Archives for May 2018
Full Time Profits, May 14th, 2018 – ADBE, GOOGL
I’d like to point out something about technical “patterns.”
Sometimes, many times, the failure of a pattern is just as important as when it works.
The most recent example is the S&P 500 right around the 200 day moving average — that orange line.
This is one of those things where it becomes self-fulfilling. Get enough eyeballs on a level, and it starts to gain more importance. it feeds on itself.
The market has tested the 200 day twice over the past two months. And there were breakdowns…
But the breakdowns failed.
When we see breakdowns fail, what tends to happen is that the market will run to the other side of the range. I think that’s what we are seeing right now.
The market is still knocking out a large, multi-month trading range with higher odds of reversion. Odds are we won’t have price action like we did in 2017, so it’s reasonable to expect some kind of a pullback here.
Yet if that doesn’t happen… if the momentum just takes off…
Then we just need to be patient. Wait for the better setups. Don’t get stupid aggressive on selling call spreads.
Yet if we do manage to pull in, then we’ll get a few great setups on stocks we’ve been stalking for a week.
Trade #1: ADBE
Looking for a pullback to breakout setup. We’ve already traded this one successfully back in April and I want another crack at it.
Trade Setup
Expected Price: 230
Sell to Open ADBE Jul 205/200 Put Spread
Tier 1: Enter at 0.65, Exit at 0.15
Tier 2: Enter at 0.95, Exit at 0.45
Tier 3: Enter at 1.25, Exit at 0.75
Trade #2: GOOGL
Looking to play the gap fill… IMPORTANT NOTE: if this level is not tested by May 18, then it is a “no trade.”
Trade Setup
Expected Price: 1134.42
Sell to Open GOOGL Jul 1230/1240 Call Spread
Tier 1: Enter at 1.35, Exit at 0.35
Tier 2: Enter at 1.95, Exit at 0.95
Tier 3: Enter at 2.55, Exit at 1.55
Full Time Profits, May 11th, 2018 – AAPL, NVDA, CMG, FB
We are starting off today’s newsletter with a look at QQQ – the Nasdaq 100 ETF.
Earnings are out. Headline risk is gone. Overall markets are making higher highs and higher lows.
Yet near term, we’re a touch extended.
QQQ is coming into a HUGE resistance area at 170. This is the gap fill area from the “island top” pattern put in at the most recent peak.
I’m not super bearish here. I think the headline risk has worn off and any correction will be sideways before we make a move higher.
The gameplan here is to look for pullbacks in the strongest stocks.
Trade #1: AAPL
After its earnings, the stock is a touch extended. It has broken to new highs, and I think any backfill will be bought here as it restest its previous breakout levels.
Trade Setup
Expected Price: 185
Sell to Open AAPL Jul 170/165 Put Spread
Tier 1: Enter at 0.60, Exit at 0.10
Tier 2: Enter at 0.90, Exit at 0.40
Tier 3: Enter at 1.20, Exit at 0.70
Trade #2: NVDA
NVDA just released earnings. Good numbers, yet they were probably priced in with the most recent ramp higher. Look for a pull to that gap fill to start scaling in. If it runs to 300 without us, so be it.
Trade Setup
Expected Price: 242
Sell to Open NVDA Jul 210/205 Put Spread
Tier 1: Enter at 0.80, Exit at 0.30
Tier 2: Enter at 1.10, Exit at 0.60
Tier 3: Enter at 1.40, Exit at 0.90
Trade #3: CMG
This is a post-earnings bull flag. Expect higher prices.
Trade Setup
Expected Price: 427.50
Sell to Open CMG Jul 370/365 Put Spread
Tier 1: Enter at 0.60, Exit at 0.10
Tier 2: Enter at 0.90, Exit at 0.40
Tier 3: Enter at 1.20, Exit at 0.70
Trade #4: FB
Massive earnings gap, and the stock is jamming higher into all time highs without much of a pullback. This is one large cap tech I like as a short here.
Trade Setup
Expected Price: 187.27
Sell to Open FB Jul 205/210 Call Spraed
Tier 1: Enter at 0.73, Exit at 0.23
Tier 2: Enter at 1.03, Exit at 0.53
Tier 3: Enter at 1.33, Exit at 0.83
[CLOSED] – Scaling Calendar in MA
Update – May 30th, 2018
Closing out the trade for a profit.
Proactive Trades, May 7th, 2018 – AAPL, FDX, LULU
The main pivot level to watch now is based from the previous newsletter:
And if the market manages to clear and hold 2680, then we’ll assume a move to 2800 is on deck.
Today, 2680 was breached, but it didn’t hold. For me, the logic is simple. If we can manage to hold above that, then we’ll be off to the races.
And a test of the 200 day moving average would signal SIGNIFICANT technical deterioration.
Where we stand right now… the past month has been an ever tightening range and we should expect volatility expansion sometime soon.
Trade #1: AAPL
Great rip after its earnings. It’s overbought in the short term and put in a reversal candlestick (open and close at the low of the range).
I’d like to see a pb2bo, pullback to breakout. The breakout bar from yesterday… at the 50% level of that bar is where I want to start. If hit, it will also coincide with some short term rising moving averages as well as the 1st std dev upper bollinger band (not shown).
Trade Setup
Expected Price: 181.21
Sell to Open Jun 170/165 Put Spread
Tier 1: Enter at 0.65, Exit at 0.15
Tier 2: Enter at 0.95, Exit at 0.45
Tier 3: Enter at 1.25, Exit at 0.75
Trade #2: FDX
I’m looking for a stop run under the 200 day moving average and a test of the range lows. We would need to see some REALLY nasty price action, but if it happens quickly I want to be involved.
Trade Setup
Expected Price: 225
Sell to Open FDX Jun 220/210 Put Spread
Tier 1: Enter at 2.25, Exit at 0.80
Tier 2: Enter at 3.00, Exit at 1.50
No Tier 3
Trade #3: LULU
I’ve been trying to get a reentry into LULU and now that it’s seen a BIG pullback, I’m looking for a second leg lower into retracing 1/3 to 1/2 of the most recent rally.
Trade Setup
Expected Price: 93
Sell to Open LULU Jun 82.50/80 Put Spread
Tier 1: Enter at 0.45, Exit at 0.10
Tier 2: Enter at 0.60, Exit at 0.35
Tier 3: Enter at 0.75, Exit at 0.50
Full Time Profits, May 3rd, 2018 – COP, IBB
Another day, another shakeout. This morning it looked as though the market was finally going to give it up and we’d see a swift move to 2500.
And then… buyers showed up. Again. This is the same playbook as two days ago… and last week… and last month…
Yet now I’ll go ahead and put it out there– buyers aren’t in control. We’ve had a series of lower highs and lower lows.
My new key level is 2680. The longer we hold under that level, the higher the odds of a proper rollover. I’m not expecting a crash, but 2500 is plausible.
And if the market manages to clear and hold 2680, then we’ll assume a move to 2800 is on deck.
Overall base case still holds… the market is working out a large, multi month, range correction.
Trade #1: COP
This is the healthiest uptrend of all the major oils (XOM, CVX, COP).
A retrace to the gap fill at 5/11/18 would be a great dip buy. This may be one we miss if the oil momentum keeps up.
Trade Setup
Expected Price: 62.50
Sell to Open COP Jun 57.50/55 Put Spread
Tier 1: Enter at 0.32, Exit at 0.07
Tier 2: Enter at 0.47, Exit at 0.22
Tier 3: Enter at 0.62, Exit at 0.37
Trade #2: IBB
IBB has tested the 102 level too many times. I’m looking for aa flush to the June 2017 breakout open.
Trade Setup
Expected Price: 98
Sell to Open IBB Jun 90/85 Put Spread
Tier 1: Enter at 0.60, Exit at 0.10
Tier 2: Enter at 0.90, Exit at 0.40
Tier 3: Enter at 1.20, Exit at 0.70