Bullish Jan 2023 Beans - Update 1

Jan Soybeans Daily (yellow annotations)

We had a very nice Bullish day. Got a higher high and higher low. Formed something close to a Doji Sandwich candlestick pattern, which is Bullish. Closed very close but slightly higher (1649 1/2) than the previous swing high (1469). We had strong volume, and higher volume than yesterday. BB/KC continues towards a break out.

Only thing that gives me pause is that Stochastics are overbought (>80).

We definitely want to stay in this trade.

Bullish Jan 2023 Beans

Jan 2023 Soybeans Daily Chart

Went long January Soybeans with a Jan 1450/1460 Call Spread for 5 1/8. Multiplier is $50/pt, so cost was 5 1/8 * $50/pt = $256.25. Today's bean close was 1459 1/2, which means our Call spread is very close to 100% intrinsic value. If the futures price stays over 1460, we'll see the valuation of the option spread widen out from 5 1/8 to 10, which would double our investment. It'll widen out because the time value of the long option will wane as we get closer to expiration on 12/23/2022.

See the yellow annotations on the chart above.

Went long because I see:

• Flag pattern break out.
• Scoop pattern about to break out.
• Bollinger Band/Keltner Channel squeeze about to break out.
• Left/Right Combo candlestick pattern.
• Close above the 8ema, with continuation today.
• High up volume.
• Above all Moving Averages.
• No Grain Reports for at least 1 week.

Soon as the order was filled, which was 14:18 ET, 2 minutes before the grain futures market closed, I entered a sell order for 9 3/4.

The expected bullish move of the Jan Soybean futures price is the D point of the AB=CD pattern (see thick yellow angled lines). D can be calculated from 1406.75 + (1469 - 1366.75) = 1509. This is very close to, but just shy of, the previous swing high of 1512.25.

Summary:

Entry: 1459.

Target: 1509.

Stop: not necessary because our risk is fixed and affordable, thanks to the option spread.

Risk: 256.25

Reward: (9 3/4 - 5 1/8) * 50 = 231.25

R:R = 1:1 which doesn't sound great but expect this a high probability setup.

Amazon Bullish Kicker - Exit

AMZN 1 day 14:15 ET

AMZN 3 min 14:15 ET

While I still think we'll get up to at least 109 (top of the gap), I got out today when AMZN was 100.60 (see my 2:19pm ET Tweet) because there is possibly significant resistance at about 100.25 - 100.50 due to:

• Previous double bottom lows at 101.26 and 101.43
• 20 ema
• 100 price round number

Also, its Friday and there are many possible headline risks over the weekend. I think its better to exit with a profit and look to re-enter on a dip.

On the other hand, its possible AMZN will gap up on Monday and run up to the Target, giving no good entry point. If so, then we missed it. So what, there will be plenty of trade opportunities next week. Its better to protect your capital and take a profit, than take a significant risk of a loss when you clearly see possible resistance. Holding over the weekend is very different than monitoring a trade in real time.

Besides, I'd rather be out wishing I was in than be in and wishing I was out.

Result for now:

AMZN Nov 100/105 Call Vertical Bought 1.18, Sold 1.90

190 - 118 = $72 profit per contract

(190-118)/118=61% gain

Amazon Bullish Kicker

 

I should wait until the end of the day to enter this trade, but the market momentum for today is very strong. So it seems very unlikely the technical setup will not be in pace at the Close. The market gapped up today on the CPI inflation report that indicates inflation is easing. I think this sentiment is premature, but I think it'll last long enough to hit our Target.

AMZN is showing the following on the Daily chart above:

• Kicker candlestick pattern
• Bounce off the 127.2% Fibonacci level
• Low stochastics
• Likely Close above the 8ema

The Target is the top of the 109.77 - 104.87 gap. Bought AMZN Nov 100/105 Call Vertical option spread for 1.18 at 12pm ET today. The close proximity of the 11/18/22 expiration date will help with the "fuller" valuation of the spread than a later dated expiration. The spread will help mitigate the high Theta time decay.