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Trade Review


My entries were around the lower range of the day for both of these trades.

My exit for CAAS was made lower. BCLI met the target today so I’ll look for a failure to make new highs or take out a candle low or I may exit on a close below the target.

caas bcli

Maybe a reentry in CAAS?

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Weekend Chart Blasts 3/6/16

A few notes: We’ve advanced significantly since the last signal set up and then confirmed as blogged about, but into further strength faces resistance above and is currently oversold. Here was the past chart provided. Much of the overhead resistance remains as we are trading above 200 on the SPY.

Although the last market outlook I made didn’t completely confirm a bear market, there was some evidence of a bear market on the horizon, and so I’m looking to mostly be a seller into strength. I’m mostly neutral here. The major overhead resistance doesn’t start until just above 205, however we are overbought on the S&P and Dow and quickly approaching overbought on the Russell and Nasdaq while the McClellan $NYMO is really high as well.

Bullish setups


YOLO setups


bearish setups


The bearish setups outnumber the bullish ones, and my intention is to gradually place more bearish positions than bullish ones moving forward into strength.

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‘Tis the seasonals

There are various themes that can put the “wind at your sail” so to speak.
There’s fundamentals suggesting a stock worth more than the price.
There’s technicals suggesting a good setup to manage risk and also an increased likelihood of a big directional move in your favor.
There’s the general business cycle timing and the sector rotation into specific areas that go with it.
Then there’s the broad view of the sector setting up with the fundamentals and technicals (in the right part of the cycle)
And then there are seasonals for the sector as well as the individual security.

Tech sector rotation
Tech Seasonal

Not great, but offers a reasonable window for a nice swing into the July spike plus after the dip still swings up again into August offering a nice uptrend
ALTR seasonal

Tech sector fundamentals
ALTR fundamentals

ALTR technicalsaltr1


The consolidation was all on lower volume, the pattern has tightened up considerably, the RSI made higher lows.You could wait for a breakout, but I prefer to anticipate the breakout and the seasonal is just one of those things that can help boost your edge.


I am long ALTR.

This is just as much an individual stock pick as well as it showcases how you might be able to increase your chances or maybe avoid a few names you would normally trade if there is “wind in your face”. You don’t want to “go against the grain” if you can help it. If perhaps it’s only moderately bullish or bearish in one of the areas like seasonals or technicals or fundamentals,etc but the rest of them line up fine then it should not be too much of a concern. But if the seasonal is telling you the market should decline sharply and the technicals can be interpreted more than one way, you may want to rethink it.

Seasonals are more used to help me keep on the lookout, and give me a better picture of if I want to ride the breakout for a larger trend, or just take my profits and plan the trade to just get a quick bounce.

You certainly can play them based upon the strongest month where the move is dramatic. Or you can look for a “low” or just a multi-month trend in your favor.

In this particular trade I may try to anticipate a breakout a few times and maybe trade the pullbacks a few times but as we approach mid-late August  I may begin to look elsewhere.

Aapl was an example of a strong seasonal play. I was watching Aapl looking to catch a bottom.

I really got “caught looking” on this one, but by now most of you are probably aware of the great upside potential in apple for a good trade to $500 mentioned by optionaddict.

If I was aware of this site charts.equityclock.com earlier, I may have seen that the bottom could have been near. I would see that it was offering a great upside trade according to the seasonals. I believed a price under $400 offered a reasonable entry, but felt the way the stock had been behaving that there wasn’t too much of a need to rush. I believe I may have had more of a sense of urgency as the seasonal suggested a dramatic move higher over the next 2 months. One could easily argue that the pattern is broken and it won’t see new highs and perhaps they’re right, but a seasonal rush in July-August and maybe September at least could potentially offer a great move to $500 before it goes lower or chops sideways.

You also may have had a chance to notice the pattern that was forming in WPRT and in determining if it will breakout or fail have seen the seasonal that mid June to mid-late July there is a monster run up seasonally.

That supports the likelihood of a breakout. You could have made a case that it should have happened in May-June. The weekly chart showed this stock coiled up tight for weeks similar to ALTR. However, it doesn’t automatically go up just because seasonals are strong. At times it may diverge, at other times, it will wait and then play catch up later. It merely provides supporting evidence to your perceived technical setup to allow you to be a bit more anticipatory and have a timeframe for the trade. Even though it didn’t go May-June, the trend lasts until Mid July, suggesting you may want to be willing to hang in for more time, or have sold early June and re entered on the June dip.

The volume pocket above, and/or technical setup, PLUS strong seasonals, PLUS a nearby spot to manage your risk is just one of those extra things that may be able to boost your win percentage and be enough to convince you to get long when you should often enough and keep you more patient when the seasonals go against you to get you slightly better timing. Just because a volume pocket exists doesn’t mean the stock enters it, it doesn’t mean it has a strong chance of entering it. Instead it means if it does, it offers tremendous upside potential to “fill” the volume pocket quickly.

I will have more on volume pockets in a bit going over various examples and show you what they looked at before and after they filled.

For now just consider adding seasonal charts to your arsenal. Here’s a quick view of sectors I compiled which is a great starting point for building a watchlist in the sector that sets up properly for a low or prior to a large move after a big sideways period of time.

rotation equityclock seasonal sectors1

You also may prefer to look at the charts based upon their expected “outperformance” vs the S&P instead.

rotation equityclock relative outperformance

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The Moves

I sold my remaining SPY June 07 puts for a nice gain. I sold Yen calls for a nice gain. I reduced my LNKD puts for a nice gain. I sold my VXX calls for a very small gain. I still have my SOHU puts and TRV puts and ASTX puts… and my long term December SPY puts as cheap insurance (cheap on a cost per month basis, especially since I will roll them over or sell them well before the theta decay really hits.

For the time being I still own the dreadful metal called Gold but that probably won’t last. Copper is up yet FCX is kicking me today.

I scooped up some CAT weekly calls very close to the low and followed OA on One of his plays here… not saying which ones to protect the tremendous value his members get at trading addicts.
Update:I see he listed it in the comments, so I suppose it’s “safe” now to say it was AMZN.

Also took off my SODA calls today after following OA for a big gain.
I held too long on AFFY, but not selling at high prices isn’t a reason to sell at low ones. The structure is just fine it’s still making higher lows on a short term chart, and it’s still above it’s breakout price of $1.40. I am still long FRO of course, from $1.85

I am not just taking my shorts off to rebalance, I am shifting towards a bullish bias more aggressively, taking off some of my neutral plays (like FXY) and adding. However, that does not mean that I don’t have ways to make money if market goes down.

CASH is still a position of course, as always. I like the way commodities and oil are moving today. I like the way the market found a bottom off support, holding off the volume pocket.
I am still worried about volatility ahead and possibly some kind of dramatic crash, but that’s what my puts are for.

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So I continue to play both sides of the trade.  My FXY calls have been working nicely here, and I decided to add a real speculative June UUP $23 calls for a nickle today.  I wasn’t ready to sell my FXY but basically I am starting my rotation back out of the yen and into the dollar early. Remember, I entered the dollar and rolled some gains into the yen, so basically I am rotating it back except still holding the yen. The correlation between yen and dollar are not strong or inverted, unlike the dollar and euro which has a -.95 correlation.

As a result I can add and subtract at different times and both plays still provide negative correlation (but a very small one) to the market. This helps me keep my portfolio grounded when I get carried away buying a little too much.

I may exit my TRV put tomorrow if it doesn’t turn. I grabbed some SOHU puts today. So if I scratch out of TRV it doesn’t disrupt my exposure. If we trade higher, I close out of TRV and keep LNKD and SOHU on. If we close lower, then it is a bonus. My LNKD puts I am holding.

My GLD calls and FCX calls are still working well also. Had GLD not opened and closed above $135 today I would have scratched the trade. Lack of a follow through within several days after an oversold bounce is as dangerous as support giving.It is looking more and more like we retest at least $142.50, possibly even the $150-$155 mark in which case I would love to start getting bearish in the GLD again as I still think it can get to $1200 or lower before we flush out all the bulls.

I am watching oil carefully, I was considering buying USO calls and an energy related name today buy I was waiting for a pullback in USO to 32.50. 90 in the /CL works too. I want to get this out before market closes so ending the post now I will add some comments later.

I want names that aren’t highly correlated to the market here as we are stretched, consolidating and near longer term resistance. Additionally, as long as last week’s high holds and we don’t close above it, I am in no way ready to be too aggressively long overall. I don’t necessarily need inversely correlated names all the time, (like the UUP call, FXY call, GLD puts that I have done in the past) but I am trying to find the right balance that keeps me correlated closer to zero for now while still looking at plays that I expect to gain, while still allowing me to profit from a break either way or none at all. LOL, easier said than done.


I got on the AFFY train today as it romped above $1.40 , taking out it’s previous high.  I’ve been mostly following Option Addict when I can on the long side and I passed on AMZN but got GOOG and another play I will keep quiet about… I don’t think OA has mentioned to the IBC crowd just yet today.

I was tempted to grab some gold miners, it wasn’t until late yesterday that I started to suspect they might for once actually not lag GLD and SLV and perhaps should GLD run, could even lead for awhile. But I already have some miner exposures on some metal plays, and FCX which has some GLD exposure (mostly copper though), and I was just a hair late to the punch this morning and they ran away from me.

A lot of the same GLD miners are showing up on the same screens they were yesterday. But I also have REE,ESI,LEDS and some home builders on my radar tomorrow just as sort of a preliminary list.  I am also thinking about adding FRO down here to piggy back off the FLY. I am content to sit on my hands as well, but I should get a better clue as to what the correct play is here soon. If I still foresee more confusion as to direction, I will start looking at some plays in ETFs for longer term that have low correlation with the SPY. DBA on a monthly chart looks like a good spot to bottom pick with the new lows as the stop. Oil on a monthly chart is still in the process of setting up here, but I would say for sure into 2014 it looks good, if not into the upcoming hurricane season. This also may mean good things for the fertilizers and potash names. Here’s a correlation chart of some ETFs to look at for reducing your portfolio’s correlation to the S&P’s movements.


Or perhaps you prefer a list of ALL names and their correlations for the SPY.

I will have more on the value of “reducing correlations” and such later…. For now just understand that timing is still the most relevant factor, but adding low correlation or negative correlation plays can allow you to stay aggressive without having the same degree of directional market risk.

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Computer Generated Names

I get “trade alerts” via email when certain patterns pop up. I have the alerts filtered to only give me stocks expected to make a 30% move or more.
What I do from there is look up the pattern length in time to give a projection of how LONG it takes to reach a target, and I calculate the return to the bottom end of the targeted range. THen I divide the return by the number of days to get a “return per day” average expected. Then I sort the names. I separate those optionable from those that aren’t and those that are OTC.
Yesterday the list was particularly stunning as there was multiple expected returns over 50%.
The results are below by category in order by return per day expected based on TODAY’s quotes at around an hour after the open



Also significant is that KWT a solar ETF is signaling a big move for solar has yet to occur.

Bull Flag patterns and Bull Pennants always dominate the best return per day even if they have lower expected returns because the pattern duration is typically only a few days.

So TU looks good and LINTA looks even better.

I doubled down on my hedge and grabbed some weekly 164 puts for a nickle 0.05 into the euphoria.

3:27pm est edit:Sold half at 0.35

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