The $SPY $10K day trade for 26.7%

Just a quick note on the $10K SPY options day trade for Thursday.

The long signal triggered just after the open and rose to a 97% peak (see the chart below) and closed the day up 26.7 percent, $2,670 for each $10K trade (see the white profit flag on the lower right). The is the day trade, start to finish.

Note, though, I consider a 100% gain a “trending day”, which are obviously the most important days to capture. Had this position passed above that threshold it could be locked in that profit level with a trailing stop. Just missed it today. Shucks!

However, it also should be noted that light blue candle after the peak on the chart was a chance to take at least some profits – the $10K was up 56.9% at the point. Short-circuiting the day-trade has not be more profitable over the long run this year than just letting it ride, but there at times when it just looks so obvious…

These trades are all day trades, either in the nearest in-the-money SPY calls or puts (in this case the 283 call, expiring Friday, and are closed at the close of each day. There was no signal for the puts today but on some days there are both calls and puts in play. My entry signal is proprietary, and should be tuned to any individual trader’s courage and risk tolerance.

Keep in mind, these posts are only for entertainment and educational purposes and should not in any way be construed as trading or investment advice.

$SPY options – can little losers be the prelude to a big winner?

I came into today expecting a sell-off in the general market.

It didn’t happen, at least not right off the bat. At the end of the day, it sort of sold down in a way that may mean the market “plop” I suggest yesterday will come tomorrow.

For the past three days the market has been in a very tight range – for instance SPY opened Tuesday at 285.39, opened Wednesday again at 285.39 and today at 285.53, a total range of 14 cents in three days. This might be great if one is selling SPY options but I don’t even look at the short side naked because it takes too much margin. Instead in what I’ve been calling, tongue-in-cheek “the fool’s game,” these three days have been yuck. I mean PURE YUCK!

Today was a little loser again.

Because I’ve been posting winners, primarily to explore the potential of day trading SPY calls and puts on the long side (“the fool’s game”), I’ve been met on the internet as expected by a chorus of naysayers who believe what I’m saying is far “too good to be true.” So I’ve decided to post this loser to reassure that while it is good and it is true it is not every day.

Today’s loss came from trading $10K on each trade, first the 284 call, expiring tomorrow (see the the chart on the left below), then the 286 put on the day-trading reversal. The call lost 22.8% percent on the $10K trade, $2282. The put, which was deeply underwater most of the day (see the white profit histogram on the chart on the right below), managed to surge to a .9% profit on the SPY sell-down into the close, $958. Total loss for the day was $1324 for $10K traded, 13.2% for the day.

That 22% loss on the calls and the 13% loss overall is why money management is most important in trading anything, especially any strategy like this. It is intended to be traded small versus one’s overall portfolio and traded everyday.

The tight range of the past three days suggest SPY could go big either way tomorrow. My hope is it will be a trending day either up or down since the real money here is made on trending days, usually days of options expiration like Friday (in fact, YTD Friday’s have been the best days of the week), or like last Monday…

Monday’s SPY 283 call (see the pattern on the charts) trended all day. As a result, the profit for week remains at 57% despite the yuck, yuck chop of Tuesday, Wednesday and today.

As a great, wise film fool once said: “That’s…

(click on the chart for a larger view)

Wednesday in the $10K Day Trade…Final gain 14%

The SPY options trade had huge swings on the Fed announcement today.

The action was not in the calls which never triggered a system buy despite the AAPL news and gains, but in the 282 put, expiring today, first a plummet (see the chart below), then an immediate snap back to a new high for the day before a final grind down into the close. At its low the trade was down 43% and at its high up 84%, all within 20 minutes.

It was enough to make a trader, long the puts, as dizzy as whirling dervish.

Despite the gyrations, at the close the day trade managed to nab a 14% profit, $1469 on the $10K committed to the trade (see the white flag on the lower right of the chart below).

Still, not a bad day in options no matter what.

(click on the chart for a larger view)

Tuesday in the $10K day Trade…Final 10% gain

Tweeted this trade near the highs of the day. SPY 280 Call, Wednesday expiration, up 38%. TQQQ at the time was up 1.5% ($1500 per $100K).

This was a display of a day trade based on the suggestion (see post below) that Tuesday after three days down in the Nasdaq (two of them hard down) would bounce today with an entry into the trade near the open.

Some defense (like a trailing stop) had to be played to lock in gains intraday since once again with long-term breadth still negative there was the possibility of another fade into the close, which happened. Still (see chart below), the SPY trade netted 10% for the day, and TQQQ added another $450 on its $100K buy.

Not a bad return for the day even if the defense stayed on the bench.

Tomorrow, AAPL will be the focus of the day for the general market. The company reported earnings after the close today and rose eight points in the after-market to an new all time high. The question will be can it vault the market higher for the day or will this be a “sell the news” time?

(click on the chart for a larger view)

Monday in the $10K day trade FINAL gain 76%

SPY 282 put, expiring today. Final day’s gain 76%.

“THE FOOL’S GAME”

#MarketTiming – Plunge to a climax low?

The general market seriously tanked today – Dow down 724 points, SPX down 68, the Nasdaq Composite down 178.

And it was an across-the-board slaughter as every one of the nine sector ETFs I follow slammed into sell signals, with eight of the nine now oversold on the close.

The all-important long-term breadth indicator – the McClellan Summation index — is on its fourth day down, making it obvious which side of the market to be on, but even more telling is that this is a wind down that began nearly two weeks ago on the first day down from the bounce top on March 12th (see the chart below).

There is a lot of stuff going on that could have led to this drop — Trump, Trump’s tariff plans, Trump’s saber rattling, Trump’s staff members bailing as fast as they can, the Trump chaos (we have a sitting President in litigation with a porn star and so far she and he lawyer are kicking his and his lawyer’s butt), uncertainties springing up everywhere; and the Fed is raising interest rates.

All that is taking a toll of course but this a market that has been moving up too far and too fast so the last two weeks were at some time inevitable.

Is this a bear market? Still hard to tell. The VIX, which measures volatility, is above 20, which is the territory for a correction in a bull market, but it is for the second time this year flirting with the 25-level (it closed at 23.34 today), and that is the door to a bear market. If the SPY (SPX) takes out February low either right now or after a bounce without a significant rally, a bear’s growl may, for sure, be heard.

The trouble with bear markets is by the time everyone feels enough pain to panic they are over. I suspect if this becomes a bear market that pain is going to last a lot longer than anyone believes.

But back to today. So was this drop enough downside to make a climax low. Probably not but it could lead to another quick bounce. Given that there are now pretty defined resistance trend lines in place (see the chart), this next bounce might be worth trading but it is not likely to do anything more than produce another selling for shorting opportunity.

Regardless, this is a market that after two weeks down is oversold everywhere. Four times in the last seven days, my nifty-50 stock list has had 40 or more stocks on sells, which usually indicates the bottom of a swing or the beginning of a bottom. CNN Finance’s “Fear and Greed” index is at an “extreme fear” level (at 9…it can’t go below zero), which longer-term is usually buy territory. As noted above all of the sector ETFs, as well as the index ETFs I follow like TQQQ, UPRO and TNA, are also oversold.

All in all, time for another bounce…

Except this time, maybe a crash into a climax bottom tomorrow and Monday instead (an echo of 1987)…

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Sell (Day 4).

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

CONTEXT:

SPY CLOSE – 263.67
QQQ CLOSE – 162.8
CNN MONEY’S FEAR AND GREED INDEX: 9, falling, extreme fear level).
NIFTY-50 STOCK LIST: 8 Buys; 3 Overbought, 24 Oversold, 1 new buys today, 13 new sells.

(click on the chart for a larger view)

#MarketTiming – long, strong and more to come

Didn’t getting around to posting the timing signals last week for various personal reasons so this post probably looks a little late to the party.

Oh, well…

A lot related to the headline above has already happened. The Nasdaq is already up six days in a row and the SPY, except for a minor dip during the week, would be too. My nifty-50 stocks have risen from 13 on buys and 15 oversold six trading days ago to 41 on buys and 29 overbought as of the close Friday. Virtually every index and sector ETF is overbought.

Once again, the market internals, ruled by short-term and long-term breadth, called the swing low, the turn, and the rally (see the circles and lines on the chart below).

So why bring this up now?

Because there is more to come in this bull market, either right away or right after a shallow pullback. The short-term breadth indicator is just too strong to be turned on a dime, and with the long-term breadth having just come out of a divergence itself (see the circle in the middle of the chart), there is a good chance this rally has another three, four, or more weeks to run before any significant sell-off is possible. So every dip is to be bought, and every surge savored.

Could it be different this time? The market could do whatever it wants but history says not right now, and history, when it comes to the mass psychology and movements of the market, is the best indicator of all (no matter who says otherwise).

(click on the chart for larger view)

#MarketTiming – Time for a bounce…

Just spent a week in New Orleans watching Carnival parades, eating too much food and listening to lots of great music.

So what did I miss in the markets?

Just kidding. Saw all that too. Long time coming but again, just as everyone started to believe it was, it is NOT DIFFERENT THIS TIME.

The question to be answered is was that just a correction after a great bull run or is that the first plunge from a new bear born? Probably the bear is being born but we’ll have to see if it is so in the fullness of time.

For now, after Friday’s further plunged to another new low and reversal back into positive territory, it’s likely the market will bounce this week. How high and for how many days is anyone’s guess but a bounce is what to look for, and, as they say, if one sees what one is looking for, jump all over it.

An important note, the lows and tests of lows last week set up a divergence with short-breadth (see the green circle in the upper section of the chart below). That is an aggressive trader’s buy signal. Works like a charm in bull markets. Doesn’t work all the time in bears. What happens next on that indicator could tell a lot about what kind of market we’re going to have going forward.

All swing signals registered buys Friday but the long-term breadth remains negative indicating so far this bounce will only be a bounce.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Sell (Day 10).

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

CONTEXT:

SPY CLOSE – 261.50
QQQ CLOSE – 156.10
CNN MONEY’S FEAR AND GREED INDEX: 10, rising, extreme fear level).
NIFTY-50 STOCK LIST: 19 Buys; 2 Overbought, 29 Oversold, 9 new buys today, 6 new sells.

(click on the chart for a larger view)

$SPY #Options on a roller coaster for a losing day trade

Today’s price action in the SPY was truly a day on a roller coaster. Consequently it was the same for the weekly calls and puts.

First, a gap up, then a plunge on the ETF (see the chart on the left below), another bounce into mid-day, and another plunge before a final surge into the close.

The SPY triggered a day trading buy on the calls, which stopped out for a loss 27% loss, $2688 on 10K traded, before reversing to the puts which saw a loss of $602 at the close (see the white flags on the lower right of the charts below, in-the-money calls on the left, puts on the right). That made the total loss for the day almost 33% per 10K traded, a draw down of approximately $3290, the fourth losing day in the past 20 trading days.

However, there were plenty of times defense could have been played during the day. This is day trading after all.

When the call failed to hold its open at 1.79 it could have been stopped out for less of a loss than when the system signal finally sold (the chart below on the left). On the reversal the put trade made up all of the loss on the call and about 11% more at its high (the yellow-coded spike into the last hour on the chart on the right). Selling that gain would have been a gift for the day but even coming down from that high on the puts, there was a breakeven (the end of the first cyan-coded bar)

Defense. Always take the signals, then play defense…

(click on the charts for a larger view)

$SPY #Options – #DayTrading 10K in weekly puts…FINAL UP 55%

Trading weekly 286 puts – 64 contracts at $1.49 – to start the day trade.

Current return per $10K in the white flag on the lower right of the chart below.

Will update.

Update #1 – stop at breakeven.

Update #2 – the trade topped out at up 39% (the green vertical line on the updated chart below). Violated its rising moving average at up 15% (the first red vertical line), a point at which to take some or all off for the day.

Stopped out at break even (the second red vertical line).

Obviously a disappointing day-trade in the put. Just as obvious it is the trades that do not hit the stop loss that make the most money.

Update#3 – Reentry at $1.49 again, $10K, 64 contracts. Stop at breakeven. See updated chart below.

FINAL UPDATE: the last entry in the puts rode the sell off to the close, netting approximately 55%, $5,500 per $10K in the trade. So the disappointing, even with the first stop loss, day in puts turned out to be just fine. See final updated chart below.

TUESDAY UPDATE: Another day trade in puts, triggered off SPY’s gap at the open. A fairly frustrating sideways move after the open. Stopped out on the first entry for a 12.2% loss on $10K in the weekly in-the-money 284 strike, 36 contracts. Reentered the 284 strike, 41 contracts, for a 27% gain into the close, for a total net of 14.8% on the day, $1,480 per $10K in capital. I’ll skip the chart for today.

(click on chart for a larger view)