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Lowbase

20 JAN 348/ 27 JAN 358 DIAGONAL PUT Low Base Set Up: Since December 13th we've been selling off and the last 6 days we've been in a low base. It's had lower or equal volume and it traded below the consolidating low of about 378ish on the 22nd. Overall market sentiment is bearish with the 20 day looking to cross the 50 day The candle on the 22nd of December was used as my entry point/trigger. The consolidating lows were about 378ish. I will not have any stops. Set up for max loss risking less than 2% of my portfolio. 348.11 target was determined because this was the low of October 13th. I wanna give this enough time so my time frame is going to be 4 weeks. If this decided to have a year end rally, I'll still have enough time for this trade to work. Plus I'm already hedged short term if we do get a end of the year rally. If this goes lower... below 348, I'll watch it come expiration week to see where it's at. But I may want to just close out the entire combo. I might also adjust my position...maybe get rid of my 348 strike and ride the 358 strike depending on volatility in the coming weeks. If this goes sideways, I'm set up for max loss. If this goes higher this week and a little into early next week (as this could happen), I'll still have enough time for it to continue down to my target. And I'll be set up for max loss. If we are well below my 348 target by expiration, I'll close out the entire combo.
AMEX:SPYShort
by MMOTA_
AMD JAN 20 57/ JAN 27 62 DIAGONAL PUTLOW BASE SET-UP: AMD has been in a low base since about Dec 22nd and has been consolidating for more than 5 days with lower or equal volume. Overall market conditions are bearish, so downside is probable. I was planning on using the Dec 28th candle as my entry point back then, but at that moment in time, it did not meet the 5 day consolidation requirement. So I waited a bit more. Turned out to be a small bear rally back to the 20 day on Jan 3rd. I'll be using today as my entry point. No stops. I will be set up for max loss risking under 2% of my portfolio. DIAGONAL SPREAD STRATEGY: How strike prices and expiration dates are selected : 57 is my target point. From Oct 10th to about October 24th we traded in another low base set up (supply and demand zone) and my thesis is that we revisit that area within the next couple weeks or sooner. On the hour chart, I identified a tight downward channel which I used to determine my outlook. I originally was thinking we could visit 57 by Jan 13th, but Jan 20th is more than enough time. Position management strategies when the stock goes lower : If this falls lower than my 57 target and stays below 57 by the 20th, I'll close out the entire combo. The week of the 20th I'll watch this if this is below my 57 target to see if it'll run back up to hit the apex of the trade. Position management strategies when the stock goes sideways : If this goes sideways, I'll let my 57 strike expire and hold on to my 62 strike until the 27th. I'll be set up for max loss. Position management strategies when the stock goes higher : If this goes higher, I'll let it expire worthless and move on to the next trade Position management strategy at expiration : At expiration, if this is below my target or at my target I'll close out the entire combo. We we're still above my 57 target, I'll hold on to my 62 strike until the 27 and close it out.
NASDAQ:AMDShort
by MMOTA_
Cup and Handle FormingImpressive day today with a strong close. As of last week, we were forming a low base pattern, signaling more down side to come. I was anticipating more selling to happen at the start of this week. And......Well..... Here we are blowing 3800 a kiss before tomorrow. However, last week, I did have in mind a cup and handle pattern forming before making its way lower. Reason behind that, is due to the amount of selling we experienced throughout the month of September. So there was a high probability of a small rally to complete the cup and handle pattern. I think we have to wait to see the reaction at the 20 day moving average. Which, we're technically there. Could we go test that 50 day average by the end of this week? That would put us at 3900ish. Super aggressive move that COULD happen and still form the cup and handle I'm looking for. But overall, my lean is more on just hanging out here in this 3800ish area for a couple days. Then, slowly start making our way down to complete the handle. If the VIX gets to 40, within the next 5-7 trading days, then I think we can head lower much faster. Only time will tell. Happy trading everyone!
SP:SPX
by MMOTA_
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