe that we’ll see neutral price action in the near future.
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 will go out to the 19JUL series and sell the $15 calls for at least $.15 credit.
- CSCO – I sold the 16AUG $50 puts (6/10) for a $.64 credit. I will look to close this one for $.05 to $.10 debit.
We’ll see if any subsequent pullbacks allow better entries.
Position Management – Directional Trades
Thoughts on current swing strategies:
- 8/21 EMA Crossover – Looking at the next signal; I would like to see a pullback first closer to the 21ema. I would focus on the 12JUL SPY series at this time with a $1-wide call spread shooting for around $.50 debit.
- 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 – None at this time..
Crypto “top ten” coins have been positive since early April, although the rally has lost steam lately with the larger timeframes needing a rest.
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 287.65, there is a +/- 4.711EM into this coming Friday; this is somewhat smaller than last week’s 5.309 EM. The EM targets for this Friday’s close are 292.36 to the upside, and 282.94 to the downside.
I would be a buyer of a successful test of the lower EM this week with an ITM front day/week call option.
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:
- WMT 12JUL 107/108 debit call spread (6/10) entered for $.50 debit; I will look for a 50% return on this trade.
Per this weekend’s report, I’d like to enter one additional long trade if possible:
- PYPL 5JUL debit call spread – enter at around $.50 debit on $1-wide spread. This one ran away from me this morning so I’ll try again Tuesday.
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.