#IPOs for “Dummies” – $GOSS $ALEC $HARP UPDATED

This an update of this post below: IPOs on buys.

As outline in that post, all three of these recent stock IPOs were crossing the highs of their first day of trading (the “IPO Day”).

Once in the trade, stops, at the individual trader’s discretion, can be on a close below the IPO-Day high (which is what I would use), or if one has the patience and risk tolerance as far down as the low of that day.

The numbers in the white flags on the charts below are the gains per $10K invested in each stock. The numbers, at 10K, also correspond to the percentage gains (for instance GOSS is on today’s close up 12%).

(click on the chart panel for a larger view)

#DayTrading stock options in the “Fool’s Game”

Let’s call this a “Fool’s Game” trilogy.

Three days experimenting with buying calls or puts (calls in this instance) according to the rules of the “Fool’s Game” suggested here for day trading SPY options on a lucky November 13th last year in this link: IS It A FOOL’S GAME?.

The basis of the entire strategy is the simplicity of going long calls or puts (what’s been called the “fool’s game”). The cost is clear since it is simply the cost of the option itself with no shorting margin requirements, no covered stock scenarios, no spreads or complicated attempts to calculate delta and neutralize theta and try to fill the four legs of iron condors both going in and trying to get, and no more god knows what else…

This is this simple: buy calls if you believe it’s going up, puts if you think it’s going down.

The results trading SPY options, either in the money or at the money on the nearest expiration — Monday, Wednesday, Friday. were astounding last year, and earlier this year (that system is currently experiencing its biggest draw down since I began tracking and trading it). Both because of the “astounding” and the “biggest draw down”, I decided to take a look at stocks using the same criteria as outlined in this link: DayTrading Stock Options two days ago.

The criteria for selecting AAPL, FB, BABA, NFLX and TSLA for the trades is noted in that link.

The first day of this experiment, Tuesday this week, netted 13.2% in trades that triggered in all five of those stocks (I highlighted TSLA on a chart in a post below), and netted 37% on trades is four of the stocks yesterday (see charts in the post below). FB options did not trigger a trade that day.

Very fine returns for the system, and much to be learned in its context.

Today (see the muddle of charts below), the trades in calls lost 8% on options traded on four of the stocks.

Still, a good three days overall.

But as I mentioned there was much to learned in context – a logical intraday stop on the NFLX trade (the first blue candle as seen on the NFLX chart below), would have cut the total loss to only 3%. Stops, needless to say, like with all systems, need constant examination and re-examination.

I looked into this because I’d been told day trading stock options can’t be done. This week may be an outlier but as far as this “trilogy” of day trades has gone, it has been done.

(click on the chart for a larger view)

#DayTrading Stock Options in the “Fools’s Game” Part II

(CLICK ON THE CHARTS FOR A LARGER VIEW)

TSLA at the end of the day – net up 94%.

BABA at the end of the day – net up 52%.

AAPL at the end of the day – net up 14%

.

NFLX at the end of the day trade – net down 43%.

#DayTrading stocks in the “Fool’s Game”

Don’t quite have it together yet, but am working on developing a strategy to day trade stocks mostly because I’ve been told it can’t be done.

It is based on the basic idea of buying calls and puts as a simple way to play options, calling it, tongue in cheek, “the Fool’s Game”:

IS It A FOOL’S GAME?

The game has been played mostly with SPY options for the liquidity, the three-times-a-week expiration days, and the measure of market breadth they provide.

But what about stocks?

They have to be liquid and as close to expiration as possible – weeklies. And they have to be big prominent popular stocks. To start off I’ve selected AAPL of course (it practically is the market on a weekly options basis), and FB, BABA, NFLX, TSLA. All solid, sometimes big, movers. But even with these one can’t eliminate the randomness (sometimes they move with the rest of market, sometimes they don’t) and the risk of news out of the blue related solely to the individual stock itself.

Still, as the great market wizard Trader Vic Sperandeo once said: “if it moves, I’ll probably try to trade it”

So stock options on a day trade using strikes close to the money on the open and closed at the end of each day. As I said above not completely confident in this but today TSLA gave a glimpse into the possibilities. This is a strategy for day trading, but it is likely it will be more suited to scalping.

On the chart below, I’ve color-coded my buy and sells signals (each trader needs to work out their own). Simply put, I say to myself “buy the yellow, sell blue.” In TSLA today, a trade set at $10K (to easily show the percentage gain) in the nearby out of the money 295 call (TSLA opened at 292.11) resulted in a 74% gain ($7,400) in just under two hours, a scalp sort of…

I suspect today was a best-case scenario but maybe not…

To be continued…

(click on the chart for a larger view)

Here’s a sneak peak as possible a best-case

$SPY – it doesn’t even rhyme, it repeats?

History…

Back in December there was this post:

$SPY – Simple black candle tops…

In which it was noted:

Again and again, market upswings end in black candles – a hanging man, a shooting star, a dreaded doji, or just a sign after six days up and two blasts of nothing-much news the buyers get tired. Not always it’s a black candle ends the rally, but it happens often enough, me thinks, for swing traders to take notice.

And it was further noted going into that December black candle:

“If I had to guess, I’d pick the 281 neighborhood as a place where the SPY may settle this trip up (see the chart). Maybe even a bit higher. It may not take long or it may chop up until January. After that all indications are we have not seen the eventual lows of this bear.

The December black candle (see the chart below) started the plunge into the December 26th buy signal from which we have rallied again to…you guessed it…280 on the SPY! Lots of traveling around in the market to go almost no where. Swing traders love this — after all what a rally! Long-term holders must sit grateful that it’s not as bad as it was…but is it going to get any better for them?

Well, we’ll see. Like last time we were here, there are again simple black candles everywhere: besides SPY (the chart below), and QQQ they are in a slew of ETFs – TAN, FAS, SOXL, FNGU, TNA, TQQQ, UPRO — as well as DB and C in the banks and no less than eight staring me in the face in my nifty-50 stock list (that a lot for a single pattern all at once).

So what’s it mean? Maybe nothing since all-important long-term breadth continues to rise, but then short-term breadth (measured by the McClellan Oscillator, $NYMO), continues to wind down (see the lower portion of the chart below), giving warning signs of a turn to the downside coming near. To keep it simple, let me say it will not surprise me if a dip starts Tuesday and goes down a while.

(click on the chart for a larger view)

#IPOs for “Dummies” – $GOSS, $ALEC, $HARP on buys

Took a look at some recent IPOs since this is one of the easiest trades any trader and investor can make.

I don’t mean being on the inside, or some investment house’s favorite client, or some politician on the take. This when to buy a newly-issue stock offering AFTER it come public.

The strategy is outlined in this post below:

Buying IPOs For Dummies

Don’t mean to insult all those guys who went to Harvard and Wharton and Stern, but simple is best and there is no simpler trade than this.

Note the range on the first day of the IPO’s trading. The buy signal is a close above the high. It is too difficult usually to short these stocks so let’s set that aside for now. The stop loss after the buy is up to the individual trader’s or investor’s risk tolerance. It a can be as close as the price coming back below the first day’s high or as far away as falling through the first’s low.

Below are the charts of the selected recent examples for the stock symbol GOSS, ALEX, and HARP. I have no idea what these companies do nor how qualified they were to sell stock to the public.

This purely a technical analysis entry signal. GOSS was a buy above $19 on today’s open is currently up 1.9%; ALEC was above 19.50 on today’s open is up 4.9%; and HARP was a buy on Friday’s open and is at the moment up 6.1%. The numbers in the white flags on the lower right of each chart is the dollar gain per $10K invested.

Needless to say, as indicated by those quick gains, the first-day high is an important line to play.

(click on the chart panel for a larger view)

#MarketTiming – the rally to fool everyone continues

Been on vacation and been lazy so haven’t updated this blog for a month or so.

No matter. Nothing has changed much since first getting the buy signal on this upswing way back on the open of December 24th in this POST BELOW. Along the way I made the quote below in this entry back on January 7th — Santa leaves behind a “fast up” rally. :

So what now?

Probably more upside but it would be prudent to set stops to preserve swing profits. I’ve cautioned in the posts below that this longer term is a relief rally, and likely just the kind of rally the market uses to make everyone believe it’s the resumption of the multi-year bull.

The key here is go along for the ride but guard against being fooled by how fast the up.

This is still my overall opinion. This is a bear-market rally. It has been and continues to be spectacular but it is still likely to be the rally to fool everyone into believing the bull is alive and well. And maybe it will turn out that it is but no matter. The key is be long as long as it lasts but don’t fall in love with it.

Long-term breadth, as measured by the McClellan Summation Index, the $NYSI (obviously the most important stock market timing signal there is), has been rising now for 37 trading days and yesterday short-term breadth, as measured by the McClellan Oscillator, the $NYMO, turned up from a dip last week giving a renewed general market buy signal for today’s open (see the chart below).

It is a notable uptick since the $NYMO, as it often does ahead of a downturn, was giving warnings that the rally was flagging but the new low above a low in the $NYMO pattern (see green circle on the chart) suggests there is at least a week more of rally to come.

So, as I said above, nothing much has changed this year. The trend is up. Be long and don’t even think short. For now.

(click on the chart for a larger view)