GLD Bullish Cup and Handle (Video)

Gold has been strong and formed a Cup & Handle pattern. Price hasn't broken out yet but it probably will early next week.

For a detailed explanation please see the 8 minute video here:

https://youtu.be/ci827rOPunk

TLT Weekly Flag Breakout - Update 1

I explained the details in the previous post. Today, very simply, we had a good day in our favor.

Started the week with a gap up, then a retrace to fill in the gap, and finally a reversal to the upside and a close on the high, with higher than usual volume. That's a great candle.

If you look closely you can see the light blue upper Bollinger Band starting to angle upward to accommodate a bullish breakout from a consolidation phase.

Looks like next week could likely take us to the previous high. Might see some volatility there.

TLT Weekly Flag Breakout (Video)

TLT, long term bond ETF, on a weekly chart, shows the beginning of a Bullish Flag Breakout pattern. It hasn't confirmed yet because it hasn't surpassed the previous swing high at 148.90. So its really early to trade it for a bullish move, but I defined my risk to a fixed small amount by buying a May 145/150 Call Spread for 1.70 ($170). You can't lose more than the cost of a spread.

Risk = $170, Reward = (150-145) $500. That's about 1:3 which is great!

Please see the 8 minute video for a fuller explanation at:

https://youtu.be/xBfMuowjgBM

INTC bullish pattern vs Earnings Report in 2 days - Exit

Close enough to my target to get out with a nice return percentage and no overnight Earnings Report risk. I think its more likely INTC will drop back a little this afternoon than continue higher.

-3.27 Bought INTC Apr 60 Call
+1.70 Shorted INTC Apr 65 Call
+5.11 Sold  INTC Apr 60 Call
-2.31 Covered INTC Apr 65 Call

123 Profit/327 Initial Risk = 37.6% Gain in 2 days.
123 Profit/(327-170) Adjusted Risk = 78.3% Gain in 2 days.

If INTC comes out with a better than expected ER tonight and goes higher, I'll feel like I missed out, but I'll also know I did the right thing and reduced my risk when I could and ultimately followed my rules.

All in all, I'd call this one a win.

AMPY Bullish - Exit

Well, AMPY dropped from the open and hit my stop loss on all shares at 6.80 at 9:39am ET. I lost about $150. The pattern looked great, but patterns don't always work out in your favor. So you have be disciplined with a stop. I'll make it up somewhere else.

AMPY Bullish - Update 5

Well, price behaved exactly as I described it would in the last posting. It came down, went below the 8ema to the trend line to the penny. Then it bounced a little and retraced the candle more than half way.

Everything is proceeding as I have foreseen

The important thing is what now? I'm going to follow my plan. Which is to hold as long as we don't close under the downward angled trend line. However, if we start sliding down the trend line and close below the previous swing low at 6.80, then I have to sell.

I don't know whether we go up or down from here but my expectation when I entered this trade was that if we retest this support level then we'll reverse off of it and continue upward.

See the previous posts on this thread for more details.

INTC bullish pattern vs Earnings Report in 2 days - Update 1

Its 15:00 on 1/22/2020. Earnings Report coming out after the close tomorrow. Had a very nice nice up day today. My Apr 60 Call option is up about $100 from the 3.27 purchase price. Stochastics are barely overbought. Reasonable target is about 64 as I discussed yesterday. This makes me think I want to scale in some more.

However, you can see the current candle is at the 27.2% Fib extension and way above the upper Bollinger Band. Wouldn't be surprised if this candle drops by half by the close today. Also, I have to remember I shouldn't even be in this trade over the ER. It's one of my rules actually lol.

So I thought about it and rather than add more calls, which would add risk, I decided to sell an Apr 65 Call for 1.70. This reduces my risk from 3.27 to 3.27-1.70=1.57. Now I own an Apr 60/65 Call Spread for 1.57 with a potential reward of 65-60=5.00. That's a 3:1 R:R, which is nice.

After shorting the 65 Call, I entered 2 exit orders:

• One is Good Til Cancel sell limit of 4.90, which is as much profit as I can expect. 
• The other order is to sell the spread if INTC hits $64 before the market close tomorrow.

I will be happy with either of those exits, but I think 64 is too high to hope for by the close tomorrow before the ER. If I don't exit then I'll be sweating out the ER and will probably kick myself whether its a good or bad report.

If its good, INTC could pop over the 64 target and I'll miss out because my profits will be limited to the $5 spread.

If its bad, and INTC drops, then the Call Spread will drop in value significantly. One reason I picked the April expiration, rather than an earlier one, is to preserve some time value if the trade goes against me.

INTC bullish pattern vs Earnings Report in 2 days

Intel is breaking out of a beautiful slow round bottom today. An AB=CD (yellow thick lines) projects a target of about 64, which also coincides with a 61.8% Fib extension. You can see price went a little higher than the previous high. There are no resistance areas above us on the daily or weekly charts.

Stochastics are not yet overbought and volume has been increasing. The round bottom bounced off the 20sma and the 50% Fib retracement.

Normally I would definitely take a long position on this, but there's an Earnings Report due out after the market close on 1/23/20. I normally don't hold a position over an Earnings Report, although some people say the ER is usually in the direction of the stock pattern. I doubt that's correct, but I haven't done a study on it so I don't really know.

I'm conflicted about whether to take a bullish position or not. So, I decided to get a second opinion.

I called into the Steve Rhodes internet show on TFNN.com. He is highly ranked as a market timer and was doing his show while I was pondering what to do. You can hear our conversation here beginning at minute 37:

https://www.youtube.com/watch?list=PL3E7E63C349749274&v=HPK3l6TjkPU&feature=emb_title

The bottom line was to go ahead but take a small position. So I got a Apr 60 Call for 3.27. I'll see how INTC performs the next couple days. I may get more or sell what I have. If I'm really lucky, it'll hit my target at 63.64 before the close on Thu.

AMPY Bullish - Update 4

Looking at the chart 7am ET 1/21/2020 you can see the previous trading day was a bearish harami red candle. This is a sell signal and stochastics are overbought, so we need to watch this carefully. However, the last candle closed over the 8ema after a bullish break out.

My interpretation is this is a retest of the break out level preceding a resumption to the upside. Normally I'd use the 8ema as a trend indicator, but on the current chart  I'll use the angled upper downward trend line as the trend indicator. That means if we close above the trend line I'll hold the position, and if we close below it I'll have to sell the position to stem losses on a possible further drop.

The upper downward trend line coincides with the 200sma and 20 sma, and perhaps the previous swing low, depending when the candle hits the trend line. This suggests a significant support level.

AMPY Bullish - Update 3

We had a bit of a retracement today, but we closed over the 8ema, so we want to hold it. In fact, I wouldn't be surprised if it came down next week and tested the upper, down sloping, trend line, which coincides with the 200 sma, and the 20sma. These are under the 8ema but I'd be tolerant of that dip, expecting a bullish rebound after that retest. If it closes under the lower trend line, which is right under the 20sma, we'll have to dump it and see what happens next.

If you need to see what color lines are what, see my profile.

AMPY Bullish - Update 2

Got a nice break out this morning and closed 1 penny under the close and a higher high than the last swing high. Also an increase of recent volume. All bullish signs. Steady as she goes.

I added a conditional sell order for all 3 lots that if we're still in this trade at 15:55 on 2/4/20, then exit everything. This is because we want to be out before the quarterly earnings report the next morning before the market opens.

I smell bacon - Exit

This morning before the open I was looking at April Lean Hogs chart. (The chart shown above is after the close.) I was looking at the consolidation between Nov 20th and Dec 12th. I kept having the thought that we are right in the middle of that zone as well as the 76.4/78.6 Fib retracement level, and that we could well have a bounce from here before hitting the 72 target.

The need to protect my position kept growing until finally I added a stop loss to the Put option. Then I posted this comment to yesterday's post in case anyone needed to know:

"I tightened my stop at 9am 1/14/20 before the hog market opens to 73.94"

Well, as you can see by today's chart, the stop loss was hit and I got out with $20 gain. Good thing because today's high was 75.30 and the close was 75.00.

However, notice today's candle closed right on the 8ema. So, by the way I trade, the down trend hasn't yet ended because we didn't close over the 8ema. But today's candle combined with yesterday's candle forms a Bullish Engulfing pattern, which is bullish. And stochastics are still oversold. 

So, I decided to just stay out of the Lean Hogs market for now and see how it develops.

AMPY Bullish - Update 1

This chart is zoomed in to show today's candle. As mentioned in yesterday's video, I had a buy stop limit order sitting at 7.26. Would you believe today's price action had a high of 7.25? It's true. One more penny and all 3 lots of 100 shares each would have been bought. But none were.

You can see price broke out modestly to the upside, but not enthusiastically. I was conflicted because if this breakout is going to continue upward tomorrow, then I want to enter today in case there's a gap up. On the other hand, the candle can pull back to the trend line, or below, at the last minute right before today's close, which would mean we may not have a breakout at all, and we could see a retrace downward tomorrow, in which case, I don't want to be long yet. Also, notice how little volume there was today. This introduces doubt as to the validity of the trend line break. However, yesterday's candle combined with the candle before it form a Bullish Harami pattern, and yesterday closed above the 8ema. This adds confidence the break out is genuine.

So, I decided to wait until 1-2 minutes before the close at 4pm ET and see where price was at. If it looked like we'd close with price clearly above the trend line then I'd get 1 of the 3 lots and leave the buy stop limit on for tomorrow for the other 2, thereby reducing my risk but still have a toe in the water in case AMPY rockets up tomorrow.

As you can see on the chart today's candle did close above the trend line so I changed the buy stop limit order to a limit order at the Ask price and got 100 shares at 7.19 at 3:58:21 ET. I picked the lot with the lowest target price, which is 7.86, and the stop for all 3 lots is 6.75.

We'll see if this was a good idea or a mistake tomorrow.

AMPY Bullish - 1st Video

This is a beautiful Cup and Handle setup. That doesn't mean it'll be profitable, but it sure is a sweet setup. In fact, it was so nice I decided to take a risk and make my first video. Its 15 minutes and explains a lot. Hope you like it:

https://youtu.be/nVoA04Hs-bw

One thing I forgot to mention in the video is that when the first target is hit, I'll move my stop loss to break even.

I smell bacon - Update 7

Another good down day. Since the 14 day stochastics are oversold, down below 20, and the shorter length recent AB=CD terminates around 72, and the previous swing low was 71.90, I raised the target to 72.

I expect to get a bounce there for a few days, and then go lower. So my plan is to capture profits at 72 then look for a pull back and a reversal of that pull back, at which point I'll get back in short.

I smell bacon - Update 6

Both the larger AB=CD projection and the smaller AB=CD projection, as well as the previous swing low, are in a range from about 72 to 71. My target was 71, but if stochastics get to an oversold level below 20%, I may move my target up to 72.

However, the yellow range 161.8% Fib extension and the bottom of the channel are in the 67-68 range. I'm going to keep that in mind too.

Another level of interest, but probably the least influential, is the endpoint of the yellow Head and Shoulders projection at about 70.

Meanwhile, we closed today below yesterday's close on good volume, and stochastics are not yet oversold. This is suggestive of more downside. We'll see what happens next week.

I smell bacon - Update 5

Beautiful chart, don't you think :) Nice big red candle, keeping within my thesis of a down move to about 71 or so.

Looks like we broke out through a Bearish Flag, as drawn on the chart. This and the mid-level stochastics suggest more room to the down side.

Big grains report tomorrow Fri 1/10/20 at 12:00pm. I haven't done a study on if this report effects Lean Hogs, so I don't know if it will, but since I have an option rather than short the futures directly, my exposure is limited to the cost of the options. So, I decided to hold on for now.

I smell bacon - Update 4

Not thrilled we're creeping up, but we rejected off the 8ema and closed under it. In fact, we closed under the 3ema. So I don't see a good reason to sell yet.

We could be forming a Bearish Flag pattern, which is bearish. I'm -$388 under water on the Apr .75 Put, but ya gotta be able to take some heat. So, holding position and looking for 71 target.

TSLA seduced me - Exit

This is a 3 minute zoom-in this afternoon around 2:55pm ET. $500 was my target for TSLA. You can see we got really close then started rolling over, so I walked my offer down on the Feb 450/460 Call spread and finally sold at 6.25.

So profit was 6.25-4.25 = $200 per spread. $200/425=47% gain. Thank you very much!

Mar YM 1/8/20 4 Hour Head & Shoulders

Just noticed Mar YM 4hr Head & Shoulders. Armpit 12/31/19 28341, Head 1/2/20 28893, Armpit 1/6/20 28351, Neckline break last night. We dropped to exactly 50% of projected measured move, which I've observed is sometimes all you get from a H&S breakout. But its interesting.

I smell bacon - Update 3

In the last update price was consolidating up against the channel trend line. I couldn't see an edge to either break out to upside or break down back into the down channel. So I just monitored HE April futures until there was a tip in the balance.

Jan. 3rd there was a doji gap down with further downward price action and closed below the 8ema, and with good volume. The doji gap down pattern is a strong bearish signal. But by the time I first saw the chart a big move was already made. The candle closed on the 50% Fib, so there was a reasonable chance we'd get a bounce back up on the next trading day. So I decided to wait and see how the market opened after the weekend.

When it looked like we were getting a continuation I got a April .75 Put option for 5.90. I have a target when HE futures hits 71, which is at the end point of the AB=CD projection. There is more room after that down to 70 which is a nice round number at the bottom of the previous Head & Shoulders (yellow thick lines), another possible target, and also down to the bottom of the channel at the 161.8% Fib extension of the yellow range around 67.60.

Also have a Stop Loss when HE April futures hit 77.50. Today we hit the 61.8% Fib retracement of the yellow range (78.825-71.90). There's a chance we bounce off of that level, at least for a while. But while I want to have a Stop Loss, I'm not that concerned about the 61.8% Fib because of the strong sell signal and stochastics are in the mid-range with more room to go before being oversold.

TSLA seduced me

Can't believe I went long TSLA the day after we slapped Iran across the face. I was checking a few momo stocks about 10 minutes before the market close. And I saw this chart. It was so beautiful I couldn't help myself. New Year's resolutions be damned.

The angled thick white lines show an AB=CD projection. 

I was taught the current pattern is called a J-hook pattern because that little dip of the past few days is anticipated to be the bottom of a capital J. The J-hook is a bullish pattern, but of course it doesn't always work.

You can see the end point of the AB=CD coincides with the 161.8% Fibonacci extension based on the most recent up leg 327.25 - 435.31. 

The AB=CD and 161.8% Fib both are very close to 500 which is a round number. Round numbers are known to be magnets and levels where important things happen.

TSLA is making new all time highs, so there's no resistance from previous price action. 

I try not to pay attention to fundamentals, and I haven't read or heard anything about why TSLA is rising while so many stocks are lower, but I assume its because oil supply may get constricted due to what's happening with Iran, and therefore electric vehicles will become more popular and maybe even new subsidies might be forthcoming from the government. It doesn't matter and I shouldn't even mention it, but those thoughts added to my seduction.

So after drawing on the chart, realizing all of the above, and seeing there's only about 6 minutes left before the close, I started looking at Call Spreads. Looking at the AB=CD it looks like it'll take about 3 weeks to hit the end point. The Earnings Report is currently expected to be 1/29/20 after the market close, according to EarningsWhispers.com, and I'd want out before that news. The January monthly option expiration is 1/17/20, which is too early. Don't have to worry about the Theta time decay because its a spread. So I looked at the Feb options.

Interestingly the 450/460, 460/470, and 470/480 all cost about $4.00. So why not get the earliest and benefit from more Gamma?

Bottom line, with only a few minutes before the close, I started walking up my offer for the Feb 450/460 spread from the midpoint by 5 cents at a time, about every 15 seconds until $4.25 was accepted. 

I didn't even have time to figure out a Risk:Reward but you could eyeball it was good. I'll figure it out now. 

Assuming the $500 target is hit for TSLA, and I get 90% of the spread, that's (460-450)*90%=9. 

I'd abandon the position if price drops below the bottom of the dip, say 401.50. TSLA price when I got the spread was about 443. The option Delta for the 450 long is .505, and for the 460 short its -.456. So the Delta for the spread is .505-.456=.049. So, (443-401.50)*4.9%=2.

So the reward is 9 and the risk is 2. That's 4.5:1 which is great!

Other than the fundamental fear of the geopolitical scare we just had yesterday, fear of loss, doubt from every good setup that didn't work out, a future bad tweet from Elon Musk or Donald Trump, or some other black swan event, there's no good technical reason not to take this trade. Right?

NFLX due for a dip? Update 7

Was looking at getting Jan 330/340 Call but last nights' news of USA military action against Iran is a game changer. Going to just monitor for now.

NFLX due for a dip? Update 6

Well, now I'm wondering if yesterday's mistake (see update 5) was actually a "Freudian Slip", my subconscious asserting itself by erroneously entering an order that got me out of a bearish position. What I'm trying to say is NFLX turned around and made a bullish signal.

The most recent 3 candles, including today's, makes a Morning Star pattern with a candle close over the 8ema. We also closed a gap shown on the chart and bounced off the 200sma. These are all bullish. The stochastics are higher than I'm comfortable with but they did drop below the 80% overbought level.

The odds now are that price will continue to increase. If that's what happens, there are 3 common ways it can play out.

1) After going higher, price turns over again and heads down before reaching the recent swing high at 338.

2) Price rises to the previous swing high and then turns over and heads lower, forming a double top pattern.

3) Price surpasses the recent swing high and continues.

The second scenario merits some weight because there is a 161.8% Fibonacci level there. Its from the green range 281.12 - 316.83.

I can't say which of these is most likely but the current configuration is bullish enough where its probably worth going long but in a very cautious way. I wouldn't set it and forget it, but taking a small bullish position and maybe adding more when there's confirmation seems like a reasonable course of action.

A target would be the yellow 161.8% Fib extension at 343.93 if we make it past the recent swing high and green 161.8% Fib around 338-339. This also coincides with the AB=CD projection.

This morning's market activity was pretty dynamic with good volume, compared to what's been normal the past several weeks. Hope the markets continue to give us short term traders good volume and volatility.