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.

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)

#SwingSignals – Price, Breadth, Volatility…

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Sell (Day 12).

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

CONTEXT:

SPY CLOSE – 257.49
QQQ CLOSE – 152.10
CNN MONEY’S FEAR AND GREED INDEX: (72 rising, greed level).
NIFTY-50 STOCK LIST: 33 Buys; 14 Overbought, 18 Oversold, 6 new buys today, 9 new sells.

Swing signals – when to take the trade…

My three swing signals, based on price, breadth, volatility, are all on the buys.

A question arose on whether these trades should be initiated on the close of the day they are triggered or on the open of the following day?

Both times make money but the open of the next day is better. This is a market-timing system I developed to have its signal register after the close each day so a trader only has look at it once a day and can look the night before to put in an order for the open of the next day. It is geared to both longs and shorts but as it has turned out longs are more important over the long haul and the next day’s open is better than the previous day’s close probably in both cases because of the market’s long-term bullish bias.

This week has been a pretty good example of the open versus the close. I had a sell signal on Monday’s close and sold into that gap up Tuesday. Gaps go both ways but more often than not it goes like that.

The signals on the close of Tuesday again triggered buys for today’s open and produced a nice bounce for the day. Of the the 3x-leveraged index ETFs I follow, XIV led, up 1.7% from its open. And incidentally, SOXL, the leveraged semiconductor sector ETF, continued its amazing rally, putting on another 3% on its 11th consecutive day up (that is probably not sustainable…).

It should noted that long-term breadth is again climbing – it is never wise to short anything against it.

It should be further noted that the short signals do not work as well as the longs over the long-term. The were profitable in 2008 and 2011 (of course) but not much at any other time. In other words, being in a bull or bear market matters.

XIV, based on volatility, has led this swing system all year. On the chart panel below the closed returns are in the white rectangles on the lower left and the current profit is in the white rectangle on the lower right. Each trade is calculated at $100K to yield an easy percentage number. As the chart shows, XIV’s closed profit on price is up 60%, on breadth up 51%, and on volatility up 71% (appropriately). These were all buys on the open of the day following the close the signal was triggered.

SWING TRADING SIGNALS:

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

CONTEXT:

SPY CLOSE – 255.02.
QQQ CLOSE – 148.04.
LONG-TERM BREADTH: Buy (Day 2).
CNN MONEY’S FEAR AND GREED INDEX: (83 falling, extreme greed level).
NIFTY-50 STOCK LIST: 22 Buys; 116 Overbought, 7 Oversold, 4 new buys today, 6 new sells.

(click on the chart for a larger view)

#The10kDayTrade UPDATED – $BID, $NFLX, $FSLR, $SPY calls in play

MARKET TREND:
Long-term Breadth: Positive.
Short-term Breadth: Neutral.
Price: Positive.
Volatility: Neutral.

All possible trades are $10k longs on the open:

Bellwether stocks: BID, NFLX, FSLR.

UPDATE: BID loss $57; NFLX gain $437; FSLR gain $28; for a total gain of $408.

3x-leverage ETFs: XIV, TQQQ, LABU, SOXL.

UPDATE: XIV gain $252; TQQQ loss $640; LABU loss $41; SOXL loss $88; for a total loss of $117.

The options list: SPY calls, QQQ calls.

UPDATE: SPY weekly 252 call gain $7,900. SPY monthly 252 call gain $3,900.

NOTE: Market rally is overextended with SPY up now seven days in a row and most index ETFs overbought. Once again this is a difficult day-trading market that could pull-back any moment but hasn’t yet on the close. The stocks and being nimble with options are likely the better play.

#The10kDayTrade Update – $SPY ITM call nets $2595 for the day

MARKET TREND:
Long-term Breadth: Positive.
Short-term Breadth: Neutral.
Price: Positive.
Volatility: Neutral.

All possible trades are $10k longs on the open:

Bellwether stocks: TSLA, NFLX, FSLR.

UPDATE: TSLA plus $105; NFLX plus $166; FSLR plus $166. For a total gain of $437.

3x-leverage ETFs: SOXL, FAS, NUGT.

UPDATE: TNA loss $21; NUGT loss #39; FAS loss $10; SOXL loss $19. For a total loss of $89.

The options list: SPY calls, IWM calls.

UPDATE: The SPY in-the-money (ITM) 252 Call for this Friday’s expiration netted $2,595 for the day, two trades. NOTE: The first $10,000 buy (82 contracts) was stopped out below its open for a loss of $164. The second $10,000 buy (89 contracts) netted $2,759.

NOTE: Market rally is overextended with SPY up six days in a row and most index ETFs overbought (TNA up 8 consecutive days). Once again this is a difficult day-trading market that could pull-back any moment but hasn’t yet on the close. The stocks are likely the better play.

#The10kDayTrade on ETFs, stocks, options…

This is a system to “show me the money” when only trading a $10K account.

Stocks are selected the night before and bought at the market on the next day’s open. They are monitored on a 5-minute chart (see below) with a stop-loss on any close below the day’s open after the first five minutes. If a stock does not stop out right away, it will immediately be in profits. If the ETF or stock or option does not violate its open any time during the day the profits can be taken on the close to end of market day. That is the basic trade.

An alternative trade is to buy after the market open in the direction of the market trends whenever any ETF, stock, option is above its open, and manage it the same as above. The market trends are for the three time frames based on market timing – a Day, a Swing and a Rally trend for the longer term.

Profits can be taken at any time when the ETF, stock, option is overbought, or when it breaks down through a fast falling moving average. And as a day trade the trade ends on the close no matter what.

MARKET TREND:
DAY: Positive.
SWING: Positive.
RALLY: Positive.

Let’s take a look at TNA as an example from today, the 3x-leveraged ETF for the Russell index. It was a buy on the open based on criteria at its previous day’s close. That criteria was that all market trends were positive and the ETF itself closed the previous day above its open and above the rising fast moving average.

Show me the money:

The net gain for the $10k trade in TNA today was $337 exclusive of slippage and commissions.

(click on the chart for a larger view)

Remember this blog is a journal of my own stock market thinking and is presented here for entertainment and educational purposes and for absolutely nothing else. It should not be construed in any way as market trading or investment advice.

$TNA – up 26.3% on this swing…but…

Twenty-six-point-one percent in little over a month since long-term breadth gave a buy signal a bit over a month ago.

And now it’s up four days in a row on this swing leg of the rally, wildly overbought, with CNN MONEY’S Fear and Greed Index lodged solidly in the “extreme greed” level, and short-term breadth clicking down a bit today, all signs that the market and the stocks are both ripe for a dip if not a sell off but…but it has to turn down first and it has not done that. Amazing how many times traders can look at something going straight up (or straight down) and convince themselves this move is going to end – right now! Maybe, but until is does there is nothing to do but tighten stops but still give it enough room to keep going.

Among the other leveraged index ETFs, like TNA, XIV is up 23.2%, UPRO up 9.7% and TQQQ, the Nasdaq 3x-Leveraged ETF, is the laggard up only 6.7%. In a four letters TQQQ’s trouble is AAPL, with the highest weighting in the index – down 4% on the same market signal in the same time period.

Among the leveraged sector ETFs, ERX (energy) is up 35.3% on the signal, LABU (biotech) is up 24.1%, SOXL (semiconductors) is up 24% and FAS (financials) is up 11.9%. Same market signal, same time period.

We’re talking a little over a month here so it has to be said yet again – this what swing trading is all about.

SWING TRADING SIGNALS:

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

CONTEXT:

SPY CLOSE – 250.35.
QQQ CLOSE – 144.41.
LONG-TERM BREADTH: Buy (Day 34).
CNN MONEY’S FEAR AND GREED INDEX: (79 rising, extreme greed level).
NIFTY-50 STOCK LIST: 33 Buys; 9 Overbought, 6 Oversold, 8 new buys today, 6 new sells.

(click on the chart for a larger view)