$SPY – Runs up on a tweet into the FED…

MARKET TIMING SIGNALS FOR 6/19/2019.

Long-Term Breadth (NYSI): BUY DAY 11
Short-Term Breadth (NYMO): BUY DAY 2
Price: BUY DAY 2
Nifty-50-Stock-List: 34 BUYS, 14 NEW BUYS, 26 OVERBOUGHT; 16 SELLS, 1 NEW SELLS, 1 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 44, Rising, FEAR LEVEL.
Bellwether Stocks: 13 UP, 2 DOWN.

WHAT?

The Market ran up today when President Trump tweeted that he and President XI would be meeting at the G-20 conference (like they weren’t going to?) and would discuss the tariff tensions between the US and China. Then it stopped for the day when a Chinese spokesman shortly after basically declared the victory and planned to have no more than lunch with Ding-Dong.

Now there’s a fundamental for you?!

Oh, and it also came out that Trump wanted to fire the head of the Federal Reserve. On the first day of the FOMC meeting that news breaks!

Used to be this kind of uncertainty and instability would tank the market but evidently not now, or at least not yet.

OF PARTICULAR NOTE TODAY:

Stocks followed through another day with more strength to the upside – 26 of the nifty-50 list are now overbought, and 12 of the bellwether stocks up on the day.

NVDA calls led the options day trade with an 82% gain, AAPL ITM calls were up 38%, BABA ITM calls up 26%, and finally the SPY calls also joined the rise, up 52%.

WHAT NEXT?

Tomorrow is a FED day, with the Federal Reserve Open Market Committee making known its policy on interest rates. Any thing can happen in reaction to the FED decision, but given the market is in a positive upswing, tomorrow should be more of the same bullishness no matter what the FED does.

Unless one is an investor, this is a day to sell into the FED if the market’s rising and buy if it is falling. The aftermath for the rest of the week will matter more.

#MarketTiming – tracks of the bear?

Sometimes, as they say, it’s not a stock market, it’s a market of stocks:

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$SPY – market tries to reverse Trump tariff sell-off

MARKET TIMING SIGNALS FOR 5/6/2019.

Long-Term Breadth (NYSI): SELL FROM 5/6.
Short-Term Breadth (NYMO): SELL FROM 5/6.
Price: SELL FROM 5/6.
Nifty-50-Stock-List: 27 BUYS, 4 NEW BUYS, 13 OVERBOUGHT; 23 SELLS, 11 NEW SELLS, 5 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 56, FALLING, GREED LEVEL.
Bellwether Stocks: 1 UP, 14 DOWN.

OF NOTE SPY OPTIONS DAY TRADES:

SPY CALLS, 5/6 288 UP 71%, 290 UP 120%, 291 up 190%. No put trades.

OF NOTE
:
Fourteen of the bellwether stocks (AAPL, TSLA, NFLX, TWLO, AMD, NVDA, QCOM, GS, GOOGL, BABA, MSFT, FB, FSLR, AMZN) were up from the open although down on the day; and one (WYNN) was both down for the day and down more from its open.

WHAT:

The futures market sold off hard overnight on the news Trump threatened new tariffs on Chinese imports, then rebounded immediately at the open on the news that the Chinese negotiators planned to come to the U.S. to talk as planned anyway. The market was poised to go higher, prior to Trump’s announcement but the news cut short the buy signals across the board on Friday’s gains.

Can’t do anything about news, either positive or negative, except to go with the flow as it unfolds – in this case for day and swing traders it was a buy on today’s open and turned out to be quite a remarkable bounce back. Fourteen of the bellwether stocks were up from the open despite remaining down for the day. The $10K day trading system, had today’s 290 calls (in the money, ten minutes into the market) up 120% or the day, and just out of the money 291 call up 190%.

WHAT’S NEXT?

All technical signals I follow gave sell signals today for tomorrow open as the one-day blip up in long-term breadth ($NYSI) Friday retreated today on the tumble in short-term breadth ($NYMO); the price buy for today’s open, which racked up 4.5% on TQQQ and 3.7% on UPRO on the close, will be a sell on tomorrow’s open. In addition, CNN’s Fear and Greed Index dipped today while still at a greed level, and volatility surged (VIX), both negatives for the market.

Sell signals are sell signals but what’s next is tricky given the velocity of today’s rebound (see the candle on the SPY chart below), but it did not quite reverse completely and it may have used up immediate buying power to get to where it got on the close. If so, chances are it reverses again to the downside tomorrow. The key will be play the open, preferably with either calls or puts, while looking to lock in profits on today’s gains on TQQQ and UPRO and any of the bellwether stocks.

(click on the chart for a larger view)

#DayTrading Stock Options – Puts

The quote from this link three days ago continues to be my prevailing opinion on the market action for stock options:

#DayTrading Stock Options in the Fool’s Game

With the all-important long-term breadth now declining, stock options trading has shifted to the puts.

Long-term breadth turned down on 2/28 triggering sells, and bearish swing context for the general market from the open of 3/1. Despite the blip up Friday, market direction remains most likely to be down.

In additions, short-term breadth turned down today in negative territory, and prices across the indexes reversed a gap up on the day.

Hence, going long puts. See posts below for more discussion on criteria for the trades.

Today, the big four bellwether stocks I’m using for this options strategy — AAPL, BABA, NFLX, TSLA (see charts below) — racked up a 57.4% gain for the $10k committed to the trades ($5,341).

Still, for the record, today’s gain merely brings the week’s total so far to breakeven. Although the market turned negative with long-term breadth turning down, the rollover to the downside has been slow, and has just begun to register in the options day trading.

In general, the market could bounce here. There is news tomorrow – the employment numbers — and the trading going into he rollover was so tight the market is getting overbought rather quickly on the pull back. None of that matters to this day-trading strategy, which opens each day some time (and only sometimes) after each open and always is closed on each close. On an overall positive day it’s likely the buy signals in the puts will not trigger.

(click on the charts for a larger view)

#DayTrading Stock Options in the Fool’s Game

With the all-important long-term breadth now declining, stock options trading has shifted to the puts.

Long-term breadth turned down on 2/28 triggering sells, and bearish swing context for the general market from the open of 3/1. Despite the blip up Friday, market direction remains most likely to be down.

In additions, short-term breadth turned down today in negative territory, and prices across the indexes reversed a gap up on the day.

Hence, going long puts. See posts below for more discussion on criteria for the trades.

Today’s entries, despite small losses in AAPL and BABA, as a $10K day-trade basket ($2500 in each positions) was up 18.8% for the day, driven by a 36% gain in the TSLA 300, and a big win in the NFLX 360. All put positions are weeklies, expiring Friday.

(click on the the chart below 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%

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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

UPDATE – $SPY #Options trade on a “Turnaround Tuesday”

Pretty great day in the gone-long options world.

Bought the Wednesday 287 call based on the immediate post below speculating that today would be a turnaround day suggested by history and by David Bergstom’s analysis at the “See It Market” site.

Several notable stocks were also up more than 3% from the open: NFLX, AMZN, BABA, and AAPL almost at up 2.95%. TQQQ, the Nasdaq 3xLeveraged ETF, was up 3.8% from the open.

#SwingTrading – 2-day swing ending with all bellwether stocks in black

The technical end of this trade, started just yesterday on the open, is tomorrow’s open.

But as of today’s close all 12 of my bellwether stocks are in the black so there’s a good chance they will remain in profits barring any over-night news.

Regardless, it is a market signal that runs this strategy so no later than tomorrow’s open a sell for swing traders it will be (would be nice to have a gap up for that).

My “bellwethers” are TSLA, NFLX, AMZN, BID, TWTR, BIDU, AAPL, GS, FB, NVDA, FSLR, BABA. See chart panel below. The white flags on the lower right of each chart is the current profit per 100K committed to the trade (also correlates to a percentage gain).

The current swing is led by BIDU up 4.5%, followed by BABA up 3% and NVDA 2.9%. That’s in two days.

As a side note BABA is up eight days in a row so if there is market weakness tomorrow it is ripe for a day-trade scalp on the short side.

(click on the chart for a larger view)