GOING TO BE A SLOW WEEK

If you represent the portion of the crowd that is eager to start betting against the market here, know that tops are a process and not an event. There are two main things you want to see happen in the market first before taking a stab:

1. Speed. There is always a big correlated sell effort that comes into the market before a range is established. On the last market bottom, this occurred on November 12th. The day might not stand out as easy on the chart, but everything I owned or watched lost 3-5% that day. The market rallied back over the next few weeks, but that following rally was the one to short.
2. Divergences. Similar to how I show you to watch for bullish divergences at lows, use the opposite into rallies. As bearish divergences persist, start lightening the boat.

Part of me is conflicted in this whole market set-up. The market has taught people to buy blood, and sell quickly. The bulk of participants were conditioned on this last drop that this was a bear market, and we were going to fall even further. Very few people bought in Jan-Feb…and that is how prices break free from ranges. The moment one side of trade cries uncle and doesn’t step in to buy, the market inflicts its pain upon them. At some point it will suck you in.

Enough of that, I am going to be in and out this week for personal reasons. I picked up $YELP calls and am watching $P here as well. Things continue to fire on all cylinders here, so keep making hay while the sun is out.

More later,

OA

Bottoming patterns are easy to identify. I wanted to throw up this chart comparison of the SPY in Jan-Feb against the IBB.

Back in Jan-Feb we ran a comparison against the Aug-Sep bottom as well to teach how these patterns form.

HAGW,
OA

I’m a little late in reporting for duty. It’s expiration day and I have shit to sell. The market grind is fantastic…makes for some pretty sweet trading conditions.

I’m developing a watchlist for next week in After Hours with Option Addict later today. If you’ve stopped by for the free trial, I hope you’ve enjoyed yourself. Come grab a few ideas for next week before the weekend.

Speaking of which, what are your top picks?

OA

The market has been running for a few weeks now, and perhaps we’re reaching that point of upward exhaustion.

If that’s the case, how about one last risk rotation? I’m thinking the Chinese Burritos.

I bought April $VIPS yesterday, and $CTRP this morning. It was March through April last year where these stocks doubled in roughly 6 short weeks. I’m in accumulation mode, owing several China stocks here.

More later,

OA

I think I’ll start to book some stuff here.

I entered some $GS calls for next week. Need to book some March paper here and focus on some longer dated stuff.

Hope ya’ll encountered a little winship today.

OA

Biotech acts as if it will never trade higher again. I’ve been riding $LABU at $6 for what feels like the better part of the year. Might be time to cut ties and move on. Too much bad press. Too many landmines. Too many eager beavers to buy in.

My trade plan in $CMG last night failed, as I patiently waited for a little selling at the open and for prices to touch down at $470. I’m still sitting here waiting for that print. FML.

Now I sit here, waiting on the Fed. Not much else on my screens at this point. I bought Apr $TWTR calls at the open and $CIE stock. Hoping to book $KMI and $NFLX calls later today.

OA