GOOG In-Trend Short Update 1

Tough call. Very tough call. The Put option ended the day down -$666. Represents a lot of heat, in more ways than one. Do I sell or do I stay? Here's my thinking:

Notice the low of the last 4 candles. They were all within 77 cents of $1031. That seems remarkable. You might conclude there's some very hard support at 1031. Also 1031 is very close to the 61.8% Fib from the most recent upswing, which could be helping with the support. Today closed over the 8ema on slightly higher volume with a sizable candle. Looks like the DMI+ green line is about to cross over the DMI- red line, which usually is coincident with a pop in price (in my opinion). The 10/29/18 low coincides with the 3/28/18 low, which could provide support and result in a double bottom pattern. Together these make a reasonable case to get out of the trade and preserve what value is left in the option.

On the other hand, notice the bottom of today's candle body (the open), is slightly higher than than the bottom of yesterday's candle body (the close). Technically this means we do not have a valid engulfing candlestick pattern, which means we don't have a candlestick buy signal. Today's candle closed right under the 20sma and a trend line that it recently broke to the downside. This could be just a retest of that trend line. The 20sma often acts as resistance. Today's candle close is very close to half the retracement of the most recent down swing, which is a very typical retracement before resuming the current trend. The dominant trend, which you can see in the previous post, is decidedly down. Stochastics have not been oversold for many days. There could be some price movement today due to options expiration day tomorrow. Together these points introduce serious doubt whether getting out today is the best idea. It could lead to missing a gap down day tomorrow.

The big picture is we've been in a consolidation phase since about 10/30/18, after a respectable down trend. You'd have to say the momentum is currently to the downside, which means the breakout of the consolidation is more likely to be to the downside.

So, after considering all of the above, I decided to hold it overnight and see the degree of follow through to the upside tomorrow, if any. This isn't the price action I was expecting to see, but you just have to play the cards you're dealt the best you can.

GOOG In-Trend Short

Bearish Harami. Close under 8ema. Under all DMA's. Stochastics not oversold yet. Broke short term Trend Line (Flag). Cooperative Ichimoku chart.

Target previous support 988. More conservative target could be 1000 swing low
& round number.

Got a GOOG Dec 1000 Put at 3:46pm ET for $23.50. Set a target of 1001. Used 1001 instead of 1000 in case of an early bounce.

Notice the Option Open Interest is the highest (2.62K) for the 1000 strike price. Guess I'm not the only one with this bearish view of GOOG. Notice Theta shows a daily loss of about $48 in time decay. I thought about getting a vertical spread to save on Theta and reduce the value at risk, but the Bid/Ask spread isn't very attractive and the spread will have a significantly lower Delta which will substantially cut into potential profits. So I just got a simple option since the bearish chart pattern looks so good. The faster it hits my target the more I save on Theta loss, but I'll be happy if it hits my target at all, rather than a deviant rally.

AAPL Head & Shoulders short exit

Well, I expected the trade to last more than one day, but I'm out with a nice profit. The target was the 200 DMA which I estimated would be about 194 when price hit it. This morning when the stock price broke 195 around 10:40am ET I started micro-managing the trade on the 3 minute chart.

Price hit a swing low at 194.32 and started creeping up. It looked like a bottom was forming, at least on the 3 minute chart, plus around 10:30am ET is often a market reversal time, and we were overdue at 11:00am when price pierced the 3 minute 8 EMA. So, to risk staying in for another few pennies of profit on the option, literally a few pennies, versus capturing a sizable profit very close to my target, didn't seem like a good risk/reward.

So I sold the AAPL Dec 195 Put for $7.45. With a cost yesterday of $3.20, that's a profit of $425 per option, or a 133% gain. Not bad.

AAPL Head & Shoulders short

11/9/18: Head and Shoulders neckline break followed by a retest of the neckline. Couldn't close over the 8ema and gapped down. Thick white vertical line is the Head and Shoulders expected measured move. Thin white horizontal line is half the measured move, which is sometimes the extent of the move. But the 200dma is just under that, so make the 200dma the target, around 194.

Got AAPL Dec 195 Puts at $3.20.

ULTA looking bearish Update Final

Boom! Out at 9:31 at $9.40. Had entered the Feb 230/210 Put spreads at 5.41, so that's $940-541=$399 profit per contract, or 399/541=74% increase, woot!

Looks like steak tonight. So nice when something works.

ULTA looking bearish Update 5

We got a very constructive candle today. Nice big red bar with a close below the 8ema and 50sma, and near the bottom of the bar. In fact, the low was only $2 over our target. Close enough to tempt me to get out with a nice profit, but I fought the urge and held on. It looks very likely we'll hit the target tomorrow.

Looking forward to the market open.

ULTA looking bearish Update 4

Yesterday started with a nice downward drive and looked like we might hit our 219 target, but then it retraced and closed just above the 50sma. In addition to that uncertainty, the candle closed as a doji, which symbolizes uncertainty.

We're still below the 8ema and stochastics are above 20%, so we want to hold our short position. In addition, the little bounce we had the past three days and yesterday's slight break below it sets up a possible AB/CD lightening bolt pattern. I added the yellow bold vertical line segments as the projected measured move. The thin horizontal yellow line is half the measured move, which I find is more reliable than the full measured move. Notice the halfway point of the AB/CD measured move is very close to our target of 219 which we established from the white line segments based on the Head & Shoulders pattern and the 50% Fibonacci level. This confluence adds confidence to the target level.