Daily Newsletter
December 18, 2019Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
Bitcoin/Crypto
View Doc's New Book
December Expiration
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Market Commentary
Consolidation at the top of a 350 point S&P swing seems normal as both the Weekly and Daily charts are into exhaustion. Could we see the same result at 2017 where prices stalled for two weeks in a narrow range, before exploding once again as 2018 ticked over? It’s unlikely to occur in the same manner, but we know the monthly swing now unfurling won’t stop just yet.
We did see some rotation today out of some of the Industrial sectors and back into Nasdaq/Russell ones.
Short-Term Outlook: Prices are breaking from a massive consolidation pattern in play 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, and the first weekly trend is playing out in that direction..
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Offensive Actions
Offensive Actions for the next trading day:
- No trades 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.
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 the advancers minus decliners coming in at a mixed value of -3.
SPX Market Timer : The Intermediate line has flattened in the Upper Reversal Zone and is still “Bullish.” After three days of a Strong Bearish Cluster with the two strongest timeframes in the Upper Reversal Zone, we saw a pause today.
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 sideways trend, and a short-term uptrend. The Dow is in an intermediate uptrend and short-term uptrend.
VIX: The VIX rose to 12.58, inside the Bollinger bands. The RVX fell to 14.22 and is inside the Bollinger bands.
Fibonacci Retracements: The price is into new highs again.
Support/Resistance: For the SPX, support is at 2825 with no overhead resistance. The DOW has support at 25500 and no overhead resistance. The RUT has support at 1450 and resistance around 1742.
Fractal Energies: The major timeframe (Monthly) is charged again with a reading of 42, and is starting to reflect the very linear trend from late 2018. The Weekly chart has an energy reading of 32, deeper into exhaustion. The Daily chart is showing 34, into exhaustion again. We’re seeing a runaway bull once again but both Weekly and Daily charts into exhaustion.
Other Technicals: SPX Stochastics rose to 80, overbought. RUT Stochastics rose to 81, overbought. The SPX MACD rose above the signal line, showing an increase in positive momentum. The SPX is at the upper bollinger band with the range 3081 to 3199. The RUT is at the upper bollinger bands with the range 1582 and 1667.
Position Management – NonDirectional Trades
I have the following positions in play at this time:
- SPY 20DEC 296/297*319/320 Long Iron Condor (11/4) was entered for a $.17 debit on the puts and a $.16 debit on the calls. I closed the call spreads (12/12) for $.42 credit. Assuming that the put spreads expire worthless, this gives me a net return after commissions of $5.10/contract or a 15.4% return on capital. I decided to sell the position into strength at a less-than-target level as we only had days of time left in the position.
No additional positions at this time.
I have the following positions in play:
- SPX 23DEC 3015/3020*3150/3155 Iron Condor (12/3) was entered for a $2.50 credit. I have a $1.80 GTC debit exit order placed. We’ll look for any kind of pullback back into the range of this trade as an opportunity to close it, or reduce our closing debit prior to Monday..
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. Looking for the next rally to sell calls against.
No other trades at this time. Let’s let the moonshot subside and look for a general pullback in markets.
Position Management – Directional Trades
Thoughts on current swing strategies:
- 8/21 EMA Crossover – The long cross has fired and is gone. The next entry would be off of the 21ema which occurred the week of Dec 2.
- RSI(2) CounterTrend – I’ll look for the next setup.
- Daily S&P Advancers – Looking for the next signal to go long with single-digit advancers to close the day.
- Swing – None at this time..
BTC and other top-ten coins are once again in a downtrend; could this be the final capitulation after slipping into a Bear almost two years ago?
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 317.32 there is a +/-5.004 EM into this coming Friday; this is larger than the 4.194 EM from last week. The EM targets for this Friday’s close are 322.32 to the upside, and 312.32 to the downside.
We will continue to look for downside tests of the weekly EM.
I have no positions in play:
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:
- SLV 20DEC 15.5/16.5 debit call spread (11/18) entered for $.42 debit and closed (12/17) for a $.42 credit for break-even.
- PYPL 3JAN 108/109 debit call spread (12/2) was entered for $.50 debit. I will seek 50%.
- DIS 10JAN 147/148 debit call spread (12/13) was entered for $.49 debit. I will seek 50%.
- WMT 24JAN 121/122 debit call spread (12/16) was entered for $.50 debit. I will seek 50%.
- V 24JAN 185/187.5 debit call spread (12/17) was entered for $1.25 debit. I will seek 50%.
No additional trades at this time.
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 the following open positions at this time:
- SPY 21FEB 279 long puts (11/15) entered for $2.21 debit. I will look to clear half of the position on any test of the 200 sma, and the other half upon a 10% haircut in price.