A LESS THAN INSPIRING TAPE

This is a waste. Nothing here is moving with purpose.

My best advice here is to watch and observe the market here over the next two weeks. $XLU is getting defensive today and risk stocks are still in chop and drop mode. If that character persists, then bet on volatility. If it continues to flash on/off…keep waiting.

Things are at a point where I can see set-ups gradually materializing. However, nothing is actionable yet.

Going to be a grinder. I’d try not to over trade, or over think here.

OUT OF POCKET

Sorry for the lack of action here on my part. This computer situation has cost me the day and will keep me preoccupied tomorrow to get everything resolved.

After Hours with Option Addict members, we’ll meet again today, but not tomorrow.

Thanks for your patience.

 

CAREFUL, THEY’RE WATCHING

Russian hackers infiltrated my system yesterday. They got me. Fuckers.

Waking up to that kind of a loss yesterday, I had very little to say. From what I can tell, its the newest version of Ransomware and nothings recoverable. I don’t even know how I got it. But if you haven’t yet, go backup your files, invest a few bucks into securing your machine. I deserve this for being a moron, and for thinking I am smart enough to prevent something like this from happening.

On the day I bought shares of $CARA this morning at $7.40 and am long /CL again here for a bounce. I love $BIDU here, tempted to take $BITA, $VIPS, $DK, $STMP, $CIEN.

As for the market, I don’t want to talk about this fucking range anymore to be honest.  A rally cometh soon.

More later,

OA

THE OLD GAP, GRIND AND FADE

This action is so hard to watch, I can barely stomach writing up a play-by-play, or finding anything intelligent to talk about here.

I bought Nov calls in $LN this morning. That’s all I’ve done.

I appreciate the lists of stocks you guys chimed in over the last few days. I’m watching the following stocks this week for entries…

$TDC, $DK, $STMP, $VIPS and $SINA.

After earnings, I am stalking $VMW, $ATI, $BIDU, $TRU and $TSLA.

Off to see about a nap.

A QUICK GLANCE AT MY OCTOBER OPTIONS LINEUP

Yeah, its that bad. I came into the month looking for any slight reason to lighten up. My thoughts I had laid out were that I felt this month would be the first difficult month we’ve seen since the start of the year. I watched for clues, warning signs, etc. And despite the market staying low and slow, the rotation over the last few weeks just blasted me. 1% move in the $SPX, high beta momo stocks took 10-20% beat downs.

I have a significant number of positions expiring worthless tomorrow. The hard part is that the majority were profitable at one point or another. I froze in the first week of the month, watching as my stocks continued to rip…but then they slowly started to shift.

The good news is that it’s prompted me to build an indicator to try and determine when these shifts are going to occur. The bad news is that it cost me thousands this month to motivate me to start building.

Now I’m sitting here planning my comeback tour. Aside from shelter, butter, guns and burlap…I am trying to piece together a list of 10 stocks I want to take into YE.

I’d like to ask you, the reader, the same question. What are your top stocks you would engage here for year end? (Min 3, Max 10)

Also, After Hours with Option Addict patrons…I am unable to meet after the close today. If I have enough interest, I will happily meet later in the evening if that works for the majority of you. I would plan to meet at 8pm ET. If I can land 10 comments here saying “Yes,” see you then.

Again, sorry for the inconvenience.

FORGIVE ME, BUT AHWOA CANCELED FOR TODAY

Folks, I apologize but had some things come up that I need to attend to.

No webinar after the close today (10/19/16) but will pick back up tomorrow as usual.

Thank you for your understanding.

RISK ON, RISK OFF

 

Risk cycle, opportunity & how I’m building my TWLO stock position

 

 

Back in late September, I started to give a soft warning about how the market might be a little more difficult coming into October. Partially due to the fact that October has been incredible over the last few years. The other reasoning was that I’ve been on an incredible run all year, and at some point some of these easy trends have to shift gears.

Well, October has been a little more difficult, but the market metrics I use as a warning to switch style never signaled. This means that the market is still in the state that I want it, however the difficulty has come from the rotations that have occurred within the market. This confused me a bit in the process, and has cost me a bit over the last couple weeks.

I use this chart below to describe how the market’s appetite for risk changes gradually in a trend. Over the last few weeks, the China stocks were ripping, Marijuana stocks have been trading awesome, and frankly the best performing stocks were not of the best quality.

2016-05-22_21-57-31

As we hit oversold on the McClellan last week, it seems that my high beta favorites were sold the hardest. The stocks that held up the best, or had the best relative strength were stocks of a higher quality. Stocks like $SBUX, $WHR, $TGT, and several other long term trade candidates we’ve been following lately.

When the market makes a rotation like this, it’s important to pay attention and to follow its lead.
If you jump back into the same old stocks as they’ve been correcting, they might not be the first to bounce back. This is especially important if you are trading short term options.

However, if you are trading stock and there’s a high beta name you want to own at these lower price points, start accumulating.I’ll give you an example…

Last week I sold a chunk of $BABA I had bought late last year. With the proceeds I wanted to start buying blocks of new issue $TWLO.

I planned to split my intended position into 3 or 4 buys:

  • I made my first on 10/13 at $48.15.
  • I bought my second block 10/17 at $45.30
  • I have one last piece to add, and am hoping to get it under $44.

This year’s IPO class has been amazing. They’re following the same patterns that the IPO class of 2012 had. So many stocks that opened in 2012 more than doubled that year and went on to be big names. I feel the same way about this year’s IPO stocks, for the most part.

GUN TO THE HEAD, PERHAPS WE GO NOWHERE

As noted yesterday, market structure looks great this week. This should be enough to carry the /ES back to 2150, or SPX to 2155.

I like the action in crude here as well. I took a shot at it at $50.15 just a few minutes ago. This should be a decent spot to pivot back towards $51, and possibly carry prices out of this week long range.

During all the recent anxiety into a 1-2% market pullback, the inner pulse of the market has stayed consistent. There was no real uptick in correlation (which surprised me) and market speed has remained unchanged. Upticks in both of these measures will get me anxious, but market movement without them is really just a better opportunity to stick to the script and keep doing what I’ve been doing.

The only thing that’s worth noting about the market is that the risk rotation I use has been reset. Therefore, jumping into the same old dogshit stocks might not be the best move here. Start with some better names, and move to the trash as the market leaves this range.

The last two weeks were an awful stretch for me, but I’ve dried my tears and am laying the foundation for a nice year end sprint to the finish line.

I’ll discuss the road map in After Hours with Option Addict today.

MARKETS SEARCH FOR MEANING

Very little that’s inspiring about today’s flow in stocks. Expiration week generally leaves much to be desired, but October expiry in particular has some decent historical trends behind it.

That said, it’s also helpful that Gartman has turned negative towards stocks again.

Market structure, when zoomed in favors a decent foundation underneath current prices for the time being. spx30minToday’s close ought to set the tone for the week. $NYMO no longer oversold, but suggests upside risks are greater than downside risks here.

BE A BIG DOG

Had to post this tonight in response to the countless articles and such I am asked to interpret, weigh in on, and other various forms of garbage I am asked to dumb myself down to suffer through each day. Guy reminds me of J Krull from long ago. This is now my favorite trading related video of all time.

What if? Lol.

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