These Charts tell a story of a "Pandemic" MarketWhere is the money coming from? I think,
The market rally is backed by FEDs and their enormous pocket (printing press). Showing who is in control.
1. Money is flooding into markets Equity, Bonds, Commodity. It is not traders or market makers money in the equity. Its the FED press money .
1a. Commodity is where risk averse and foreign money is heading for safe haven (will stop soon possibly by this month ).
2. Job numbers that came out are unequivocally better, but this steep rise is unprecedented. (Thanks to PPP loans, and Happy to see most returning to work - Will it last?).
3. This orchestration of markets conducted by FEDs with Govt Support will cave in. When the music stops, the sell off starts. Possibly before the end of July.
4. I am not blaming FEDs for the rally, Only pointing out the desperation behind their action to inflate (INFLATE) the economy. .
4a. The cost of the inflation will hit us in the next 2-3 years. If your gas and groceries cost (100%) more, do not be surprised. But remember, why!.
4b. Not blaming because, if they do not support the market now, the inflation will hit right away and a possible collapse of Global Economic Recession (worst than now) will start.
5. Not just FEDs, all around the world this is happening. (FIAT Money).
If What I am speculating above is happenning.
*** The upcoming FED announcement will not change the market direction*** Infact will make the market rally higher, as they would add more confidence. May be a new high ( this month on ES1! SPX SPY ) for our president to cheer up.
Main Street and Wall Street seems like they are on different planet. The space is growing and growing, now it just got accelarated.
For traders, one take away. Drop all your naked position basing strategies for 2 weeks+. HEDGE and HEDGE based strategies to keep your recent and past gains taken away from this market.
This artificially inflated market will find its home soon. Please do not be led to the trap. I recommend to trade with sizes that you can afford. If you have a large position, Weigh it against the (SPY, IWM, QQQ, GLD, TLT) and hedge accordingly. Hedge too much can cost you as well, Hedging little would erase your gains. So be mindful.
If you are not in a long term position, Not the time to load in the market. Or Commodities
Commodities may rally a little higher. If the FEDs support the market, the commodity will go lower (Investors love their Dividends). So HEDGE your long or short, regardless.
EASY MARKET IS GONE FOR THIS MONTH. Now the real test for traders start.
NEXT MONTH, will update what I think. Soon the storm is over, will publish my picks again. Until then there are plenty of opportunities in the Market and Market derivatives for a lota greens $$$$....
Till then - Gear Down and Hold.
Ucsgears
Time to get some $TLT tilt Long with BSNice Pop on all the Bullish Trades I had.
No matter what I think and how Bullish the market pretend to be. TLT is Tilted too steep too quickly. I want a piece of this to the Long Side. The best way to catch a falling knife is with GLOVES. Thats what Back Spread Does.
Wanting to get Long Exposure in Gold (Short Term)All these are for a short term long exposure. GDX has sold off significantly.
Ofcourse, if you are long GDX, you are betting against the market. So, do not treat this as a position trade, But like a hedge. What do I mean. If you are long a bunch of spread in the Equity sector, You can hedge them by getting spreads on Gold and Bonds.
Building an exposure here is a hedge on if the Market shakes out in the next 2-3 weeks. Your GDX and its component will make you money.
NUGT - Do not Enter naked option positions.
Long Term Positions - $HD $LOW $RH $W (Watchlist Candidates)These stocks look extremely overbought to my eyes. Add them to your watchlist for a long term short play. Will need to monitor them for momentum change / Divergence.
Just from the looks of it, W is already showing early signs of divergences (if it doesnt make a new high above 210 for the divergence to stay). These could be the next big short, if you enter with a good, defined risk trade.
- Do Not Pick Up Shorts yet.
- These are components of DJUSHI (Dow Jones United States Home Improvement Retailers Index). Google DJUSHI for more information. The economical impact that is about to unfold will start to weigh in on this industry.
Reason I am selecting them for the next set of short to watch for is because of strength in this sector. Until the strength fades like mentioned above, I will stay long. More to come into the watchlist, as we see some rotation.
$SPY $ES - Does this make any sense?Apparently, History is repeating itself. Will it repeat forever?
Last time I did an update on ES, I was completely wrong. Glad I did not take position in ES based on my ES analysis. ;)
I am surprised as much as anyone here in the market. But, lately I have been thinking and comparing various charts and putting together a one giant symbol to if foregin money or local money is moving the market.
1. We all criticized the govt when their balance sheet was raised to $2T, now its $7T. This forces the market to fight to go up just like before (Theory)
2. US equity market dividends are higher than most developed countries interest rates (been that way for years now), so more money fueling the rally. (Theory)
Time out...... Dont do what I did above.
All I can do is build theory on what has happened to make myself feel better about how my analysis was wrong. Just like many traders.
Make sure you manage your risk. I am glad even with my analysis totally wrong, I did not lose money on my trades.
I am posting this, and really want to see another down turn so I can bear up once again and bank. ;)
Good Luck Yall.
$ABC $ADI $STX $GWW - Channel ShortsOk, now we have the most ideal UCS#2 Strategy - Channel Shorts.
These are by far my fav strategy with surprisingly high winners. Others published UCS#2 Shorts are like pre mixed dough, these are like prepared hot cakes (to me).
The idea here is to ride the wave down when it triggers an entry. (Interstingly, Industrial Sector in general had more picks when I scanned it, Dont want to publish all of them. Where does the Industrial Sector stand in the last 3, on my rating)
Strategy Snapshot
Sector Rating as of today
$UAL $AAL $DAL $LUV Shortterm ShortsThis mild rally.... will it last?
Looking bright to fade. Will trade options on one of these.
LUV - 75% IV, 30% IVP. Sizzle - 50%
UAL - 110% IV, 33% IVP, Sizzle - 45%
DAL - 95% IV, 25% IVP, Sizzle - 50%
AAL - 136%IV, 33% IVP, Sizzle - 45% - Makes sense. Says a story for every every option trader out there. The risk of AAL going down is huge.
First thing - BACK RATIO SPREAD is not an option in the options strategy
Secondly - Tight Credit Spread can give you Great Credits.
Third - An DEEP OTM Iron Condor would give tremondous credit. Worth Leggin in it too.
Fourth - Diagonal with 4-1 Risk to Reward.
Fifth - Calender Risk 1 -2 Risk to Reward.
These seem to be the best option here. I will do the one that makes sense tomorrow, provided the entry triggers.
$CMG $LULU $DIS $TMUS - Contrarian ShortThis is another contrarian short setup developed from today's market action. We cannot expect anything less than this after the wild market rally today.
Yes, the markets are rallying, but I am skeptical.
Positive Bullish Stories can be built for each of these, DIS - may start seeing traffic, Lulu should see more customers with Gyms on the verge of opening and +ve earnings.... etc.....
But, The setup is a setup. Its a High probability fade setup. Expecting a Consolidation for this run. Will it happen? May be not.
Everything comes down to how to enter manage your trade. I may NOT pick these up, because I have many short exposure. Infact will be hedging with Long positions.
$XOP - Considering Going ShortIn w/ Back Ratio Spread on this.
What do I have to lose. If It moves to retest $40. I will make $$$, If it goes ape **** and runs away to $60 I will keep the tiny $ credit from the spread.
As long as it doesnt chop in a range. I make $, whether it is $ or $$$$ is a waiting game.
$TAP $UPS $CHWY $NVAX - 4 More Early Long SetupsThis is another set of early long setup scan results from my pullback strategies.
Remember - A good trade is - Definable, Manageable and then Profitable. So, Define your Risk, Manage your Risk and eventually you will be profitable.
Good Luck.
If trading options - The Vol Skew can be your best friend. Choice of Strike defines your Profitable Trades.
$JNJ (Pullback Long), $CAH, $PYPL, $CRSP (Contrarian Short)JNJ - Looking to go long if an entry happens.
CAH, PYPL, CRSP - Looking to go short, soon I sense weakness in the stock.
Use your entry and exit methods. Trading success not only relies on Setup, but also on ENTRY and EXIT.
NOTE - Its easy to manage a winning trade, What defines a successful trader is how he manages losing trade.........
Define, Manage then worry about profit.
Comparing Vix to VVixVVIX is the volatility of VIX. Comparing them would give you a bit more insight.
The risk in the market is not off the table my friends. As you can see, VIX is still hovering in the red zone. Watch, Watch and Watch.
BTW, for those who dont know VIX is always quoted in %. That's why the zones start at 10% and go to 50%. Beyond 50% is uncharted territory. Market has printed 50% only 5% of time in the time.
APA seems to be the weaker of the BunchNo interest in trading options for this.
This is "Probability to Bounce" based setup. Which means you got 75% prob, this will go down.
If the plan doesn't work. Dont get in. If in and goes wrong, get out.
Squeeze Trigger Indicator - Working IndicatorHow many times we wanted to trade a squeeze and never had a good timing? I faced it everytime. Now I have built the Squeeze trigger indicator with confirmation.
I am sure this is much sought knowledge and my ultimate squeeze indicator (has been copied to an extent by TTM or Simpler trading) already.
To avoid the risk of exposing the code. I am going to keep this one private.
NOTE - Again not a holy grail, but effective.
ES - 1 week data - Probability to Bounce at workAs you can see, how the UCS_PTB adds the much needed confidence in getting in on a pullback. Of course its not a holy grail. But It just improves the probability of successful trades.
With Proper measures of StopLoss and Target. You will be consistently repeat the strategy.
$SIX Sig Flag - Breaking out of squeeze. The manageable way to setup option position for such a breakout IMO is.
Get in with a Debit Spread, in this case Call Debit Spread (Buy 16, Sell 20 strikes) (Buy open 16 and Sell open 20) If the breakout runs greater than $20, you can take the profit. If the breakout turns out to be fake, Roll the sold 20 strikes to 13 strike. I.e., Buy to close the 20 strikes and Sell to open 13 strike.
By doing this, you may salvage a losing trade, if managed adequately.