Tuesday, October 13, 2015 iBankCoin Conference starts
The first hit is always on the house.
Joined Aug 2, 2009
1,086 Blog Posts


In response to the confidence in my feed recently that the market would be plunging lower today in crisis form, how do you feel about this response? Just holiday noise? Real crisis surfaces tomorrow? Real traders don’t sell out of respect for Columbus?

I’m emboldened by the 4 point range in the S&P today. She’s quiet as a lamb.

Since speed was the #1 signal we were looking at this week, it’s official; we’re off to a slow start. If this market were seller controlled, then they’d be selling this, no?

Rather than read too much into today, let’s continue to apply the same analysis over the course of the week.

I did way too much over here for such a quiet day. If things are quiet again tomorrow, try and remember that less is more. I’m going to try and focus on that this week and work on managing what I have already.


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I picked up some Oct4 30 calls in $TWTR today at a nice price. Looking for a continued run into earnings.

More later,


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A few observations thus far on the structure of the day.

There are some negative divergences going around today. In the context of a range bound week, which I believe we are heading into, these divergences confirm such action.

On the topic of breadth, we’ve had only one extreme sell signal since the 1st of the month. That’s pretty impressive. As of today, we have upside extremes, no downside extremes.

Today feels like the first day we aren’t ping-ponging leadership between oil, biotech, or momo-stocks. Today, I see China names are popping up a little bit.

What concerns do I have here? Only time. How long things take to map out this week.

Today is the slowest day you’ve seen in this entire process, right? This ought to be the norm for the week.

My only concerns to my overall market roadmap this week are speed, negative breadth, no leadership.

More later,


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I’ll discuss some overall market metrics on my next write up, but for now I’ll post this chart that you’ll want to keep eyes on.


At the open, prices attempted to break their range, as we had anticipated coming into today. After said movement, its not uncommon to trace backwards a bit to retest this move.

I have quite a bit of biotech exposure now, so using this as a feel-good indicator, I’ll tell you my thoughts…

At the moment, $IBB is not following the market on this path of lower lows. I like divergence.

Second, I am comfortable with a move back to the middle, but won’t tolerate much more than that.

According to this chart, we’re still buyer controlled.


PS- I added to $PYPL and picked up $UWTI this am. Looking at $LNKD for a quickie and will be booking $WING profits here.

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I trust you’ve had a most enjoyable weekend considering the new stacks you earned over the last few weeks. Bravo.

I thoroughly enjoy this process of taking step-by-step motions though a corrective market. Having gone through the last few weeks, I’d go back and print out some of the recap posts I did. Not to admire the work, but to remember the process.

The next feature we’ll focus on from here is speed, or lack thereof.

There are three things I watch in order to understand market speed: $VIX, ATR (average true range), and correlations (which can be measured various ways).

Bear markets are fast, bull markets are slow. We’ve gone through some fast market action over the last several weeks. The sharpest corrections always occur within the context of a bull market. To confirm we remain in a bull market this is where we should pause to work off overbought signals. If this is any sort of bear market as many are calling for, then speed will need to exist to support this cause. To support my overall case, if there is no speed, then we’re simply stalled and waiting for the next leg up.

For the upcoming week, I mentioned that the cybersecurity and software stocks excite me.This includes $PANW, $FEYE, $FTNT, $DATA, $PFPT, $RNG, $STMP.

A few others I’d focus on: $PYPL, $TSLA, $CYOU.

If the market itself starts to slow down, we’re going to absolutely crush it this week. We’re entering the types of markets I outperform in.

See you tomorrow,


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@sentimenttrader sent out a great chart via twitter earlier today:

“I guess they expected a lower low. Small traders moved to a record bet against stocks this week”


Back on October 1, after seeing the question asked multiple times over the course of the week “Lows or no lows” the audible was called for the perfect pain trade set-up. A quick excerpt:

I said at the open “This is it.” It sure is starting to feel that way.

The more I think about this whole thing, the more I’m convinced that the only thing both sides of the trade are watching for here is the lows. All analogues call for a break of the lows, right? Except for the 2015 analogue?

The ultimate pain trade here is that while everyone watches the lows with bated breath, the market has already bottomed.

What’s so interesting is how critical it was to set the bear trap heading into that week.

I’m pretty well past the market analysis portion of this exercise. If you are in from early October, you are in good enough shape to manage. Correlations fell through the floor this week, and when that signal hits, its time to start picking stocks.

I’m feeling generous tonight, so here is a free preview of After Hours with Option Addict. In this, we discuss market conditions going into next week, watchlist candidates, some historical analysis and Q&A. It’s 60 minutes, feel free to check it out if you are curious about the service.

All sessions are recorded and archived, and there are static links to Crash Course material from old events.

PS – If there were ever a time in my career that I would entertain going to a presentation about trading/investing, it would be now. Especially coming from a guy that’s offered some timely calls in moments of need. Get a ticket already. It will be worth every penny.

Be back this weekend,


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