UPS Possible Swing Top Exit

Today opened gapped up right on the 50 SMA. I knew I was getting out today sometime before the end of the day to avoid the uncertainty of the Quarterly Earnings Report tomorrow morning 7am ET before the option market opens. When I saw gap open I thought price would just sit there all day but I waited to see if it would start running to the upside or head back down to the trend line. You can see it started heading down almost immediately.

But I got busy with other trades and when I got back to check on UPS, it had already hit bottom and was rising. I went to the 3 minute chart and was watching for it to top and start down again.

Then I noticed a Head and Shoulders pattern forming on the 3 minute chart. See the angled thick white line that represents the neckline. The white vertical lines is the measured move. I've noticed Head and Shoulder patterns on equities often reverse at half the measured move. I was worried the FOMC rate decision due 2:00pm ET today could effect my trade. So I was going to get out at half the measured move or a minute or two before 2:00pm, whichever came first. Fortunately for me, price hit the half  measured move (thin white horizontal line) at 1:54pm and I sold for $3.10. Dramatically, price started back up with the very next candle, then the FOMC news came out and really pumped up the price.

So bottom line is I purchased the April 95 Puts for $2.36 on 1/22/19. Sold today for $3.10. So $74/236 = 31% gain. Not bad for 8 days. The Earnings Report tomorrow may take the stock much lower, but my personal rules say don't hold over ER unless there's a very good reason and a very small position. Getting out today was a sure thing, so it wasn't a hard decision.

UPS Possible Swing Top Update 5

We floated up a little bit into the narrow trading range we've been in for a few days. We'll probably stay in this range until the Earnings Report scheduled for 1/31/19 7am ET.

My April 95 Puts are still profitable by about $45 each. The conservative thing to do would be to sell them at the close today. But this setup is so beautifully bearish I decided to wait until tomorrow to sell, thinking it may head back down some.

UPS Possible Swing Top Update 4

Closed the day very close to the 8 EMA, just under the 3 EMA, and still under the 50 SMA and 200SMA. But we also haven't closed below the trend line, although the first half of the day looked pretty weak.

Notice the DMI lines are approaching each other and are close to crossing. If we can get a crossing where the red DI- line goes above the green DI+ line, that would be a good bearish signal.

I'm still uncomfortable about this trade, but there's no good reason to get out. So, just holding my position for now.

UPS Possible Swing Top Update 3

Today we got a little scare at the open with a little gap up and a continuation upward, but by the end of the day we are left with a doji candle, which is said to indicate indecision. I don't like that we closed above the 3 EMA and the 8 EMA, which is a little bullish compared to yesterday, but the position is still in the money, so I held on for now.

Also, the close today (100.83) retraces the difference between the low of yesterday (98.83) and the high of 2 days ago (103.13) by about 50% (98.83+103.13)/2=100.98). This is a very typical move in general. So not a good reason to get out.

We'll see what happens next.

UPS Possible Swing Top Update 2

We got a nice gap down at the open then spent most of the day below the 8 EMA but closed very close to it. I'd say we're just short of a confirmation, but today's price action is still constructive. However, I'm not ready to add to my position yet.

The Quarterly Earnings Report is next Thursday before the market opens, so I want to be out by the end of the day on Wednesday. In my opinion, Earnings Reports are unpredictable, and can cause a large reaction against you. If you want to hold onto your position, you need a hedge to protect yourself.

Because the Earnings Report is coming up soon, and we lose 2 trading days after tomorrow, I would appreciate a solid down day tomorrow. We'll see what happens.

UPS Possible Swing Top Update 1

Didn't have to wait. Got the rejection today I posted about yesterday.

The chart above was saved just after the close, You can see we got a nice Bearish Engulfing candle. That's a sell signal, but I don't want to add to my position until we get confirmation. Confirmation in this case, the way I trade, is a close below the 8 EMA (the orange curvy line). We pierced it during the day, as you can see by the candle wick, but we closed well above it right on the 3 EMA (the purple curvy line). It would have been more bearish if we closed below either of those moving averages.

Lets see what happens tomorrow.

UPS Possible Swing Top

1/22/19 12:22 I see 5 reasons why UPS may be hitting a swing high today or within a few days. You can't say a turn down has started yet, so its more conservative to wait for confirmation. But it might be worth entering a small bearish position if we're lucky enough to catch the top. I got the UPS April 18th $95 Puts. I like the volume, open interest, and 27% Delta of those options in the April option chain.

I see 4 possible targets:

Previous swing low $89.92
The Head & Shoulders projection (yellow), which is also the 27.2% Fib extension $82.50
The AB/CD projection (light blue) $75.75
The 61.8% Fib extension $73.04

I like the $82.50 target the most because you have confluence of 2 different independent measures, and I believe the 27.2% Fib extension gets hit more often than the 61.8% extension.

Here are the 5 things I see that give me confidence there's a good chance this trade will work:

General down trend of lower lows and lower highs.
Head & Shoulders neckline break and retest (thick yellow horizontal line).
50% Fib retracement possible resistance.
50 DMA possible resistance.
High stochastics, well over 80%.

When I see good evidence there has been a strong rejection I'll increase my short position.