Analysis for Tuesday, August 25th

After market close:
Although today was essentially a doji the close was up from yesterday pretty much across the board.  Volume was a little lower though so although the fight did not move much of anything people might be starting to wait for a stronger indication before pushing in either direction.  I don’t like that because then we’re more subject to news and I don’t like paying attention to the news.
Yesterday I believe that I stated the Q’s have more room to climb and they do.  But there is a second upward trending resistance line that it’s tracking against right in step with the upper trend lines that the rest of the indices seem to be sticking to.  So… everyone has, at least for today stuck to this upward trending line  that is currently acting as resistance.  Joy.  For the moment I think we’re going to keep following it too.  The only real problem I see here is that this could be viewed as the top of the range for the DJI and SPY.  Albeit as a shorter term trend line.  The longer term for SPY has a much more defined area to climb within and in looser terms its the same story for the DJI.
Despite all this, I feel like the markets still want to move up.  Subjective, yes, but my impression is that the longer term trend is stronger and we aren’t at the top of the range.    Saying that seems to imply that we’re due to pop.   But given the volume today, I don’t think we’re ready yet.  I would expect to see it either level off or drop more significantly first.
One last thing: Although the volume was down a bit, it was, still, essentially average.  Yet, looking at the intraday trading the markets were all over the place.  There was quite a lot of push and pull, just in a small range and to get not much of anywhere.
Expectation for Wednesday, August 26th: slightly bullish bias; SPY +0.3

After market close:

Although today was essentially a doji the close was up from yesterday pretty much across the board.  Volume was a little lower though so although the fight did not move much of anything people might be starting to wait for a stronger indication before pushing in either direction.  I don’t like that because then we’re more subject to news and I don’t like paying attention to the news.

Yesterday I believe that I stated the Q’s have more room to climb and they do.  But there is a second upward trending resistance line that it’s tracking against right in step with the upper trend lines that the rest of the indices seem to be sticking to.  So… everyone has, at least for today stuck to this upward trending line  that is currently acting as resistance.  Joy.  For the moment I think we’re going to keep following it too.  The only real problem I see here is that this could be viewed as the top of the range for the DJI and SPY.  Albeit as a shorter term trend line.  The longer term for SPY has a much more defined area to climb within and in looser terms its the same story for the DJI.

Despite all this, I feel like the markets still want to move up.  Subjective, yes, but my impression is that the longer term trend is stronger and we aren’t at the top of the range.    Saying that seems to imply that we’re due to pop.   But given the volume today, I don’t think we’re ready yet.  I would expect to see it either level off or drop more significantly first.

One last thing: Although the volume was down a bit, it was, still, essentially average.  Yet, looking at the intraday trading the markets were all over the place.  There was quite a lot of push and pull, just in a small range and to get not much of anywhere.

Expectation for Wednesday, August 26th: slightly bullish bias; SPY +0.3

Analysis for Monday, August 24th

Monday August 24th, after market close: After a near 3 white knights pattern the market tried to move up but didn’t have enough push to close above its open.  It did however close above the previous day’s close.  This was done with average volume while the previous day’s upward move was slightly above average volume.  From the graphs and the volume there isn’t a clear direction to move in either direction.  There was hesitation today for going up and there has already been a solid move to the up side, so we could roll.  However, people seem to be happy and positive lately and the latest move just puts us at the top of a channel, which have acted like glue lately so we might hangout up there for a bit.  I’m slightly bullish just because the market feels happy lately.  That is, it feels like it wants to go up, or at least maintain its upward moves for longer periods.  It might also pop from here to the upside since it’s sitting on an upward trend line.
Edit: looking at the Q’s there is clearly room for an additional move up before hitting much (or any) resistance.  So, unless the Qs roll for some reason outside of its chart, it’ll probably be up tomorrow.

After market close:

After a near 3 white knights pattern the market tried to move up but didn’t have enough push to close above its open.  It did however close above the previous day’s close.  This was done with average volume while the previous day’s upward move was slightly above average volume.

From the graphs and the volume there isn’t a clear direction to move in either direction.  There was hesitation today for going up and there has already been a solid move to the up side, so we could roll.

However, people seem to be happy and positive lately and the latest move just puts us at the top of a channel, which have acted like glue lately so we might hangout up there for a bit.  Mainly though, I’m slightly bullish just because the market feels happy lately.  That is, it feels like it wants to go up, or at least maintain its upward moves for longer periods.

It might also pop from here to the upside since it’s sitting on an upward trend line. Looking at the Q’s there is clearly room for an additional move up before hitting much (or any) resistance.  So, unless the Q’s roll for some reason outside of its chart, it’ll probably be up tomorrow.

Expectation for Tuesday, August 25th: slightly bullish bias; SPY +1.2  (edit: actual +0.2, 0.19%)

Broad market support?

Will the 50 MA provide support?S&P 500

I was speculating, over the weekend, the relative risk of the RUT versus the IWM.

 So, I created a spreadsheet that computes profit, risk, probability of success and return on investment.

 I think the results are interesting.

 Assumptions:

  • Successful trades are removed at 90% of their profit potential ( commissions on both sides)
  • Unsuccessful trades are allowed to expire (commissions only on entry)
  • All trades are vertical spreads and thus have two legs
  • Commissions are $1.50 per option

  

 On the IWM trades I tried to match the profit potential of the RUT.

 As the spread increases and the number of options, so does the risk, while the ROI decreases.

 It would appear that a single trade on the RUT is actually much less risky than putting on 15 IWM trades over a several day period.

 What do you think?

 

 

 

SOLD VERTICAL VMW 100 MAY 08 65/60 PUT @2.30

This is what I wrote last night. In after hours trading the stock have moved up 14.6% to $66.5.

VMW Daily chart EOD Apr 22
This is setup for a nice play to the upside. As you can see in the screenshot, there pretty much is no resistance till 71.2 level, and the gap fill goes up to $77.7. Considering the downtrend prior to the gap down, the $77.7 resistance should hold and stock should channel in $55-77 range for a period of time. Because of the high volatility I do not feel comfortable buying options, but I will be setting up iron condors for the 60-85 range. I don’t feel that $60 is strong resistance level, but there should be plenty of time in the next 24 days to close that leg with some gains

The reason I have opened a 65/60 leg is the lucrative 46% gain on the trade when the stock was at $63.0. Per what I’ve said earlier, I don’t think that I will keep this trade to expiration.

Bought to close:VERTICAL DIA; APR 08 129/130 CALL @.02

I hadn’t even checked the markets today when I got a message on my way to lunch that a trade had been closed out…

This was an automatically triggered buy back for a trade listed in an earlier post. The original sale was for 25 cents ($0.25). It was bought back for 2 cents, so the profit for this is 23 cents (multiplied by 100…more than once). TOS doesn’t charge commissions when closing a trade for less than 5 cents (yeah TOS!), so this was a commission free close.

Getting all but 2 cents and freeing up capital a week before expiration all without commissions…not too bad.

OIH – Oil Service Holdrs

Sell APR Call vertical -190 / +195
Credit $1.25 Spread $5.00
Probability of success 72%
Short delta .33