Monthly Archives: October 2016

11-1-16 – Trading Strategy

11-1-16 – Trading Strategy

What I’m In


10/18/16 – 4 VXX (VIX) Nov 18 $29 CALL @ $5.00 ($2,000 Position Size)
10/28/16 – TMV (Inverse 20+ Year Treasury Bonds) @ $19.20 ($20,102 Position Size)

What I’m Buying


  • No new orders for now. FOMC interest rate decision on Wednesday and an upcoming US presidential election makes me want to scale out of positions for now.

What I’m Selling


Sell TMV (Inverse 20+ Year Treasury Bonds) Limit @ $20.00 4.17% or ($837 Profit)
Sell TMV (Inverse 20+ Year Treasury Bonds) Stop Limit @ $17.70 7.81% or ($1,570 Loss)

Sell 4 VXX (VIX) Nov 18 $29 CALL @ $8.00 ($1,200 Profit)

Today’s Update


market-snapshot-10-31-16

Not a whole of excitement today. I’m glad I got out of EWZ (Brazil) because BRZU (Leveraged Brazil) is still holding it’s own. A big reversal move in DRN (Real Estate) which was the only market to exceed it’s daily ATR, except for UWTI (Crude Oil) which took a big hit.

It doesn’t look like the day was heavily correlated, but volatility in the US market should continue to rise as we near the presidential election. Also, the US FOMC will be making a statement and interest rate decision at 11am PST on Wednesday. This is close to when I plan on being out of VXX (VIX). My goal is to sell volatility to those who want to hedge against and FOMC surprise (very unlikely with the election so close) but also against a surprise win in the election.

I do NOT want to hold through the election because if Hilary wins, we’ll most likely see a drop in volatility since she’s highly favored, if Trump wins, well then if you were in VXX (VIX), UVXY (Ultra VIX) or some other equivalent you will hit the stock lottery jackpot.

However, I really see no need to be holding during these events so I’m going to try and take profitable trades off the table and re-enter into the markets once direction sets in again. Not in the trading game to gamble, but to exploit the opportunities in which the market gives us an unfair advantage over the speculators.

JDST (Inverse Junior Gold Miners) did have a decent drop, but still not enough to get filled. I’m losing interest in this trade especially with the FOMC coming up on Wednesday. I’m going to back off an wait for now.

jdst-10-31-16

Sold SOXL (US Semi Conductors) Stop Limit @ $46 2.07% or ($363 Loss)

When you look at these charts every day, you know what a bullish move looks like and you know when it’s failing you. I got in on the triangle breakout, but then SOXL moved down 4 days in a row closing on the 20-day EMA. Today’s move was higher, which isn’t a surprise as a small recovery from the recent move down, but it wasn’t an exciting recovery that could even break yesterday’s high. As a result, I’ve exited the trade early.

This just isn’t the pattern of a strong move higher but more of one that is going to continue to move down or go sideways. Either way, I’m taking a small loss so I don’t chew up all the profits I made on previous trades. Also, I recovered some of my paper losses in SOXL from earlier, so by selling this early, I still added more profits to my portfolio.

soxl-10-31-16

Performance Update


performance-10-31-16

My returns continue to grow for the month with only 2 active trades left to close out. Today’s move higher was due to SOXL (US Semi Conductors) recovering some. Selling out early actually helped my over-all return since I’d already banked other profitable trades and I’m losing confidence SOXL has the staying power to go higher, so I’m comfortable with where I stand.

As I was stating earlier, I believe volatility will continue to rise up until the FOMC meeting on Wednesday, so I’ll most likely sell out by close on Tuesday or Wednesday morning before the meeting.

Finally, TMV (Inverse 20+ Year Treasury Bonds) should still benefit if the FOMC stays it’s course with a possible interest rate increase in December. It should go to the moon if they surprise everyone with an earlier indication or an actual increase ahead of schedule. I will be holding on to TMV through the FOMC announcement as a result since there are more ways for me to profit than lose in that case.

What I’m Selling


Sell TMV (Inverse 20+ Year Treasury Bonds) Limit @ $20.00 4.17% or ($837 Profit)
Sell TMV (Inverse 20+ Year Treasury Bonds) Stop Limit @ $17.70 7.81% or ($1,570 Loss)

TMF had a small move higher today, but still well within the existing trend channel lower. I don’t suspect we’ll see any big movements until the FOMC meeting on Wednesday. However, I’ll have to be watching during the 11am PST time frame so I can get out of this trade if there is some kind of surprise.

tmf-10-31-16

TMV (Inverse 20+ Year Treasury Bonds) chart and orders.

Keeping the same orders for tomorrow, no significant movement to change the plan here.

tmv-10-31-16

Sell 4 VXX (VIX) Nov 18 $29 CALL @ $8.00 ($1,200 Profit)

More and more continue to buy up volatility in anticipation of the election. I have most likely 2 more days maximum before it’s best to sell out. This will be either tomorrow at market close or the day of the FOMC announcement. The option is selling for $5.53, so I may drop this down tomorrow to a $7.00 price target.

vxx-10-31-16

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10-31-16 – Intraday Update

10-31-16 – Intraday Update

SOXL (US Semi Conductors) was my bullish position and I was expecting a possible rebound today. We are seeing a “slight” uptick, but nothing to signify a reversal or a continuance of the bullish move that led me to get into the trade. I’m going to cut my losses short here and put in a sell order for 46.00. If it doesn’t fill then I will exit by market close.

I was looking for a break of yesterday’s high and we’re just not seeing that which again doesn’t look like a bullish sign of strength.

soxl-10-31-16

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ETFs to Watch 10.30.16

ETFs to Watch 10.30.16

Market volatility picks up as the US election nears. Correlation across markets continues to be rather strong so it’s difficult to find diversity amongst markets as well. Many markets are showing more bearish signs, but nothing extremely significant yet. Everyone is waiting for the Nov 8 elections and the charts show a slow sell-off with increased volatility in anticipation.

Get your wallets ready, after Nov 8th I’m expecting many of these consolidations to finally give some strong directional bias to trade from!

 

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