1-25-16 – Trading Strategy

1-25-16 Trading Strategy

What I’m in

1/22/16 – GASL (Natural Gas Companies) @ $3.44
1/22/16 – EWJ (Japan) @ $11.29
1/22/16 – RUSL (Russia) @ $7.97

What I’m selling

Sell EWJ (Japan) Limit @ $11.75 (4.07% Profit
Sell EWJ (Japan) Stop Limit @ $11.05 (2.13% Loss)

Sell GASL (Natural Gas Companies) Limit @ $4.50 (30.81% Profit)
Sell GASL (Natural Gas Companies) Stop Limit @ $3.15 (8.43% Loss)

Sell RUSL (Russia) Limit @ $9.85 (23.59% Profit)
Sell RUSL (Russia) Stop Limit @ $7.50 (5.90% Loss)

What I’m buying

  • No new orders for Monday as I have loaded up on the market close today

Today’s Updates

Market Snapshot 1-22-16

I was filled on 3 orders near the end of the trading day as I announced in my intraday email 2 hour prior to the close of the market today.

Today was the kind of day you look for as a potential bullish reversal. This is not a market to be messed with as these double digit gains across the board can be very very risky or very lucrative. I am sharing my trading experience with others on this blog so they can learn how I approach markets and how I trade with my own money. I want to caution everyone on following on this one. These volatility moves can be very dangerous so if you are not experienced enough yet, don’t play in these conditions.

I was still able to close out 2015 profitable despite taking on big risks, and I’m willing to do it on this considering the rare historical occurrences of such extremes.


What I’m Watching

SOXL (US Semi Conductors) broke above it’s $18.00 support level today. This is a bullish sign as well. We are sitting on 4 days up in a row now, so it may come back to test before it moves higher. Also PPO hasn’t turned over and volume wasn’t as high as it has been recently so I didn’t want to speculate on this one just yet.

SOXL 1-22-16

SPXL (S&P 500) broke out of it’s sharp down trend channel today which is the first bullish sign. I’ll wait of PPO to turn positive as we have a clear pivot bounce off of $58.00.

SPXL 1-22-16

UGAZ (Natural Gas) – I was stopped out for a small profit this week because the decline just didn’t run as long as I was hoping for. We’re now playing around with the $1.85 marker, but if PPO turns negative after going down further from 1.85 then I will most likely take another position in DGAZ (Inverse Natural Gas)

UGAZ 1-22-16

VGK (Europe) broke out of it’s downward trend channel today which could be a good sign for a stronger reversal next week. We’re nearing the 20-day EMA and a PPO turnover to the upside could be following soon as well.

VGK 1-22-16


What I’m Selling

Sell EWJ (Japan) Limit @ $11.75 (4.07% Profit
Sell EWJ (Japan) Stop Limit @ $11.05 (2.13% Loss)

Japan crossed up above it’s previous support level of $11.15 after an extreme drop below. Getting in at close today provides me a safe 2% stop loss just below that level. The volume going into it today was over 3x the average volume. PPO didn’t turn up, but I like the 2% risk level and volume indicated there is very strong momentum going into this. My goal is to only hold onto this for 1-2 days tops and get out as I don’t want to rely on this being a long term bounce.

EWJ 1-22-16

Sell GASL (Natural Gas Companies) Limit @ $4.50 (30.81% Profit)
Sell GASL (Natural Gas Companies) Stop Limit @ $3.15 (8.43% Loss)

This is an extreme PPO turnover play. GASL has been on a very sharp freewill and PPO has turned over on 2x the average volume. If there isn’t any bad news over the weekend this could turn out to be a very big pop. The PPO turnover is something I discuss in detail in my Educational Series. It doesn’t happen very often, but it’s a higher probability setup and the conditions are perfect since we are seeing this reversal across the globe as well.

The ATR of GASL is off the chart though. Daily up/down movement can be as high as 20.99% currently. I can’t justify putting a stop with a risk level that low, so I’m putting it just below today’s low.

The risk is if Monday’s volatility causes me to be stopped out it could gap and go higher. I just can’t take the risk of letting it go beyond my risk tolerance level as this could easily go 20% against me and I just can’t let that happen. So there are risks in this trade, but the risk/reward of this trade are too much for me to give up trying. I’ve lost 8% on trades that I didn’t think had nearly this potential.

GASL 1-22-16

Sell RUSL (Russia) Limit @ $9.85 (23.59% Profit)
Sell RUSL (Russia) Stop Limit @ $7.50 (5.90% Loss)

Russia also had a PPO turnover to the upside today due to UWTI (Crude Oil) going much higher. I’m looking for one good day on Monday to most likely exit my position, but with the potential daily gains being as high as they are I will have to watch this closely intraday. The fact we filled the gap today that took us lower last week is also a key bullish sign. I’m not expecting a multi day rally, but if you can see that PPO can stay positive in a bullish position for a good enough amount of time for a profitable trade.

My stop in this position is much like it is in GASL. I can’t let it drop all the way down to $7.00 if there is another gap fill to the downside, I’m having to set my stop at a place that would invalidate the upward momentum. However, today had the largest amount of volume go into RUSL since April of 2015. This is a high % setup.

It’s very depending on crude oil, so I’ll be watching the futures market on Sunday to get a feel for how things will open on Monday.

RUSL 1-22-16