Early Tuesday morning ES has just moved above our 1929 area and is currently at 1933.25. If price can continue to climb we will have a new mS area at the 1929 area and price will attempt to trend upward. Trend change will be more obvious by today's market close...
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Kinda of a boring day today as the ES came down to test the Major Support area of 1893 before bouncing. We are currently sideways from 1928-1893 and the longer this market continues sideways, the more likely we will head lower to the 1852 area. I'm currently setting on my hands waiting for a breakdown or breakout in the market, even though, I was net-net short over the weekend and was able to take some profits at the open today. It will be interesting on what happens overnight...
Overnites price action looked bullish enough to believe that we might break the current downtrend on the 60 minute chart, but a retest of the minor support area (mS) without making a new low negated this mS area and now we can call it Major Resistance (MR). Currently we are now in a sideways range between 1928-1883 and I'll be sitting on my hands (SOH) until we breakout above or below this area.
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I've included a copy of the daily ES chart showing targets lower to the 1860 area of the ES...
And since it is Monday, here is a copy of the current weekly chart...
The SPY triggered the daily sell yesterday only to gap up above the entire area overnight. This failure is a very powerful signal that the market is heading higher.
Here is the 60 minute chart with targets etc. I'll be looking to get long again if price pulls back into the mS or MS areas...
I had to rebalance my portfolio today with a neutral to slightly long Delta and positive Theta. I also had to kill and take a loss on a PDS that I had purchased yesterday. I don't regret getting Delta short nor buying the PDS yesterday because that is what the chart was telling me to do. Today is a new day and I had to make adjustments which many new traders won't do because you have to admit that you were wrong and take the loss. Since I reacted quickly yesterday taking profits and today taking small losses, I'm net, net positive for the last two days of trading and ready for if the market really takes off into the New Year...
The ES has failed several times to go higher and has formed an M top on the 60 minute chart. We have a nice void below to the 2031 level first stop on the 60 minute chart and the Daily chart has a beautiful sell setup forming. Price looks lower going into Monday before the New Year...
After reviewing the SPY charts for a friend I have concluded that the longer time frames of the SPY are beginning to look more volatile with larger price swings producing wide and whippy price action on the monthly, weekly, and daily charts. Wide and whippy price action is usually the sign of the beginning of a stage 3 sideways action in where we will continue to see larger swings in price throughout 2016. I'm not ready to predict a stage 4 downtrend or hard selloff for 2016, but if we continue to confirm a stage 3 price action in 2016, you just might have to buckle your seats because 4 always comes after 3.....
I'm sorry that I've not posted in awhile. My trading has been transitioning from a directional trader to more of a position options trader. I'm finding that I'm more consistent trading options vs. equity trading. Here are my current position trading only the SPY. My goal of late is to have an Iron Condor on every week with the goal of making money on both sides of the market. Hard but not impossible using options defending techniques such as the back ratio and monitoring your Deltas. My goal is to have lots of Theta decay (Time Decay) working in my favor, but when you back ratio a position you give up some Theta.
Click on Image to enlarge
Last week I was able to take profits both on my Dec. 4th and December 11th Put Credit Spreads which were 50-75% of their profit potential. I was able to roll up my Dec. 4th PCS to a new higher strike of 204.5/203.5 for .18 cents which is a 1% ROI on the amount invested per day until expiration. Below is a photo of my current orders pending for the day which will only trigger if we get a swing in this slow moving market today. The orders are for a PCS expiring DEC 18th, and another one for December 11th, which would complete the PUT sides to my Iron condors for these weeks. I also throughout an order for a 216/215 CCS expiring Dec. 24th attempting to get .33 cents for the month...
Finally, here is a screenshot of the 60 minute Chart of the SPY with a few targets. $212.30 is the ultimate long target for the SPY by the year's end. We also have a shorter target of 211.18 but the SPY must clear this current area of Resistance at the 210.00 area. Major support is at the 208.25 which has to hold for this current 60 minute uptrend to continue...
Click on chart to enlarge
I wanted to sell a Put Credit Spread (PCS) yesterday near the lows of the day, but something told me to wait since I really wanted to short this market not go long. My portfolio is a net long so I felt it would be better to wait for a rally. I woke up today with the market gapping down much lower. At the open, the market rallied for the first 5 minutes then just rolled over again. I wanted the ES #F to hit the 1998 level, as price approached this level I was able to open an Oct. 9th 184.5/183.5 Put Credit Spread for .18 cents, punch #1. My 188.50/187.50 expiring this week was getting a little challenged this morning but I believe I will collect the entire premium by Friday.
I then bought my runner a Sept 30th Call for .94 cents and took it to my target of 1.27, which is punch #2. It took about 1 1/2 hours but pretty cool trade if you ask me...
After the large sell off overnight I wanted to share my most recent option play with you. Options have become my bread and butter plays as of late, I just need to share more plays here which I plan on doing more in the future. This morning at about 11:30 am I got a fill on my SPY Put Credit Spread (PCS) where I sold the Oct 2nd 192.50/191.5 strikes for .22 cents expiring in 14 days(Punch #1). Over a 1% ROI on my money over the 14 days. And as you look at my chart, this trade looks to be pretty safe as well, as I wait for a retest of the 196.00 area where I'll look to get Long with long Call directional (Punch #2) for my potential 123 punch play...
I did not get the first drop in the SPY this morning but I was going to be all over the next setup which triggered just after the 11:15 am reversal time. I had the trigger that I took but I knew I might have to set through a little heat, and I did as the high of my trigger bar was taken out by a penny. If the next 5 minute bars high would have been taken out, I'd been outta there, but to my luck price rolled over and headed lower. Price did not hesitate as it moved through the 20 ma and put in a nice little pivot I area where I was able to add more shares to my play and bring my stop to a break even. Soon I hit my first target of 209.70 which was near the prior low. Price just kept falling from here hitting my long low target of 209.45 where I sold my last lot. Honestly, at this point, I should have been bar by bar with my management on the 5 minute chart which would have given my an additional .65 cents if I just waited for a green bar to close on the 5 minute chart and take my profit once the high of the green bar was pierced. I guess I'm just a little bit rusty, new broker, new platform, new layout, etc... Even though I missed out, overall it was a great money maker, and I'll take it...
