Monday, April 30, 2012

TRADING THIS WEEK

Hi Folks, This week I am generally bearish. I expect the week to end lower. I have a couple of short term trade setups that I am looking at. One is buying Weekly Option puts in JCP. I have a short term price target of 34.25. Another is IDCC Weekly Option calls. I have a short term price target of 29.24. I have several others but waiting for a good entry point. I'll keep you posted. Thanks and Good Trading, Tim

Sunday, April 22, 2012

BELOW THE TREND LINE

Hi Folks, We are now below the trend line that I have been talking about for months. We needed to get back above it quickly and stay there to maintain the uptrend. My sense is that we now are going to trend lower. My short term target is 134.98 in terms of SPY. Below that we have 132.10 then 127.49. Thanks and Good Trading, Tim

Wednesday, April 11, 2012

TBT WEEKLY OPTIONS

Hi Folks,

Just a quick update. I bought TBT April 19 calls at .16 on Tuesday and sold them today for 0.26. I had 2 targets in the stock; 19.10 then 19.45. I sold half at .26 early in the day when the stock was trading 19.10 then when we broke out above 19.10 I moved my stop up to .26 on the other half of the position and got stopped out shortly thereafter. Maybe a little aggressive on that but I was nervous about the market rolling over as it did later in the day so I kept it tight.

Thanks and Good Trading,

Tim

Tuesday, April 10, 2012

TRADING THIS MARKET

Hi Folks,

The SPY traded below the long term trend line today for the first time since the October 4th lows. We didn't break the line considerably so it is permissible for it to regain the trend as long as it does it quickly. The next level lower in SPY is around 134.10 or roughly 2 points lower than today's close. My feeling is that we will more than likely get there. However, I did buy calls today in TBT because my trading rules said that I should. I had multiple positions that I was looking at but only chose to do one of them since I feel we can still go a little lower.

Thanks and Good Trading,

Tim

Wednesday, April 4, 2012

WHY I TRADE WEEKLY OPTIONS

Hi Folks,

Option trading provides many advantages over other investment choices. They offer leverage, defined risk, insurance and the ability to profit in bear, bull or flat markets.

I primarily only buy options and do not sell options unless I am executing a vertical spread. Most of my trades are directional bets. There are two main vehicles in options trading. They are calls and puts. A call gives you the right to buy a stock at a certain price, known as the strike price, at or before a defined expiration of that option. A put is the opposite; it gives you the right to sell a stock at certain price at or before a defined expiration of that option. Options are traded in contracts. Generally 1 contract equals 100 shares of the underlying stock. For example, let’s say that you feel that AAPL is going to move higher in the immediate future. At that time AAPL is trading at $600/share. If you wanted to buy 100 shares of AAPL you would need $60,000. If instead you look to the options market, you could buy 1, 620 call for $4. That would only cost you $400(1 contract = 100 shares x $4 = $400). If AAPL trades up to $640/share, your option is worth $20(640-620(strike) = $20) for a value of $2000. That is a 400% return. If instead you bought the 100 shares of stock your return would only be 6.6% instead of 400%.
Until recently options were only offered with monthly expirations. They expire the 3rd Friday of each month. You could buy the current month options and various months in the future up to and including several years in the future. Now many stocks and ETF’s offer weekly options. The new series for the next week of trading are available to trade starting the Thursday preceding that week’s expiration. For example the weekly options that expire on Friday April 13th are available to trade on Thursday April 5th. The growing popularity of the weekly options leads me to believe that soon most stocks and ETF’s will also offer weekly options not just the monthly options.

A great deal of the technical analysis that I do allows me to spot short term price moves in stocks. The moves generally unfold anywhere from 1-7 days. This makes trading weekly options ideal for what I do. I get to maximize my trading capital to take advantage of the short term price swings. I have defined risk as I can only lose what I spend on the options. Generally my winning trades offer anywhere from 100 – 400% returns on those trades. Of course not all trades are winners but even if you are only right a little better than half the time this strategy works well. I have been fortunate enough to win 75-80% of my trades.

You can get a list of the all of the weekly options that are offered at: http://www.cboe.com/micro/weeklys/availableweeklys.aspx

Thanks and Good Trading,

Tim

Wednesday, March 28, 2012

WEEKLY OPTIONS

Hi Folks,

Sorry it has been a while since my last post. I have been working on the new website. It will be ready soon. I will keep you posted with the details.

As for the market, the long term up trend is still intact currently around 136.50 in terms of SPY. This week is the end of the month and more importantly end of quarter. That can mean some end of quarter marking up of positions for hedge funds and mutual funds. That equals volatility which to me equals opportunity.

I did end up selling my TBT calls on the last day for .32 so I doubled my money on those. The only trade I did this week so far was to buy the weekly options for VXX March 16 calls on Monday for .45 and I sold them yesterday at an average price of .94. I will be posting more regularly now here and on Twitter now that the bulk of the work on the website is finished.

As always feel free to comment here and ask questions about any particular stock or ETF etc..

Thanks and Good Trading,

Tim

Friday, March 9, 2012

JOBS REPORT TODAY

Hi Folks,

We pulled back around 2.7% this week from the highs. That is in the range that I was expecting. So now what? My sense is that we are going to struggle again. If we fail this time, I expect it to be a bigger failure and a bigger sell off. The trend line that has been in place since the 10/4 lows is still intact and is what I will be watching. If we break it I think we could hit 129 in terms of SPY over the next 2 weeks or so.

Thanks and Good Trading,

Tim

Tuesday, March 6, 2012

TREND LINE

HI Folks,

It looks like we are in the middle of the pullback that I wrote about on March 1st. The trend line in SPY is now rough 133. This is the level to watch. If we break it, the bull run would be over temporarlily and set up a larger selloff in the next 6 months or so. If we bounce off the trend line, then the market could continue higher and make new highs.

I am working on a new website and will have details shortly.

Thanks and Good Trading,

Tim

Thursday, March 1, 2012

3-5% Pullback

Hi Folks,

The market seems to be having trouble getting through this area. Again 137 level in terms of SPY. I still expect the market to pullback 3 - 5% here so my bias of selling the rallies remains. The area of caution is if we break the trend line that I posted a chart of the other day. One of the technical indicators that I look for in a pullback is when the stochastics make an "M" shape and the MACD is inverted. On the 4 hour chart and the daily chart we have this set up in both charts.

Thanks and Good Trading,

Tim

Wednesday, February 29, 2012

Mess With the Bull and You Get The Horns

Hi Folks,

Well it seems as though this market wants to keep grinding higher. Any selloff is met with immediate buying. Sunday night, most charts looked like the were ready to selloff and they all did Monday morning but then reversed within the first hour of trading. I am still in the sell the rallies mode here. We are in the 137 area in terms of SPY and I still feel that this is going to be a difficult area for the market to get through. Let me be clear I am not bearish. When I say sell the rallies it is mainly in terms of day trading. We could easily keep trending up to the 142 level in terms of SPY.

Thanks and Good Trading,

Tim

Sunday, February 26, 2012

Trading This Week

Hi Folks,

It's Sunday night and I'm doing my prep work for the week ahead. Looking at a lot of charts and most of them look like short setups or they are very near. I only found 1 potential long and that is FSLR but it is a short term trade and they have earnings soon so I won't touch it. The trend that has been in place since the October 4th low is still intact. The support for the trend is around 132 in terms of SPY. A break below this could set the stage for bigger concerns down the road.


If we break that trend line as we did in March 2011, it set up the selloff that we saw in July. Notice that even though we broke the trend in March 2011 the market did rally to a new high in May 2011. The trend line then acted as resistance.



Thanks and Good Trading,

Tim

Wednesday, February 22, 2012

DOW THEORY

Hi Folks,

One of the principals of the "Dow Theory" is that the stock market averages should move in tandem in order for the trend to stay intact. The idea is that if the industrials are doing well then the transportation stocks that ship their goods should also be performing well. According to the theory, the transportion index generally leads the other indexes. If you buy into this theory then there is a divergence occurring right now. Coincidentally it occurred about the same date I changed my bias from buying the dips to selling the rallies. I do not follow the Dow Theory personally but it is worth noting. While the Dow Industrials have been climbing since the beginning of the month the transports have been selling off.

The market is still looking like it wants to pull back some more. I am looking for the market to hit 132 - 133 in terms of SPY short term. The indicators that have been successful for me still show the general trend is still up, just a short term bearish bias. We are extended above the moving averages and need to come back and test them.

Thanks and Good Trading,

Tim

Tuesday, February 21, 2012

DOW 13,000

Hi Folks,

The DJIA hit 13,000 briefly today for the first time since May 2008. The SPY traded 137.05 and backed off as I had mentioned I thought it would in previous posts. I still expect the market to struggle a bit against this level so my bias of selling any rallies is the same. However, I like to see the longer term moving averages flatten before I see a larger reversal. Below are images of the 4hr and 2 hr charts. You can see that the 34 Moving Average(red line) has not rolled over or flattened. It is still trending up. This should make it easier to understand wht I mean by flattening moving averages.






Thanks and Good Trading,

Tim

Sunday, February 19, 2012

LULU SHORT?

Hi Folks,

I feel like now is a good time to short LULU. This is a bit of a longer term trade rather than a day trade. I am looking to do this through options. I am looking at the March 62.5 puts. In doing this I am getting the right to sell LULU stock at 62.5 before the 3rd Friday in March. My target is $55 in LULU stock. The stock is currently selling at $65. I am hoping to buy these at $1.75. 1 option contract is equal to 100 shares so, if I buy 1 LULU March 62.5 put at $1.75, my cost would be $175(100 shares x 1.75). My breakeven point on this trade is for LULU stock to be trading at or below $60.75(62.5 strike - 1.75= 60.75). If LULU gets to my target of $55 before March expiration, the option would be worth $7.5.

If you own LULU stock and want to keep the stock but want to buy yourself some protection from a sell off in the stock, you could "collar" the position with options. You could sell a call and buy a put with the proceeds from the sale of the call. Here is an example. You own 1000 shares of LULU stock now trading at $65. To protect yourself from a sell off you could sell 10 June 67.5 calls for $5.80 and use that money to buy 10 June 62.5 puts for $5.80. 10 contracts x 100 shares = 1000 shares which is how many shares you currently own. So if the stock is trading at $55 at June expiration, the calls you sold are worthless and the puts you bought are worth $7.50 and you still own the stock.


Thanks and Good Trading,

Tim

Friday, February 17, 2012

LONG WEEKEND

Hi Folks,

Market very close to a short term top in my opinion. If not for the long weekend I would be buying SPY puts for next week. Markets are closed on Monday so I don't need the extra day of decay. As I mentioned before I think the short term top in this market will be around 137 in SPY and we got close today.

Today I did a quick flip in GOOG Feb 600 puts. I bought them for .25 and sold them for .40. I lost all of my money in my trade from yesterday. I bought the SPY 135 puts for .20 and they are going out worthless.

Have a great weekend!

Thanks and Good Trading,

Tim

Thursday, February 16, 2012

OPTIONS EXPIRATION

Hi Folks,

Tomorrow is the last day for trading the February monthly options. Monthly options expire the 3rd Saturday of each month and since there is no trading on Saturday's, Friday is the last day to trade them. These are different from the weekly options. They come out the Thursday before the next week for trading. So the weekly options that expire next Friday came out today.

I am holding a short position overnight. I but SPY 135 puts at an average of .20 and yes they expire tomorrow. Not a great trade so far. We will see how the market looks in the morning.

Thanks and Good Trading,

Tim

Wednesday, February 15, 2012

OPTIONS TRADING

Hi Folks,

I only executed 1 trade today. I bought GOOG 605 February puts @1.70 and sold them @3.50. As always these trades are live tweets on twitter. For those who do not know options, they consist of either calls or puts. Calls are bullish bets and Puts are bearish bets. They offer incredible leverage and defined risk. As you can see from todays trade I made 105% return in one day. I do not recommend them for those who are not familiar with them. I use them to trade intraday and over a couple of days for the most part.

My bias remains the same of selling the rallies.

Thanks and Good Trading,

Tim

Tuesday, February 14, 2012

SELLING THE RALLIES

Hi Folks,

Just sitting down now in front of the computer for the first time today. My bias remains the same as it has been now since I blogged about it on 2/8 BOND AUCTION, I am selling the rallies. Major selloffs take a while to form. There are many warning signs prior to a major selloff like we had this past summer. Those signs are not in place yet. So to be clear, I have had a short bias since 2/8 but it is not the looming crash in my mind.

Thanks and Good Trading,

Tim

Monday, February 13, 2012

DAY TRADING USING WEEKLY OPTIONS

Hi Foks,

The action is pretty boring to say the least today. I day trade SPY often on days like this using weekly options. The reason is the risk/reward is greater. If anyone is not familiar with options, feel free to comment and I will respond. As always you can follow my trades on Twitter.


Thanks and Good Trading,

Tim

Friday, February 10, 2012

MISSED THE BOAT

Hi Folks,

Well due to my schedule this week I missed great trading opportunities yesterday. The GLD, SPY and FCX short setups were their for the taking. I was not infront of a computer until after the markets closed so I missed the boat. I was hoping for a chance to put something on this morning but we fell to far too fast.

Thanks and Good Trading,

Tim

Thursday, February 9, 2012

GLD Short

HI Folks,

I have been away from my computer all day today and most of the day yesterday so I have not done any trades other than the one from yesterday morning. I am liking the short set up in gold. I am looking for an entry point to short GLD since i missed the setup earlier today. I will tweet when I open the short position in it.

Overall still have the same bias of shorting into rallies and will keep you posted.

Thanks and Good Trading,

Tim

Wednesday, February 8, 2012

Trading Today

Hi Folks,

Just a quick update on today's trades. I only did one quick trade this morning. I shorted SPY at 135.20 and bought it back at 134.90. For those who don't know, selling short is just the opposite of buying a stock. When you buy a stock you hope to sell it at a higher price than you paid. When you short a stock, you sell it first and then hope to buy it back(cover the short) at a lower price. As I mentioned in this mornings blog, I will be looking for more of the same. That is to sell short into a rally.

Thanks and Good Trading,

Tim

BOND AUCTION

Hi Folks,

We are getting ever closer to at least a short term top in the market. I think that around 137 in SPY(the ETF that mimics the SP500), would be the short term top in the market. So I am moving my general market bias from buying the dips to selling the rallies. The SPY is currently trading around 135 so I am comfortable shorting against the 137 level as my stop loss. In other words, if I short the rallies I would only cover the short with a significant push through 137 in SPY.

Today we have a no real news to speak of other than the 10 year bond auction at 1pm. That should have an impact on interest rates and more importantly my postion in TBT. TBT is the ETF that tracks the yield on the 20 year treasury. So with the opinion that TBT is going to move higher over the next few months, I am saying that there will be net sellers of treasuries. In bonds, price and yield have an inverse relationship. TLT is the ETF that tracks the price, not the yield, on the 20 year treasuries. So being bullish on TBT is the same thing as being bearish on TLT.

Thanks and Good Trading,

Tim

Tuesday, February 7, 2012

CONSOLIDATION

Hi Folks,

I think we are in a period of consolidation. In order words, the market needs to digest it's gains. We are up over 20% since the lows on October 4th. I think we are going to see the market in a range of 20 SP500 points either way. If you use SPY, which is the ETF that mimics the SP500, that is a 2 point range either way.

I will continue to Tweet my trades on Twitter. Please feel free to comment on any post and/or ask about any particualr stock, ETF or currency pair you like and I will be glad to share my opinion.

Thanks and Good Trading,

Tim

SD2PQRRR6ATC

Friday, February 3, 2012

JOBS JOBS JOBS

Hi Folks,

Today's jobs number was quite the surprise. It helped push the NASDAQ to an 11 year high. I have heard that those of you who "Follow by Email" are not getting the emails in a timely manner. That is my I decided to add the follow by Twitter button on page. I will Tweet my trades and summarize them in this blog. If you choose to follow me on Twitter, you can receive a text from Twitter when I post on Twitter. Just go to your list of people you are following, find me and in the drop down click the "Turn on mobile notifications" and when I Tweet you will get a text.

Today I sold TBT. I mentioned it on Tuesday afternoons blog. At the time, TBT was trading at 18.15. Sold it this morning at 19.30. I still own the March 21 calls. I bought those for .16 and they closed at .36 today. I still think we have more upside in TBT. If we make another push higher in TBT early next week, I should have triple(.48) on those calls and will probably sell at least half the position.

Thanks and Good Trading,

Tim

MONTHLY JOBS NUMBER TODAY

Hi Folks,

Today it's all about the jobs number at 8:30. This should move the market. Economists are growing more positive about the economy and consensus seems to be improving on the jobs numbers. I hope we are not setting up for a disappointment here.

I am still cautious here but not bearish on the markets. I added Twitter to this page if you want to follow by Twitter. I will be using Twitter to give live trades starting next week and will post the results here on the blog.

Thanks and Good Trading

Tim

Thursday, February 2, 2012

GROWING MORE CAUTIOUS

Hi Folks,

I am growing more cautious on the market short term. The moving averages on the 30, 60 and 120 charts are flattened or flattening. The 4 hour is still not flattening and did bounce off the first touch of the 34 MA as I had mentioned in my post a few days ago. There still is room on the upside and I am not long term bearish yet but that can change. I will be looking for short term trade setups today and will post if I find one worth mentioning.

Thanks and Good Trading,

Tim

Wednesday, February 1, 2012

TRADING TODAYS ACTION

Hi Folks,

Today we have a few economic releases. We have the ADP Employment Report, ISM Manufacturing and Construction Spending. For day traders, most of the action occurs in 2 time frames during the day. Around 10:00 am - 11:00 am you usually see a nice move. This is usually due to an economic number being released. The most common times for these release during the trading day are 10:00 am and 2:00 pm. So from 2:00 pm to the close is the other time for a lot of action.

So how to you use this? I generally have an opinion on the direction or trend we are in. In simple terms if my bias says buy dips as it has been recently, I buy the dips around 11:00 and reassess later in the day. There is a lot more to it but just wanted to give you a little insight into how I generally frame my day.

Thanks and Good Trading,

Tim

Tuesday, January 31, 2012

TBT

Hi Folks,

I am getting long TBT right now through options. I am buying the March 21 Calls at .17. I'll keep you posted. I am looking to sell these before March expiration for $3. We will see and I will keep you posted.

Thanks and Good Trading,

Tim

MOVING AVERAGES

Hi Folks,

I figured I would explain what I mean about the moving averages flattening while waiting for a trade set up. I recommend using 2 moving averages on your chart. People choose many different periods. Through trial and error and eventually the advice of a friend I use the 34 and the 81 period for my charts. Many use the basic 50 and 200. I like to see the 34 MA start to roll over and flatten out before looking for a short in a general uptrend. The exception to this is when the stock is well above the 34 but still trending higher. I use these same MA's on all time frames.

On the 30 and 60 minute charts, the MA's are flattened out now but the longer term( the 2 hour and 4 hour) are not flattend out yet. This is the first touch of the uptrending 34 on the 4 hour so I expect a bounce off of it. However the setup for a short is getting closer.

Thanks and Good Trading,

Tim

Monday, January 30, 2012

CHANGING FORMAT

Hi Folks,

I have been asked to focus more on the short term trades. So I am going to be giving my opinions on individual stocks and ETFs on a short term basis for daytrading as well as my longer term views. So in order to follow these it is important that you type your email in the "Follow By Email" box above.

Thanks and Good Trading,

Tim

Friday, January 27, 2012

The Song Remains the Same

Hi Folks,I am still NOT bearish on the market. I am still in the camp that you buy dips here. We are well above the moving averages and eventually they have to pull back a bit but for now, the moving averages are still trnding higher. No flattening yet. As for GOLD, it has gotten ahead of itself here. I expect a consolidation here even a minor pullback. I expect the dollar to get below 79 before another push higher on the DXY.Thanks and good trading!Tim

Wednesday, January 25, 2012

Pullback

Hi Folks, More of the same today. Small pullback but not any major pullback yet. Overall I would be buying dips until I see the moving averages flatten out. I will begin to start giving individual picks shortly and giving intraday trades as well. Thanks and have a great day! Tim

Tuesday, January 24, 2012

Wait and See

Hi Folks, Ok so the markets are a little ahead of themselves here so a pullback is expected. However I don't see a setup for a major pullback yet. One major thing I look for is the Moving Averages to flatten out before I really get excited about a short. This type of setup usually has a decent pullback which causes the MA's to flatten. Then you get a rally back up into the flattening MA's and that is when you put the better short on. I will be watching for this. I use multiple time frames when looking at charts. So when I say I am waiting for the moving averages to flatten, I am usually referring to the 30 and 60 min charts at a minimum and possibly longer. I also like to see the MACD's become inverted at the same time. That is when the signal line crosses below the MACD in the longer time frames. Please email me if you have questions about this. Thanks and good trading, Tim

Monday, January 23, 2012

Bonds due to get crushed: Look to TBT and TLT: Mortgage Rates Higher

Hi Folks,

It's been a long time since I blogged. I am going to start to actively blog more often now.

So now, I am looking for the bond market to get a bit of a butt kicking over the next several months. TLT is now rolling over. You can play this one of 2 ways. Either short TLT or get long TBT. If you are going to use options to trade this I would stick with TBT and at a minimum use March options are even June options. I see TBT getting to at least 25 and possibly 30 over the next few months.

This will also lead to higher mortgage rates for those of you looking to refi make sure you lock in your rates.

As I have mentioned before 90% of my analysis is technical analysis so I don't offer much color at this point to any reasons behind my oprinions other than technicals.

Please feel free to comment or ask about any particular stock, ETF or currency.

Have a great day!

Regards

Tim