Daily Newsletter
July 17, 2019Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
Bitcoin/Crypto
View Doc's New Book
July Expiration
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Market Commentary
NFLX dropped a bomb on their earnings release afterhours today, and took a modestly weak market today into what might be a honest pullback tomorrow. Of note were GLD and SLV exploding higher; I might have to adjust/roll my SLV position which expires on Friday
Speaking of earnings, of note is FB on the 24th, AMZN and GOOGL on the 25th, and then AAPL on the 30th. That pretty much wraps up earnings season (the big boys) after AAPL releases, so we’ll see if markets dive or lift by that point.
I typically do not play earnings releases as a strategy; I prefer to look for a trend breaking out after earnings and then riding that as the IV dissipates.
Earnings Reports: The following companies of note report in the next few days:
- Thursday: COF, UNH, MSFT
- Friday: AXP, SLB
- Monday: HAL
- Tuesday: KO, LMT, SNAP, TRV, V, UBS
- Wednesday: BA, CAT, F, FB, TSLA
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:
- If the lower EM is tagged and holds as support, I might look to play a 19JUL SPY call ATM for up to a 100% gain.
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.
- If SLV starts to rise above the $15 level I’ll have to roll my JUL options further out in time/price; see “stocks” below.
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 weak value of -233, closing near the lows of the day.
SPX Market Timer : The Intermediate line has flattened in the Upper Reversal Zone and is still bullish. The two weaker timeframes clustered in the Lower Reversal Zone, creating a Weak Bullish Cluster, normally a leading signal for an upside pop.
DOW Theory: The SPX is in a long term uptrend, an intermediate trend, and a short-term downtrend. The RUT is in a long-term uptrend, an intermediate sideways trend, and a short-term sideways trend. The Dow is in an intermediate uptrend and short-term uptrend.
VIX: The VIX rose to 13.97, inside the Bollinger bands. The RVX rose to 16.47, and is inside the Bollinger bands.
Fibonacci Retracements: Fibs are out of play now with the price near all-time highs.
Support/Resistance: For the SPX, support is at 2730 and There is no overhead resistance. The DOW has support at 24800 and no overhead resistance. The RUT has support at 1460 and resistance at 1618.
Fractal Energies: The major timeframe (Monthly) is charged again with a reading of 51. The Weekly chart has an energy reading of 45, starting to pick up on the uptrend. The Daily chart is showing 38, in exhaustion. 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 flattened at 88, overbought. The RUT Stochastics flattened at 60, mid-scale. The SPX MACD histogram fell above the signal line showing a decrease in momentum. The SPX is below the upper Bollinger Bands with support at 2905 and resistance at the upper band at 3031. The RUT is below the upper Bollinger Band with its boundaries at 1525 to 1588.
Position Management – NonDirectional Trades
I have no positions in play at this time.
I will consider the Long Iron Condor strategy when all three timeframes are wound up again. We are very close to this.
I have no positions in play:
I believe we’ll see a very choppy summer period and might try to take advantage of Weekly Short Iron Condors when we get the right signals.
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 SLV 19JUL $15 calls (6/20) for $.15 credit. If the price rises above $15 before Friday’s expiration then I will close/roll these calls out to the 30AUG series and try to get a $.16 credit at the $16 strike price
- 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 in the short term 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.
- 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..
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 300.65, there is a +/-3.272 EM into this coming Friday; this is somewhat smaller than last week’s 3.423 EM. The EM targets for this Friday’s close are 303.92 to the upside, and 297.38 to the downside.
Watch for a test of the lower EM tomorrow that holds; we could play a 19JUL call option against it.
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:
- DIS 2AUG 141/142 Debit Call Spread (7/8) entered for a $.50 debit and closed (7/15) for a $.75 credit; this gave us a net $21/contract profit after commissions or a 42% return on capital.
- PEP 9AUG 133/134 Debit Call Spread (7/12) entered for a $.50 debit and will look for 50%.
- GLD 16AUG 133/134 Debit Call Spread (7/15) was entered for a $.44 debit and will look for a 50% return.
No new entries for tomorrow.
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.