$SPY – the fool’s game’s not foolin’ for 79% on the day trade

THE FOOL’S GAME – BUYING CALLS AND PUTS FOR DAY TRADES

After SPY’S opening gap, it was very trying trading in the early action as the ETF whipsawed back and forth across its open.

The market’s first ninety minutes chopped out two short signals and two long signals before settling into an downward trend for the rest of the day.

That slide into the close saved the trade for the day. After an initial draw down of $1500 (on a $10K buy-in on each trade), the overall net at the close was $7,900 for the day (or 79%) trading the weekly calls and puts (see the chart below for an illustration). Instead of saying the drop from 8 a.m. (PST) into the close “saved” the day, I guess it would be more apt to say it made the day-trade with this system once again great for the day.

I have upped the ante on what I talk about here from buying $5K worth per trade to $10K worth for each trade simply because it’s easier to talk about percentage gains and losses using that level. The SPY is best for this kind of options day trading because of the liquidity in both the weekly and the monthly strikes. The action today was in this week’s 266 calls with a volume today of more than 63,000 contracts and this week’s 267 puts with a volume today of more than 9,000 contracts, both were in the money contracts (that volume may be skewed by the fact this week’s expiration Friday is also a monthly expiration). Size ranged from 72 to 90 contracts per trade.

With $10 in the trade, it’s also fun to say on good days like today — Made $7900 today with my 10 grand in the market and now I’m flat with no overnight risk! What a fool am I?!

(click on the chart for a larger view)

REMINDER: The commentary presented here is for entertainment purposes only and should not be construed in any way as direct investing or trading advice.

#MarketTiming $SPY – Another day, another…

Had short-term sell signals across the board for Wednesday and the market went up. Marginally.

This bull is trending so hard, it hard to get even two down days in a rows, happens but it is hard. Especially when long-term breadth is rising. For the most part one want to be on the same side as long-term breadth.

For today, both Price and Short-term breadth (see the red circle on the chart below), have again given buy signal so the market should go up. “Should” is not a word that has been that predictable these days either on the long side or the short side although the long side has the edge.

Note: RIOT, the wild and crazy stock featured in yesterday’s timing post, did do what it was “supposed” to do, which was to go down — from 28 to 23.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 1).

PRICE: Buy. (Day 1).
SHORT-TERM BREADTH: Buy. (Day 1).
VOLATILITY: Sell, (Day 2).

CONTEXT:

SPY CLOSE – 266.75
QQQ CLOSE – 155.99
CNN MONEY’S FEAR AND GREED INDEX: (67, rising, greed level).
NIFTY-50 STOCK LIST: 27 Buys; 6 Overbought, 3 Oversold, 4 new buys today, 4 new sells.

(click on the chart for a larger view)

#MarketTiming – said bounce and so it came to pass

Yesterday, my nifty-50 stock suggested a bounce in the market today and so it came to pass.

In the process, the bounce turned long-term breadth up, to go along with the buys now on all of the swing signals (see panel below). With 15 individual buy signals on the nifty-50 list today, the list itself moved to middle ground from oversold which would suggest more to come to the upside.

All of the leveraged index ETFs – TQQQ, XIV, UPRO, TNA – are buys on the open tomorrow, as well as 9 out of the 12 bellwether stocks I follow (see chart panel below).

With all of those positives in the midst of a bull market, one has to assume this is once again going up. Until it doesn’t.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 1).

PRICE: Buy. (Day 2).
SHORT-TERM BREADTH: Buy. (Day 1).
VOLATILITY: Buy, (Day 3).

CONTEXT:

SPY CLOSE – 264.07
QQQ CLOSE – 154.02
CNN MONEY’S FEAR AND GREED INDEX: (60, stalled, greed level).
NIFTY-50 STOCK LIST: 24 Buys; 8 Overbought, 10 Oversold, 15 new buys today, 1 new sells.

(click on the chart for a larger view)

#MarketTiming $QQQ – a bounce nearly guaranteed…

Thirty-nine of the stocks on my nifty-50 stock list are on sells. Nineteen of those are oversold. If that number was 40 sells or more, I’d take out the “nearly” in the title above. Forty is the magic number that brings a bounce in the market within a day or two.

But only 39…so only nearly guaranteed…

See the chart below to view the stretch of sells (the red boxes) on the stock list and what happens next in the Nasdaq.

In addition two of my three swing signals – Price and Volatility – switched to buys while short-term breadth remained on a sell for the fourth day in a row. Four days down on breadth tends to also lead to an upward pop.

With long-term breadth on a sell, the bounce, if it come today, might be a one-day event but we’ll see.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: SEll (Day 2).

PRICE: Buy. (Day 1).
SHORT-TERM BREADTH: Sell. (Day 4).
VOLATILITY: Buy, (Day 1).

CONTEXT:

SPY CLOSE – 263.24
QQQ CLOSE – 153.50
CNN MONEY’S FEAR AND GREED INDEX: (61, falling, greed level).
NIFTY-50 STOCK LIST: 11 Buys; 3 Overbought, 19 Oversold, 3 new buys today, 8 new sells.

(click on the chart for a larger view)

UPDATE (12/5): $QQQ and $SPY weekly options – a recurring plus 100% dream…

UPDATE (12/5): As suggested yesterday the day began with the Nasdaq (TQQQ) rallying, but unlike yesterday, which was perfect for a QQQ weekly option trade, today would have taken some nimble trading to secure any profits in the QQQ calls and the SPY calls. On a $5k buy close to the open, the QQQ in-the-money call for this week (152 strike) rallied up 56% at its peak, violated a trailing moving average at up 48% ($2400), before selling off all the way to breakeven. Two $5K buys on the SPY in the money calls first stopped out for a 1.2% loss, and on a reentry rallied up about 25% before collapsing again to breakeven.

However, the options day-trade play of the day came in the SPY in-the-money put (265 strike) which triggered later in the day and finished at the close up 66% ($3300 on $5K.

Not a terrible day, but a trading test at best.

Haven’t had a chance to update entries here since Wednesday (11/19). Given what happened in the market today, it is as if nothing has happened since. Today was almost an exact replay of last Wednesday with the Dow up, the SPX relatively firm and Nasdaq Composite slamming down 72points.

Take a look at the post below. My first sentence was:

The Nasdaq sold down hard right from the start today, and that is a day-traders dream in weekly options.



If there are recurring nightmares in life, can there be recurring dreams?

No doubt.

With the Nasdaq selling down hard right from the start today, the $5K day-trade in the weekly QQQ in-the-money put finished on its peak at the end of day up 120%, $6000 on a $5000 commitment to the trade. Even the SPY in-the-money weelky put cash in on the market’s the slide, netting 118%, $5900 on the $5000 play in the option. The key to this day-trading system for options (as I have written before) is having an entry a trader is comfortable with, likewise a comfortable protective stop, and on the days (like today) when the stop is not hit, the gain, obviously, can be substantial.

I’ll let the great trader and “market wizard” Linda Bradford Raschke sum it up: “Always take the trade,” she once said, “and sometimes you just get lucky.”

So what now? Once again TQQQ may have dropped too far too fast so I will not be surprise if that 3x-leveraged Nasdaq ETF bounces tomorrow like it did last Thursday and takes the rest of the market with it. Maybe for a couple of days…or more.

LONG-TERM BREADTH: Buy (Day 9).

PRICE: Sell. (Day 2).
SHORT-TERM BREADTH: Sell. (Day 2).
VOLATILITY: Sell, (Day 2).

CONTEXT:

SPY CLOSE – 264.14
QQQ CLOSE – 152.71
CNN MONEY’S FEAR AND GREED INDEX: (63, falling, greed level).
NIFTY-50 STOCK LIST: 20 Buys; 13 Overbought, 13 Oversold, 7 new buys today, 4 new sells.

$TQQQ – a Nasdaq bloodbath too far too fast?

TQQQ, the 3x-leverage ETF based on the Nasdaq 100 stocks (NDX), was down 5.4% today, a bloodbath that affected many of the bellwether Nasdaq stocks in the index.

See the table below:

(click on the image for a larger view)

NVDA down 14 points, NFLX down 11, and so on. Pretty ugly in the momentum bellwethers.

There was a fake-out nudge to the upside Tuesday, but can’t say today’s slam down was unexpected. Posted this two days ago:

This could be tricky since long-term breadth continues to climb (up for the fourth day). Given that, if short-term breadth turns up here in the next day or two (or bless a bottom dollar, three days), the market would get another bullish boost. If long-term breadth turns down, this could very easily become the hook that catches every bull off guard. Although the bull market has so far defied the signs over and over again, it is inevitable that one of these times, like today, when the signals signal a turn, the turn will come. Probably when the bears are worn out and the bulls don’t expect anything of on their blindside.

If today’s sell off continues, that will be relevant, but there are signs this is done already.

Nearly every time TQQQ falls through the standard deviation lines (the blocks on the green lines on the chart below), the Nasdaq bounces the next day or two days out (the red vertical lines on the chart). It is as if any fall this far is too far too fast. And oftentimes in this bull market, the bounce becomes another rally (see the diamonds on the chart are TQQQ). In fact, a look-black on the chart shows this last great upswing in the Nasdaq, which began in late September, started with a touch down on the green lines just like today.

So I’m looking for the bounce, and looking to ride a rally if it develops here (Santa time?), and if it doesn’t then the suggestion in the quote above might indeed be a sea change in the market.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 6).

PRICE: Sell. (Day 1).
SHORT-TERM BREADTH: Sell. (Day 1).
VOLATILITY: Sell, (Day 1).

CONTEXT:

SPY CLOSE – 262.31
QQQ CLOSE – 153.89
CNN MONEY’S FEAR AND GREED INDEX: (67, rising, greed level).
NIFTY-50 STOCK LIST: 14 Buys; 11 Overbought, 8 Oversold, 6 new buys today, 3 new sells.

(click on the chart for a larger view)

#MarketTiming – up strong today, more tomorrow…

As projected yesterday, when all the short-term signals turned up in unison, the market had a strong blast to the upside today.

Long-term breadth turned positive after a 25-day decline so one assume there is more to come in pre-holiday trading. Except for being overbought – forty of the stocks in my nifty-50 stock list are on buys with 28 overbought – this rally could carry beyond the Thanksgiving holiday.

Bulls, give thanks.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 1).

PRICE: Buy. (Day 2).
SHORT-TERM BREADTH: Buy. (Day 4).
VOLATILITY: Buy, (Day 4).

CONTEXT:

SPY CLOSE – 259.99
QQQ CLOSE – 155.50
CNN MONEY’S FEAR AND GREED INDEX: (54, rising, neutral level).
NIFTY-50 STOCK LIST: 40 Buys; 28 Overbought, 4 Oversold, 6 new buys today, 2 new sells.

Day trading SPY options for 72% so far…

Day Trading SPY options – is it a “fool’s game”?

CONTEXT FOR THE TRADE

Playing the fool’s game today.

Buying the weekly SPY 257 in-the-money call, expiring Friday, with a limit of $10K. At the moment up $7200 (72%) on two trades, $5K each (see the chart below).

Will update.

UPDATE END OF THE DAY: The trade mechanically closed the day up $4800 (48%). At its peak (see green vertical line on updated chart below) is was up 83%, and there was a possible exit after the peak at up 72% (the while line of the chart).

(click on the chart for a larger view)

Day trading SPY options for 72% so far…

Day Trading SPY options – is it a “fool’s game”?

CONTEXT FOR THE TRADE

Playing the fool’s game today.

Buying the weekly SPY 257 in-the-money call, expiring Friday, with a limit of $10K. At the moment up $7200 (72%) on two trades, $5K each (see the chart below).

Will update.

(click on the chart for a larger view)

#SwingTrading – ready for a quick bounce…

Damage has been going on inside the market for several days and finally the indexes showed some of it with all major indexes down today.

But just as the market is looking vulnerable to more decline (and may get some), the swing signals are getting oversold (see table below). Price is down only two days in a row but only two minor upticks kept it from being down five from the last high up day. CNN Money’s Fear and Green index continued to ratchet down. Long-term breadth is down 22 days. That’s getting to be a long time and it is now deeply oversold. And the Short-term Breadth and Volatility signals are both down five consecutive days. Five days is usually too many without a bounce.

So tomorrow I expect a bounce, maybe even a swing up into Friday’s options expiration close.

Among the bellwether stocks (see charts below) TSLA, FB and BABA appear to be candidate for the scalps on the bounce. Also, if the market is going to have a couple days to the upside, there is a good chance AAPL (also down five days in a row) will participate.

After Friday?

…Worry about that over the weekend.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Sell (Day 22).

PRICE: Sell. (Day 2).
SHORT-TERM BREADTH: Sell. (Day 5).
VOLATILITY: Sell, (Day 5).

CONTEXT:

SPY CLOSE – 256.44
QQQ CLOSE – 152.59
CNN MONEY’S FEAR AND GREED INDEX: (53, falling, neutral level).
NIFTY-50 STOCK LIST: 14 Buys; 3 Overbought, 14 Oversold, 3 new buys today, 11 new sells.

(click on the chart for a larger view)