Daily Newsletter
June 24, 2019Non-Directional Strategies
Semi-Directional Strategies
Directional Strategies
Bitcoin/Crypto
View Doc's New Book
July Expiration
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Market Commentary
Well, here we go again. Now that we’ve essentially “socialized” the stock market, 2020 Presidential Candidate Bernie Sanders has the next idea on how to use the market to pay for college debt:
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I did the math on Bernie’s 2016 plan, and it would have put $20/side options commissions into play, $40 round-trip. Essentially no one would trade any more, or traders would move to cryptocurrency exchanges off-shore to trade. I have seen these plans come up year after year by those that view the market as a source of huge windfalls, when in fact it would likely hurt the little guys like us more than anyone.
It’s unlikely to pass both House and Senate regardless, however I’ve seen odder things happen. In the meantime, the market did exactly *nothing* today as expected.
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, 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:
- No new orders 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.
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 well below-average today with advancers minus decliners weakening at -119, after a low-water mark of -2136 later in the session.
SPX Market Timer : The Intermediate line has turned higher into the Upper Reversal Zone and is still bullish. The two strongest timeframes have now negated the three-day cluster in the Upper Reversal Zone.
DOW Theory: The SPX is in a long term uptrend, an intermediate trend, 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 flattened to 15.29, inside the Bollinger bands. The RVX rose to 18.44, 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 resistance at 2964. The DOW has support at 24800 and resistance at 27000. 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 52, starting to pick up on the uptrend. The Daily chart is at exhaustion from this recent uptrend with a reading of 27, with Thursday showing the lowest value I’ve seen. 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 89, overbought. The RUT Stochastics fell to 83, overbought. The SPX MACD histogram flattened above the signal line showing a decrease in momentum. The SPX is at the upper Bollinger Bands with support at 2735 and resistance at the upper band at 2989. The RUT dropped from the upper Bollinger Band with its boundaries at 1465 to 1570.
Position Management – NonDirectional Trades
I have the following positions in play:
- SPY 15JUL 278/279*298/299 Long Iron Condor (6/17) was entered for $.17 debits on both call and put spreads. Per Thursday’s advisory I closed the call spreads (6/21) for a $.40 credit. This gave me a net profit of $19/contract on the call spreads; I will look for any kind of dip over the course of the next week to remove the put spreads .
I have the following positions in play:
- SPX 28JUN 2925/2930*2975/2980 Iron Condor (6/24) entered for $2.50 credit. I will look for a $1.85 exit to secure 25%.
The daily chart is so exhausted and right up against overhead supply; I believe that it’s worth a shot to see if the daily chart will just spend a few days range-bound to allow it to catch a breather
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.
- 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..
Crypto “top ten” coins have been positive since early April, and Bitcoin has gone parabolic above $10k again. The Bear appears to be over.
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 294.00, there is a +/-4.565 EM into this coming Friday; this is similar to last week’s 4.544 EM. The EM targets for this Friday’s close are 298.57 to the upside, and 289.44 to the downside.
The price obliterated the upper EM last week due to Fed forces, so I would expect to see a more mild week this week where either EM is fair game to fade. See the “LP Iron Condor” section above for a possible weekly condor trade we can enter.
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:
- MCD 26JUL 205/207.5 Debit Call Spread (6/24) entered for $1.22 debit. I will look for a 50% return on this trade.
Nothing else while we wait for markets to take a breather.
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.