$SPY – Simple black candle tops…

Let’s call this a KISS moment as in “Keep It Simple, Stupid.”

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.

On November 26th, it was suggested this market would rally in this post: If Santas’s rally is coming to town… and on the follow up in this post: Fast and furious the bear-market rally rises… it was suggested this swing has the speed of a bear-market rally and it was noted:

“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.

Well, it didn’t take long. SPY came within 60 cents of that 281 number today and sold off. Hence the black candle.

So is this swing done?

Could be but maybe not… If not the simplicity of this looks truly stupid, if so I suppose it looks…smart? The key to these singular candle moments is what always comes nest. Looking back over the chart below, it appears, what comes next is the smart part but if it breaks that red line at 281 it will likely go considerably higher (more Santa gifts for bulls and those who want to jump out of the house from an upper-story window).

Must note that all of my bellwether stocks – NFLX, AMZN, NVDA MSFT, GS, BIDU, BABA, FB, TSLA, AAPL — were up today from yesterday’s close, and ALL OF THEM were down from today’s open. In other words, in one of the posts linked above it was suggested in a bear market there would be selling pressure nearly every day – today during the day it was obvious this was one of those days.

Tomorrow could another and it could bring more serious selling if the simple black candles have their way.

(click on the chart for larger view)

$SPY #Options – Year’s 35th trending day nets 200%

No surprise today’s rapid bear-market rally notched the 35th trending day of the year in what I call “the fool’s game” – buying calls and puts solely as day trades.

With SPY opening at 269.60, it was today’s expiration in-the-money 268 call that trended all day to a 203% gain on the close, $20,331 on each $10K traded (see the chart below on the left). Today’s at-the-money 269 call trended to a 336% gain (see the chart below on the right). The key to these gains is trading strikes nearest to expiration with the choice between in-the-money and at-the-money (or out-of-the-money for that matter) being entirely up to an individual trader’s risk tolerance.

Trending days obviously are the days when all the profits get booked. The rest of the trading days have resulted in net losses overall. Losses on their own that are rather huge.

This is a highly risky strategy that takes extreme measures of persistence, discipline and experience to execute.

(click on the chart for a larger view)

$SPY #Options – Trending Day-Trade 32 for 166% in the “Fool’s Game”

When something looks too good to be true it usually is.

But so far not this year.

The day-trading strategy developed here last November and dubbed in earlier posts “The Fool’s Game” has now had 32 days like today since the start of this year.

Thirty-two trending days.

I define a trending day as any day the SPY calls or the SPY puts or a combination of both gain more than 100% on the day trade. All trades are long only. The 276 in-the-money put for today closed the day trade up 166% on each $10K traded (see the chart on the left below). There were no trades triggered in the calls.

This was one those great trending days that goes one way all day.

And by the way, the market, with today’s hard sell down, is now wildly oversold so the chance of bounce tomorrow is very high. I say that chance is about 85%, but that’s mostly a guess based on the past six months market action. No telling how high. There’s also about a 75% chance the bounce will be a one-day wonder.

For fun, I’ve included a chart of the “at-the-money” 277 Put for today below on the right just as a comparison between one strike and another on a day of expiration. The gain per $10K traded, $25,384 (also the percentage gain, 253%) is in the white flag on the lower right of the chart.

Obviously, the greater the risk the greater the reward.

Remember these posts are meant solely for entertainment purposes and for the educational purpose of showing what the possibilities are in options if one has persistence, experience and discipline. They are in no way be construed as any kind of direct or indirect trading or investing advice.

(click on the charts for a larger view)

#DayTrading $SPY #Options – today’s 291 put UPDATED

–The 291 put, in the money, and up 100-plus percent at the moment…

The total per $10K traded (also the percentage gain) is in the white flag on the lower right of the updated chart below.

My definition of a trending day is any time the trade in the calls, puts, or a combination of both gains more than 100%. Today’s put may not hold to the close at more than 100% but it has touched that level for the second day in a row (yesterday it faded to just under 100%).

(right click on the chart for a larger view of this UPDATED CHART)

#SwingTrading – a serious swing through the weed patch

Marijuana stocks are the ruling weeds in the market garden on this upswing.


SWING TRADING TRIGGER – AUGUST 16TH

That was the technical trigger for the open three days ago.

The fundamental trigger came on the news Constellation Brands (STZ), U.S. distributor of Corona and Modelo beers, was investing $4 billion for 38% of CGC. All of a sudden, the Wall Street mob discovered it might be acceptable to pour money on the weed patch, particularly those springing up in Canadian gardens where marijuana has recently been made legal throughout the country.

As a result, of those traded in the U.S., CGC is up 26; a new IPO, TLRY, up33%; CRON, 27%. Even the most legitimate of the medical marijuana companies, the stalwart GWPH is up 3.6%. See the white flags on the lower right of each chart below which correspond to the cash and percent gained for each $100K invested.

Of particular note is MJ, up 10.7 percent, the sector ETF for the weed patch. MJ tracks the Prime Alternative Harvest Index, generally by holding many of these stocks and others traded on the Toronto Exchange.

(click on the chart panel for a larger view)

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”