Daily Market Newsletter

I have the following positions:

• SPX 24AUG 2775/2780*2855/2860 Iron Condor (7/30) was entered for a $2.50 credit. I will look for a 25% return on risk from this position.

The last three days of price action has pushed the price higher into the profitable range and away from the T+0 profit peak; this delays any potential early exit and might have to go the distance on this one if the price continues grinding.

I have no remaining positions. Calendar spreads are good for markets in quiet/trending character, so there is a good shot that we can start to play these 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 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:

• VXX Stock – I own 12 shares of this stock and will hold until Armageddon occurs.
• SLV Stock – I have 1000 shares of the SLV that was assigned at the $15 level. I currently have 17AUG $16.50 SLV calls (6/8) for $24 credit. .

No entries at this time; I’d like to see a decent pullback before we go shopping again for new candidates.

The crypto market has been very soft the last few days and many bear flags have been broken; BTC is still holding strong but cannot hold up the entire market by itself. The bear market and strong weekly downtrends look to be having their effect.

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 283.60, there is a +/-2.867 EM into this coming Friday.  This is significantly smaller than last week’s 3.525 EM, which shows the impact of getting major risk events out of the way.

The EM targets for this Friday’s close is 286.47 to the upside, and 280.73 to the downside.

With a lot of short-term energy available on the daily chart and a small EM, this week does not present a good fade opportunity to the upside, however it might be a good one for the downside EM target..

This is a new section for this newsletter; I would like to start to carefully build some bearish positions that would be the virtual opposite of a covered call, yet I will use deep ITM long puts as the short stock substitute, and write short covered puts against those long puts.

I would like to add one additional consideration to the criteria, in that I’d like to see the price print a “lower high” first on the daily chart. Otherwise what is “high” can go “higher” as we’ve seen repeatedly over the years.

I will also publish the criteria for managing the short and long positions with this strategy. This is definitely counter-trend for now but might prove to be valuable down the road.

The scan that I’ll discuss 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.

I have the following positions:

• XLB 10AUG 58.5/60.5 call vertical (7/11) entered for $.91 debit. I will look for a 50% return from this trade; I will have to close this on the next move higher.
• XRT 17AUG 49/51 call vertical (7/17) entered for $1.02 debit. I will look for a 50% return from this trade. If the price hits the $51 level and gets stuck there, let’s exit the trade rather than fight overhead supply.
• XLF 7SEP 28/29 call vertical (8/6) entered for $.46 debit; I will look for a 50% return from this trade.

We need to close out the XLB trade tomorrow; we are out of time on this trade and it’s showing a positive return, or at least it was at one point today. The gamma is too high and we’ll see wild fluctuations in the next couple of days. We could always roll the position if we still believed in it.

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

• I entered the 17AUG SPY 245 puts (5/14) for a $1.41 debit. I will hold these through the next test of the 200 dma.

If the price continues grinding higher, I will add the next series of long puts after August expiration.