XLE Re-entry - Update 3

XLE Daily

Now the buy/sell/hold decision is getting harder. We had a significant down day on decent volume. Today's and yesterday's candles formed a Left/Right Combo candlestick pattern. Stochastics are still high and there's still a tiny little gap below us. It's not unusual at all for a breakout to do a small reversal and test the breakout level, or in this case, the Trend Line. These can indicate a bearish move of about 3 points or so, down to the Trend Line, which is coincident with the tiny gap.

On the other hand, we found support at the 50sma and 8ema, which happen to be coincident today. This could suggest a reversal tomorrow and continuation with the up trend.

It seems like a 50/50 bet from here. But since we're in an uptrend, and we found support, and not closed below the 8ema, I decided to hold the position.

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.

JNJ No Tears Gartley Pattern - Exit

JNJ Daily at 9:46am ET

We opened gap up, then started to fill in the gap, but reversed back upward before even filling half the gap. This is quite Bullish, but there's a scheduled testimony by Federal Reserve Chairman Powell at 10:00am ET. That, plus the fact we're struggling a bit at the 50sma, led me to sell our position at 178.22, which is very close to the 179 Target.

At 9:47am ET I Tweeted:

"Sold the GARTLEY pattern near the 179 Target on JNJ. Want to be out before 10am ET Powell testimony."

The .618AD Target at 179.27 was subsequently hit 14:23 ET.

This has been a beautiful textbook trade. Everything worked as it should with very little heat or gray areas.

Summary:

Bought JNJ Aug 175 Call for 3.52 6/14/22

Sold for 7.95 6/23/22

795 - 352 = $443 profit.

795/352 = 226% increase.

443/352 = 126% return.

ZIM Zooming Down - Update 3

ZIM Daily 6/13/2022

Today we opened gap down then retraced to fill in most of the gap. But today's price action was so bearish, we headed back down before we could fill the full gap.

We ended the day with a Doji candle but near the bottom of the range. Today's low was 47.68. The previous swing low (our B point in the AB=CD) was 48.21, which means we confirmed the AB=CD pattern by surpassing the B point. This is encouraging for our trade.

But, take a look at the Stochastics panel on the bottom of the chart. It is definitely oversold now (under 20). This is a concern as it provides a kind of pressure to reverse the price action. When Stochastics are oversold, I start looking for the next likely support level. I see it as the 61.8% Fibonacci level, which also coincides with a previous swing low on 10/6/21 at 42.14. The 61.8% Fib can be calculated as:

A-.618(A-X) = 91.23-.618(91.23-11.34) = 41.86

So, I changed the target for the new July 40 Put option to 42.50, which shades the previous swing low of 42.14 to account for slippage, Bid/Ask spread, and premature buying pressure.

Given the strong momentum of the current down leg, characterized by gaps and relatively long candles, I'd expect we'll ultimately get down near our original target at 29. However, it seems likely we'll get a bounce before then. I'd rather exit and re-enter later than ride out the bounce.

Also, there is a potentially big market moving event this Wed. 6/14/22 at 14:00 ET. The FOMC rate decision. It would be great to capture profits and be out of the market before then. That's a supporting reason to raise our target.

ZIM Zooming Down

ZIM Daily

Shorted stock ZIM this afternoon by buying a July 55 Put for $3.20. Quarterly Earnings is 8/17/22 before the market opens. I Tweeted this out at 15:39 ET.

Here's why I'm bearish:

• Kicker candlestick pattern
• Blue ice failure
• Negative Stochastics Divergence
• Close below 8ema,200sma
• High volume, Big bar
• AB/CD

A Kicker pattern is when you have 2 candles separated by a gap and facing different directions (Up and Down).

Blue Ice Failure I learned from Steven Bigalow in candlestickforum.com. Its when price comes up from below the 50sma, breaks through it but can't hold it, and falls back through the 50sma. Steve uses blue for his 50sma while I use red. That's why he calls it Blue Ice Failure.

To see the NSD, look at the downward angled thick, white, line segment in the Stochastics panel at the bottom of the chart. Then see the upward thick, white, line segment on the price chart directly above. Price was heading up while Stochastics was heading down in the same time period. That's Negative Stochastics Divergence and a bearish indication.

The AB/CD pattern has not been confirmed yet because it hasn't closed below the B point at 48.21. So I did get in early but I figured it was a reasonable decision thanks to all the other bearish indications. The measured move for where to expect price to go is the D point where AB=CD, which can be calculated by D=C-(A-B)=71.40-(91.23-48.21)=28.38.

The calculated D point coincides with the 78.6% retracement at A-.786XA=91.23-.786(91.23-11.34)=28.44. So this area makes a good target.

Also, if we get to the target, then we will have set up a Gartley pattern. So the Target is a great place to reverse our position.

Summary:

Entered 6/8/2022 15:13 ET, ZIM=58.91, Bought July 55 Put for $3.20

Target 29 (which is shaded a little to account for slippage, bid/ask spread, and an early completion)

Stop is just above the Kicker at ZIM=70

Using the stock to calculate the risk:reward ratio:

Risk = 58.91 - 70 = -11.09

Reward = 58.91 - 29 = 29.91

R:R = 29.91/11.09 = 2.70 which is great.

July Corn Possibly About To Pop - Update 6

Sent this Tweet 9:34am ET

Sent this Tweet 14:10 ET

July Corn 15 min Close

Leading up to the Corn market open (9:30am ET), and after, the price action was bouncing between the bottom of the Gap and the 38.2% Fibonacci retracement level from the Daily chart. Its Bullish that we're getting strong support, but on the other hand, we don't have enough strength to break out up through the Gap. So its hard to have any conviction which way we break out of this range.

You can see above where I sent out a Tweet just after the Open that we raised the Stop to just under the swing low at the Gap bottom. That held all day. Nearing the end of the day, and the week, I wanted to exit if we saw any weakness. If we didn't see weakness then I want to stay in the trade over the weekend, thinking we'll continue the previous uptrend.

So, I used the existing Stop as a determinant of weakness. The Stop wasn't hit, so we're still long this trade. 

July Corn Possibly About To Pop - Update 4

We got a gap fill exactly as I've been talking about. In fact it was even better than I planned for because it filled the whole gap. I entered the limit order 2 points shy of the full gap because gaps sometimes "mostly" fill rather than completely fill.

I sent these Tweets this morning as it was happening.

9:52am ET

9:59am

10:10am

By the end of the day, the 5 minute chart looked like this:

July Corn 5 min

Notice how we hugged the bottom of the gap all day once we reached it, even though the world was selling off around us today. Also notice the big bullish volume bar at the very end of the day and we closed above the 8ema, 20sma, and 50sma. There is also a possible Bollinger Band/Keltner Channel breakout pending. These suggest we'll drift upward from here. And like Louise Yamada says "The longer the base, the higher in space".

So, bottom line, we're back in this long trade:

Entered: 785

Stop: 768

Target: 860

July Corn Possibly About To Pop - Update 3

July Corn Daily

Haven't given up yet. The candles for today and yesterday form an encouraging candlestick pattern called a Bearish Harami. I say encouraging because I want to get back down to fill the gap and catch our limit buy order waiting at 785. Then we can head back up and go for the ride.

Tomorrow's candle could be important, if we don't just drift sideways. If we get a bullish candle tomorrow, I'll probably give up on this trade.

July Corn Possibly About To Pop - Update 2

July Corn Daily

July Corn 15 minute

July Corn futures came down to 792 3/4 after the gap up before heading back up, just missing our 792 limit order to get back in Long after the weekend. It drifted upward from there.

Now expecting a retrace down to 783 to fill the gap and bounce off support. See 15 minute chart (bottom chart above).

Changed our limit buy order to 785. Stop (768) and Target (860) are the same. If we get too close to the Target, I'll have to cancel the buy order.

So, in trying to protect against a big loss from a gap down, we missed the whole trade due to a gap up. No joy in Cornville.