AHWOA CRASH COURSE

Since today is destined to provide only time decay, in our After Hours with Option Addict meeting today we are going to tackle futures trading. If the market volatility kicks up next week you can set options aside and focus on day trading a few high probability set-ups with me.

If you are going to attend, please visit the CME site to take notes of contract specs for Index futures contracts. Mainly margin requirements, contract specs, and point values. I’m going to spend more time on the application and risk management angle.

http://www.cmegroup.com/trading/equity-index/

I only focus mostly on equities, metals, and oil. However, you might look at currencies, rates, various commodities, etc.

See you After Hours.

OA

Folks were jamming out of all publicly traded stocks and high-rise building windows yesterday only to turn around today and start nibbling back into said stocks because today’s prices are much more attractive than they were yesterday.

WTF?

In yesterday’s After Hours with Option Addict discussion, we talked about the lack of fear and extremes into what ended up being a 2% rectal rout in stocks. Today definitely confirms that element as stocks slowly drift higher off their lows.

The groups to watch for a change in overall market attitude are the $IBB, $SOX and $IYT. If these don’t recover their bear raids from yesterday, this is a big concern going forward. I don’t think a simple “rotation” keeps this trend in tact. At best, if these sectors don’t recover, we’ll likely see another choppy range like we got back in January.

Keep it simple here.

OA

Question: What’s the pain trade for tomorrow?

The initial rise from the Fed was fast and the follow through left buyers at some fairly elevated prices. According to breadth stats today, most of the heavy selling pressure was done near the lows of the day, which we’re trying to take down as we speak.

The ES_F is at 2059, and as discussed in my last post is a fairly important number. The TF_F has just touched down on its Pre-Fed print and the YM_F is approaching. The NQ_F is trading a slight distance underneath.

Again, what’s the trade that hurts the most participants tomorrow?

Over the Fed announcement we discussed how the last price print prior to the announcement is an important reference point. Let’s go back to the $SPX/$ES_F. We’re in pursuit of that price mark here today.

This value is 2059 in the ES_F, it is 2067 in the SPX cash index. Until the last hour or so, market breadth had avoided any extremes. In other words, this all felt like a lack of buying interest. For the health of this trend, these upcoming price points are critical levels to hold the market up. If they fail, time to adjust strategy.

For now, I’m looking to initiate a long at the above prices.

Note: The NQ_F is sitting at its pre-Fed price right now. First one to touch down.

Top Stock Idea: $BABA holding up incredibly well here against this tide.

OA

We managed to catch a nice ride in $NFLX weekly calls in 12631 today, having purchased them yesterday afternoon. I’m still a buyer of dips in this tape, so I took the opportunity to move into $PCLN weekly calls, $GRPN April calls, and some $NDRM shares.

I missed my opportunity in $GMCR this morning, but am also looking at $CRM calls and $ASTI shares this afternoon.

If you were going to buy weekly calls here, what’s your top pick?

More later,

OA

As discussed last week, I’m starting a list of high short interest candidates to start watching this week if the strength in the market persists. Most of these are stocks with short interest >20%, and are stocks that I would consider have not yet participated in this market move. Here are the tickers:

AMRI

ANGI

CMCM

CYBR

CYTR

JMEI

KING

NWBO

RMTI

TFM

UBNT

WB

WUBA

X

Z