The market is down early in the day, which is starting to confirm the possible rollover that I charted and posted for you yesterday. The ISM came out with a reading of 49.6, the market popped for about 5 minutes, and I immediately sold the DIA, SPY, and KSS puts. When Big Money sold off to a lower low 5 minutes later, I re-entered puts on DIA, SPY, and QQQQ. I don't know why Big Money is selling on a better-than-expected ISM, but they are. It may be that traders believe that the current month and next month will attenuate in Manufacturing, so they are looking ahead and not behind. It may also be that the higher than expected ISM (which means the economy is still chugging along) will keep Energy and Commodity inflation high, which is bearish for consumer spending, and may lead to an interest rate hike by the Fed sooner rather than later.
These are the exits I mentioned: I sold DIA for a .70 cent gain, or 19%, I sold SPY for a .59 cent gain, or 15%, and I sold KSS at breakeven. I then re-entered puts on DIA, SPY, and QQQQ based on the speculation that the market will shake off a good ISM report and keep selling, which will confirm the rollover.
9:00 am MT: I sold a small part of the FWLT calls for a 2.35 gain, or 52% profit so far. I sold a part of the PXD calls for a 1.25 gain, or 24% profit so far. I also bought calls on HES, CNX, and BTU. I also picked up MEE calls, which I will treat like the RL trade that I did last week.
11:35 am MT: I sold the rest of PXD and locked in a total of .77 cents, or 14.5% gain. I'm sure it's premature, but I have so many positions that I want to cull back some trades that look unlikely to make a higher high intra-day. I also culled out X for a 16% loss on a 1/3 sized position, so minimal damage done there. I am looking at re-entering puts on KSS, adding to puts on DIA, SPY, and QQQQ, and creating a put position on MS or GS if the market bounces here.
12:15 am MT: I picked up some puts on GS, and I re-entered some puts on KSS.
6:00 pm MT: The market confirmed the rollover for each index as I had warned was possible on Saturday's post, (see the index charts I noted). Kudos to CNBC for calling the rotation into Tech right at the top.....So if any of you were wondering if "News Marketers" really do help you with your trading.....
S&P took negative credit rating actions on several Banks and Brokers, and here's where you'll really be surprised, Financials rolled over and dropped like a rusty anchor chained to a cannonball.
This is a list of some nice confirmed rollovers, across all sectors: FMCN, MS, GS, DIA, SPY, QQQQ, COF, NYX, MER, ICE, ITW, AXP, ERTS, HON, JPM, MCD, MCO
Also Note: PCP may be getting close to a rollover. HPQ is in a Triangle, but rolled over. TROW confirmed a lower high. AAPL confirmed an equal high (gasp! oh noooo.....). RIMM confirmed a lower high. Almost, but not quite on KSS, it may be getting there.
Also Note: PH confirmed a lower high. MMM and IYR (and most of the REITS) could break down.
Here are some stocks to keep an eye on for bullish moves: RL, ABT, GIS, (MEE, CNX, BTU, ACI), UPL, PXP, HES, MUR, NBL, DXD
Also Note: ESV, FTI, NEM, MRO, SU, NBR
Here is your continual reminder: don't hang around in your trades for a week and a half (unless you're Cherry Picking). Any swing trades that have confirmed with some momentum are usually good for 1-3 days in the type of market environment we are in, so start locking in a little of the profits sooner rather than later.
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Entered some CALL Energy plays this morning, they look great so far. Also, I have PUTS on a few Financials and some Retail (KSS, JCP). Along with put plays on QQQQ, DIA, and SPY.
ReplyDeleteHow's everyone doing so far?
Joe
Took some profits in HOT, HK, but am riding those w/GS, GME, DIA, SPY puts, and RS and SINA calls.
ReplyDeleteHey Guys,
ReplyDeleteI made a mistake and got out of NOV and WFT this morning on the drop. I sure wish that I kept them. I still was profitable on the trades.
I already had puts on the DIA, QQQ, and SPY so those are going well.
I picked up puts on JWN and KSS on the retail side. I also picked up puts on COF. I had it breaking the trend line.
I am still riding calls on X and CSIQ from last week.
I am getting ready to take some profit. My account is up $3500 today.
I picked up puts on KSS and MS today.
ReplyDeleteIt looks like many of you are doing a great job with your trading, very nice work.
ReplyDeleteDwight, are you still hanging on to your spy put? Just curious...
ReplyDeleteThanks,Denise
Mahmood: KSS is a Retail put you could look at. Your GS and CAL puts look good so far.
ReplyDeleteDenise: I am still holding a partial position on SPY. I'll add to it late in the day if it looks like the market will close weak.
Gary
ReplyDeleteThanks for taking a look at those stops on the calls I was looking at for entries today. I missed the pullback this am on CNX which would have been pretty profitable - oh well ......next :)
I am glad you mentioned ow you take the first hour and evaluate tight stops from there. - do you find that you get stopped out a lot in your favor doing this? I had been setting most of my stops based on the daily chart and am not finding much success with that as I always seem to take max loss.
Denise
Doing the same thing - one contract at a time and this does not allow me to be able to scale out - papertrading this strategy seems like it would give us the practice we need to get comfortable in doing it with REAL money - have kind of been trigger shy lately and getting over THAT seems to be more of a challenge than anything right now
Claudia
MS vs MER, I bought MER puts because of the 30 cent spreads in MS.
ReplyDeleteClaudia & Denise,
ReplyDeleteI know first hand about being gun shy and trading small positions. The problem is that if you don't enter that trade perfectly, you have to ride it out for a 1 contract profit (or loss). I trade my children's Coverdell for school and they are small accounts. If you trade 2-3 contracts it allows you to sell 1-2 and ride the last one out. The scaling out could be locking in profits on 1-2 and seeing what the last one does on a tight stop. Dwight's advice is sound and he has very few losses. Try a few contracts on some uptrending stocks of ETF's and set goals 1,2,3 dollars and out. You will be surprised how fast it can happen and how rewarding it is. Playing smart is a must but playing scared will not make you money. I was also stopped out of WTF this AM on a tight stop and was disappointed at first, but then it retraced and is back to my stop again. This market is unstable and we as beginners should be ecstatic about profiting in this environment thanks to Dwight. I know I am! A few weeks ago I learned a valuable lesson and it costs me some big profits that took me back to even on most of my accounts. It taught me a lesson- stick to your plan it may pan (out)! (I just made that up). Emotions will kill you in this game. See SOHU. Stopped out because of emotions two weeks ago Friday ( small loss) only for it to come back like $8 to a new high ( my target)last week. Could have kept going the other way (down), but it didn't break support. However, my entry was not the best so I felt that I had risked more than I should have.
Gary
are we forming a double bottom on DIA 30min & 60 min charts - what significance - if any is this to what we see on the daily chart?
ReplyDeleteDwight, thanks so much for your response on SPY...I had one successful trade and that was FWLT in the early part of the day. I exited 2 trades with a small loss just like I should have. 2 other trades I'm kicking myself in the butt.
ReplyDeleteClaudia and Gary: Gary, I almost posted a comment to Claudia without reading your entry. Very interesting and helpful. Ok but lets say for example I would have placed 2 contracts on my SPY Put that I have going right now. I am currently down $21.00.
2 contracts mean $42.00. So if you were in my shoes right now with 2 contracts and a $42.00 loss...would you be scaling out of 1 contract right at this moment? or at what point? That's always my dilema.
Thanks to all, Denise
SPY is acting like a big head fake and that really gets me MAD!!!
ReplyDeleteDenise
p.s. just complaining
Dwight, it almost seems better to get into plays in the 1st hour of trading and not miss the majority of the moves. You got into or could've gotten into spy, dia, cnx, btu, aci, leh, mer, ms, and so on in the 1st hour with tight stops and made a fortune today! Am I looking at this right or am I just being a baby cuz I didnt get into any of them and made nothing.
ReplyDeleteFor me to do this I have to get up at 6 in the morning do you think its worth it or on average not much different getting up at 7:45 and missing the 1st hour and a half?
Thank you
Denise,
ReplyDeleteI try not to (although I do) watch my trades all day which can make one emotional. The SPY failed to make a higher high today and Dwight said it's rolling over (short term 1-2 days). Maybe an acceptable loss is $100 with $200 to the upside (2:1). Watch it in the morning and see if it wiggles down out of the gate. Sometimes you have to let the option work for you! Remember, you have a July option and it (SPY) will probably go down between now and then. I wouldn't be surprised to see 138ish or lower tomorrow. I'm not in your shoes, but I don't like to lose money and I'm sure nobody here does either. Unfortunately, you have to risk some to make some. Dwight is our coach to help limit our risk and guide us to profits.
Good luck
Gary
Dwight,
ReplyDeleteI made the decision to take a lot of profits today near bottoms on the DIA, QQQQ, and SPY and other put position. It was a nice profitable day.
I did decide to re-enter puts on the DIA, SPY and some other put plays at the end of the day. I am not sure if that was a smart decision. My thought was profit taking was occuring verses buying power.
How do you know the difference?
Chic
Dwight,
ReplyDeleteAre you still holding AA? I still have it because it has not broken support.
It's not playing out like I thought.
Chic
Gary, Claudia and Denise,
ReplyDeleteWith regards the single contract. That is the reason I started the switch from a single GS put to multiple MER puts. More flexibility as it (hopefully) moves into profit territory.
My plan is to sell the GS put near the tomorrows open, the manage the MER's for the rest of the swing.
Steve C.
ReplyDeleteI live in Cali and get up by 5:30 to do my pre-market check.
It does get easier. This weekend I woke up Sat and Sun around the same time w/o the alarm. Kinda scarry...
Thanx Bob. I also live in so. ca. I tried doing this b4 watching Dwight in january and feb. It kinda sucked getting up when it is still dark, quiet, and cold outside and i wasnt as sure of what i was doing. But maybe this time if I do it again it will be better all the way around. i guess I will see you at 6 a.m.
ReplyDeleteThe energy stocks had an interesting pull back in the middle of the day but are going up again. Do we play these again on the 3rd?
ReplyDeleteMy put on VZ missed its target stop by 30 cents and now I am hoping it drops again tomorrow! Ouch
ReplyDeleteI started trading in nov 07 been losing more money in my account than making. Started to follow Dwight on V.C. and his family page in mid Feb started to move my paper account positive. So the month of may i used my own account and by the end of may I was actually up 4.3 percent first time since I started trading I just need to learn when to exit the trade better. Dwight is good teacher & mentor look forward to following him in V.C.& family page. Thanks for all your extra work. Jim
ReplyDeletewhat broker do you guys recomend mine is optionxpress it is user friendly but expensive
ReplyDeleteisaac
Hello all, I too live in So Cal and am up at 5:30 each day to watch the premarket to get into the trades at the right time. The open gap up got me several times (costly when not papertrades)
ReplyDeleteI now follow Dwight's info on the 'page' and enter some trades at closing to be in for the opening gap. Bill F
Dwight and Gang,
ReplyDeleteMy SPY trade is a perfect example of where I find my exiting skills weak. I guess what i'm wondering when other people are in this same situation what would they have done? I'm probably answering my own question, but I suppose once I discovered it was setting up to be a possible head fake I should have left the trade immediately instead of "hoping" it wasn't.
These market conditions can be tricky - when the stocks are tanking most of the day and then by the end of the day you see an unexpected rally.
If I was unsure, I should have exited right away but instead I allowed my emotions to get in the way of good judgement.
Denise
Gary
ReplyDeletethanks for that explanation re: one contract entries. My problem has been locking in profit period. So, if I were to enter 3 contracts and the stock never goes the direction I anticipate I am at a loss x3. I guess I just don't see how I am cutting my risk buying more unless off course the stock goes the direction anticipated.
Bob
could you explain why going to multiple contracts on MER is better risk management then your 1 put on GS. I understand that MER puts are a lot less expensive than GS but I don't follow your thoughts on this.....
Isaac
When I first started trading I was with Options xpress....All I can say is that Think or Swim has been so much better for me. Fill time is immediate , prices are better and you have SO many more tools available for use ( I was not trading spreads when I was using Options xpres but I know with TOS I can set stops on my spreads). The platform can be intimidating when you first start- it seems a lot more complicated than the options xpress one but I am so happy I took the time ( and will continue to take time ) to be intimidated and learned how to use it. TOS is my only pick
Denise
ReplyDeleteok this is probably the stupidest question but what do you mean by head fake?
Denise: don't get too hung up on the intra-day charts and miss the big picture on the Dailies. Sometimes you get upper or lower shadows (like FWLT or SPY) that don't mean a lot. I don't like them when I'm in them, but you also have to allow for some wiggle. One of the toughest jobs in trading is discerning short-term noise from real price consensus. It gets even tougher in choppy markets.
ReplyDeleteSteve: I've seen good trade entries happen at any time in the day. It really depends on what you're seeing. If a company announces earnings before the open and gaps up huge, then maybe it was good to be on it early.....maybe (I've seen them fade too). If you catch an early bounce or breakout, it's the same story. We had a lot of deep pullbacks intra-day today. It would have been nice to catch every single move early, then with a magic crystal ball see that you needed to sell because it was going to be a deeper than normal pullback, then get back in because the crystal ball said the stocks were going to ramp up again tomorrow. All we can do is speculate on probability, and that means that any time of day is open season for an entry or exit, depending on what happens.
Chic: your are an excellent example of what I was explaining to Steve. You happened to nail it right on the head, as it turned out after the fact. But what if the market kept on fading in a momentum day? Then you would have left some money on the table. The point is that you pick a style, stick with it, and realize that sometimes your style will work perfectly, and sometimes it won't. No one style works perfectly every time, and factor in that market conditions constantly change, and you can see that you won't ever perfectly optimize every trading day. Today, Chic, you were dead-on-the-money correct with what you did. Very nice job. And yes, I'm still Cherry Picking AA, it looks just fine.
Jim: welcome to the Profitable Option Trader Club.
To all you Pacific Coasters: I did that in Seattle for 7 years. I usually woke up at 5:50 am, ramped up the computer, did my pre-market checks, and was ready to go by 6:30 am. I learned to have everything laid out the night before: a watchlist printout, notes on what I wanted to do, charts, the whole deal. It's always good to come in to each day with reminders from the previous day, and a plan - even if the plan changes because the market changes.
Claudia: one contract trades are just fine, especially in trending markets. However, you lose flexibility to scale in and scale out of trades within entry and exit "regions." So often we deal with zones of support and resistance, and not precise points. Factor in constantly changing market conditions and it blurs the zones even more. You don't have to trade more than one contract, but in choppy market conditions you will probably want to be pretty nimble or quick with your exits (in other words stay on top of your trades a little closer). One thing that you will find is that if you develop a "paper" system of trading multiple contracts and scaling in (Cherry Picking) when conditions warrant it, and scaling out as well, and the system is profitable - even under tough market conditions - then you will probably find a way to beef up your account enough to trade that way. Just do all things in wisdom. If your one contract trading is working out, then stick with it.
ReplyDeleteThank you all. I guess it will be nice knowing i put in a full day and will have no excuses why i didnt get into or out of a trade.
ReplyDeleteSee you bright and early from now on.
Claudia, r.e. multiple contracts, DA said it all regarding the stock getting into the profit zone.
ReplyDeleteThe other benefit to that strategy is being able to scale in. If the stock goes against you, right into your stop, you've "only" lost 1/2. So if the GS put is $11 I can't scale in. However I can buy 2 MER puts for a total of $5.50 or so and test the water.
That being said, last week I cherry picked GS because it had a beautiful looking bear flag and the other brokers did not look like they were setting up as nicely.
I've also played AAPl, buying only one contract. When I do, it's usually based on the interday bars.