Expecting WMT Bullish Reversal - Exit

Nov. 24th, 9:32am ET, I Tweeted "Changed my Target for Walmart to 147."

At 9:39am, 7 minutes later, the 147 target was hit. The high of the day on 11/24/21 was 147.06.

Today there was crazy market action on Covid news. The WMT high was 147.88, then dropped and closed below the 8ema.

So basically, we nailed it.

Summary:

11/17/21 Bought a December 17th 145/150 Call Spread for $0.95.

11/18/21  Bought another December 17th 145/150 Call Spread for $1.15.

11/24/21 Sold all the options at $2.23.

Profits:

223-95=128

223-115=108

128+108=$236

Expecting WMT Bullish Reversal - Update 5

Another good day for our bullish position. We didn't make a candlestick pattern but we did close over the 8ema. And we closed very close to the high of the day. Stochastics are mid-range, so not a factor. Volume was a tad lighter but we are nearing Thanksgiving in the USA.

The ADX DI- and DI+ are getting close to crossing. If we can close a trading day with the DI+ over the DI-, that would be a nice Bullish indication.

All in all, we still have a very Bullish looking chart.

Our next big challenge is the 20DMA (Daily Simple Moving Average). Its the thick, green, squiggly line (We currently topped out today at the 20ema.). Its very close to the 61.8% Fibonacci retracement level of the yellow range. This confluence is also coincident with a previous swing low at 147.39 on 10/27/21. And more recently, the yellow 61.8% Fib provided 3 days of support.

Because of this confluence, I'm expecting a temporary pullback from the 147-148 area. Due to that, plus this Thursday 11/25/21 starts a 4 day period of either very light volume or closed markets, I'm seriously thinking about exiting the position if price hits 147. This would lock in our current profits in a very sketchy market environment, and we can always get back in.

Expecting WMT Bullish Reversal - Update 4

'Twas a good day for our bullish position. We got a larger than usual candle, based on the passed several days. And we got it on higher volume than the past 2 trading days.

We came very close to closing over the 8ema but price pulled back near the close. Still, we closed very near the high of the day, and above the 50 DMA (Daily Simple Moving Average).

Stochastics are up off the bottom now, but still quite low. So we have a long way to go before worrying about being overbought.

All of the above are bullish, but we did not make a valid candlestick pattern today. That plus the fact we couldn't close above the 8ema is a concern. But I'd say the Bulls definitely won the day. We should definitely hold our position.

I added the thick, white, angled lines to the chart to show the possible AB=CD target.

Expecting WMT Bullish Reversal - Update 3

Normally I include targets in my posts but I haven't yet on this one. I'm really not sure yet but I do see some possible targets. Here they are in ascending order:

• 145.11) 38.2% Fib of the yellow range.
• 146.43) 50% Fib of the yellow range.
• 147.74) 61.8% Fib of the yellow range.
• 149.61) 78.6% Fib of the yellow range.
• 151.90) Trend line.
• 155.03) 127.2% Fib of the yellow range.
• 156.71) 127.2% Fib of the green range.
• 158.16) AB=CD 140.86+(152.00-134.70)
• 158.88) 161.8% Fib of the yellow range.
• 162.69) 161.8% Fib of the green range.

Of course, none of these are guaranteed. We could start tanking on Monday. But if I hazard a guess now, I'd say the confluence of the AB=CD at 158.16 and the 161.8% Fib at 158.88 looks good.

In addition to the confluence, if price is making a swing low here, then we're reversing in the middle of the channel we're in rather than the bottom of the channel. That would be Bullish.

Also, Stochastics are still oversold. So we have a long runway to the upside based on that. And, it has a slight upward slope over the past couple days. In fact, you'll notice while the Stochastics are sloping upward the past couple days, the candle lows are sloped downwards. That's a Positive Stochastics Divergence, which is very Bullish.

And on a fundamental basis, which I try to ignore, Walmart's quarterly Earnings Report on 11/16/21 was considered very good and analysts were surprised the stock went down. I'd guess it was a Wall Street manipulation to fill the gap. Also, I think the strong inflation we obviously have will increase traffic to Walmart for quite some time. If these fundamental reasons are true, they'll provide a tailwind to Walmart's stock.

But, I'm not confident at all about a target at this point, just an opinion we're heading higher based on technical analysis. This being the case, I picked a price range for a Vertical Call Spread that I thought would be within the up leg I think we're starting, and had an expiration date that gives us enough time for the price action to reach its swing high, far enough in the future to limit the Theta time decay, yet not so far as to limit the Gamma. As you know from the original post in this thread, I picked the December 145/150 for about $1.00 each.

Soon as I bought the options, I entered an order to sell them at $4.95, which represents the maximum valuation of the spread other than holding to expiration. 

So, the bottom line is we don't need an exact target on this particular trade, at least the way I'm trading it. We just need WMT to rise high enough over 150 such that the option spread reaches a valuation of $4.95.

Expecting WMT Bullish Reversal - Update 2

Today's Daily chart is actually more interesting than it looks. First thing to notice is we opened gapped up. If Stochastics were high, this might be considered an Exhaustion Gap, which would be Bearish. However, Stochastics are still oversold, which gives a Bullish connotation to the gap up, because it shows enthusiastic buying at this price level.

Then you notice the candle went down and closed near its low, forming a Dark Cloud Cover candlestick pattern. This is a Bearish pattern, however given the oversold condition, the pattern's importance is greatly diminished.

Filling the gap that we made this morning is a good thing, in my opinion. Why?  Conventional wisdom says all gaps get filled, sooner or later. If you look at any heavily traded security, you'll see its true to a large extent. So, when a gap is made, and left open as price action continues away from it, I imagine there's a "gap fill pressure" that can slow down and reverse the price action to come back and fill the gap. That's just a fictitious mental construct on my part, but it adds a factor to my decision making. My point is that we won't have any "gap fill pressure" going forward since we immediately filled that gap today. 

Another thing to notice is we bounced off the 50 DMA (Daily Simple Moving Average). Looking backwards on the chart you can see WMT doesn't give the 50 DMA much respect, so I wouldn't give this much weight.

Also, today's candle body stayed within the 143.66 - 142.01 gap from Oct. 19th. This suggests to me that the fact we formed a down candle and a Dark Cloud Cover pattern may not be significant.

Finally, notice we didn't go below the bottom of our 3 supports and didn't make a new swing low. This is Bullish.

So, given all of the above, plus we're in a Bullish season of the year, and we have a Full Moon tonight (there is much research, including my own, that shows a high correlation between Full and New moons and the equity indexes), leads me to hold our Bullish position over the weekend.

Expecting WMT Bullish Reversal - Update 1

We hit and reversed off of all 3 support levels I called out yesterday. Doesn't mean we won't plummet to new lows tomorrow, but I think the odds are for more upside.

Yesterday's WMT open was 143.16. Today's close is also 143.16. That means today's green candle body on the Daily chart above fits within yesterday's red candle body. That means we formed a Bullish Harami candlestick pattern.

So, I Tweeted today at 15:52 ET that I got another WMT Dec 145/150 Call Spread for $1.15. 

Expecting WMT Bullish Reversal

Expecting Walmart (WMT) stock to do a Bullish reversal due to multiple coincident sources of support:

• .618 Fibonacci at 141.32
• Gap fill at 142.01
• 200sma 141.32
• All the above are with oversold Stochastics

So I got a December 17th 145/150 Call Spread for $0.95. Assuming full value at exit, the vertical option spread will worth close to $5.

So the Risk:Reward is about 5/.95 = R:R = 1:5, which is fantastic.

I expect to add more spreads when the price action shows the reversal has begun.

Christmas Wheat Reversing on Ag News - Exit

This morning 7:26am ET I Tweeted that I exited the trade at 810 1/8 based on an Inverted Scoop pattern on the 5 minute chart. See the top chart above. As you know from the other posts in this thread, I was looking to get out today by the Close due to a wheat related report that was scheduled for release after the grains market closed.

In the morning, price was heading down and looking serious about it. I was watching the paper profits dwindling away, not knowing or having any indication whether we would continue down all day. So I went down to the 5 minute chart and watched for a pattern or some indication about where the market was headed for the rest of the day.

Then I saw an Inverted Scoop pattern develop and trigger to the down side. See the red oval on the top chart above. So, the most reasonable thing to do was exit before more damage was done.

Of course, after the 9:30am ET Open, price started back up and hit a high of 826 3/4, which is about 5 points away from our Target of 832. See the bottom Daily chart above. That Target may well be hit the first day of trading next week. I thought about chasing wheat back up today, but that could have turned out badly and erased the profit we already realized. I decided to go trade other things.

All in all, can't complain about this trade. Price behaved exactly as anticipated overall and we made a good profit. Of course, I wish price had moved a little faster and there was no Ag report today. But a perfect trade is rare.

Summary:

Entry: 780 5/8, 11/9/21

Exit: 810 1/8, 11/12/21

Profit: 810 1/8 - 780 5/8 = 29.5 points * $10/pt = $295.

If we used the full size contract, profit would have been 29.5 * $50/pt = $1,475.

Christmas Wheat Reversing on Ag News - Update 2

Another good day for our long position. In fact, today's high was 824 3/4, which is getting close to our target of 832.

At 10:03am ET this morning, I Tweeted that we moved our Stop to break even at 782. We're at a point now, that if we fall that far, something is curiously wrong, and we'll probably want to be out of this trade.

Today's high was stretched out pretty far from the 8ema, and even from the 3ema. That, plus possible resistance from the 127.2% Fibonacci extension of the yellow range, made the pull back to about the halfway point of today's candle, unsurprising. 

We got a nice volume spike today after yesterday's increase in volume, which may indicate Dec Wheat is getting increasing attention. If the attention is coming predominantly from Bulls, then that's a good thing. The fact we closed in the middle of today's candle tells us the Bears aren't yet dominating, and this uptrend is most likely not yet over.

As I mentioned in yesterday's post, I want to be out of this trade before the close tomorrow at 14:20. So, I entered a conditional order to sell our position at 14:14:14 tomorrow, Friday (just having some fun with the time). It would be preferable if we exit due to hitting our target rather than timing out. If we get another  green candle of today's size, or yesterday's size, or even Tuesday's size, we'll hit our target. That's the goal.

Christmas Wheat Reversing on Ag News - Update 1

Great day in the wheat fields. We created a bigger candle than yesterday on higher volume with a close very close to the high of the day.

When looking at the chart, please focus on the green annotations and the yellow Fibonacci range on the right side of the chart.

Stochastics are not yet overbought, so no pressure there. We gapped up on the open but filled the gap in, so no pressure to fill the gap.

If we exceed the previous swing high at 807, then we may attract break out and momentum traders, which will add a tail wind to our long position.

I thought about moving our Stop to break even but it would be too close to the 8ema, and our original Stop. I'd hate to have a temporary pull back overnight, hit break even, then take off to the upside. Its happened to me plenty of times in the past. So I didn't move the Stop yet.

I'm concerned about a possible rejection off the previous swing high at 807, which could create a Double Top. But, judging from the strength we're seeing, I think the odds are that we'll breach the 807 level with a mild to no reaction, then continue for a higher close on the day tomorrow.

There's a monthly report named "Wheat Outlook: November 2021" due out this Friday 11/12/21 at 15:00 ET. I don't have any intelligence on how likely this report is to move the market, so I'm thinking I want to exit this position by Friday's 14:20 close. This would avoid the risk of the report as well as weekend risk.

Bottom line; we're looking good at the moment.

Christmas Wheat Reversing on Ag News

Agricultural reports today were bullish for wheat. By the end of the day for grain futures, 14:20 ET, I observed the forming of a Morning Star candlestick pattern and a close over the 8ema. This was on substantial volume in a general up trend. 

When looking at the chart, focus on the green annotations and the yellow Fibonacci range on the right side of the chart.

I see 3 good candidates for targets:

• Confluence of the 27.2% Fibonacci of the green range (832.59) and the 161.8% extension of the yellow range (834.5). 
• AB=CD (856.75)
• 61.8% Fibonacci extension of the green range (865.25).

Starting with the most conservative target of 832. Using a Stop just under the swing low we just made. Specifically 761.

Summary:

Entry: 780 5/8

Stop: 761

Target: 832

Risk: 761 - 780 5/8 = -19.625

Reward: 832 - 780 5/8 = 51.375

R:R = 51.375/19.625 = 1:2.6, which is great.

Short Term Short Christmas Corn - Exit

Didn't expect "Short Term" in the title to be this short. There were Agricultural Reports that came out today that referenced the grains.

Unfortunately for our trade, they came in bullish. You can see on the Daily chart above price started upward, but finally settled down under the 8ema. Technically, since we closed under the 8ema, we should have held the position. But we're also bouncing off the 20sma.

Bottom line is I lost confidence in this trade, and remembering the old adage "I'd rather be out wishing I was in, than in and wishing I was out", I just looked for the exit.

Net:

Entered: 553 1/8

Exit: 554 3/8

Loss: 553 1/8 - 554 3/8 = -1.25 * $10/pt = -$12.50

P.S. At the market close, wheat was looking strong, so I went long. See next post.

Short Term Short Christmas Corn

On the Daily chart above, of December Corn futures, I noticed the following:

• Completed AB/CD
• Bearish Harami candlestick pattern
• Bounce off Trend Line
• High Stochastics
• Close below 8ema & continuation

So, I entered a short position using the YC mini-contract at $10/point, rather than the ZC contract at $50/pt. 

Set the Target to the 61.8% Fibonacci retracement at 531 1/4. Actual Target will shade the mathematical Target by a little to account for slippage and Bid/Ask Spread.

Used a Stop just above the high of the second candle back, that also gives close to a 1:1 risk:reward ratio. A better Stop would be just above the previous swing high at 586, which is also coincident with the downward angled Trend Line (thin white line). But that would give a terrible risk:reward and I'm concerned we may get a bounce off the 20sma (green).

Summary:

Entered: 11/5/2021 14:15 ET at 553 1/8.

Stop: 573

Target: 532

Risk: 553 1/8 - 573 = 19 7/8

Reward: 553 1/8 - 532 = 21 1/8

R:R = 21.125/19.875 = 1:1.06 not great but acceptable.