Earnings news is on the light side, and there are no major economic reports this morning. So the focus will be on the modest stabilization of the world's financial markets. The market is set to gap up a little at the open. I speculate that we will get some upward drift this morning, and it looks like we are getting some of that already pre-market. Remember that corporate earnings come in a lot heavier tomorrow, so traders will gyrate a bit as they position themselves ahead of the expected volatility the next couple of days.
8:00 am MT: I nibbled on calls for ERTS, NUE, SPY, and the Q’s. I also traded in and out of AAPL calls for a small .33 cent gain in 15m, and then I nibbled back in to the same calls. The market gapped up at the open and is drifting up a little, just as I speculated it would on Friday. We’ll see where things go from here.....
8:20 am MT: The rhetoric coming out of OPEC is heating up.....The cartel is planning an “emergency” meeting to get together and discuss how awful it is that oil is dropping below $70.00 per barrel.....I guess were all supposed to forget what life was like 5 years ago when oil had a trading range between $20 - $30 per barrel. So this is really a “hurry and slash output before we cut into our massive profit margins” meeting.
2:00 pm MT: Market Wrap: I warned that today was likely going to be an upward drift or Drifter Day, and that’s exactly what we got. The market gapped up at the open, popped a bit, came back and tested the gap, and then drifted slightly upward all day long. Now, I know that it was a 413 point day on the Dow, but relative to the price action from the past two weeks, today was a nice upward drifter of a day.
I sold all the calls by the end of the day for nice gains. I wasn’t trying to set any records today, but I wanted to be exposed to some stuff so I would be in position to take advantage of the bullish drift. Volatility compressed quite a bit, so my biggest gainers were only 7% profits on NUE and ERTS intra-day. Normally those would have been a little bigger but the VIX put in a mini Double Top as the market put in a mini Double Bottom, and volatility compressed a lot today.
The major indexes are headed towards the resistance zones that I drew out for you on the charts yesterday. Most of the stock charts I posted yesterday also moved up.
Here is an additional set of interesting Bullish Movers from today (including stocks from the Watchlist yesterday):
Steel: CLF, NUE
Coal: BTU, WLT
Chemicals: PX
Tech: NIHD, ERTS
Defense: GR, RTN
Energy: PXP, UPL, OXY, CAM, RRC, DVN, RIG, DO
Remember that we get hit with a lot more earnings tomorrow, so the market will be in “processing” mode in the morning. That means we will probably have more gyrating tomorrow morning than we did today. The charts are saying the market wants to go up again tomorrow, but we’ll see what the earnings news does to all that.....
Dwight,
ReplyDeleteWhat do you think of NRG? It's up 25%. Exelon's put in a buyout.
Happy Monday trading, everyone!
Bernacke is selling another stimulus package. I guess we will just keep the money printing press going 24/7.
ReplyDeleteDwight, how deep can we bury ourselves with all this spending. Do we just keep printing til we've paid for everything we want without consequence.
It would seem there has got to be a line somewhere where we have to stop. Any idea where that line could be?
Hey Guys,
ReplyDeleteEntered BTU right at the open this morning and closed it at around 36.90 for a 19% gain. Looking to buy in again when we get to the bottom of the channel its in. After the market shapes up a little bit I'll probably get in an index option.
Joe
It looks like we drifted upward until 10 mountain time and the we started down. We have closed the little gap this morning. Bernanke was talking to congress so it looks like the market didnot like what he and congress had to say.
ReplyDeleteOops, my profit chart is in eastern time.
ReplyDeleteJoe,
ReplyDeleteI bought a SPY call at a pullback, but just before the big dump and before Bernanke spoke. I think Paulson is about to speak, also. Great job on getting in and out of BTU early. A trade like that can sure improve your day! Anybody else out swimming today?
Laurie
ReplyDeleteI also bought a SPY call on the pullback but before the turn down - took a little loss.
Did you enter NRG? It looked like there was some resistance around 25
Joe good job on BTU
Steve,
I guess as long as the ink keeps printing......... :)
By the way, has anyone else been having problems with prophet? They seem to keep freezing on my when I change charts or the time interval is changed.
ReplyDeleteJoe
Joe my chart seems to be freezing also, I caught it several times today where the candle stick also totally disappears for a few seconds. One minute its bouncing up and down normally with trades, the next its gone completely?
ReplyDeleteDwight, what chart system do you use? I cant believe you would rely on prophet seeing how bad they are.
ReplyDeleteI looked at esignal and they want over $100 per month... no thanx. I am trying quote tracker but they have no phone support, that really bothers me, and they dont support tos so I am checking with interactive brokers wich by the way is pretty cheap commissions. I also use tos charts but there is something about them that I just dont like. Any ideas?
The prophet charts are a big distraction when you cant trust the data.
Claudia,
ReplyDeleteI'm about at break even on the call. It may just drift like Dwight said, but I'm hoping it drifts UP! Bulls and bears are at it right now. No, I didn't play NRG. It gapped up and then dropped. It would have been great if you already were in, but...
Joe, and ?? Francis?,
Prophet's been troubled for awhile now. I look to the trade tab to confirm the current price, then keep refreshing the daily chart for comparison, switching to shorter times if they're reliable. It seems like there are more data problems on the 15 and 5 min charts. There must be some data feed problems from the exchanges themselves, judging from last week's glitches. Yahoo finance's charts have shown some strange markings, too.
Hello Laurie,
ReplyDeleteI watched opening for about half and hour and decided to go back to bed as it just seemed sideways to me. Here we are now and the SPY still meandered between 95-96 area. Maybe now into closing it might move. I use the Think or Swim Paper Trade account Prophet charts which do seem to drop periods of data sometimes. I have an empty gap on my SPY 2 min and 5 min charts
Francis
Dwight, once again, right on with your analysis. I guess this is the exact definition of a drifting upward day. No real pullbacks.
ReplyDeleteI put up a 4 square grid with the tos charts for 5,15,30, and 60 minute charts to learn about what you have been preaching on watching all of the different timeframes. Its pretty cool.
You called it right again, Dwight! I know I shouldn't be surprised. I sold my SPY call. Even though it wasn't the easiest 5% I've ever made and despite it taking all day, I'm still pleased. I watched as the SPY meandered its way through to the upside of the triangle I'd drawn, then I exited. I left a little on the table, so I guess that'll be for another day.
ReplyDeleteI like your use of the time frames with grid charts, Steve.
Using the 5 minute charts lately.
ReplyDeleteDay traded NUE calls today for a nice 16% profit. Sold all but one contract. Gives me some wiggle room and keeps me in the trade.
Bought MCD calls today also. Drifted ever so slowly up today. It finally made decent move in the last 5 minutes of the day, too late for me to get out. Chart looks decent, so I am happy to hold over night. I think.
Some one had the idea to day trade through multiple accounts to avoid the 3 day trades in 5 days rule. That is a really good idea.
Good trading to all.
Don
Don,
ReplyDeleteNot sure what you mean by trading in multiple accounts? If you buy it in one account you can't sell it or stop out in another. Am I missing something? It would be about every week and a half that you could day trade traded three accounts and had 9 trades to use that way.
The other way that MAY work is: If you have an existing position that you held overnight, added to it and then closed the entire position the same day that you added.It worked for me ONCE (the only time that I mistakenly did it) and I think it worked for Francis too?
Dwight,
Is that a kicking pattern on the DIA 5's @ 2:40?
Hey Everyone,
ReplyDeleteHas anyone ever tried a system to sell a position after its reached a certain percent loss? For example, Investor's Business Daily recommends selling when you've reached a loss of 8%.
Joe
Joe,
ReplyDeleteNever used one but have read about them also. FYI: In TOS when you place a stop order using a "Training Stop", under the "Link" column I believe that you would choose "Mark%" and enter -8% to enter an 8% trailing stop. You probably wouldn't want to use that on an option position. However,you may be able to add it under the "Order Rules" tab for the underlying stock price on an option trade? Great question...I hope I didn't go too far?
Good luck!!
Gary,
ReplyDeleteThanks for the response. I think I'll test it with papermoney and see how it works out. I'm just gonna set the stop by multiplying the option price by 8% and then setting the original price minus that. Easy enough..
Joe
Joe,
ReplyDeleteDon't know if I understood your post correctly. But an 8% trailing stop stops you out when the position retraces 8% of its current price at any given time as it trends. So, if a stock goes from $9-$10 then back to 9.20 or 9.19 (8%) you're stopped out. I wasn't sure if you understood what IBD was referring to, but I'm pretty sure they were saying was to move your stop up 8% accordingly in case of a pull back. ? Let us know how your experiment goes.
Gary,
ReplyDeleteI just meant 8% of the original price. The rule doesn't qualify for trailing stops. So if I bought a call at $3, I'd set the stop at $2.76.
Joe
Gary,
ReplyDeleteI'm not good enough on the patterns yet to comment, but I think a kicking pattern has to have two different colored candles(for bullish or bearish).
There's a site I went to that has pics and descriptions of candlestick patterns. I don't think Dwight will mind me sharing the site. If he does mind, he can delete it. It's candlesticker.com. and may be helpful to you.
Multiple accounts are good for day trades, but it takes longer to get to the magic number if your money's scattered in more accounts. The one time I sort of worked around the day trade problem I did this. I think I bought one contract on a stock and added more to it that same day, then sold everything together within the one day.
Joe, let us know how your 8% stop works out.
Have a good trading day tomorrow, everybody!
Laurie,
ReplyDeleteAs soon as I read your post, I knew I posted mine wrong. I meant to say Rising Three. OOOPS!
Dwight,
ReplyDeleteHow did you know we were going to have a drifter day today?
Joe
Joe,
ReplyDeleteThe 8% rule is from Investors Business Daily, specifically Bill O'Neil's books, "How to Make Money in Stocks". It basically says that if you buy a stock (NOT AN OPTION) at the correct buy point then sell it if it drops by 8%. Their experience is that a stock rarely returns from an 8% drop in a reasonable amount of time. Again it is from the proper buy point such as a break above the 200 DMA or a bounce off the 50 DMA.
I have done well with this before I started IT and IBD is a great daily paper. IBD is mostly (but not completely) a bull market investment strategy. That is, it is only looking at stocks going up for the long haul. Small number of home runs versus many singles.
Hope this helps if you even bother to read it.
Good trades to all
Don