Testy Tuesday – 50 DMA Spectacular!
by phil - August 19th, 2014 8:06 am
You've gotta love those trend lines.
Chart people sure love them and we love chart peopel because they are SOOOOOOOO predictable and predictable behavior is behavior we can bet on and that makes us happy. Today we'll be seeing the 50-day moving averages on the Dow, the NYSE and the Russell all tested at the same time – what happens next will tell us a lot about this rally.
As I pointed out to our Members in our Live Chat Room this morning, though we may be past our bounce levels and though we are now challenging the 50 dmas, we still have 3 of 5 of our Must Hold levels red on the Big Chart – that's not too impressive. Consider what a 50-day moving average is. It means that, over the last 50 days, half the time the index has been above the line and half the time it's been below – so how impressive should it be to see the index back in the middle?
Nonetheless, Chart People believe it's some mystical symbol that gives them a rally signal and half the time they are right – so the religion of TA continues to prosper! As you can see from Dave Fry's SPY chart from yesterday, 75% of yesterday's gain came on no volume as we gapped up in the Futures and the rest of the day's trading was one of the lightest of the year.
The reason I like Dave is because he's one of the only TA people who actually pay attention to volume and this volume is total BS. Still, it's enough to stampede the retail suckers back in and God bless them because they throw money at us to sell them the things we liked when they were out of favor.
In May and June, for example, we compiled a Buy List for our Members, which had 29 trades we liked for the rest of 2014. Here's a few that we are done with already:
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The Buy List – 20 Great Trade Ideas for the Rest of 2014 (Members Only)
by phil - June 7th, 2014 8:24 am
What a rally!
While stocks certainly aren't "cheap" by any measure, we've been able to identify 20 that are still good values. We've been compiling this list and going over trade ideas for playing them in our Tuesday Webinars since May 13th and, of course, we've been posting them in our Live Member Chat rooms, so this is just a review to consolidate our trade ideas.
We cashed in our Long-Term Portfolio last week at what we thought was a top but so far – so wrong on that call! Since it's up 19% in just 6 months, we're not going to cry about missing the last 400-point move on the Dow (2.5%) – we'll just have to look ahead to deploying our cash again, following the same strategy that was so successful in the first half of the year, which was, essetially, our "7 Steps to Consistently Making 20-40% Annual Returns" system:
As we did in building our Long-Term Portfolio, we're not going to rush in and buy everything. We will do exactly what we did in January where, following our Fall Buy List, we simply added stocks from our list whenever they became cheap. While our Members are able to pick up our trade ideas as they are released, we don't always add them to our virtual portfolios right away. As with the first half's Long-Term Portfolio, we will track every entry and exit in both our Live Weekly Webcasts, as well as in our Live Member Chat Room and alerts will be sent to our subscribers (you can join here, Basic and Premium Members get full access).
Our picks were originally grouped by industry sectors but, for reference purposes, I'm going to list them alphabetically below – these are the original trade ideas (the Webinar dates where we discussed our picks are next to the symbol), most are still playable but some have already taken off :
ABX (5/28) we featured in our June 3rd post - obviously one I like. If you don't want to buy the stock for $15.90 (and we NEVER pay retail at PSW!), then you can sell the 2016 $15 puts for $2.05,…
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Love Letters (Weekend Reading on Valentine’s Day)
by phil - February 14th, 2010 8:25 am
Happy Valentine's Day!
Last Valentine's Day was as Saturday, following a frightening Friday the 13th, where we had fallen through the 8,000 line on the Dow. I wrote a very interesting post that morning discussing how I came about my political views, which is good for new Members to check out. We also flipped short that day on SKF, too early at $130 but that ended well as we kept after them and it was our biggest bet by March 6th, which eventually returned over 1,000%. We also stopped shorting GOOG at $350 (it did keep going to $300 but the upside was nice too). I closed the morning post with:
For us, it’s all about the levels as we try to remain unbiased as investors, no matter how voraciously we defend our political views. Dow 7,800, S&P 820, Nas 1,460, NYSE 5,100, Russell 437 and SOX 203 all better continue to hold today but, even if they do, we’re nowhere near where we want to be and we’re going to take some bearish covers into the weekend – just in case. So whether you are a witch celebrating the horrors of the 13th or waiting for a rose from your true love the next day, remember to be careful out there – we are certainly still deep, deep in the woods!
That Tuesday (Monday was President's day) we fell 300 points and another 300 points by the end of the week! That was a fitting way to mark the 80th anniversary of the St. Valentine’s Day Massacre when Al Capone’s "South Side" gang, dressed as cops, rousted a garage run by Bugs Moran’s "North Side" gang and had them stand against the wall and then executed all 7 men. They shot them 70 times with machine guns and made their escape by using the Capone men dressed as cops to "arrest" the other Capone men and drive them away from the scene in broad daylight. Now that's what I call a good plan!
Here's a great chart that summarizes our year to date. Someone else found this, I wish I knew how to use StockCharts this well, they have tons of good things in there:
It's a bit worrying that XLU is doing so poorly – so much for diversification keeping you safe… It's going…
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Testing Tuesday Morning – S&P 1,010 Edition
by phil - September 1st, 2009 8:30 am
So far so good.
As I said in yesterday's post (and the weekend wrap-up), we were well-positioned for the drop – It's just a quesiton of finding a bottom now. It didn't take very long as we found it at 9:46 when I sent out an Alert to Members saying: "Once again it’s a good time to sell the DIA $95 puts at $2 as the volume on this sell-off is not at all exciting so far. As long as the Dow holds 9,450 (now 9,475) it’s a good play." We had a couple of spikes below but, on the whole, 9,450 held like a champ and those puts hit our 20% target by the day's end (some of our quicker traders even had a chance to double dip). That level and 1,010 on the S&P will be our critical tests today as well.
As you can see from David Fry's SPY chart, that 1,010 line on the S&P represents the bottom of the range we broke out of on Aug 21st after failing it several times earlier in the month so it either holds this week or last week begins to look like noting more than a blow-off top at the tip of a downturn.
We followed through with our DIS play but we're still hoping to do better on the call sale to complete our buy/write. We took an early stab at shorting OIH but chickened out by the end of the day and we took advantage of a nice drops in ITMN, LZB (hedged) and CIM (hedged) while adding protective plays by going long in TZA (hedged) so it was a busier day than we planned. We also picked up some more fills for our $100K Virtual Portfolio, as per our weekend plans and that virtual portfolio jumped $500 on the day, which is nice for a down day and indicates we are doing pretty well on that balance thing…
At 1:03 I sent out an Alert to Members saying: "Should be stick time after a blow out bottom - I still like those DIA $95 puts sold naked for $2+, looking for .25 to .50." We got a false run at 2:30 then a drop down to a blow-out spike at 3:30 and then, of course, the daily stick, that took up right back to…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.