Joined Dec 4, 2012
319 Blog Posts

Maintenance Items Remain With $IWM Calls and Close Out $GDX Calls

I have been out skiing for several days but now am back. After getting back up to speed on Monday and Tuesday action, I have a couple thoughts.

I recommended $IWM April $153 Calls here last week and sticking with them for a bounce into next week. Also, recommended were calls in $GDX. The recommendation price of the $GDX April $21 Call was $1 and they are trading at $1.04 currently. So close this out as gold is not acting like it should for GDX to go higher.

In terms of both Monday and Tuesday, I thought both days saw bogus action. Especially the gap up on Monday and then the selling from 1:30 into the close on Tuesday. It should be noted the only legitimate volume on $SPY happened from 3:45 p.m. EDT to 4:00 p.m. EDT. Tuesday was simply a “liquidity suck”. Understand that machines are in charge. That is all for now. Have a great long weekend and get ready for the second quarter.

P.S. I am in complete agreement with Le Fly that the president’s tweet this morning on $AMZN was out of control. See my tweet under Bullet86 early this morning. Trump needs to shut the f$#k up and go to sleep for a quarter or two.



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Playing IWM Over SPY As Hits Oversold

For the past month the Russell 2000 has been crushing the S&P 500. The Russell for March is up 2.08% and the S&P 500 is down -2.58%. More to point, the Russell is now oversold on the QPI Oversold Indicator at 29.75.

So I recommended in my options service the following trade:

We are going to play the Russell 2000 via $IWM. We will buy calls on the iShares Russell 2000 ($IWM) using the April $153 Call that is trading at $3.30. $IWM is at $153.22.


There is no limit to this trade and the breakeven is $156.30 due for expiration April 20th.


We have it hit oversold a 29.75. More on this over the weekend. Good luck.


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Back To Oversold & $GDX Comments

The SPY buy signal earlier this week failed to work beyond two days and we knew this earlier on. As such, we locked in our 22% gain on the SPY Calls. Now we are back to my oversold indicator hitting 19 on $SPY. Under 30 is oversold. Above 70 overbought.

I expect to be a call buyer in short order again, from sometime this afternoon to Friday or next Monday worst case. Could today be a case of sell the rumor and buy the news? I am in the camp of Fly that the action today will end up being a none event. Machines are just doing what they do.

On days like today I keep BloombergTV on in the background when not on calls. BloombergTV is for adults and CNBC is for teenagers. The upcoming Trump trade announcement is all about positioning and not about starting a trade war. The Chinese will respect this trade and it will blow over more than likely just like other Trump tweets and appearances.

For those looking for a trade yesterday in my gold and energy options service I recommended buying April $21 $GDX Calls. They are cheap if $GDX can breakout here. I recommended at $1.25. They are in the money at $22.25 and the ETF is at $21.67 so still in the money by $0.67. The calls are now at $1 so you can pick up cheaper. I will alert here when I close out the trade.

P.S. I heard that Super Mario’s portfolio which was 100% gold has added $GDX to make the quarter.


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Why I Closed Out My SPY Call Trade

When I recommended calls on Monday in SPY, it seemed like a trade that I would be able to stick with for a few days. My oversold indicator got down to 29.34 intraday as SPY hit its low at $268.62 and I thought we were going to bounce as I looked at my intraday lines. So I recommended calls in my option service and here on this website.

The April $273.50 SPY Calls were recommended at $2.70. By the close, they were at $3.40 for a cool $0.70 gain and SPY had risen to $270.61. Somehow, by 4.15 p.m.the calls were down to $3.26. Yes, Oracle (ORCL) was off -6% but the futures were flat. Then today when the S&P 500 was up 10 point the calls were still not above $3.40. This was a serious WTF moment.

It is rare I see a 10 point move in the S&P that is not reflected in the option. It happened today. I checked with several smart sources to find out why most SPY calls were declining despite the drop. It did not make sense. So when something that does not make sense happens, it makes me pullback my positions.

The trade was closed out late this afternoon with a nice 22% gain when the SPY was at $271. But this trade still is very annoying because it should be a 35% gainer. Maybe when the FOMC makes their announcement tomorrow I will understand the odd action today.

For now I simply am going to “play present” and forget about this trade. Hey it made money so why should I complain.


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Locking In Gains On SPY Calls

More comments later but here is the close of the trade. You are welcome.

We are going to lock in the gains on the S&P 500 via SPY. We bought calls on the S&P 500 ETF (SPY) yesterday using the April $273.50 Call that was trading at $2.70. SPY was at $269.31 and is now at $271.00. The call is at $3.30 for a gain of $0.60 or 22.22%.

I hated the action today as far as how options were priced. The fix is in.


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Back With Posts

I believe in what The Fly is trying to do here. As such, I am back. I had been working on trying to put together a deal with a monster publishing firm but that is on hold for now. During my hiatus, I read The Fly each day. He is part of my process. In fact, there are 4-5 people I read every day just to see what they are thinking.

Since I began to write here, if you look at my calls then you will see there is a method to my madness. It revolves around process. Expect to see a couple comments a week going forward. It felt could to post today and hopefully some bought the calls and now have a nice gain. A strong open tomorrow and I likely will be taking gains. You will be among the first to know when I exit stage right.

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Hit Oversold This Afternoon on $SPY

My oversold indicator hit 29 on SPY. Once under 30 it is oversold. We like to wait for it to move higher back above 30.

We wait to buy when it moves back above 30. Why? Because there is good and bad oversold. Bad oversold is dropping below 30 and staying there. Good oversold is a quick drop under 30 and then a bounce back above. In the past, we have highlighted this indicator here and picked up some nice buy signals.

In my options service, I decided to front run this oversold condition today. Here is the trade idea. It was published a bit earlier near the low for the day.

We are going to play the S&P 500 via SPY. We will buy calls on the S&P 500 ETF (SPY) using the April $273.50 Call that is trading at $2.70. SPY is at $269.31.

There is no limit to this trade and the breakeven is $276.20 due for expiration April 20th.

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The Week Ahead: Earnings, Earnings and More Earnings With Some Draghi To Round It Out

1. Geopolitical and Fiscal Events. Thursday sees the BOJ and ECB announce their latest interest rate decisions. ECB Head Mario Draghi holds a press conference.

2. Economic Releases. Releases of note this week include the weekly chain store sales, oil/gas numbers, mortgage applications, jobless claims and Empire Manufacturing, NAHB Housing Market Index, Housing Starts, Philadelphia Fed Survey and Leading Indicators.

3. Earnings Releases. Notable releases include BLK NFLX JNJ BAC USB MS MSFT V GE HON.

Monday, July 17

July Empire Manufacturing is due out at 8:30 a.m. EDT and is expected to fall to 13 from 19.8.

Tuesday, July 18

July NAHB Housing Market Index is due out at 10:00 a.m. EDT and is expected to remain at 67.

Wednesday, July 19

June Housing Starts are due out at 8:30 a.m. EDT and are expected to rise to 1,160,000 from 1,092,000.

Thursday, July 20

July Philadelphia Fed Survey is due out at 8:300 a.m. EDT and is expected to fall to 22 from 27.6.

June Leading Indicators are due out at 10:00 a.m. EDT and are expected to rise to 0.4% from 0.3%.

At 1:00 a.m. EDT, the Bank of Japan (BOJ) is out with its latest interest rate decision.

The European Central Bank (ECB) is out with its latest interest rate decision at 7:45 a.m. EDT and press conference with ECB Head Mario Draghi at 8:30 p.m. EDT.

Friday, July 21

No events of note.

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Morning Briefing: Futures Mixed With ECB, Comey and U.K. Elections Leading

In After Hours Trading

IPOs on deck none of note . Secondaries of note BWXT CORT HLT MSL USDP.

In After Hours Trading: ABM +.07 CMTL +.09 DTEA +.02 TLRD +.08 VRNT +.11.

Lower Guidance: .

Mixed Guidance: .

Positive Guidance: .

What’s Happening This Morning

U.S. futures: S&P +0.00, Dow Jones -25, NDX +19.25 and Russell 2000 +1.40. Asia higher ex Japan and Europe higher ex the U.K.

Copper higher with silver and gold lower. WTI Crude and Brent Oil Futures lower. Natural Gas is flat. $ is higher vs Euro, higher vs. Pound and higher vs. Yen. US 10 year Treasury yield at 2.20% yield, one day change +2 one month change -19 and +49 one year change. Prices as of 7:55 a.m. EDT.

Top Sectors Financials, Conglomerates and Services.

Weak Sectors Energy, Materials and Industrials.

One month winners Utilities and Services.

Three Month Winners Consumer Goods, Utilities and Technology.

Six Month Winners Conglomerates, Industrial Goods, Financials, Energy and Materials.

One Year Winners Energy, Materials, Industrial Goods and Utilities.

Year To Date All except for Energy and Conglomerates.

Earnings Expected

Earnings due after the close (by avg. trade volume): PAY ASNA LAYN among others.

Due Friday morning (by avg. trade volume descending): FGP among others.

Rags & Mags: Inside Wall Street

Bloomberg: Japanese Yen struggles as the Bank of Japan figures out how it will exit from the current stimulus. Investors are avoiding big bets ahead of today’s action.

WSJ: Comey’s prepared remarks do not include any game changers from what is already out. House set to pass bill to roll back rules on Wall Street. China exports rose for third straight month.

NYT: Comey says President Trump began to pressure him early on. Facebook (FB) role in European elections under review. Anthem (ANTH) will exit insurance exchange in Ohio.

Reported Earnings This Morning

Reported Earnings This Morning (Best to Worst absolute beats/misses [+.02 or greater/-.02 or worse]): SJM +.08 PTHN +.01 MTN -.48.

Missing: .

Lower Guidance: .

Current Morning missing: .

Mixed Guidance: .

Positive Guidance: .

Data Points

Yesterday saw 1359 stocks rise and 1513 fall on the NYSE. NASDAQ saw 1516 rise and 1337 fall.

The SP 500 is back above its 50 day exponential moving average and above its 200 day exponential moving average. The Russell 2000 is back above its 50 day moving exponential average and is above 200 day exponential moving average.

The 10 day spread moving average of breadth is back to cash as of last Friday’s close. The Madison Market Timing Indicator is now invested since November 18th.

YTD 2565 stocks are higher and 2056 lower. Updated 6/2/17 close.


The Weekly Natural Gas Inventory is due out at 10:30 a.m. EDT.


The European Central Bank left interest rates unchanged but drops reference to lower interest rates. Press conference at 8:30 a.m. EDT.

The United Kingdom holds a general election with Prime Minister Theresa May in lead. The lead has been narrowing. Poll are open to 10:00 p.m. GMT.

Former FBI Director James Comey testifies before the Senate Intelligence Committee about collusion between Trump campaign officials and the Russians.

Conference & Analyst Meetings

Meetings, Conference Calls or Announcements of note, AZPN SYMC COT CMS ENB INSG BABA URBN. Deutsche Bank Global Industrials and Materials Conference. Jefferies Global Healthcare Conference 2017. Baird Global Consumer Technology & Services Conference.

Conference of Note

NAREIT REITWeek Investor Forum 2017

M & A News

Key Upgrades and Downgrades

Firm Upgrades Downgrades
JP Morgan LEA
Goldman Sachs
Morgan Stanley
Deutsche Bank
Citigroup ERIC NOK
Merrill Lynch CG
Wachovia/Wells Fargo
Credit Suisse
Banc of America
SunTrust RH
Sanford Bernstein
Raymond James
Piper Jaffray
Friedman Billings

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Key Events For The Rest Of The Day : Beige Book Leads The Catalysts

These are the secondaries of note priced this morning ARI STAY JRVR.  STAY is trading well while ARI and JRVR have been hit on the pricing.

Earnings due after the close (by avg. trade volume): HPE PANW OLLI SMTC among others.

Due Thursday morning (by avg. trade volume descending): DG MBLY DCI CIEN TECD SFUN GIII EXPR CONN among others.

Federal Reserve releases its latest Beige Book AT 2:00 p.m. EDT.

Federal Reserve San Francisco John Williams speaks at 7:30 p.m. EDT.

Meetings, Conference Calls or Announcements of note, TPIV SCOR. Deutsche Bank Annual Global Financial Services Conference. KeyBanc Capital Markets Industrial, Automotive and Transportation Conference. Cowen & Co Annual Technology, Media and Telecom Conference.

This is an abbreviated version of our Morning Briefing produced Tuesday, Wednesday and Thursday.

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