|
Well here we are in another oversold full stohcastics day on the 60 minute charts with a new development of some positive RS divergence starting to show up in the indexes here.
right now its 7 down weeks in the market and sitting in the tag of the 200 day average support zone in here and it puts us in prime time for some sort of short cover rally or even a potential 4th up wave, call it what you will . We’ll see. Odds favor after options expiration we get a decent pop. Lets just get thru this week first shall we?
Remember its all about getting into the 4th wave for longside purposes for trades. We get a wave 4 rip to upside great and then of course upon completion its wave 5 down potentially so we’ll want to lay out some short sells then. After that? Welcome to the summer rally and the famous earnings season phrase heard round the world of? "BEAT BY A PENNY"! and away we go.
================================================================
Short Side Coming Attractions
TPX
6-8 Until we see some sort of snapback rally for shorting purposes there is nothing to talk about with this one.
This issue as you can see needs some time as in chart time to develop the pattern
We talk about buy the dips and sell the rips around here right? Well in this case we get a rip we’ll consider selling that rip as in short selling it. Wait for the bounce.
SLV
6-16 This name gets deleted and over the next few weeks should this issue build out a bigger snapback rally along with a retest of the 50 day if not higher then we’ll look at it. Last thing you want to consider these days is shorting after the markets have been down for 7 weeks!.
6-8 for us until we see what a retest of the 50-day average blue line looks like there is nothing to talk about for shorting purposes.
6-12 Notice how small this list is getting? That ought to tell you something after 6 down weeks in the indexes. This is how the market talks to us via chart patterns.
==========================================================
LONG SIDE WATCH LIST
"Only The Best And Forget The Rest "
"We Trade What We SEE, NOT What We Think, Hear Or Fear "
Remember the name of the game is Pullback Off Highs (POH) as it’s the only pattern you’ll ever need.
IPGP
6-16 I should probably adjust the pink line to encompass the headfake, still though a market leader thats above lateral support.
CTXS
NEW NAME
6-16We don’t need a rocket scientist to tell us this name gets deleted from the watch list here.
NFLX
NEW NAME
6-16 Speak of the 6-13 notes devil. Here we are taging the blue support/ 50 day average. Imagine that. How can you not like how this issue is setting up in here.
6-13 Sure would have liked to see some sort of tag of the blue line/50 here. For us? That is what its going to take to get me interested on the longside.
=====================================================
FEATURED BUT NOT TRADE TRIGGERED BY US
This is where names that we have on our watch list that have triggered but for whatever reason we did not take them (can’t do them all) in our trade trigger alerts. This section is because a lot of our subscribers opt to use our information as they see fit from a do-it-yourselfer standpoint.
LONG SIDE
GLD
6-16 One word- sloppy as in the last 4 days chart action.
=====================================================
All About Options In The World According To All About Trends
Over the weekend we posted an article in this space entitled:
OPTIONS- Your best friend and worst enemy
That article is at the bottom of this newsletter for reference anytime you need it.
NFLX
NEW NAME
6-16 The ones we want to look at and consider are the JULY 225 calls as they are priced at 27.17 with the stock at 248.70 giving us about 3.50 points of time in them.
We’ll watch this issue closely as there is a good possibility in the next few days we do a face of fear longside trade on this. Its a chart and name we want to use for repositioning our June call options.
MAKO
NEW NAME
6-16 Here too is a stock we can use to reposition our options with. At this moment in time (subject to the next moment in time over which you have no control over because you dont know whats going to happen in the next moment in time) how can you not like the classic "Stock in clearly defined uptrend pulling back to support and the 50 day"
The JULy calls we want to look at and consider are the JULY 25 calls. As we post they are at 3.20 with the stock at 28.10 giving us 3.10 in the money and 10 cents of time.
Current Holdings
NOTE: All of the June options need to be sold to close between now and friday’s close so be aware.
IBM (We are now long 2 JUNE 160 call options to open at 7.30)
As we post they are currently trading at 2.52
ILMN (We are now long 2 JUNE 65 call options to open at 6.30)
As we post they are currently at 6.00
SFLY (We are now long 2 JUNE 50 call options to open at 5.40)
As we post they are currently are 1.30
CAT (We are now long 2 JUNE 95 call options to open at 11.10)
As we post they are currently at 1.60
AAPL (We are now long 1 JUNE 320 call option to open at 22.30)
.NOTE: The exchanges recently started WEEKLY EXPIRATIONS of options. Going forward, make sure that you check to see which ones you are buying. Let’s stay with traditional options expirations which are the ones that expire the 3rd Saturday of every month.
Options Watch List – All JULY call options
As we post they are currently at 7.5
(We are now long 1 JULY 300 call option to open at 30.00)
As we post they are currently at 29.35
We added one more call today in the form of a JULY call. Some will say this is rolling out the option to the next month and I get that if thats what you want to call it.
Between now and Friday’s expiration our JUNE AAPL call and all the other June calls need to disappear so expect some trade trigger alerts on those between now and Friday’s close.
=======================================================
Let Your Stocks Tell You What To Do By The Action They Exhibit"
LONG SIDE POSITIONS
INFA (We are LONG 200 shares at 55.11 as of 6-9-11)
6-16 We own it at 55.11 and here it is at 53.76 so no big deal here yet.
MAKO (We are LONG 300 shares at 29.52 as of 6-9-11)
ILMN (We are LONG 200 shares at 70.59 as of 5-25-11)
SFLY (We are LONG 200 shares at 54.24 as of 5-25-11)
6-16 Support is holding and here we are going on 4 days of that.
AAPL (We are LONG 50 shares at 338.15 as of 5-5-11)
6-15 SUPPORT SUPPORT SUPPORT, and the 200 day average. That is all there is to it.
6-12 (326.96) Well there you have it, basically right to the 200 day support zone. So should we short sell this issue here? Should we get emotional and sell our position right here? Not me. Worst case technically is a trap door (baring an unforeseen over which you have no control over anyway) is a quick tag of that 320 level in April. This issue looks good in here for those who are interested in picking off the kingpin without having to chase it and in the face of fear.
6-8 (332.80) Those who are more investors than they are traders this issue is basically in the zone per the notes in the chart. If you are one who doesnt mind an issue flip flopping around a bit then you are in the zone but take your time as we still have to get thru those wicked closes.
CAT (We are LONG 150 shares at 105.15 as of 5-5-11)
6-16 Well today we have a whole lot of nothing going on. It seems Elvis has left the building for the day with this issue. still though four days of nowhere. When the indexes are hitting new lows and a lot of stocks are not following thru with that new lows that is how positive divergence gets built.
6-13 This issue looks so ugly here that if I didn’t own it I’d probably consider buying it here.
6-12 Super ugly here and selling is after the fact. Keep in mind when they run the dow this is one name they are going to come looking for fast.
=============================================================
To our NEW SUBSCRIBERS
What we’ve tried to do is break our watch list down into chart pattern recognition structure from a visual standpoint. Learn the patterns and the components of patterns and you’ll blow those Wall Street MBAs away. You don’t need a $3,000 software program either. All you need is a BURNING DESIRE to be the best that you can be and we’re here to help.
We have a lot of new folks here and we thank you! We want you to take it easy, get to know how the routine works around here for awhile and to feel comfortable.
We hope you all aren’t here because you are chasing performance. For us it’s more about educating and making you the best you that you can be first (that’s what we focus upon!). Like many of our long time subscribers they have all found out that they have no use for traditional Wall Street (and we don’t blame them) and it’s our hope that over time you’ll have acquired enough knowledge from us to say the same with conviction.
One of the most important things we want to stress is that of RISK MANAGEMENT via POSITION SIZING. You don’t need to stack your account with just a few big positions as we’ve seen it time and time again that those who get into trouble are the ones who take large positions and do not employ any risk management system IE shoot for the fences. Those are the people who live on the fringes of extremes and yes ultimately get burned.
As a guideline a good initial system is that of the following example.
Let’s say you have a $100,000 virtual portfolio and let’s say that as a guide you never place more than 10% ($10,000) into any one position. Now let’s say that one day a news driven event hits (over which you have no control over anyway) and one of the positions tanks 20%. On its own that position is sporting a $2,000 loss, while that may seem devastating on its own its really no big deal overall.
Why? Simple its all about risk management being properly employed. What is the impact of a $2,000 loss to the TOTAL VALUE of the virtual portfolio in this example.
Answer: A whopping 2% LOSS. Now you know why we say no big deal.
We can also tell you new people here that you will get stopped out of names and you will take hits. There is nobody on the planet living that has ever hit 18 holes in one and there never will be. We’d rather get you grounded in reality right away vs talking about pie in the sky all the time like a lot of other sites. In so doing your head is screwed on straight from the start and when those days happen (and they will) mentally it won’t mean a thing to you. To us that’s what’s most important is YOUR state of mind as it’s your most important asset. We hope you appreciate our honesty.
We have a very good retention rate here at All About Trends and a lot of great outstanding people here. We like to think that a part of that is being upfront about what can happen (in both directions). Verses those up 500%, I turned $50,000 into $3 million or some other absurd number to get you to bite. That’s not who we are.
WELCOME ABOARD!
================================================
Lastly with regards to taking any trade:
Remember the moment you take a trade you are at the mercy of the market and have no control except when to sell. If you are not willing to take the risk and are not willing to pay that price do not take the trade. We are willing to take that risk knowing full well the end result could be a loss. That said make sure that virtual portfolio management trade size is used accordingly. With any position you may take make sure that should something go awry the amount of total impact to your account does not devastate your acct. Try to stick to a 5% position That’s the key to virtual portfolio management, not biting off more than you can chew.
Remember the mechanics of reality with regards to the stock market states a stock can only do one of three things: Up, Down, Nowhere. The moment you hit the enter button you are at the mercy of the market therefore the only control you have is when to sell/cover. You can’t manage your gains as you have none to manage initially. Knowing this in advance it allows you to stay in outcome, that being you will either:
1. Make a gain
2. Wash
3. Get stopped out at a loss
Remember the market IS the boss. IT is going to do what IT wants to do.
======================================================
OPTIONS- Your best friend and worst enemy
Let’s talk about options for a moment. First off this is a big universe with a lot of advanced strategies and terms like theta, delta , straddles, butterflies and the whole gambit. For the purposes of this conversation we’ll keep it real simple and not try to get to deep.
We’ll approach it from simple buy puts (short side) buy calls (long side). The first thing I want to mention is that options attract the fast money crowd in hopes of turning 500 into 10,000 overnight. This is also the get rich quick crowd. And more often than not these type of people get broke faster than they get rich. Please don’t be one of them as greed kills.
Time and time again we hear from people who like to trade options, and time and time again we hear the horror stories too. When we hear the horror stories nine times out of ten we can guess as to why their option went to zero. Nine times out of ten it was because they bought out of the money options or at the money options. This is the reason why 80% of those who do options lose money by the way.
Sure there are folks who use out of the monies and at the monies but those are experienced traders that know the ins outs ups and downs.
You see the trick is to NOT pay for time. You want as close to a point for point move as possible with the stock because there is nothing worse than seeing your stock move yet your option does nothing or very little, know the feeling?
So for All About Trends we only want to look at IN THE MONEY CALLS OR PUTS and we DO NOT WANT TO PAY FOR TIME, sure they cost more BUT we want to be as close as possible to being able to see a point for point move with the stock.
We hate paying for time. We want true value without the time. We’re not saying our way is any better than others, we’re just saying it’s what works for us.
Now let’s touch upon how we would build a virtual portfolio dedicated to options and how to make it a piece of your overall virtual portfolio via allocation. Keep in mind this is more geared towards beginners so you advanced people might be bored with it but then again it never hurts to revisit the basics every now and then.
At All About Trends Trends we talk a lot about never biting off more than you can chew and trade size position management. We do that for a reason, we do it so as to when Murphy’s law shows up it never devastates us or blows us up. Typically we try to stay within a 5-7% position size when we do a trade. The same thing goes for options. If we were to start a virtual portfolio of options or shall we say allocate a portion of our overall virtual portfolio to options the way we would look at it is the following:
For example, let’s say the total value of your virtual portfolio is $100,000. The most we’d consider allocating towards an options strategy is 10% of the whole virtual portfolio. In this case $10,000. So now you’d have a $10,000 option virtual portfolio to work with. Now let’s say that you are the worst trader on the planet (we doubt that!) and you lose the whole option virtual portfolio, what’s the risk to the total value of the overall virtual portfolio? 10% in which case you live to play another day. Now let’s touch upon that $10,000 you allocated toward options. Let’s reduce the risk even further (and we haven’t even talked about what stocks to trade yet). Let’s take that $10,000 and split it up into no more than 10% ($1,000) can be allocated to anyone position as a guide. (Sometimes 1000 can get you 3-4 contracts you know). Now let’s say that one of those positions goes bust (and they will! and sometimes more than one at the same time we assure you.) What is the total impact to the overall options virtual portfolio? 10% right?
Now let’s take that a step further. What’s the total impact to the overall investment virtual portfolio of 100,000? 1% – that’s right 1 measly percent. When it comes to options you need to employ some sort of virtual portfolio risk management structure parameters as this way you can get in trouble and you don’t lose sleep – you just have a bad day that’s all.
As for getting rich overnight? Forget about it. That’s just a marketing ploy. As for taking 50,000 and turning it into millions? Ain’t happening overnight but it sure sounds good doesn’t it? And that is why people bite on those marketing ploys.
As for time? We never go out months. As a swing trader we’re in positions for only a couple of weeks best case so why pay for the time to go out further in time when you don’t have to. When the stock moves whether it’s right away or not they sure seem to suck that time out of you just as fast anyway right?
Typically we’ll look at the front month (current month) or the next month but not months. When we say front month if options expiration is a week or sometimes even two weeks away we’ll look out to the next month and not the current. While time is our enemy in most cases, in this case it’s your friend. It’s just that you don’t want to pay for it
============================================================
SUBSCRIBER ONLY WEB SITE
Don’t forget you can view updates in the middle and the end of each trading day complete with current charts, along with our current performance at our subscriber only web site.
|
