Look at where VIX is... First pattern triggered the $SPY's rally to 195$ (see linked idea)
Now we have a second pattern to follow - Pay attention to VIX
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VXX
TRADE IDEA: VXX SYNTHETIC/POOR MAN'S COVERED CALLSynthetic covered calls using options are a good way to utilize capital efficiently as compared to buying the underlying outright and initiating, for example, a covered call. Were you to buy 100 shares of VXX at $14, it would cost $1400, with the current value of the short call reducing that cost basis by about $160, so it would cost around $1240 to put on, as compared to the $585 or so per contract to initiate this position. Moreover, you'd naturally have to wait until VXX struck $14 to get in at $14/share, so a synthetic gives you the added advantage of your being able to kind of "pick your price" and/or cost basis for the underlying, even though it's just a "synthetic" price.
Here, the September 16th 14 long call stands in for the stock (since it's mostly made up of intrinsic value), against which I sell calls to reduce my cost basis in the long option over time, the goal being to take off the entire setup in profit when the total credits collected for the short call (and any rolls) + the current price of the long option exceeds what I paid for the original setup.
Here are the metrics:
Sep 16th Long Call/April 15th 21 Short Call
Probability of Profit: Unknown
Max Profit: Unknown
Buying Power Effect: $585/contract (debit)
Unfortunately, the probability of profit and the max profit are unknown for this setup from the get go, since exactly how much credit you can collect for the rolling of the 21 short call in the months after setup is unknown and will vary over time. It is also possible that, depending on the price movement in the underlying.
I would also note that VXX, by nature, generally suffers from contango, so its price will naturally decline over time in the absence of backwardation. Consequently, it's entirely possible that price could break 14 at some point going forward. Naturally, that's okay as long as the amount of credit you receive for the rolls of the short call exceeds what you paid for the long call (currently, $745) and, of course, I'm assuming that price in VXX will be somewhat above 14 for the duration of the trade.
THE WEEK AHEAD -- FOMC, FOMC, FOMC; LONG VIX; OIL; EARNINGSHere's what I'm looking at for next week:
VIX/VIX PRODUCTS . VIX finished last week at 16.50. I will look at VIX/VIX product setups early next week depending how the "horse does at the gate" (Monday). If we see a tight range in the S&P like we did pre-Draghi in prepation for FOMC, VIX could drift go a little lower Monday through Wednesday, in which case I will want to use VIX, VIX, or UVXY to go "long volatility."
Index ETF's . There is little sense in selling April expiry premium here in broader index instruments with VIX the way it is. Brazil, oil/gas, and the gold space continue to have the volatility, but I'm already in all of the underlyings that have any juice in their options that are at 70+ implied volatility rank (UNG (covered call), EWZ (iron fly), GDXJ (short strangle), RIG (short strangle), GLD (credit spread), and XOP (short strangle) in those sectors.
If you look at SPY implied volatility month-to-month, it doesn't approach something "regular" until the June expiry (19.9%), so I may look to set up some small premium selling play in the June expiry on the possibility that low volatility sticks around for a period of time and to have something in the queue for that event. Trying to sell 45 DTE premium in the index ETF's in a period like we had last year between mid-March and late August was a total slog ... .
Oil . The 2016 high was set on 1/4 at 35.36 in USOIL. it tested the underside of that level Tuesday, Wednesday, and Thursday of last week and broke through it by a whopping .20 cents on Friday, so who knows whether that'll hold. If oil caves, the S&P will follow hard (the S&P currently has a .93 correlation with USOIL). However, oil has a tendency to enter fairly lengthy consolidative periods before moving directionally forward, so be prepared for oil to taunt you with both suggestions that it's going to break significantly higher and indications that it's going to totally implode ... .
If you're into trading spot forex, watch oil's effect on the petro currency USDCAD. The Loonie may get a double whammy from a cave in oil plus Fed tightening/dovish-hawkishness. The Loonie's entire strength profile from 2/11 is largely on the back of oil.
EURUSD. This is the strong/weak pair to watch post-Draghi and running up into FOMC. For me, this is not a pair I would mess around with "playing in the middle" between 1.08 and 1.10. As I did last year, I would wait for it to hit 1.14 and then go short if it's inclined to react to the upside on whatever FOMC says; otherwise, stay out. The fundamentals on this pair should be telling everyone to only short on strength (ECB easing; Fed tightening), as attempting to play the 200 pips between 1.08 and 1.10 has been and is likely to continue to be somewhat discouraging as it looks to find its footing in the larger range between 1.14 and near parity.
EARNINGS. Although the earnings season has been described as "over" for this quarter, there are a few issues that are still due to report that might be worth playing, assuming that the volatility is there: ORCL (Tuesday, after close), FDX (Wednesday after close), and ADBE (Thursday, after market close). As it stands right now, none of those meet my implied volatility rank rules (70th percentile plus), with all three of those having percentiles hovering around 50, but naturally that might change running up into the actual announcement.
SPX500 short term bullish, long term bear?Found a nice and easy way to confirm my trades. Standard deviation, heiken ashi, and some general charting IN
CONJUNCTION with simple gettrendstrategy provide some good insight. Look for a trend change, and a convincing breakout above or below previous channel, with appropriate slope (that's really your risk level). I use heiken ashi to confirm those trend changes, through consecutive color changing bars (that are OUTSIDE of S.D. regression channel), as well as Ichi with accumulation and distribution (not pictured). I also take a look at momentum for better trade entry and exits.
All said and done, we're in no man's land, but the current uptrend has been getting weaker, and SD regression channels are really small now, so a break in either direction would likely get amplified.
Waiting for a short entry sub 1980 confirmed by multiple red bars on a fast move, trend change, ichi cloud turning red, trailing price below current price, MACD going down, $TLT moving up, $VXX/$UVXY moving up, $SPY distribution kicking in, and finally the Put to Call ratio for SP500 going more bear ;).
Key Support And Resistance for SPY (longterm)- Week of 2/29/2016Heading into the session tomorrow investors and traders are going to be watching these lines closely. It is my own opinion that the 210.31 line is major resistance, and that any surge above this line will be sold quickly back down into the 200 - 195 zone. The bull run i've mapped out with the pitchfork is from the end of the 2008 recession, and as you can see, not really much of a retracement has occurred. From 2014, the rsi has slowly been coiling up at 40. This could be a signal of a new bull rally, but i stand by my position that it must make 210 support. If you're selling short, watch the .382 (176.48) and the .236 (168.53) for signs of support. From what i interpret from this chart, the bulls better quickly turn things around to at least 198.50, if it cant hold that line the bear position is one that i'd be watching. Let me know what you guys think!
VXX daily - bearish - 2/19/2016Breakout failed. Now lost 3 supports (red lines, 10 day MA). RSI broke too and below 50.
VXX daily - looks like a cup handle - 2/6/2016I will be a buyer if it closes above the red. I will short it if blue support broke.
MARKETS long term short, short term long.Markets have dropped to extreme levels, down to a near technical correction, so I have to think that peoples' psyche will kick in here, and that institutions/HFTs will target all depressed "good" companies, and scoop them up for lower prices.
Additionally, I am highly focused on options and overall market advance/decline trends. Regarding these, the P/C ratio for SPY has been decreasing to lowest in over a week, at just barely above 1, indicating an enormous amount of call buying. I have to evaluate these with prejudice, however, as they could be hedges for long positions in the market, but either way it's still a useful metric. Similarly near term volatility has finally started decreasing aver 5+ trading days of increases, and I've found weekly reversals to be meaningful at the very least on a short term basis. UVXY has the highest P/C ratio in the last week as well, to go along with bullish market expectations.
Technically, a correction is viewed as a short term bottom, and thus the violent bounce in August. If we pick up steam after the lows below 1900 in SPX, there's a good chance to test the 2000 before anything else happens. My focus here would be to short UVXY, as with even a slow market incline the volatility should evaporate.
From the news side, I do think there are some positive signs for a bullish behavior. China has stopped forced devaluation of their currency, where it would allow them to be much more export friendly, but also could cause a world markets meltdown well below the current levels. North Korea news has been priced into the volatility indexes, and I find it hard-pressed that anyone is really considering them a "factual" imminent threat.
The last bit of a puzzle would be for the FOMC to come out and reiterate some dovish signals, like a freeze in rates increase; or for the OPEC/US or any other oil producer to continue reducing the supply; re-imposing sanctions on Iran and so on.
My point is that something HAS happened to quell the markets from China, but it was offset by oil/north korea/and general world currency and other unrest. It's a chance that it may be enough, but more than likely it would not be. I think some additional actions (as suggest above for example) have to be taken, to re-establish market stability and eliminate volatility. Devaluing dollar would likely be the EASIEST and best idea at the moment.
THE VXX PLAY (I WANTED TO PUT ON FOR THE "FOMC POP")When we had our first rate hike in umpteen million years in December, I had a play like this on for a GTC fill to fade any volatility spike we might have in response to that. Of course, it never came ... .
But thanks in large part to Chinese markets, I've now got that spike and will fade it here if I get the chance. Here's the setup:
VXX Feb 19th 16/17 long put spread (the 16 is the short, the 17 the long)
Probability of Profit: 16%
Max Profit: $93/contract
Buying Power Effect: $7 per contract (at the mid price) (will that be around on Monday? Who knows?)
Break Even: 16.93
Naturally, this is a total longshot setup at the outset. However, the idea is not to expect price to break $16.93 (that would be a "glory shot"), but rather to take it off at, for example, 50% of max profit.
AAPL short playAAPL showing weakness in its uptrend, this is actually a large bear flag pattern, we saw price break through the angled (dotted) trend line, It has consolidated after and created a head and shoulders pattern. It also has ran into resistance and 50% retracement level. Volume has also declined as price moved up showing divergence between price movement and actual conviction.
1) Ran into resistance
2) Ran into 50% retracement
2) Broke trendline
3) Head and Shoulders pattern
4) weak volume; volume/price divergence
Only enter this short trade if a 30 mn candle closes inside or below the rectangle under the neckline of the head and shoulders pattern.
Market reversal VXXAnother bounce play, we have a triangle pattern or abc pattern forming on the bottom of this trend. Lots of buying action in anticipation of this move. The chart says the rest. Long at 19.67 with a tight stop just under. Out at 20.34.
A VXX SHORT SETUPI virtually never short a VIX product. I am, after all, largely a premium seller and, as such, am already short volatility in the vast majority of my setups. So, by shorting a VIX product, I'd basically be "piling on" to what I already do. I also virtually never do debit spreads ... .
However, with FOMC next week, I thought I would at least consider taking a VXX short position that takes advantage of any spike in volatility that occurs, since this is basically a one-off event. I mean when is the next time we're likely to see the Fed raising interest rates after six years of QE, TARP, and ZIRP? Well, hopefully never, but quite possibly not again for a couple of decades, at least.
So, let's get to it. I actually looked at a wide variety of setups that take into account the fact that I am not going to be hovering over my keyboard in the days and hours leading up to FOMC and the days and hours thereafter waiting to pull the trigger on a VXX short when I "think" it has peaked ... . This "peak" can be incredibly fleeting, not to mention that my luck with "calling tops" is about the same as that of everyone else -- pretty darn poor.
In any event, I want to attempt to take advantage of a VXX spike (1) without knowing in particular how high it will potentially go; (2) knowing that volatility will inevitably contract at some point in the future to a point below 20; and (3) all while defining my maximum risk.
Here's the setup to do just that -- a long put vertical. As an example: Jan 15 VXX 19/21 Long Put Vertical (The 19 is the short; the 21 the long).
Currently, the mid price for this setup is a .79 debit, and that is with the price of the underlying at 23.32, but I do not want a fill at this price. When and if price spikes, the cost to fill this particular spread will decrease and the spread will become cheaper to put on. The kind of "cheap" I am looking for is something in the vicinity of .07-.13 for the spread, but for simplicity's sake, I am going to put on a GTC order for the spread to be filled if VXX spikes, resulting in the spread's costing .10 to fill. If I do get a fill for .10, the break-even price of the setup becomes 20.90 (the price of the long strike minus the .10 debit) with a maximum profit potential of $190.00 (i.e., risking $10 to make $190).
You can also naturally consider more accommodative setups that have a higher break even by moving the strikes up or use more than just one setup at different expiries that take advantage of a potential spike that is more and more profound (e.g., a Jan 15th 19/21 long put vertical for a .10 fill, a Jan 22nd 21/23 long put vertical for a .10 fill, a Jan 29th 23/25 long put vertical for a .10 fill, etc.). If you do multiple setups at different expiries, keep in mind the possibility that you may want to roll one or more of those setups if volatility doesn't contract in fairly short order (2-4 weeks), so you naturally don't want to go hog wild either with respect to the number of setups or the size of the number of contracts used in those setups ... .
REALLY TRICKY ...MAYBEsorry for the late day posting guys/girls... But I was busy at work and couldn't get a chance to post anything/calculate my work.....I have stupid student loans that i need to pay and i have to work to pays those off...until i make enough money trading or working I got Bills that i have to pay.....but one day I hope i can become a day trader
Please click the link if you like my work.... I use this link to help me graph my trades, they give me a sentiment reading to help make my calls but the technical are all done by me ( that's my work involving calculations ) www.sentimenttiming.com
Today.. the bears came full force into the price area I was looking at 1995 but they pushed it to 1993 BUT BOUNCED OFF THIS LEVEL ( THATS WHY I SAID DON'T PUT ON YOUR SUPER BEAR FACE ) ...NOW it gets really tricky..From a technical point of view, we are totally oversold on the daily readings which would be ok to try and graph a trade but THE FED ... will be announcing the RATE HIKE DECISION. This could throw investors and traders on a roller-coaster. However mathematically and the laws that govern the stock market ( THIS IS WHAT I DISCOVERED...I believe that the end result ( hike or not ) will cause the market to push up. I have a few targets that the SPX500 should get to based on my mathematics and laws and that target is around the (2145-2200). But for now I did try to graph something but again just keep an open mind AND AS ALWAYS USE RISK MANAGEMENT ...THIS IS THE KEY TO WINNING THE MARKETS...ALSO BEING CASH IS A POSITION TOO AND SHOULD ALSO BE CONSIDERED.
I will try my to give you guys updates but THESE BILLS ...lol this song describes it perfectly www.youtube.com
**I TOLD YOU SO - 160 POINTS ON THE SPX CALLED SEE FOR YOURSELF IN THE LAST 3 DAYS - I CALLED THE FOLLOWING 160 POINTS
THIS IS WHAT TRADING WITH CONFIDENCE LOOKS LIKE!!!!!!!!!!
I WILL BE STARTING MY OWN EMAIL BASED WEBSITE SOON....IT WILL BE FREE AT THE START BUT THOSE OF YOU WHO SUPPORT ME AND SEND ME YOUR EMAIL.. I WILL GIVE A REDUCE/ SPECIAL RATE.
EMAIL ME : SENTIMENTTIMINGNEWSLETTER@GMAIL.COM
FED RAKE HIKESame old story will the fed high rate or not?
Here we go, I believe the fed will hike rates next week. However I believe it will be a one and wait and this will be taken very positively for the market. This one and done idea is more important than the hike hike it self. Watch old Janet talk about it here below:
money.cnn.com
If the fed hikes i believe we are in for a good bull run. If they don't hike that will show they are still nervous about the economy and I believe stocks will fall.
Currently I'm short SPX500 but I am looking to cover that Friday/monday and then I am getting long.
RISK MANAGEMENT : Now is not the time to be a super bear ! Please support by clicking the link below...
www.sentimenttiming.com
I have a feeling that we might need a another good push down to get all the shorts out... that's one options or we have already ended this down move and will be going up ( making higher lows ) . PLEASE USE RISK MANAGEMENT WHEN TRADING!!!! THATS THE KEY TO WINNING
SHORT TERM OUTLOOK - SUPPORT BROKEN: BULLS BEWARE FOR NOWToday, we saw the break and hold below of an important long term trendline in effect for months leading up to now, as well as several strong points of support.
Rationale for short:
- Break of lower bear flag channel trendline & hold
- Successful retest and rejection of trendline.
- Broken support at 206.80s and 206.00s
- Huge bull rally immediately and decisively reversed to new lows.
- Close below Friday, Tuesday Close prices
- Small bear flag printed in closing hours today, visible on chart at close today.
I am still short, and I have decided on a few important levels below us.
Short 205.71
Target 1: 203.72
Target 2: Lower trendline in current short term descending channel as shown on chart
Conditions: Price must always close (15min candles) below long term trendline we broke
I expect the price to head a lower for now. The 15th could be a reversal point, historically the 15th is the start of the main "Santa Claus" rally in December.
UPDATE --- MADE A KILLING TODAY The Sentiment on 12/2 was 93% Bullish . As I noted: “In general it is never a good idea to Buy on High Sentiment.” We have seen that every extreme cluster of Low Dorsey Sentiment have been ideal time to Buy zones. However, it is little recognized that “High Sentiment and Low sentiment are materially different in that they represent different aspects of the Emotional Market Brain.” The 5% Bullish on Thursday has been followed by 2% Bullish today after yesterdays’ dramatic declines. Stocks are trying to recover this morning and that may continue to some extent. However if the market remains relatively weak and there is low Sentiment on Monday, it could register a MEMBERS ONLY [/b Negative Sentiment Cluster and fit with the profile for declines into MEMBERS ONLY [/b time zone. However, given that the Price High and Key Reversal from the 93% is only, MEMBERS ONLY [/b,” the best profile resolution is for generic weakness to persist into MEMBERS ONLY [/b . There is overt and obvious support down to the MEMBERS ONLY level. Thus it may yet turn out that this profiled hiccup is still just more Range Trading. The interesting idea that I provide is that there are short term profiles within the longer time frames that most investors are focused on and/or seduced by. There are high probabilities profiles that don’t require long winded cognitive rationales.
I had surmised that the “Seasonals would NOT be typical this year.” After this downside surprise, there is due to be an MEMBERS ONLY and then perhaps another MEMBERS ONLY [/b into year end. Let’s take it one trade at a time. I repeat: “Thus, this is not the time for Big Bets and Out-sized trading positions.”
.Don't be on the wrong side!!!! click on the link below to see what Woody Dorsey has to say and if you want more information
This link will provide a free report www.sentimenttiming.com
Sentiment Timing - DEC/4/2015 - THIS DROP WAS COMING The Sentiment on 12/2 was 93% Bullish. As I noted: “In general it is never a good idea to Buy on High Sentiment.” We have seen that every extreme cluster of Low Dorsey Sentiment have been ideal time to Buy zones. However, it is little recognized that “High Sentiment and Low sentiment are materially different in that they represent different aspects of the Emotional Market Brain.” The 5% Bullish on Thursday has been followed by 2% Bullish today after yesterdays’ dramatic declines. Stocks are trying to recover this morning and that may continue to some extent. However if the market remains relatively weak and there is low Sentiment on Monday, it could register a MEMBERS ONLY Negative Sentiment Cluster and fit with the profile for declines into MEMBERS ONLY time zone. However, given that the Price High and Key Reversal from the 93% is only, “ MEMBERS ONLY ,” the best profile resolution is for generic weakness to persist into MEMBERS ONLY . There is overt and obvious support down to the MEMBERS ONLY level. Thus it may yet turn out that this profiled hiccup is still just more Range Trading. The interesting idea that I provide is that there are short term profiles within the longer time frames that most investors are focused on and/or seduced by. There are high probabilities profiles that don’t require long winded cognitive rationales.
I had surmised that the “Seasonals would NOT be typical this year.” After this downside surprise, there is due to be an MEMBERS ONLY and then perhaps another MEMBERS ONLY into year end. Let’s take it one trade at a time. I repeat: “Thus, this is not the time for Big Bets and Out-sized trading positions.”
.Don't be on the wrong side!!!! click on the link below to see what Woody Dorsey has to say and if you want more information
www.sentimenttiming.com
