Monday Trading Plan (June 01, 2009)

Most of the trades this week will be determined by the dollar. As of this morning, the DXY has dropped another point....

Analysing the chart of SPY shows that the bulls still have the will power to push this market higher. I don't recommend you holding shorts overnight...coz if the bulls push this market above that 200 MA it is going to get stuck up there for a while. Buying on dips and shorting intraday are better strategies in this scenario.



I think copper is on the rise again, time to take a look at FCX again. Buy on dips.



I will also be keeping an eye on TBT



I have no doubts that Gold is going to attempt to break out sooner or later above 1000. Most of the gold miners report their earnings in mid July, so there is still plenty of room to run. Perhaps June could be a bullish month for gold...we shall see.

Listen to Good Things she has to say

I am aware that some of you are facing a hard time trading this market because it is trendless...
in case you were attempting to give up...well don't.

Patience is the game in this market and if you keep working hard eventually you will be rewarded with a nice trade.

Well, here is one of my idols....Mariah Carey. I admire her for her openness and honesty during the interview. Bare in mind that she had to face many difficulties in her life and "suicide" has never crossed her mind.

Friday Trading Plan (May 29, 2009)

Greetings, yesterday's action on most stocks was quite choppy. And the breakout from the trendline was slow and lack conviction.

Lets look at JPM as a study, notice that the prices are above their moving averages as compared to previous prices in the historical data....this is bullish. But you have to be careful that this could be a fake out before any eventual breakout. Who knows the price could go back below that trendline...

I see JPM going sideways or up in the short term.


Looking at the SPY chart, I don't see how far this market can go unless there is an attempt to break above SPY 91.91.

It just makes me wonder how on earth is the market going to do that with OIH and Nasdaq getting overbought...? I suspect some other sectors have to join in the rally

Thursday Trading Plan (May 28, 2009)

The market is behaving as expected.... As long as SPX 875 holds, I won't be holding any shorts overnight.

We had a big rally on Tuesday due to technicalities and the ascend was really steep.
So naturally the market corrected itself today on a pullback to the 20 MA. IMHO, this is a second buying opportunity for the bulls. If Fund Managers decide to do some month end window dressing, I am expecting a move up either tomorrow or Friday.

Here is a chart of SPY, to the downside...we have support at 88.45. On the other hand, any move up will be a big gap up or a slow grind up.




As for the Financials, I am looking at JPM for clues.

As for the DOW, the transports are not doing very well. But you gotta give that Triangle a benefit of a doubt because it could break out either way.



The rails have been quite straight forward trades, unlike commodity related stocks that are trying to act strong...and sometimes whipsaw like hell.

Look at the minute charts for these two stocks

UNP


BNI

Consumer Staples still strong (May 22, 2009)

Consumer Staples has not had any major correction since this rally started....I just wonder when that is going to happen....? This is by far the most bullish sector depending on the underlying stocks.

Trading Plan for Friday (May 22, 2009)

This market is still holding up quite well above SPX 875, I am neutral on the market despite some analyst calling for a run to 1000 or a deep correction to 840 or 800.

It is pretty clear why the market is holding up here, the government is only going to accept TARP fund repayment after June 8...and the financials need to meet their expectations.

Overall, the market is making use of the long weekend to correct itself from overbought conditions. Which is positive as we approach the month end...typically we could see some window dressing activities soon.

The chart of SPY still looks pretty murky to me, perhaps there will be a trade once stochastics get above 20 with some volume. Frankly, I think the double bottom is too small...its just an "S" size. I prefer to see at least an "XL" before I commit some capital....lol


As for JPM, the game plan is more or less the same....except for some ambiguity on a lower high or a follow through above that resistance-trendline. The bulls will hold the fort at 34.


GDX is approaching a key resistance soon, time to get cautious with your trades. Im expecting some sort of sideways action or a pullback. If it gets above 42.82, the next target is 46.52.

Thursday Trading Plan (May 21, 2009)

Update : I have removed the Google Follower gadget, I think it has not matured...serves no purpose for now.

This market remains tricky to trade, don't put on your bear suits yet. Most of the stocks I
looked at are currently in a very defensive position....there is just no clear change in trend yet. So the best strategy is still to follow the market and try not to think too much.


On the smaller time frame, to get really bearish....SPY 90 needs to be broken. Other wise expect some sideways action that will bore you a little....Theoretically, this market should bounce if stochastics turn up.


JPM could be going sideways again, all will not be clear until June 8.


Neutral on OIH.


Neutral on AMZN


GS could be a great buy soon if it holds up, my view will switch to Neutral if 132.58 is broken.

Trading Plan for Wednesday (May 20, 2009)

The SPY has gone through a mild correction, those red candles with moderate volume are quite noticeable. I believe this market is going to go somewhere decisively soon....now that VIX options expiration is behind us. The key events that I am watching for are Jobless Claims on Thursday, Memorial Day holidays, FOMC and Month end window dressing if any.

In order to rally really hard for Month End Window dressing, naturally we need to pull back a little more. On the other hand, there is also this possibility that the MMs might take the path to surprise everyone by pushing this market above SPY 95.....that is something "Insane" I know.




I like the setup for AMZN, for either a long or short play... There will be a compelling trade soon.

This is a setup I hate, but just posting this as a plan.


JPM is now in a very defensive posture, could go sideways or a little down....For the upside, the target is pretty clear.

An example of a Dissipating VIX Trap (May 20, 2009)

A fellow reader mentioned STI the other day. This stock had a day of decline yesterday. On a day when the VIX is decreasing in value, your puts will need more dollar value movement on the underlying to be profitable.

Here are some charts to illustrate my point:

Good long term play (May 17, 2009)

CLX beat earnings recently, but was downgraded for its 2010 outlook. There is a possibility that this stock could turnaround at any time. I am watching for a higher high to go long. My Target price is between 55 - 57.




PNRA is setting up for a very interesting play too, Im currently neutral on this. If that channel breaks watch out below.

SPY still the best all rounder (May 17, 2009)

On Friday, I realised that I missed out one sector...which is related to Crude Oil.
So I looked through all the components of DIA and SPY and IWM again to reevaluate my strategy.

Here is what I concluded:
SPY is by far the best all rounder that covers most sectors compared to IWM or DIA. However, IWM can make the most profits if financials do rally...sometimes up to 80-90%. On the other hand DIA is good for following Crude Oil related sectors.

There are some Pros and Cons for having a good all rounder Index compared to specialized etfs like OIH, XLF, QQQQs. If one important sector rallies and another is in a correction. SPY will appear flat/ complex to analyse, that can be frustrating too.....

So there is no running away from analysing each sector each day.

I also realise that even with Alerts and all sorts of fancy tools....a DayTrader can only monitor a limited amount of trades. For that reason; usually I limit myself to monitoring 3-4 stocks/etf....mainly from Financials, Commodities, Tech, Consumer Discretionary (or could be any Hot Sectors at that moment).

In summary, I've decided to have SPY as my main daytrading ETF for next week. At least if Financials are sleeping, I do see some other sectors moving on my screen...lol.

I welcome any feedbacks/ comments on my thoughts above.

Why I don't trade spreads (May 16, 2009)

One reader raised an interesting question on whether I trade spreads.....Well, I don't.

My strategy of trading is to follow the flow of the market...rather than trying to think I am a Market Maker....

Market Makers have more advantage trading spreads because they are usually well connected and naturally know where the market will pin to on OpEx.

The market conditions have turned more volatile these days.....even if you are looking at a daily chart...what trades could you possibly find if you don't drill down to the smaller time frames...?

So I decided that the best strategy for me is to take the market on a day to day basis..."unless we see a clear trend" like the rally from March, 2009 lows.

The advantage of trading spreads is to manage "Time Decay", but that also means you need to hold on to your spreads longer....Hence exposing yourself to unnecessary risk beyond your control.
If you trade small positions, you will need time to breakeven due to broker commission.

My ideas can be profitable even if you are trading with 500 dollars. Anyway, whatever approach you use...whether spreads of just plain call and put options. Your ability to stay profitable still lies in 80% technical analysis and 20% fundamental analysis.

Good luck in your trading.

Steady Stream of Readers

The first community that I followed was OptionsAddict...before Jeff decided to introduce paid subscription for TradingAddicts.

So I decided to start this blog to share my ideas on the market. I find that having community feedback does help to improve my trading. I sometimes hangout on SlopeOfHope and EvilSpeculator...to me the communities are more or less the same because everybody is on Disqus.

I remember I chat a lot with MoleCool while on OptionsAddict before EvilSpeculator days.

I find that, the traffic for this blog follows the sentiment on the market somewhat....Just look at that spike on April 30, 2009...lol.





Hope you have a Nice Weekend!

IWM Zig Zag

Effect of dissipating VIX (May 15, 2009)

I am not actually too happy with most of my planned trades, due to the VIX....ideally I don't like paying too much for the options I wan't to trade.

Friday Trading Plan (May 15, 2009)

This market is beginning to look like a daytrader's paradise again. I expect the market to keep us guessing again on its next move.

We have Consumer Sentiment and Industrial Production related events on Friday. So I expect AAPL, OIH to move....while I am neutral on the Financials.

The ultimate aim of OpEx for MMs is to profit as much as they can from expired options. So keep a close eye on which stock has more calls or puts...that could be a clue on where the pin is.

The market could pullback a little on bad news, that will be the ideal case because I think the market could be positioning itself for the upcoming FOMC meeting on Wednesday.

I will be watching GS. Stochastics suggest that this stock could go sideways before making any moves.

The IWM chart looks quite similar to GS, so the plan is quite similar. Pick either one depending on your trade size.



AAPL is still in a downtrend, watching out for resumption of the downtrend or a possible trend change.


JPM...Ahh...one of my favourites....simple trading plan



MOS is in an uptrend, possible short or long opportunity...you figure it out yourself! ;)

Thursday Trading Plan (May 14, 2009)

Update: GS, this stock never fails to perform....

There is some positive divergence showing up on the SPY chart, so I expect some kinda sideways action or a bounce. Regardless of the outcome, I am planning to exit all my trades by EOD.

Here are some possible scenarios for the day....Rule of thumb is...if there are more calls -"most likely the stock will sell"...if there are more puts - "its likely the stock will bounce".


AMZN is still an interesting play depending on the sentiment of the market. There could be a bounce if we analyze base on A-B-C price pattern to 78. Of course the other outcome is for this stock to go sideways. Watch out for 66.84 if support breaks.



IWM is clearly heading down now, just planning to follow the flow.



Im neutral on JPM, here are some possible scenarios.


Im trying to stay focused on as few stocks as possible...because I know I am no SUPERMAN. As you might have noticed.....I did not include any commodities. Well...I think everyone is waiting for more clarity on the direction of the dollar.....Crude Oil no doubt is down...but ...you know I don't like overnight trades.

Thoughts for Wednesday (May 13, 2009)

Update - WATCH THE DOLLAR CLOSELY

The sentiment on the market is very positive, dips are being bought and investors are getting more confident. As long as we are following the rules of trading of buying cheap and selling high...we should be ok.....IMHO

For tomorrow, I shall continue to remain cautious.

Here are a few charts:

I am expecting a rally for IWM towards 51, of course the surprise is for a descend to 48. Anything can happen during OpEx...especially when we are in the middle of the month.


Gold is still in an uptrend. The leaders were GOLD, RGLD. If you want a good entry into miners, try AEM...this company beat earnings and is no where near the top. So there is still plenty of room to move. Buy on dips or on continuation of the move up. But....I think you need to watch the dollar!


Currently there are more calls options for JPM May Options, my suspicion JPM's pin is 34....But this stock has been great on its intraday moves for a decent daytrade.


We have Retail Sales numbers in the morning. I am Watching AMZN for a daytrade.

FCX and Copper (May 11, 2009)

I have moved to the sidelines since FCX broke down from the up channel. FCX has some exposure to gold so this stock a bit on the grey area when you see copper retrace a little.


Looking at the copper chart, I can see two possibilities...either copper moves sideways or retreats to the 50 MA.


FCX should theoretically retrace to the 200 MA or the 20 MA.



I am also watching the US Dollar, the weird part is the Dollar is down pretty huge and copper did not make any gains. So be on your guard for copper....don't short blindly, the trend is still up ya!

My Plan for next week (May 11, 2009)

The SPY chart shows that there are some supplies originating back to Oct - Nov last year. This chart looks nearly the same as OIH and some major crude oil producers like XOM, CVX, COP.
So all eyes on those if you are playing the SPY. Just some change in Crude Oil prices might trigger a sizable correction.






AMZN is currently in a down channel with support at 74.73, I am expecting some sideways action before the next big move. I will be watching the RSI and stochastics for more clues. If support breaks the next level of support is 66.84.



Its OpEx next week, GS could draw in the bulls and then...we might see a surprise correction. Technically we are in an uptrend so hitting 150 is still a big possibility.



QQQQ is currently in a technical correction, could be due to positioning itself for OpEx....I suspect this ETF could end up somewhere between 33 - 35. So I am Neutral on this