Monthly Archives: August 2015

9-1-15 – Trading Strategy

9-1-15 – Trading Strategy

Current Holdings


Real time portfolio updates are now available here

8/28/15 – DGLD (Inverse Gold) @ $81.00
8/28/15 – TMV (Inverse 20+ Year Treasury Bonds) @ $28.42
8/31/15 – DWTI (Inverse Crude) @ $97.00

 

Today’s Updates


DGAZ (Inverse Natural Gas) sold limit @ $6.50 for a 7.62% profit

DWTI (Inverse Crude) limit order filled @ $97.00

It appears the major reversals are losing steam and looking at today’s movements compared to their 7-day ATR % many were on average for the day. This means the movements aren’t significant enough to call for a full blown decline and looking at today’s charts these movements were rather expected. I think this will still take a few more days before there is confirmation a second leg down is occurring or if prices will continue to climb reclaiming their recent losses.

Market Snapshot 8-31-15

One highlight today was INDL (India). This is a very low volume stock so I wouldn’t recommend trading it, but PIN (non leveraged India) is a good alternative. It appears to be setting up for a good short possibility. Another down day tomorrow larger than today would be a good confirmation this market is ready for shorting.

Unfortunately there are no inverse ETFs for India so this would have to be a short play.

INDL 8-31-15

Also of interest is RUSL (Russia) which has had it’s 5th positive day in a row and has now hit the top of it’s upper downtrend line. I would like to take a stab at RUSS (Inverse Russia) as I think this is due for a reversal, but I want to wait another day to get confirmation that we are going to fall back into this downtrend and this isn’t the start of a new breakout.

RUSL 8-31-15

 

Current Holdings with Open Orders for 9/1/15


Sell DGLD (Inverse Gold) Limit @ $83.00 (2.47% Profit)
Sell DGLD (Inverse Gold) Stop @ $80.00 (1.23% Loss)

Gold barely moved today which concerns me. If I’m bullish or bearish on a position I want it to be in a trend and continue to move after I enter it. The fact it declined slightly has be worried we may move into a sideways movement and or I might be losing my directional edge. I’ve moved up my stop to $80.00 and lowered my limit order to $83 in case this market goes sideways.

I will check on the price of gold about midnight PST to see if there are any big movements, if so I may increase my limit order, if not it will stay the same for tomorrow.

DGLD 8-31-15

Sell TMV (Inverse 20+ Year Treasury Bonds) Limit @ $30.50 (7.32% Profit)
Sell TMV (Inverse 20+ Year Treasury Bonds) Stop @ $28.50 (.28% Profit)

TMF (20+ Year Treasury Bonds) made a nice drop today after testing the $80 resistance level this morning. In fact, TMV (Inverse 20+ Year Treasury Bonds) dropped as low as $28.20 and my stop was at $28.10. I’m bumping up my limit order only slightly because I think there will be a decent move tomorrow, but not so far away that it would take days to hit. I’m worried about these markets going sideways and would rather cash out with gains than wait through a choppy mess.

Chart of TMF (20+ Year Treasury Bonds) testing support again before closing lower.

TMF 8-31-15

My orders for TMV (Inverse 20+ Year Treasury Bonds) for tomorrow

TMV 8-31-15

 

Sell DWTI (Inverse Crude Oil) Limit @ $110.00 (13.40% Profit)
Sell DWTI (Inverse Crude Oil) Stop @ $94.00 (3.09% Loss)

I am keeping a very tight stop on this. The purpose of this trade was to catch the extreme volatility. On these types of trades the profit is made by getting in at the best price. I was pretty close to the close of $95.75 with my $97 entry. After this much upward movement in UWTI (Crude Oil) for the last 5 days I’m expecting this to be a gap down in the morning causing DWTI (Crude Oil) to be profitable out of the gate. If it’s not, then I will quickly be stopped out.

Since Oil futures trade 24/7, I can check on this before turning in for the night gauge how this trade might do tomorrow. I will send out any updates if necessary.

Chart of UWTI (Crude Oil) on his 5th day of extreme price increases

UWTI 8-31-15

My orders for tomorrow in DWTI (Inverse Crude Oil)

DWTI 8-31-15

New Open Orders for 9/1/15


 

No new orders for tomorrow. I don’t see anything in the charts that screams a great setup for tomorrow.

 

 

Stocks on the Watch – 8.30.15 – DRN GASL INDL RUSL SPXL TMF XIV UWTI

Stocks on the Watch – 8.30.15

What a week last week was! I had been waiting for weeks for the bottoms to fall out, I’d been talking about it on video after video and when it came down to it, I was caught up in the mania and despite how well I was trading, it only took one trade to wipe most of it out.

So now what? We’ve seen the massive drop and we’ve also seen the inevitable bounce because it fell too fast. Many are crediting it with short sellers cashing in to value buyers scooping up deals in many markets not seen for over a year.

So time to ride the gravy train right? Not so fast.. at least not from the vantage point we have now. This could easily be a natural bounce to such a strong move, but looking at the markets as a whole, many are still in bearish downtrends and it’s advisable to keep short term trades short and conservative until we know for sure if this will continue to climb or quickly fall back down.

Check out this week’s YouTube video, it’s a bit longer than normal, but then again, it wasn’t a normal week either.

I don’t have a great deal of charts this week just because it’s going to take some more time before we get close to solid trade setups again, but alas, here are the few I think have potential sooner than later.

DRN (Real Estate) – Possibly bullish

DRN tried to break out twice with the second breakout having real promise before the global market mini-meltdown. I think it still has real potential to move higher. However with the weak movement on Friday I think it’s best to wait.

DRN 8-28-15

GASL (Natural Gas Companies) – Bearish

We’ve had 3 very strong days in GASL which to me appears to far too fast. It’s fitting nicely into the preexisting downtrend as well. If we close lower on Monday I’ll feel good about it’s continued trend but I think it needs a break above $8.50 to become bullish and confirm there is a true reversal taking place.

GASL 8-28-15

INDL (India) – Bearish

India has been stuck in a sideways consolidation for months and took a tumble with all the other markets last week. It looks like it made an attempt to fill the gap at $15.00 but this may provide resistance going into next week. It could certainly go slightly past it but I would remain bearish until it swings above the $17.00 mark.

INDL 8-28-15

RUSL (Russia) – Bearish

After 10 days in decline it was inevitable there would be some kind of rebound in this market, especially with the global reversals we saw late last week. However the longer term trend is down and I’d expect to see a turnover staying close to the downward trend lines into next week.

RUSL 8-28-15

SPXL (S&P 500) – Semi Bearish

I’ve thought some time about this one. The S&P has been in a big consolidation for some time. Any new record high has made headlines but silently sold off immediately after. This is what happens at the tops of markets. Billion dollar mutual and hedge funds take weeks even months to roll out of large positions. This very large drop in a period of 4 days just doesn’t seem like a healthy enough correction for those who have wanted to exit to get out.

The price increases have been on less and less volume than what was sold off.

And my finally reference “THERE IS NOTHING TO SEE HERE” statements from Tim Cook, CEO of Apple claiming the effect on China won’t hurt their business. When the head of a company does something COMPLETELY unpredictable to try and keep everyone calm it makes me paranoid and it should make you paranoid too. I’ve seen it all too many times, even as an employee of many large corporations myself, watching CEO’s try and keep the masses calm as they are silently selling off shares.

It will be very interesting to see the insider selling report of the top execs at Apple and see how they handled the situation.

Thus, when it comes to the S&P 500, I don’t think we’ve corrected enough, but from the charts, there isn’t much evidence of a trade in either direction as it stands.

SPXL 8-28-15

TMF (20+ Year Treasury Bonds) – Slightly Bearish

I may be splitting hairs on this one, but the longer term trend is down and we started a good break down four days ago. The biggest issue is usually bonds excel when everything else falls and hardly anything went into bonds. It’s now hovering below a short term resistance level at $80.00 and the longer it holds the more bearish confirmation we will have.

TMF 8-28-15XIV (Inverse VIX) – 50/50

XIV has a very interesting chart and it showing strong support at $25 – $26. In fact this level has held a number of times going back to late 2013. If we break below this level expect significant movements to the downside. Otherwise the more days that go by without it breaking could certainly be a good case for a bullish bounce of support.

XIV 8-28-15

UWTI (Crude Oil) – Short term bearish

I don’t think this sudden move in crude is sustainable. However if it is, I imagine the gains next week will be just as substantial, however if not, watch it slowly said and then reverse sharply. I think it was short term news that bumped up Crude but after this long of a downward movement, some bullish correction isn’t a surprise.

UWTI 8-28-15

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8-31-15 – Trading Strategy

 

8-31-15 – Trading Strategy

Current Holdings


Real time portfolio updates are now available here

8/28/15 – DGAZ (Inverse Natural Gas) @ $6.04
8/28/15 – DGLD (Inverse Gold) @ $81.00
8/28/15 – TMV (Inverse 20+ Year Treasury Bonds) @ $28.42

Today’s Updates


DGAZ (Inverse Natural Gas) Limit order filled @ $6.04 (Better fill due to morning gap lower)

DGLD (Inverse Gold) Limit order filled @ $81.00

TMV (Inverse 20+ Year Treasury Bonds) Limit order filled @ $28.42 (Better fill due to open gap lower)

Market volatility is starting settle down and we are approaching new pivot points for next week. I will be very curious if we continue to see upward movements or if we turn down for a second time. The fact many of the markets were no overwhelmingly up is a sign many don’t want to hold into the weekend.

Watching the commodities JNUG (Junior Gold Miners) and UWTI (Crude Oil) being up as high as they are is quite surprising. Crude especially. I haven’t spent the time to watch the news, but the chart patterns are making some substantial turn arounds.

Asian and European markets are still clawing their way back, but it’s still too inconsistent to determine if they will fall over or if new buyers will pick up the pace next week.

I was able to get into 3 positions today, with 2 being on better fills due to morning gaps lower. I ended the day in a profitable position, but I need another day or two of movement so I can capitalize on some of the gains.

Keeping my stops tight as I got good fills on my orders so I shouldn’t have to give up much more. However, if volatility picks up on Monday I could easily get stopped out prematurely.

 

Market Snapshot 8-28-15

Current Holdings with Open Orders for 8/31/15


Sell DGAZ (Inverse Natural Gas) Limit @ $6.50 (7.62% Profit)
Sell DGAZ (Inverse Natural Gas) Stop @ $5.95 (1.49% Loss)

The entire point of the trade was to try and play the $1.70 – $1.75 as a new resistance level instead of support. UGAZ (Natural Gas) closed today right at $1.75 but because of the morning gap up I was able to get a better fill on DGAZ (Inverse Natural Gas) and now I don’t have to give up as much of a loss to prove this isn’t going to work. I may be a bit conservative, but I’m keeping my risk reward ratio high. Also because we didn’t see as sharp a break out as I was expecting, I’m lowering my sell target in case this gets range bound.

UGAZ 8-28-15

Chart of my orders for DGAZ (Inverse Natural Gas) notice the low was $6.01 and my stop was $6.00. That was close!

DGAZ 8-28-15

Sell DGLD (Inverse Gold) Limit @ $85.00 (4.94% Profit)
Sell DGLD (Inverse Gold) Stop @ $79.70 (1.60% Loss)

This was the one trade I got exactly what I asked for. We had a kiss off the 50-day EMA in yellow and a close lower which is what I’m looking for. If everything goes as planned this will be a 3 day drop followed by a 2 day retracement and a good drop on Monday to cash in on a profitable trade. The one concern I have is JNUG (Junior Gold Miners) had a very strong move up today. I’ve seen in the past where JNUG’s movement has forecasted a move in Gold. As a result I’m keeping my stop tight and lowering my profit target which is still keeping for a reasonable risk/reward ratio. My stop in DGLD (Inverse Gold) will be just below today’s low.

UGLD 8-28-15

Chart of where I want to be in DGLD (Inverse Gold)

DGLD 8-28-15

Sell TMV (Inverse 20+ Year Treasury Bonds) Limit @ $30.40 (6.97% Profit)
Sell TMV (Inverse 20+ Year Treasury Bonds) Stop @ $28.10 (1.13% Loss)

Couldn’t have asked for a better move today. I was filled near the low and it closed 2% up. TMF (20+ Year Treasury Bonds) kissed right off the 20-day EMA in purple after it’s first leg down. Volume was very low despite a higher close today. PPO still remains negative so I’m happy with all the technicals here. TMF is naturally a volatile stock, so despite having a 2% advantage so far, I still need to be willing to take a small loss to go for a larger profit.

TMF 8-28-15

Chart of my orders in TMV (Inverse 20+ Year Treasury Bonds)

TMV 8-28-15

 

New Open Orders for 8/31/15


Buy DWTI (Inverse Crude Oil) Limit @ $97.00
Sell DWTI (Inverse Crude Oil) Limit @ $110.00 (13.40% Profit)

This is a simple volatility trade. UTWI has completely blown up for the past couple of days. It has been due for a correction for some time, but in this case, this is one of those typical “too far too fast” scenarios. In fact, my guess is it will gap up a small amount on Monday and drop like a rock. However, because the 7-day ATR is currently 26% there is no way I can stomach putting in a market order with some established stop. I’ll be doing this volatility trade only if it can go up another 20%. If that does, it will have moved up over 80% in 5 days which won’t hold.

Chart of UWTI (Crude Oil) making it’s first break above the 20-day EMA in purple in a long time.

UWTI 8-28-15

Where I want in on DWTI (Inverse Crude Oil) for Monday

DWTI 8-28-15

Buy JDST (Inverse Junior Gold Miners) Limit @ $7.50
Sell JDST (Inverse Junior Gold Miners) Limit @ $8.50 (13.33% Profit)

Staring at the same markets for years at a time you notice unique patterns and characteristics. One with JNUG (Junior Gold Miners) is it usually reverses after 3 large moves up. I’m getting ahead of this one and if JNUG moves up like it did today then I’ll be in JDST (Inverse Junior Gold Miners) for a quick reversal.

Now you might think “But wait, you advocate never being in the same market in two different ETFs at once” and you are right. If I get filled in JDST I will most likely already have been stopped out of UGLD (Inverse Gold).

This large 3-day up pattern doesn’t happen very often, but it’s a 80% chance of reversal if it does and I play it every chance I get.

** Disclaimer, I like to play 100% of my trades after hours, but JNUG is up 15% or more on Friday at 12:30pm PST (when I’m at lunch) then I will buy JDST (Inverse Junior Gold Miners) by market close if I haven’t been filled yet.

Chart of JNUG showing it’s sharp 2-day reversal, a 3rd day will be perfect to play the opposite direction

JNUG 8-28-15

Chart of JDST (Inverse Junior Gold Miners) with my buy point near the next possible support level

JDST 8-28-15

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