S&P 500 SPDR ($SPY) weekly puts trade completed.
For those new to options, a call is a bet that a certain stock will go up and a put is a bet that it will go down. So by buying a put option in this post I was looking for a move lower.
At the time of this writing I have taken a 56% profit after commission on some weekly SPY 127 puts that expire today. Entered in at 0.16/contract and exited at 0.28.
As you will see in the chart included, I have placed my entry and exits with yellow stars and my ideal target exit with a green star. The yellow dots in between some of the candles are times where I created an order to exit the trade and cancelled. I wanted to exit twice when I had generated 20% profit and once when I had over 25% loss.
(Click Chart to Enlarge)
My Entry (first yellow star) was just where I wanted it (below the daily pivot). I am still working on my exit execution and controlling of emotions. I usually write out how I feel about the market action or trade via either sharing with another trader via text, chat, twitter etc. When those aren’t my preferred choice I write it down on a notebook. It’s not foolproof but it helps me personally stick to my strategy and most of the time a trade.
I will provide more info about the chart for the curious ones… The purple dots represent the daily pivot point. The red dots represent resistance levels and the grey dots are support levels. The two red lines represent yesterday’s highs and lows so I would have an idea when that tight trend that developed yesterday would be broken. Also the chart is 5 minute to show the entries better but I prefer to use 15 minutes when day trading.
This is mainly on here for me to reflect on as an online public journal, they say when you publicly share something you are more committed to keeping it (in this case sticking to my strategy that works for me and just working on getting better at exits and emotions).
Update: As of 11:35AM Eastern it looks like my ideal exit has been hit and the put options were worth 0.49 a contract. Had I executed that the profits would have been 187% after commission but that’s in an ideal world. Another influencer in my premature exit (pun intended) was that Obama was set to speak around 11:35AM and I wanted to avoid any spikes that would ruin my trade.
As of 12:50PM SPY hit lower than the second support line in my chart. Emotions got the best of me and I did exit too early indeed (would have been 400% since my entry). Its hard to think of it that way. If i had exited at -25% loss (as mentioned earlier) I would be devastated for the day.
As the new InvestingFreak tag says: See it, Call it, Trade it, Bank it.
I Saw the potential for a down day, Called it by texting a fellow trader (will work on tweeting realtime to share ideas), Traded it, and well... Banked it.
Make some moneyyy!! 
-K
Market Correction: Special Edition Results [Animated Charts]
If you've been following my blog recently you might have noticed my April 28, 2010 "Special Edition: Here comes the red ink, correction begins."
On April 27th The SPX stood at 1183 and it swung as low as 1065 during the past 7 trading days to ultimately close at 1110.
As I wrote on the 28th
I finally had time to check on the market a big grin came to my face. A lot went on today and news blamed Greece and Portugal downgrades for the sharp drop. Nobody ever talks about the technical analysis because it is beyond the mind of Joe the Plumber.
The first chart was the EUR/USD which broke an ascending triangle on the daily back in December. Below is an animation of Apr 27 and May 7 to show the move. If you have trouble viewing the animated image please leave me a comment because it's the first time I'm using animated content. (CLICK TO VIEW ANIMATION)
Next we'll move onto the $TED Spread which jumped nearly 100 percent since the 28th. (Click to View Animation)
Lastly I will leave you off with the Investing Freak Special SPX chart animation. Boy was this a move, the red line is the 250 day moving average in case you are wondering. (Click to View Animation)
Where do I see us heading from here? We still haven't broken some key supports such as the 1088 trendline and the 1060 250Day moving average. So if we drop another 50 point we will still be good to go for a bounce. If more crazy days are upon us? I will check with BID ( Sotheby's ) to see if it's gone below 22 to initiate heavy short positions.
Thats just me and as always these are my opinions and even though they work for me I cant guarantee them working for you.
Have a good weekend and be on the lookout for the latest Current Picks signal changes coming up this weekend.
-K
Market Survives Heart Attack
There is no need for me to summarize today's DOW -1000 move so I will move ahead to the point of the day.
Quick Update to the post on April 28 Special Edition: Here comes the red ink, correction begins.
I want to talk about my leading market indicator ( Sotheby's BID)
As Quoted from April 28's article.
Now lets take a look domestically at BID - Sotherby's which as I mentioned on March 14th's post is Part of my indicators arsenal. A move below 32 (20% drop from 39) would tell me to wipe the dust off my ammunition and a move under 22 (40+% drop) would just signal that Chaos is back and since this is a Leading indicator to me it would highly influence my positions.
What BID did today is move below 32 for most of the day so my ammunition is now dust free and waiting for the under 22 move if it comes.
Go to the link above to check the older chart (or click here) but here is the one updated today that shows you how BID bounced right on the trend-lines I had drawn a while back. Since it bounced at 28 that to me signals that there is still a chance for survival from this heart attack.
Here's the chart and I will stop here for the day. Tomorrow there should be a textbook green day with more red on the way for next week. (Click to Enlarge)
-K
Special Edition: Here comes the red ink, correction begins.
It was a busy day today and when I finally had time to check on the market a big grin came to my face. A lot went on today and news blamed Greece and Portugal downgrades for the sharp drop. Nobody ever talks about the technical analysis because it is beyond the mind of Joe the Plumber.
Let's start off with the Eur/Usd which I have closely followed since December when it broke a long term trendline. I hadn't looked back at it since and I was shocked. Here is the first in a series of Special charts.
Next on the list is $TED which stands for the Treasury - EuroDollar Spread. You can read more about what Ted is on this November post if you are not familiar with it.
WHile the spread of 0.2 is still fairly low and below the average of 0.5 the fact that it is increasing and the moving averages are making their first crossup since before the October 2008 crisis strikes me as interesting especially given the current economic situation.
While on the subject of Europe lets check out the Greek Index $GRDOW which I wrote about on April 11 and that turned out to be the opposite of what I expected. From a low of 124.17 on March of 2009 the Greek index went through the roof at 267.40 and as of close today it stands at 138.11. Go Greece!!!
Now lets take a look domestically at BID - Sotherby's which as I mentioned on March 14th's post is Part of my indicators arsenal. BID fell from 37.75 to 34.93 today which broke a short term trendline but also another big move would put it below the 32 mark that is the next strong support. Since the March 2009 lows of 5.85 BID is up 666% to as high as 39! That's nearly 47% a month. A move below 32 (20% drop from 39) would tell me to wipe the dust off my ammunition and a move under 22 (40+% drop) would just signal that Chaos is back and since this is a Leading indicator to me it would highly influence my positions.
Lastly I will leave you off with the Investing Freak Special SPX chart that I last posted on April 14th. We hit a top, retreated a bit below the blue moving average then made a higher high at 1219 but this time it was different as the retreat didn't land on solid ground and we fell through.
Class Dismissed.
-K
Weekly Picks- Buy:IYR,XLF Sell:DRYS,SRS,SKF,SMN,VXX
This week was mostly a reversal of calls made last week, the only new call is a Sell on DRYS.
When the week moves in a range (market Zig Zagged 30 points up and down) they are called False Signals because my system is a trending one.
Nobody has called me out on my calls but this is the first back to back week that signals have reversed in my blogging days so I thought I'd clear the air 
.
I will be introducing a new Feature this week. A chart to accompany each call. The charts are 3 months and they show all signals that might have occurred during that time-frame.
Red Dots means SELL and Green dots signal BUY. Simple enough? Great Let's get started.
Here's a look at SPY SPDR S&P 500 ETF Chart
(Click to Enlarge, Same goes for the rest of the charts)
Upgrades
IYR iShares Dow Jones US Real Estate (ETF)
Upgraded to BUY on Apr 21 at $52.23
XLF Financial Select Sector SPDR (ETF)
Upgraded to BUY on Apr 21 at $16.74
Downgrades
DRYS DryShips Inc.
downgraded to SELL on Apr 19 at $6.20
SRS ProShares UltraShort Real Estate (ETF)
downgraded to SELL on Apr 21 at $26.98
SKF ProShares UltraShort Financials (ETF)
downgraded to SELL on Apr 20 at $17.32
SMN ProShares UltraShort Basic Materls (ETF)
downgraded to SELL on Apr 23 at $32.37
VXX iPath S&P 500 VIX Short Term F
downgraded to SELL on Apr 20 at $18.27
Disclaimer:
I am only giving the latest signal for the stock mentioned. Use at your own risk and make sure to take the date into consideration. If you have been trading for a while you should have realized that relying solely on the strategies of others (think Analyst Opinions) will lead to failure so please only take the signals I provide just as another indicator in making your informed BUY or SELL decision. Now go Make some MONEY!
-K
A Special S&P 500 Chart courtesy of Investingfreak
This weekend I will share with you a chart that I view at the end of every week.
When I glanced at it last night i saw that we are right at the bottom of a trending channel.
It will be an interesting week coming up so I decided to finally share it with the rest of the world (including the masterminds at Gold in Sachs)
As always click the above image to enlarge. Since a picture is worth more than a thousand words there is no need for me to comment on it further.
Have a profitable week ahead.
-K
Nightly Recap 3-23-2010
Market Summary:
DOW +102.94 (10,888.83)
S&P +8.36 (1,174.17)
Nasdaq +19.84 (2,415.24)
Nightly News Links
US Economy:
Existing Home Sales fall further in February (The Mess That Greenspan Made)
The National Association of Realtors reported that sales of existing homes fell 0.6 percent in February after a drop of more than 7 percent in January and sales are now at their lowest level in eight months. It's probably best not to make too much of the winter data for existing home sales because it is a very slow time of the year but, the "Months of Supply" metric certainly looks to be going in the wrong direction right now.
What is the Homebuilders Index pricing in? (Investment Postcards)
David Rosenberg, chief economist and strategist of Gluskin Shedff & Associates, states that his regression analyses show the Homebuilders Index to be pricing in the following:
Housing starts: pricing in a level of 800-900k (versus 575k currently)
Existing home sales: pricing in a level of 5,500k (versus 5,050k)
NAHB Housing Market Index: pricing in a level of 35 versus 15 actual.
Is this the most expensive part of the US stock market?
US Debt Update: 6 Months To Revised Debt Ceiling Breach (Zero Hedge)
As a reminder, the debt limit is $14.3 trillion. We are $1.7 trillion away from the limit. At March's run-rate of about $300 billion per month, the debt ceiling will be breached by October 2010. If somehow the government manages to reduce the monthly issuance to "just" $200 billion, we have eight and a half months until breach, or January 2011.
World Economy:
Spain to join Portugal in issuing Dollar-denominated Bond (Zero Hedge)
Yet more countries are anticipating the Fed finally killing the dollar sooner or later, as Spain now joins Portugal in issuing dollar-denominated bonds. If Europe's most insolvent countries are getting on board of the asset side of the Fed's balance sheet, it can only mean one thing: the odds for the winner of the currency race to the bottom are squarely in favor of the US currency. (K remark: I really see this as a contrary indicator being that there is an imbalance in those countries who are betting on a collapse of the dollar.)
Germany Sets tough terms for EU help for Greece (Reuters)
ermany signaled for the first time on Tuesday that it may accept European financial aid for Greece as a last resort, but only if the IMF is involved and euro zone partners accept tougher budget discipline rules. "The condition for action, as a last resort, is that Greece's financing on the capital markets is exhausted," the official said."Furthermore, it would be necessary for the International Monetary Fund to provide a substantial contribution," he said, stressing there will be no decision on actual aid at the summit.
Interesting Reads:
Jim Rogers Starts Some Short Positions (Market Folly)
Potentially the most notable bit of his conversation was when he said, "I had no shorts for about 15 months so I started putting out some shorts recently. But the fact that I've been putting out shorts means the stock market won't pull back." So, it's interesting to see Rogers fight the current trend. In his mind, it's the right play, but he knows he's going to potentially feel some pain first.
Morning Humor- American And Greek Capitalism Explained (Video) (Zero Hedge)
Explaining US economics (with an emphasis on generally accepted criminal accounting practices).
Have a Good Night
-K
Nightly Recap 3-15-2010
Market Summary:
DOW +17.46 (10,642.15)
S&P +0.52 (1,150.51)
Nasdaq -5.45 (2,362.21)
Nightly News Links
US Economy:
NY Manufacturing Index Shows Strength (Econompic)
Manufacturing activity in the New York region continued at a solid pace in March, the New York Federal Reserve Bank said Monday. The new orders index shot up 17 points to 25.4. Shipments also moved higher. Inventories climbed above zero for the first time since August 2008.
ECRI Leading Economic Index Drops For 12th Week In A Row (ZeroHedge)
Leading indicators in the U.S. are telling a similar story about a possible double-dip. Friday’s reading from the ECRI continues to show a weakening recovery. Their leading indicator’s growth rate fell to a 31 week low. The smoothed ECRI leading economic index for the U.S. fell last week for the 12th week in a row, to stand at its lowest level since July 2009. Something tells us a slowdown is about to start.
World Economy:
Moody's warns nations to cut spending or risk AAA ratings (Washington Post)
The United States and other top world economies need to make potentially painful government spending cuts or risk losing the high-grade credit ratings that have kept borrowing affordable, the Moody's rating agency said Monday. Outlining the dilemma faced by policymakers in the United States, Great Britain, Germany and France, Moody's said that debt levels in the four large credit-worthy economies had reached the point at which they are at risk of being downgraded -- a step that would drive up interest rates, increase borrowing costs and mark a turn in perceptions about the world economy.
Germany's Manufacturing Jobs Fell 4.9% in January (Business Insider)
The Federal Statistical Office said Monday the number of Germans employed in manufacturing fell to 4.9 million workers from about 5.15 million in January 2009.
Chinese Economic Indicators Are Starting To Roll Over (Pragmatic Capitalist)
“Early signs of softening in data momentum suggests we should be much more cautious about corrections in those markets that benefited late last, and early this year.” Despite being the strongest leg of the economic recovery, Chinese investors have turned remarkably cautious in recent months. The Shanghai Index peaked in July of 2009 and has traded down ever since. The index has declined 9.5% this year while U.S. investors have continued to run head first into stocks.
Interesting Reads:
Consumers Don’t Strongly Identify with Brands (Marketing Charts)
trendwatching.com calls these products and services “functionall,” or providing function for all. Often designed for lower-income consumers in emerging markets, they also have broader crossover appeal for more affluent consumers in mature markets. Look for brand manufacturers to produce more of these products, and for more global brands to try to penetrate mature economies.
Is The US Preparing For a Strike on Iran? (HeraldScotland)
Hundreds of powerful US “bunker-buster” bombs are being shipped from California to the British island of Diego Garcia in the Indian Ocean in preparation for a possible attack on Iran.The Sunday Herald can reveal that the US government signed a contract in January to transport 10 ammunition containers to the island. According to a cargo manifest from the US navy, this included 387 “Blu” bombs used for blasting hardened or underground structures.
National credit card statement (Cracked)
A National Debt happens when governments spend more than they actually have, and everyone getting the money agrees that's absolutely fine.
60 Minutes: Michael Lewis' The Big Short - Video (CBSNews)
If you had to pick someone to write the autopsy report on the Wall Street financial collapse 18 months ago, you couldn't do any better than Michael Lewis. He is one of the country's preeminent non-fiction writers with a knack for turning complicated, mind numbing material into fascinating yarns.
Part 1
Part 2
Have a Good Night
-K
Apple Poised For a Big Move $AAPL
I have been watching Apple Inc. ( $AAPL ) form a symmetrical triangle for the past two months. This is a Continuation Pattern, which means that the triangle is used as a way to head higher if the trend has been upwards and with AAPL it has been.
A symmetrical triangle is generally regarded as a period of consolidation before the price moves beyond one of the identified trendlines.The sharp price movement that often follows a breakout of this formation can be captured by traders who are able to identify the pattern early enough.
The Symmetrical triangle pattern needs to have a few things working for it and we will check them off here.
1. Trend Should be at least a few months old: Check !AAPL is from march to december.
2. Duration of pattern should be at least 3 weeks old: Check! This pattern is 6 weeks old.
3. Breakout occurs between 1/2 to 3/4 of the way through the pattern: Check! It's about 3/4 of the way.
So now that we checked a few major points off let's look at a price target. We take the distance from the widest end of the triangle and in this case is around $20.
From the breakout at around $200, this being a bullish trend apple has been in we add $20 to the upside and put it at ~$220 for a potential breakout target.
There are a few hurdles here for AAPL though the $207-208 area is major resistance so if it can break that $220 is well in sight.
I bought a January $230 Call option at 0.23 to prepare for the move instead of putting major capital in the stock
Here is the chart (Click to Enlarge)
Update: I tried posting it last night but my host was down so i gave up. $AAPL is currently at ~$207.50 (in between the resistance I mentioned)
I have also sold my Call options for a hefty 140% Profit from yesterday's buy-in price, if Apple breaks above 208 I might be re-buying some.
Merry Christmas!!
Volatility Index $VIX Is moving higher.
On Friday The VIX went up 23.95% while the market fell well over 2.5%.
VIX is a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index, it represents one measure of the market's expectation of volatility over the next 30 day period.
With the upward movement in the past 2 weeks the VIX has successfully broken a trend line going back to November 2008
See Attached Image (Click To Enlarge)
The VIX also had a bullish candlestick pattern on the 2D frame (2 days per candlestick)
Defeniton of this candlestick pattern is quoted below from Candlesticker:
Bullish Three White Soldiers Pattern is indicative of a strong reversal in the market. It is characterized by three long candlesticks stepping upward like a staircase.
The following are two charts; one showing the Three White Soldiers pattern on the 2D chart the other showing it on the hourly.
2Day Chart (Click To Enlarge)
And finally the Hourly chart (Click to Enlarge)
What does the bullish Vix momentum mean? Well by itself it means nothing to me. But when combining it with the increasing TED Spread, Broken S&P trendline, Numerous bank failings each weekend and many more indicators then it all signals that things are not well and the jobless recovery is not going to last much longer.
As always use caution as these are my observations and I do not make decisions for anyone other than myself.
Happy Halloween!
-K