1104 the support now?

The SPX finally broke and has maintained the 1104 resistance on a closing basis. As I mentioned in my earlier post, I thought that if this event occurred it would herald a resumption of the bull trend.

However, today I suprised myself at how much my perspective changed in just a couple of added days on the same chart:


Firstly, the two days that we registered (keep in mind today is not over yet) above 1104 have both been down days. This indicates that the breakout is fake and we could reverse yet. Secondly, notice that the TD setup has reached 6 meaning that the potential bull rally is over in 3 days. Third, the oscillator has reached overbought territory further indicating an exhaustion of the bull run.

So I decided to pull one of the older tools in my arsenal: Fibonacci levels. I have not used these for a while. My first observation came as no surprise: the new retracements and expansions confirmed the 1104 level. I found a new confluence zone at 1125 area that could prove to be stiff resistance.

Finally, my monthly oscillator is taking a dive from the overbought area indicating that this may be simply a correction in a much larger bear trend.

So here is my hypothesis: we will continue to rally to around 1125 area and then go right back down. I think I will wait for the confirmation of this move to come around before I make any major trades.

In the meantime, I think I may switch brokers to Tradestation. Their platform allows for much better custom studies and more importantly much better screens. Not to mention their commission rates are lower. My only concern is the whopping 7% margin interest rate which would be a pain.

-Wown
stockjockz.blogspot.com

Retested 1104 and failed

Today I thought we might break the 1104.7 resistance for the S&P500. There was a break on the daily downward trend (blue line) that has been holding up for quite a while now. Early afternoon today we also broke the 1104.7 resistance I have been stressing for a while and I ALMOST took a long position on the S&P500 (I have liquidated by short positions I mentioned in my earlier post).

Instead, I shorted the market and took a small profit as the market retraced. However, I am out of that position as well because I think we can still break the resistance. Already the selling pressure is abating and as I am typing my oscillator is turning positive. I think that during this week we can see a confirmed break out above 1104.7 but it could come after a couple days of consolidation around that level.

My GS short calls and SPY short puts are nearing expiry, both OTM. The SPY is a near guarantee while GS still has around 3% chance of going ITM. I am reading The Black Swan at the moment and so I believe the 3% is definitely a risk. I am considering getting out of that position, especially if the SPX breaks 1104.7. I have already made a 95% profit on that trade and now I am just being greedy.

- Wown
stockjockz.blogspot.com

Short on the market

This is my first post in nearly a month. As usualy, I have been very busy but have been keeping track of the markets.

I believe for the moment we are in a bear trend and even as today we are up ~1.60%, I think we can expect a few more weeks of sidways or downward movements. I am watching the resistance levels established by the market (S&P 500) at 1218, at 1170, at 1107 during the up swing from Feb to April. Since mid-April, when we started going downwards, the market rebounds, hits or approaches these levels and falls down again.

So, keeping that in mind, I am short on SPY. The only 2 things on my books right now are:
1. Short calls on GS at 170 expiring in July
2. A put 101/108 June/Sep diagonal (got very high premiums for the 101 puts so worst case scenario I get stopped out for the Sept puts and still make profit).

Still working on that spreadsheet, although slowly. The more I read about the study the harder it gets to program the damn thing...

-Wown
stockjockz.blogspot.com

What a week!

Wow, once in a lifetime kind of a week. Unfortunately I did not fare well through the roller coaster.

I was very busy with work so even though my indicators started showing bearish signs on Friday 4/30 and also Monday, I did not set adequate stop losses and took some pretty big losses on Tuesday. I thankfully managed to get out of a lot of my positions by the time the big "crash" hit. But I still had some long positions and as it happened, I was driving around and internet-less that day.

As things started going bad, my buddy was texting me the dramatically falling prices. One text simply said "its a crash. down 900" and this triggered a panic attack for me. I was sitting in a car FREAKING out thinking "Oh my god! I may have just lost everything!".

Luckily the market came back and I had short positions on GS and QQQQ so my losses that day were not that great. What really took me out was a case of the fat finger on Friday. I was watching the markets and mid day Apple showed bullish indications. So I decided to take a long position by buying ONE call option. Accidentally, however, I bought TEN calls. So, I said "that is fine, I think it is going up".

And Lo and Behold, Apple rises ~$3! Jubilant, I check my position and see that I am DOWN ~$2000. Thinking that there must be widespread falling IV's because of the rise and the delta effect has not kicked in yet, I hold on to my position. My losses just keep going up, however. At -$2100 I realized I had bought TEN PUTS instead of ONE CALL!

As a result, I have now decided to take a break. I need to develop a more solid trading plan and always set firm stops.

I am working on using TD indicators. Below is a screenshot of a spreadsheet I am developing:


The spreadsheet can download 10 years' historic data for the stocks listed on the left. It then calculates TD Setup numbers on daily, weekly, and monthly charts. I plan to add TD Sequential and Combo as well to the table and finally add PLDot numbers.

I can then use this as a screen to find stocks breaking trends on the PLDot and combo completion.

-Wown
stockjockz.blogspot.com

Chart Series: BIK

Comments
I bought BIK thinking of it as a long time investment (5 years or so). But I have lost around 10% on this investment so I went out of it. I still think fundamentally the BRIC sector has a lot of potential over the next 5-10 years (although there are concerns about China showing signs of slowing down and letting the yuan float which could hurt chinese stocks).

So I went back and looked at the index technically and realized I bought it at the top of a correction (d'oh, should have checked techincals before buying!). BIK is in a bear trend at the moment daily, moving sideways on the weekly, but on the monthly if we can close above the PLDot, a new bull trend will be established. If the weekly and the daily charts can follow up (which needs to happen anyway for the bull trend on the monthly to occur), I will buy back into BIK.

Also, I am keeping a close watch on the composite oscillator, looking for signs of reversal. I think the oscillator has reached about as low as it will go so should turn around soon. We are reaching a very key support at 24.7 which could very well be the turning point.

Chart Series: DIS

Comments
I bought DIS as a long term investment a while ago and the bullish trend has continued for a while. The stock, on the daily chart, is consolidating pre-earnings but is still showing support not far below the current price. My target is around $43 for DIS because of the bullish signals on the weekly and monthly charts.
Not to mention I think the FIFA world cup and acquiring the Marvel franchise helps disney fundamentally quite a bit.

My Trade (Investment)
long 300 shares of DIS.

Chart Series: TLB

Comments
A strong bullish trend on both weekly and monthly charts suggest the TLB is going to climb upwards. Although there are some bullish signs on the daily chart, I think any bullish move will be short lived because from an EW perspective I think we are in the middle of or end of a wave 1 (which would mean a wave 2 could pull back the gains a bit, but not below $11).
There is very strong support near $12.80 and both, PLDot weekly and daily support are above this level.

My TLB Trade:
Short 12.5 Aug Puts.