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Thursday, October 6, 2022

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Which Way Wednesday – Beige Books and Strong Bounces

SPY 5 MINUTEWow, what a fun day yesterday was!  

As you can see from Dave Fry's SPY chart, we went up in the Futures 30 S&P points and then we fell from the open 30 S&P points and then we recovered into the close 30 S&P points.  This is what we call a "Bugs Bunny Market," where Bugs throws a switch and people stamped in and out of the theater (5:00 on this video) –  and it's not usually a good thing.  

In fact, that's the action we saw back on 2/28, when I was warning people to get to cash and, in fact, I tweeted out a similar comment (with the same video link) and our trade idea for playing the next 45 days was:

TZA/Craig – Well, the April $14/17 is still doable at $1.30 and you can sell the $15 puts for .88 for net .42 now

RUT WEEKLYEven with the Russell's bounce off our 1,100 goal yesterday, TZA is still at $17.65 and the April spread, which expires tomorrow, is net $1.90 – up a very nice 350% in 45 days (you can follow me on Twitter here, but I rarely tweet our Member Trade Ideas – for those, you have to sign up HERE).  

We actually flipped long on the Russell during our Live Trading Webcast at 1pm yesterday, catching it pretty much on the button and I showed people, LIVE, how to make hundreds of dollars in just 15 minutes trading the Futures (replay available here). 

In yesterday's post, I reminded you we were shorting oil at $104 and we caught a $500 per contract move back to $103.50 but then (also live in the Webcast), we decided to wait for $105ish to re-short today (/CL Futures).  This morning, I posted early (6:22) to our Members that we had our shorting opportunity at $104.95 and already (8:06) we're back to $104.65 and that's good for $300 per contract after a hard morning's work – plenty of money for breakfast!  

We're still expecting a much bigger drop, probably not until after the weekend though, as Ukraine tensions are keeping oil high.  Rather than play the volatile Futures over the weekend, we have SCO and USO plays set up for our Members to take advantage of the potential correction.  Today though, we can still have fun with the Futures (stop at $104.75 at the moment) into inventories at 10:30.  

We're past the weak bounce lines on our indexes and now we're looking for the strong bounce lines to be taken and held at Dow 16,240, S&P 1,850, Nasdaq 4,150, NYSE 10,430 and Russell 1,145 (noted in yesteray's post) but none of it matters until the Fed's Beige Book this afternoon at 2pm and then that doesn't matter either as we have a holiday weekend and there's no sense in betting on that – better to have a nice Easter and see what happens next week – that's why we picked the April time-frame on our TZA hedges (which can still make another 250% if TZA stays over $17 through tomorrow!).  

So let's all relax and have a happy Easter with our sidelined CASH!!! and let's reflect, in this holy season, on the new study done by Princeton and Northwestern Universities, which has concluded that "The US government does not represent the interests of the majority of the country's citizens, but is instead ruled by those of the rich and powerful."  I know – duh, but it's interesting to see it in an official study, isn't it?  

No wonder the Kochs are working so hard to defund education – if it's going to uncover this sort of thing:

After sifting through nearly 1,800 US policies enacted in that period and comparing them to the expressed preferences of average Americans (50th percentile of income), affluent Americans (90th percentile) and large special interests groups, researchers concluded that the United States is dominated by its economic elite.

Researchers concluded that US government policies rarely align with the the preferences of the majority of Americans, but do favour special interests and lobbying organizations: "When a majority of citizens disagrees with economic elites and/or with organized interests, they generally lose. Moreover, because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favour policy change, they generally do not get it."

Ask yourself this weekend, WWJD?

 

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/CL / Burrben – Looks like TOS has switched to the June contract for their front month. Trading at 103.27 now.

Amazingly enough, the Dow is only about 1-2% from its highs. Could be forming a head and shoulder though. Nasdaq and Russell seem to be in a bearish price channel. Nasdaq would need to break over 4200 to escape it seems. And both now have their 50 DMA as overhead resistance.

Thanks for the updates on multiple fronts Phil – appreciated for us when the "man" gets in the way of the really interesting trading learning…….but we have to fund our habits, eh?

Tomorrow NAS will challenge 4000 (on a mission to retest 3,950) and RUT will take another run to 1100.

The Korean ferryboat disaster will go down as the most unnecessary, incompetent slaughter of innocents in maritime history.  The boat turned on it's side, but sank very slowly.  It had a full complement of life rafts — not a single one of which was deployed by an untrained crew which, I believe, had never had a lifeboat drill.  Instead, students were told to jump into 54 degree F water in the early hours of Wednesday.  Average survival time in that water temperature would unlikely exceed four hours.  The news reports 290 "still missing."  They are dead by now, except for any of them that may have been trapped inside the boat without water immersion  — very unlikely, now that the boat has settled. The captain and at least a dozen crew members escaped unharmed.  Most of the hull was above water for many hours.  By way of comparison, the Costa Concordia disaster took 32 lives — another cowardly captain.  If the ferryboat were Japanese, the captain would likely commit sepukku.  Disgraceful.

StJean – Maybe, I don't use TOS.  I am still trading the May on IB.  They do have a liquidation policy, and it's quite unclear.  Regardless I'm keeping a May contract in my paper account until expiry so I can see what they do.

I'm also trying a few "automated" ideas.  For example setting a conditional parameter to trigger a sell order and then also transmit a hidden trailing stop order as well.  So I did this when /CL was around 104.05

If /cl  double last<=103.97, sell /cl@103.99, trigger order 1.1 buy /cl with trailing .20 stop with .01 offset to ask.

which triggered.  Then I set another one to trigger at 103.47.

This is just for kicks using my paper account.

Phil, Are you suggesting closing the May $18 puts on USO win or loose today?

Phil – does that go for SCO as well?

DXD / Phil – Bot the May Bull Call spread on DXD yesterday at .80 per your posting.  Was thinking about letting it go today at a small loss and Maybe reapplying the position later at lower strikes since the DOW is STILL on a tear and shows no signs of slowing thanks to Fed doves and bottomless punch bowl.  What do you think?    

SNDK / Burrben – Just read your post re SNDK.  Much appreciated.  Thanks for the input!  

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