Watching the three levels I mentioned last week on DIA/QQQQ/SPY, for the setup, refer to this post.
The levels I am watching are:
DIA 91.23/91.24, SPY 100.14, and Q's 40.01/40.02
DIA has reached the level, a little over-penetration is to be expected as the others climb to these levels.
Update 9:59 eastern, Q's have hit this level, second portion of short can be added.
Thursday, July 30, 2009
ETF short entries... traditional stop trade...
Q's and todays open...
Our current trade stands here:
At the time of the screen capture, our draw-down is:
Secondary extension trade: 4.54%
Primary extension trade: 5.12%
There was one addition to the secondary extension trade this AM, at the 39.62 Level.
Wednesday, July 29, 2009
Channellines
I am going to be moving my blog area over to http://thetradingtruth.blogspot.com .
My technique of trading and the interface of channel line usage is not drawing the crowd which I want to target and educate. Channel lines are a primary tool of technical analysis, created by a various influence of factors, and my trading technique does not due "classical technical analysis" much justice. I have moved beyond technical analysis (and no, not to fundamental analaysis) and into different areas of expertise.
www.channellines.com, when I get an opportunity, will become nothing more than an education site on channel lines and their implementation with technical analysis. It will cover the when, where, why, what, and how of channel lines, for I have found no information even remotely accurate on the issue. When used properly, channel lines are the most helpful tool within the technical analysts tool box. I just don't carry that tool box with me much any longer!
See you at http://thetradingtruth.blogspot.com ! You can reach me at thetradingtruth@gmail.com or, as always, channellines@gmail.com.
The nature of my trading technique will go against everything you have ever seen, and will be against the masses the majority of the time. This is the primary reason comments will be disabled at the new location of the blog. Any good inquiries via email will be covered on the blog, regardless of their nature. I will follow through on the trades started here on Channellines, once they are exited profitably www.channellines.com will then get a small facelift. Good luck trading to you.
George (formerly known as "Winace")
Monday, July 27, 2009
Fridays targets...
I posted three distinct targets for a high probability turn on Friday here http://www.channellines.com/2009/07/interesting-tidbit-waiting-anxiously.html
I went on with the next post to define a better execution of this short, for they might not all hit simultaneously. DIA at 91.24-91.25.... check (91.27 todays posted high so far).
As in technical analysis, there is always one issue or another that conforms to analysis better than another at each turn. This is why it is good to keep an "eye" on more than one broad issue. Since there is no "obligatory" upside, I am not expecting the DIA and QQQQ target to be hit, but if they are, I would recommend adding to any existing short positions.
With these targets in mind, let me mention this. At the current time there is no "obligation" by the markets to the upside, yet there is "potential". The market does have an "obligatory" bias to the downside. So, these targets do NOT have to be hit for the down move to occur, they just reinforce the potential of the turn. I am short, and have been averaging in short for quite some time, it will happen, and it appears the time draws near. Many will say, "The market does not HAVE to do anything.", I hear it through my laptop screen. I will have to disagree with that statement though, historically, across all of time, in all of the regulated ETFs/Stocks/Futures, the markets have conformed to rules, and it shall continue to do so. The game has not changed, only another rule has been added.
Q's, primary and secondary extension trades
Both trades, the primary and secondary extension trades are in the green at the moment. I'll post a snapshot here shortly. We have at least 3% to go before the secondary extension trade exits. I'll keep you posted and update shortly.
Friday, July 24, 2009
Last post
A quick note on the last post. The levels listed (look in comments also) do not neccessarily need to be hit at the same time. A better way of executing this short would to be buying as each level is hit. Split the capital up you wanted to utilize amongst the 3 ETFs. The up/down motion you see in the markets (look like flags but slanted with the trend (not against as usually found)) are these levels being hit on each respective issue. For example, the first spike hits the NASDAQ objective, second hits the DOW, and third the S&P. You will see a divergence amonst ETFs at these points. Once all three positions are opened, set one stop, about 1% higher than the last entered issue.
Thursday, July 23, 2009
Interesting tidbit, waiting anxiously!!!!
40.01-40.02 will be a price level on the Q's where the Primary launch and the secondary launches have a major price level in common. This information, combined with a secondary extension of this magnitude sets up a highly low risk trade with big time favorable risk:reward. A fortune shot! Lay down some big coin to short at 40.00!!!! Stop out at 40.10!!!! Risk 0.10 for 5.00!!!! You nail it, put the check in the mail baby!!!!
ProphetCharts: IWM
IWM, April '06 reference (like Q's and DIA)... maybe..... looks like it could and then be explained by this line in hindsite.
For the Web's best interactive charts, please visit http://www.Prophet.Net
ProphetCharts: DIA
Matching to the Q's chart, does it mean anything? We will see!
For the Web's best interactive charts, please visit http://www.Prophet.Net
ProphetCharts: QQQQ
Just another chart, with another line of resistance I had drawn in a few weeks ago...
For the Web's best interactive charts, please visit http://www.Prophet.Net
Here we go.
Second matrix, lot size, 2 contracts per entry. Max gain 7,158.00, Max loss 2,300 (both approximated)
Capital allocation for trade: 22.5K
Utilizes September 46.00 puts
Q's, new matrix coming up....
Stopped out at 39.35
Total in trade 12657
Liquidated value 11580
Net loss 1077
Percentage loss 8.5%
We have hit over 12% on a secondary extension, entering back in the trade now allows for larger gains when reset is hit. I'll set up a new matrix and re-enter shortly.
Update this AM, Q's trades
At the time I snapped this screenshot the status of the trades are as follows:
The secondary extension play is getting to the limits, I set the stop at 39.35.
We have accumulated 14 Put options and the total draw-down of this trade is currently at 6.5%.
The primary extension play is at 2% draw-down. I did accidentally purchase a third option, but immediately sold it off, that may have affected the cost average slightly. With this mornings upward move it most likely hurt the trade a touch. Can't call a "redo", so we will roll with it.
I'll get to answering some questions in Disqus in a moment.
Update: Apparently there is an issue with Disqus, as soon as the comments actually post (received in email already), I will answer your questions.
Wednesday, July 22, 2009
Q's trade update
Q's are still up 0.22, yet net green on the shorts for the day. The power of averaging in.
Keep in mind, these entries are placed at the ASK. When executing these trades, you can offer pure intrinsic value only on the BID/ASK spread and get filled. The spread may show 0.20 or 0.50 wide when this deep ITM because there is no volume in that particular strike, but I assure you, you can pick it up for 0.01 over pure intrinsic value. You can typically sell it there also.
Q's update
The graphic above shows the surrent status of both the primary extension fade and the secondary. There have been a total of 5 contracts purchased so far on the secondary. This graphic shows we have a net liquidity of the secondary position being 3322.50, draw-down as of this point is 165.50. To calulate the percentage of draw-down current, add 3322.50 and 165.50, which is 3488.00. Then divide 165.50 by 3488. Rounded, we get 4.7%. This percentage figure would be much higher with using lower delta'd puts.
The primary extension play consists only of 1 contract so far. 1,669.50 is the current liquidity with draw-down of 70.50. Rounded, we have a 4% draw-down.
Tuesday, July 21, 2009
Micro trade.
Quick intra-day trade for you on SPY!
One deep ITM put at 94.82
Stop at 94.94
Target exit 94.42
Stopped out!
Why the options I chose?
A commentor (the only one, sheesh)inquired of the option strike and month. You can use shorter term options (front-running months) and even closer to ATM or slightly OTM options. Keep in mind, doing this involves a substantial amount of increased risk. If the extension is not reset in a timely fashion, you will need to calander roll the position when options expiry approaches. This involves more capital that was not initially calculated at the trade initialization (and can't be to any degree of accuracy). When the position moves against you and you lose delta, the gamma (the rate of delta change) accelerates. You need to keep the delta you have and increase it further to improve your rolling average cost basis. So, using ATM, OTM, or slightly ITM options can actually work directly against what you are trying to accomplish. My preference is little to no risk, with lower percentage of return. Using options that are ATM or OTM can return percentages of huge proportions, but when time catches you, the draw-down and forced liquidation hurts a hell of a lot more. Even if you do execute a few with OTM or ATM options, you will be compelled to compound your gains into a larger position next time, eventually it will catch you, and the result would be ugly. So either set stops and have a pre-defined loss with ATM/OTM options, or have one hell of a lot of capital backing the trade.
Q's trade
The positions I posted yesterday stand here at the moment:
You can see the secondary extension play (which is more agressive and based on a shorter magnitude of movement) had 1 lot added to the position.
The secondary trade (as I type this) is already showing green, yet we are still above the initial entry level. The first column in the graphic above is the trade price (your rolling average of the option itself). The matrix's red line on yesterdays post actually calculates the underlying stock price equivelant rolling average (delta adjusted).
Monday, July 20, 2009
Q's trade
For the hell of it, setting up a simulated primary extension trade here on the Q's for you to follow. It utilizes December 55 Puts, 1 put per tier. Allotted capital (max utilization) = 27.3K, max return 9K, max drawdown 4K. I'll show the cost average each time I add, and will announce exit. This is on the primary extension, not the secondary.
Here is a matrix set-up on the secondary. I'll stop this out at 39.30 if required. Allocation (max utilization) = 13.2K, Max return 1.23K, Max draw-down = 0.9K, success of profitable exit = damn good!
Again, I'll keep you posted on the exit (will be the green line in the matrix so you can estimate it) This trade utilizes September 45 Puts.
Friday, July 17, 2009
Forced Short Squeeze
I am seeing posts come up all over the place concerning forced coverage of short positions. This was actually kind of expected by me. A market this ripe, holding this much guaranteed movement, will be maximized by those larger entities. Period, end of story. The only ones that will be able to short, or sell, are those with the power to do such. Watch the upcoming month or two, we should be in for some really interesting times. For more information regarding the forced coverage of now "hard to borrow" stocks... check out www.zerohedge.com.
In other words, if you can not short, what is there left for you to do? Cover shorts by force, then buy on the expectations that forced short covering will rocket the markets. Who's gonna be selling you this shit? You betcha, same game, different day.
A shitstorm on the horizon......
I see a large move coming... and the time is getting pretty damn close. Let's review a few charts below of the Q's.
First, here we see a 10 year daily chart, note the channel drawn. You can draw parallels to that channel and see how nicely they fit the price incline over the last 5 years.
Now, since no charting software is perfect, and trendlines get skewed when plotted, let's get a closer look.
The channel is present in red, the blue channel is a parallel that identifies the over penetration that occured recently. This can be due to skewing of the plotted trendline, or just due to the larger time frame present (daily closes).
Let's hope that decline begins VERY shortly, for I am fighting father time, have been for four months, and I have taken a severe beating this week. Capital to calendar roll is scarce...
Thursday, July 16, 2009
IWM Trade, Here ya go!
Want to make a few bucks on IWM? Start accumulating deep ITM puts now, average in up to 54.00, place a stop right above that if you wish. Current exit for target is a few cents under 50.50. For every 0.01 that the current high is surpassed (52.15) add 0.004 to the exit listed. That will then be your exit. You're welcome, enjoy ;-)
Maximum Secondary
We are approaching the maximum extension limits for a secondary extension on the NASDAQ. 1-2% is all that is about left. With this secondary, you can expect a pullback of about 3% if you want to attempt going long and "buying the dip" on a momentum trade. Keep in mind though, we have just set a higher high within the NASDAQ, thus extending the primary extension. The compensatory move required to neutralize the NASDAQ is now topping 12%, so watch that dip buying!
Wednesday, July 15, 2009
ProphetCharts: DIA
Looking for this level to hold....
For the Web's best interactive charts, please visit http://www.Prophet.Net
Tuesday, July 14, 2009
Market Perspective
Many traders, technical or not, use indicators and oscillators to try and balance their perspective. Take a random 100 stocks within your watchlist. Set up a MACD, Slow Stochastics, and RSI study. Flip through a two year time frame, daily charts. The majority give a pretty bullish picture. Now, the same list, flip through a five year chart, weekly. Changes the whole picture, does it not? Watch the blind side, moderate you perspective. The people you follow are in a agreement with your speculation, that is why you are following them. You will see what you want to see, and you will find whatever agrees with your current outlook.
ProphetCharts: QQQQ
Slightly different ratio of numbers, for a different entity basket trading the NASDAQ...
For the Web's best interactive charts, please visit http://www.Prophet.Net
ProphetCharts: QQQQ
Nothing marks internal channels like gaps and spikes. You see one here? See if it is not reacted to/
For the Web's best interactive charts, please visit http://www.Prophet.Net
Monday, July 13, 2009
ProphetCharts: SPY
Yet another line of resistance. Added to SPY here.
For the Web's best interactive charts, please visit http://www.Prophet.Net
Fwd: ProphetCharts: DIA
---------- Forwarded message ----------
From: <channellines@gmail.com>
Date: Mon, Jul 13, 2009 at 12:08 PM
Subject: ProphetCharts: DIA
To: channellines@gmail.com
From: <channellines@gmail.com>
Date: Mon, Jul 13, 2009 at 12:08 PM
Subject: ProphetCharts: DIA
To: channellines@gmail.com
I am working on my facebook account... figured I'd put everything at one place, and facebook looks to be the way to do it. This way I don't ignore the in-laws while making coin! There are just too many lines of communication, Disqus, Twitter, Blog, Facebook, etc... etc...
I really am not that familiar with Facebook, so be patient, it may not be too attractive! Feel free to add me as a friend! Search me out, shouldn't be too hard to find.
Lengthy posts and charts, etc. will be posted here, of course, and I will ateempt hyperlinking whenever possible.
Have a good morning, hope the markets are treating you well!
Thursday, July 9, 2009
VXN
I have a good VXN chart to post, but my email posting is not working. I'll give it a shot here...
Something is up with gmail. You'll have to settle for a screenshot!
Tuesday, July 7, 2009
Continued weakness
The NASDAQ closed at a key level to expect a bounce to some extent. The bounce is not obligatory, but likely. I have covered a third of the Q's short in anticipation of a bounce here. The capital will be added back in on the short side as we rise. If we do not see a bounce... I'll have to remain happy with my existing position!
The SPY and DIA have crushed their de-leveraging areas, so any bounce here I would suspect to be short lived (re-testing those same areas). The general order of weakness/strength should be as such:
Up day:
The dow leads strength, followed by the S&P, with the NASDAQ trailling.
Down day:
NASDAQ significantly weaker followed by the S&P, the DOW will hold up surprisingly well.
Watch AAPL and GS to lead in their respective indices to the downside, any bounce we do see here has a good potential of not including these two issues. Have a good night, I hope today has treated you well!
Compensating down move
As an ETF/index/security extends downward, it builds its obligatory counter-move. The faster it moves down, and the less compensated it is, the stronger the bias builds in the counter direction. The downward moves have been compensated, to the penny in most instances, as we go along. The builds the bearish bias. There is no bias left to the upside, it is compensating as it moves. This allows for further travel and always leaves open the potential for the monster gap.
The draw-back is once the upward move from March is compensated, we may not have an immediate bias in either direction. Then a true neutral market is established until the "dumb money" decide which way they want to extend the issue. When the extension begins, momentum trades will be the trade of choice, until we start reaching an extreme in sentiment.
Sunday, July 5, 2009
Market Status
The ETFs and broad market indices remain extended to the upside. The correction seems to have begun. The time this market compensates the run up is when the majority will realize an opportunity to short. At that time, I'll be out and in cash awaiting the next fadeable move. When a market extension occurs, no stock is left behind. At least no stock that has capitalization worthy enough to have dedicated regulation. This is what occured with WYNN at the April bottom. WYNNs uncompensated decline, even after a significant run up, indicated a rise still yet due in the broad market. WYNN was not the only one left yet uncompensated, but it was the one I was watching.
The markets incline as of March has been slightly different. The ETFs and Indices have been extending while the majority of other issues compensated along the way. This is over-looked by the vast majority of individuals. The only thing that seperates this rise from an average compensated increase within the markets is less than 2 hours of pricing action within the broad market. So, was this a clear, defined, uncompensated rise? Not really, not to many on-lookers anyway. In other words, unless you know exactly what you are looking for, do not blindly fade the market. Many are expecting a decline in the markets ahead, and yes, they are correct, the majority can not be wrong all the time! Yet, it is their actions that prove profitability, not their speculations.
Once this market does compensate, it will be a dangerous time indeed for retail traders and hedge funds. It will clearly appear to be an opportune time to short, yet the market will have no obligation at that point, in either direction (unless of course we drop straight down).
I will remain short until the last issue which I am watching has compensated. Some general (not penny specific (although for my purposes they are)) targets to watch for are listed below. The targets are < or = to the following prices:
DIA 80.00
SPY 85.25
QQQQ 33.00
DJI 8000
SPX 850
COMPQ 1650
JPM 30.00
GS 123.00
AAPL 123.00
As you can see, with most issues listed, the targets are easily within reach of a one day decline on the DOW. Speculatory, yea, I can see us going much lower, but am I counting on it? No.
You may also note, the decline expected is more prevelant within the NASDAQ. Any weak days in the market should have the NASDAQ leading, any strong days should have the DOW and S&P leading. GS and AAPL should have one day, at least, where it comes out significantly weaker than the overall market.
My expectations, with JPM and GS outpacing all issues with an extension just barely exceeding anything ever seen previously, is they are accumulating large quantities of cash. This capital is not for pure profit, but in preperation to support a much larger move within the markets. As if they have been contracted by a larger entity to lessen an onslaught yet to be seen. As now, I will be playing that same side, alongside GS and any other involved power players.
DIA has broken below its area of de-leveraging, and SPY is about to approach it once again. The majority of my attention will be watching GS and the NASDAQ. Good luck tomorrow, things should be getting interesting.
Thursday, July 2, 2009
ProphetCharts: MA
As far as the above chart of MA is concerned... I do not see it as opportunistic of a short as many other issues out there. There is no real obligation for MA to move either significantly to the down-side, nor the up-side. The markets over-all momentum yet to come should allow the green circled support trendline to break. The purple support line just below that will be the tricky part, it could hold and cause some extended sideways trade while other broad market issues crumble. I do not see any advantageous play here, a stronger stock in a weak market, not much to be desired.
As far as "break-outs" or "fake-outs" with traditional market technical analysis, the odds are greatly increased of a successful breakout if the market is extended against the suspected direction of the break. If the actual rolling average (cost averaging requirement) does not support the move, it will most likely fail.
Unfortunately, I can not, and would not, share my technique of measuring uncompensated extension, but, at any time, you have a stock you want an opinion on, just let me know.
Wednesday, July 1, 2009
Subscribe to:
Posts (Atom)