iBankCoin
The first hit is always on the house.
Joined Aug 2, 2009
1,847 Blog Posts

THE UNCOMFORTABLE TRADE

These bouts of discouragement each time the Russell bottoms (May, August) is pretty easy to read. Let me show you how to do it.

First, think of what you like to do on bounce days…you like to chase the market up. Leaving yourself vulnerable to market weakness. You then think “Good hell, what a weak bounce!” So you short into the hole. Dumbass.

Last Monday, markets were off by about 1.5% a piece. I put out the same idea; what hurts the most participants? That day was similar to today. Think about all the dip buyers from yesterday all stopped out today. Think of those that shorted into the hole here as well. What move hurts the most?

If your bias is long, do what we did yesterday. We went with the approach that less is more. Didn’t do anything. We just watched longs from Tuesday do work. Those longs are still holding well, despite this sell-off. Since we didn’t follow the crowd up today, I prefer taking action on days like today.

There are a few things we like to see to establish tradeable lows. Positive divergences in risk, initiative buyers, and valid oversold signals. We’ll hit each one of these items this afternoon.

Speaking of which, I am offering a free trial to After Hours with Option Addict for the remainder of the week. Come join us to evaluate your trades, chat about the market, or just hang out and listen.

Click on this After Hours with Option Addict link to participate.

OA

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105 comments

  1. cheifton15

    have to leave for an hour or so. Taking a chance and setting a buy order for NQ 3997.25

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  2. matt_bear

    i just grabbed the most ridiculous sandwich ever at this place by work called Daily Melt. Roast beef, monterey jack, carmelized onions, all cooked and melted on a sandwich press.

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  3. UncleBuccs

    Matt – that sounds heavenly. Btw, this post made me think of the time that Texas fan received a ruptured testicle at the hands of an Oklahoma preacher. I’m not feeling that level of pain, yet. http://www.foxnews.com/story/2007/09/12/texas-football-fan-nearly-castrated-in-bar-fight-in-oklahoma-bar/

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  4. Ari Baba

    where did you get that picture of my left nut?

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  5. operator1

    lol iBankCoin logo top left of the page. BEAR X-ING!

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  6. inloworbit

    logged in to your site (on the cheap – free). I liked the way you explained your ideas and the current market. I also went over and listened to the first in your series for option trading – good stuff. Thanks.

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  7. dfasd

    dollar way overbought – corrects down to 80 at least. NUGT to 55

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  8. chub

    if you ask what hurts the market the most the next day, we will just zig zag every single day then. at some pt, there has to be a trend

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  9. canalsrb

    Anybody else think today feels like a hammer candle in the making? The Russell’s Market Profile looks great. Been sitting right under yesterdays lows forming balance… looks like path of least resistance here is up. Let’s hunt some stops!!!

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    • matt_bear

      it’s either a hammer and reversal, or the top is in. maybe not THE top, but intermediate instead of short term.

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  10. dfasd

    I feel sorry for what is about to happen to you mo-mo trendo traders

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  11. matt_bear

    Hey Jeff….what do you think of ol John Deere?

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  12. Ari Baba

    VIX making a daily high while indices are above their lows. Coincidence?

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  13. fishersunny

    IWM has broken down through the uptrend line that began in August of last year. MAJOR technical damage, guys.

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  14. Alec

    OA- I know we reviewed KORS last night and looks great on the weekly (bullish declining pennant). However, there is a huge volume pocket below 72/73. Havent salvaged this idea as yet RSI shows oversold levels. I am holding Oct calls. Should i roll forward or we got time? Let me know when you get a chance. Thanks.

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  15. gasman

    time to start buying…I’m looking at GOOGL, FSLR, AMZN (bought NFLX calls)

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  16. jon v

    FSLR / YELP / MMYT holding in ok at support. The market is starting to give way a bit below support though. Lots of action to watch. Good luck to you guys buying the dips

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  17. shawnji

    APOL short below 24.50 looks good

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  18. Jules

    My largest position is SPY calls and I intend to double down at some point. Great opportunity is in our midst.

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  19. Trent J

    You then think “Good hell, what a weak bounce!” So you short into the hole. Dumbass. – Sounds like my process earlier this year!

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  20. Punjab exel

    Buying stocks as indices fall thru support levels make no sense. Good luck

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    • Option Addict

      Please come to my free trial, so I can change your elementary approach to trading. That mentality is why you’ll have to be content with being average.

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    • canalsrb

      Exactly which indices have fallen thru support? My chart of the SPX, INDU, and NDX has us testing the July balance areas from before breaking out… still holding them too.
      If you want to see broken support look at silver… big difference.

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      • canalsrb

        And Russell still uptrending since last summer… just been moving sideways forever now…

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  21. pyromonoxide

    bought some ARWR calls, nov.

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  22. jon v

    Just one thought to keep in mind since support is holding on a lot of these and people are buying: if support fails then the dip buyers here will add to supply. This is the first time in a while that it just feels like dip buying is a bad idea.

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  23. Option Addict

    KNOW THIS EVERYONE. I AM COMPILING A LIST OF ALL YOUR LATE AND GREAT BEARISH ADVICE HERE TO PUBLISH AT A LATER DATE AT YOUR EXPENSE.

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    • linmoo

      Just Remember: Kass is short the NQ.

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      • Ari Baba

        Hasn’t Kass been short for years? I don’t know how he stays solvent. I’m sincerely impressed.

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        • jon v

          Yeah but just remember he nailed the March 2009 low. And the Feb 2009 low. And January 09. And Dec 2008. And Nov 2008. and…

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          • Option Addict

            So did everyone on StockTwits.

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          • jon v

            The beauty of being a writer like him is his audience has the memory of a gnat. At some point he will nail the top and sell it to newcomers that he nailed both the bottom and the top of this great bull market

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          • BoilMeImIrish

            If I called lows every other day I’d nail some as well

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    • Alec

      Exclude the rookies. They need to crash and learn. Why waste your time.

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      • Option Addict

        They can be saved. We lost a generation in the last few years to analysis that was irrelevant. Time to prep the future fund managers of tomorrow with more valuable shit than trendlines, MACDick, and moving averages.

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  24. 2kto2m

    let’s poll. if /es down another 10 today, will you be a buyer? not good. bulls are still strong !

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    • jon v

      A bounce is coming for sure. I still think we get a rally in the RUT back to the 1180 level before giving way to lower prices. But who really cares what our opinions are of the market? Just look for those setups that guys like OA is showing us. ZU has been holding up well. YELP and FSLR are still holding the $70ish/$67ish levels.

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      • Alec

        u left out FEYE. Another similar chart, including wday

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      • 2kto2m

        everything is holding until broken. for those high betas, if the move will not kill you, the time will.

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  25. Ari Baba

    TRTC is the place to be

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  26. Jules

    rates down, market down could there be a new correlation here…….

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  27. azulgrana

    funny how smallish bio names have become the safe haven trade

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  28. dericdarko

    RUT has some solid divergence over the past couple hours, let’s see if it continues that way.

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  29. cheifton15

    Back, pulling the NQ order so I can manage it while in front of screens. Usually it works out that I should just leave it on!

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  30. gudenaev

    The action in the VXN has me concerned more than anything

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  31. TraderCaddy

    Chuckle at some of the comments.
    I see the large caps going down while the Russell has improved it’s lot a bit.
    Stuff like TWTR and FB appear to be okay here.

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  32. jon v

    OA – That custom oscillator of yours flashed a buy signal on /NG on 7/10 and again a couple of weeks later. What do you think of the action lately? Seems like a good risk/reward setup to me with a trade back up to $4.4ish.

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  33. gasman

    commencing liftoff . . . .

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  34. lashinvesting

    Is this the site where I buy Gold Coins?

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  35. Thomas Jefferson

    Took on BHI Oct 67.50’s this morning, and TNA 68’s (10/3) just a few minutes ago. I think I’m getting a little better at this process, as the old me probably would have bought yesterday and sold today. Let’s see if there are any other buyers out there this afternoon.

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  36. bear54

    OA
    Does the pic refer to pain in the nuts symbolically 🙂

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  37. Trent J

    Bought OCT calls in $BLOX.

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  38. marlinb1

    When OA goes through the momo names tonight, looks like very little is down 3% or more

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  39. Trent J

    What do you think of BLOX OA? Nice little vol pocket above, seems easy to manage?

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  40. Alec

    wtf this market is confusing as hell. Pretty much everything is down over 2.5 percent. This including our growth names we are using as an indicator. Might be a real correction coming after a bounce. but then again, WHO KNOWS!! OA- looking forward to your analysis tonite.

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  41. mk

    which month NFLX are you guys picking up? Seems pricey unless I go waayyyy out the money..

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  42. gudenaev

    TSLA looks good here, pretty similar set up to NFLX

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  43. Ari Baba

    OA – Any thoughts on CVEO?

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  44. hesitation

    Are U Not Entertained?!

    cue up Russel Crowe throwing shit at crowd.

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  45. cheifton15

    nice bounce, missed my entry by 1 point, you win some you lose some!

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