Market Update 10/14/18

After closing the short position that I have been holding for more than a month on Thursday, my plan was to stay flat for couple days with limited % stock positions hedged with SPY until I see clear directional signs.

And it wasn’t a too long wait, as the Friday closing gave me the hints for next week.

S&P Daily

So if the option 1 described on Thursday as 270 level  being a mid term pivot point is progressing, we still have a week to hang around with in + – 1 point of the Thursday’s bottom through this week, slowly form a bottom and go higher from there in the following week. So this is the really the best bullish scenario it may possibly fold in my opinion.

A higher opening or testing 279 levels would be really ideal to re-open short position again to capture a 3% drop in week. I will not go as heavy short as I was in the beginning of this fall but I plan to short with SPXU and SPY puts for Friday if SPY reaches to 279 level in the beginning of the week.

On the other side, I am still not convinced that 270 level is going to be kept as bottom yet and equally weighing on the option 2 described on Thursday also. A Closing below 269 may trigger another sharp sell to 260 easily.

So in either scenarios, I think the down side risks are still higher for this week. I expect SPY to reach 271 range again as a minimum requirement and that’s why my intentions will be on the short side this week. 

On a lower opening I will slowly add short position with SPXU only. If SPY can able to make one more run above 277, i am planning to activate puts for 10/19.

I have about total of 25% stock positions on MU, LRCX, TEVA, HBM, FIT, BABA, BMY and AFMD which are hedged by SPY.

There is absolutely no need to rush or go aggressive on any stocks in this kind of environment and please consider the risk management as the most important parameter in these days..

 

 

 

 

 

Market Update 10/11/18

Let’s start by taking a quick look at my 9/4/18 sharing acknowledging a pull-back to 270-275 range.

Market Update 9/4/18

Today S&P reached the price target which I have been acknowledging since 9/4 but the today’s move in the first 1 hour didn’t allow me to maximize the final 2% of the drop and I accept it as it is ok in this kind of environment.

In yesterday’s session, I shared my strategy for today. After the closing, I have reevaluated, questioned again and again based on the detected pattern matches. I honestly think that the strategy was right and execution was also right but the daily move was just different than what I have expected.

In the pre-market I have detected a bearish pattern and wanted to wait couple minutes to close the short position to give little time if the market goes down directly.  As the price passed the opening level, I closed 2/3 of the SPXU and all the puts to lock the profits and as the market tend to continue up I cover the remaining SPXU position and go flat after a month long short journey!

After closing a 210% short position exposure in addition with puts, I opened up 10% long UPRO position expecting a doji or positive closing and a single day bounce for short term but had to close it with limited loss in the afternoon when the morning floor didn’t seem to hold.  This was only an unnecessary move after acknowledging that I am done for the day. (Noted for a future reference)

Without taking any index position, I have also activated a few puts for tomorrow to capture a potential meltdown if happens with a small exposure and low risk reward ratio.

I have  also initiated small stock positions about only 2-3% each on MU, LRCX, TEVA, HBM, FIT, BABA and AFMD.

I just wanted to begin acknowledging what my thought were on today’s actions. Now what to expect next?

SPY Daily 10-11

Although in the morning the price movement was leaning toward the Scenario 1 which I described yesterday, I have eliminated this option with today’s closing..

While the option 2 remains the same with above target in the daily chart, option 1 changes as below;

Today was it!!! The max target was 270.

270.36 is hit with strong bounce.

Correction is over a new wave up to new highs can start!

I am just not convinced yet because of this super high pace and I need minimum couple more days to see from here. I may add slowly to the above stocks while hedging with SPY until market stabilizes and this option gains more floor.

Option 2 chances are increased in my opinion and another negative day below 270 can turn things really ugly. The price can reach the Jan lows in couple days in this case.

I wish I had a higher visibility at this point but I believe the market will clarify and give good direction in couple days to us. One good thing is, I believe at least the boring and choppy side ways is not coming 🙂

Please keep in mind that the conditions at the moment are still very fragile and the most important thing is adjusting the % of  exposure and having risk management in this environment until there is higher clarity.

Thank you for all who have valued my sharings!  I appreciated.

 

 

 

 

 

Market Update 10/10/18

Today was the day for the harvest! 

From the times that I was sharing all my trade entry and exits along with my portfolio performance, my fellow followers know that I aim to have a balanced portfolio.  While turning short on the index at various times, I tend to keep some of the good companies at some %’s  incase if I am wrong on the direction. This time it was different!

Acknowledging the price target of 270-275  range weeks ago, I turned to short position couple weeks earlier and got in absolute short position on 10/2 with various puts and SPXU . In the previous session, I have acknowledged my portfolio as below.

I am short on SPY with SPXU and SPY 10/3 291 puts.

I am short on ROKU, CRM, DHR, GPRO, SNA, FAST, TXT, HRS, XYL, JEC with 10/19 puts

Congrats to all who were able to hold the short position until this point

I closed the ROKU, CRM and SNA puts just yesterday with good profits while missing today’s action… (well sometimes it is hard to maximize all)

I closed % of my  287 10/12 SPY puts and portion of the SPXU position around 280.4 range today and still holding 70% of SPXU position equivalent to 210% short SPY with various SPY puts.

I have also closed HRS and GPRO short positions towards the end of the day today and activated RTN puts in the morning and added to my JEC puts position.

Overall with all these pure short positon and puts this wave was a remarkable one that I will remember for sure and this may not be the end!

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Lets take a look at how this wave is progressing!

On October 8th I sent below twits for Tuesday;

https://stocktwits.com/pattern_based_trading/message/140547976

acknowledging a fast move to 283.5 level coming. There were two possible scenarios at that time decline to 283.5 bounce and go side ways as discussed on 10/2 session, or continuation to 270-275 level directly.

Yesterday’s closing provided a higher degree clarity and I have acknowledged this with the below twit

The way it was progressing was aligning with a straight fall to 275 target with a weak resistance at 280ish,

When we reach this support level, I reduced % of puts and little bit of my SPXU position. But the support was weaker than I was expecting and the market continued to melt down

How is this going to shape the new pattern is it over or going to deepen? 

Now I have captured 2 new alignments for this faster than expected move! For me the pace is a very important factor and today was too fast to align with 1-2 week 270-275 target and reverse! Below are the 2 new scenarios I can tell and my strategy.

Option 1: Lower opening, testing 275-276 range and strong 1-2 day bounce back to 284-285! and choppy side ways. 1 day up 1 day down move between 280-285 and reach 290 in couple weeks and down again around 270-275 to end this correction.

Option 2: Lower opening and continue down, accelerate below 270 to lower than January lows.  With the pace I am seeing this is not a very low chance any more!

We have to be really cautious below 270. Although I still want to say that Option 1 has higher chance of occurring, today’s move has increased the chances for Option 2 as well. (similar to August 2015!)

So what will be my strategy? How am I going to play this?

On a lower opening ideally close to 276 range, I will close 1/2 of my SPXU position and SPY puts to lock the profits.

Key fact for tomorrow is, I think in the market will continue in the direction that it goes in the first 1-2 hours. If I see a negative start turning to positive I will cover all shorts and go flat. ( I don’t have any appetite for going long at this point, I plan to stay flat and enjoy the profits of this wave and enter index position again after tomorrow or 1-2 days

If market continues going down after a gap down opening, I will hold the remaining 35% SPXU position and add puts ideally below 270 for a potential melt down (it would be difficult to add there really 🙂

I am short on SPY with SPXU (70%) and various 10/12 and 10/19 puts

I am short on RTN, JEC, TXT, XYL, FAST with 10/19 puts.

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I have been debating to dedicate my time for providing market updates based on the interest I have been receiving.

Honestly, there were some times that my motivation level was going up and I was trying to share all my trades, portfolio updates, every move i made momentarily. There were also times that I was questioning the amount of effort I am putting as it is taking a lot of time from me.

My followers feedback and acknowledgements about their gains were always my main motivation to keep on sharing my provisions!

This week was a great hit on target we all made money on a falling market ! and I definitely believe the synergy I am receiving from all of you is helping me too

Today, I decided to place an appreciation box to value my efforts. Your considerations will definitely boost my motivation to devote more of my time on providing detail market analysis and will also be used for the improvement of this sharing

https://paypal.me/pools/c/88D2V3kPVu

Thank you

Author

Pattern-based-trading.com

 

 

 

 

 

 

 

 

Market Update 10/2/18

It has been 3 weeks since my last update and S&P was going side ways within 2% range during this time.

While keeping my short position via SPXU during this period, there were couple days I loaded up the puts expecting the fall off to start but all attempts were bought up..

It is very rare that a major resistance gets broken without a prior pullback and market goes up without at least one attempt below that resistance level. My strategy was based on this pattern expecting a minimum 38.2% to 50% retracement of this wave before going higher.

From the way it is progressing a saw type down move, couple days up and couple days down within the below grey channel lines appears to be the best fitting pattern at this point.

I am holding 291 puts for 10/3 and will be activating short term puts when the price is at the top of the grey channel. I plan to cover shorts and activate short term calls when SPY reaches the lower line of the grey channel. We may see the continuation of this move for multiple weeks and expect sharp move days between the top, middle and bottom channel lines.

SPY daily

I am short on SPY with SPXU and SPY 10/3 291 puts.

I am short on ROKU, CRM, DHR, GPRO, SNA, FAST, TXT, HRS, XYL, JEC with 10/19 puts

 

 

 

Market update 9/7/18

This session is in memory of my beloved friend Melih, who was a broker at some point in his life and left us suddenly this week in age of 43 because of a heart attack. Rest in peace my brother you will be missed so much…

I decided to write this evening to keep my mind busy…

I was bearish for some time acknowledging a sell-off coming to min 275 range or below. The most important part to maximize the options play is really;  “how are we going to get there!” . It was a good but not super generous week for options.

Today I would like to discuss the two scenarios and what will  be the signs that I will look on each of them.

Scenario 1:  Potential pop to 290-291 range followed by a sell off to 275 range

Scenario 2: Straight sell off and literally a free fall to reach below February lows.

There were strong signs that I acknowledged on Tuesday opening about the potential sell-off. One of them was the volatility and it kept rising slowly during the week.

UVXY closed on 8.32 on Friday while 9/7 8 $ puts were @0.17 and 9.5 calls were @0.18. This is a quite large premium difference for a 4 day period. About 14 % higher price call premium is higher than a 2% drop put premium!  Quite interesting!   I am holding UVXY calls for Friday.

As the pace of the first 5 days were slower than expected I leaned towards the scenario 1 on Thursday and send below twit with a provisional bar for Friday. This bar was meant to show a “fake break below the Jan peak of 286.7, reaching to 286.1 on Friday”  

I waited until closing to see this fake break but it didn’t happen. The low of the day was only couple points above the Jan. summit.

SPY was able to hold above the January summit, this must be good right?

Well, it all depends on the Monday. The pattern is now aligned more with a higher degree sell off similar to February fall and potentially a more devastating one and it only needs a gap down opening ideally below 286. This may trigger a massive sell-off which I believe 270-275 level will not be able hold.

So for Monday; (+) or flat opening will lean towards Scenario 1. This one will be a really boring one which SPY can stay between 288-291 for a minimum 3-4 days up to 2-3 weeks! (yea, unfortunately not good for short term puts!) than test 270-275 and go to new highs again.

If SPY opens between 286.1-286.7 I think it has more potential for the free fall sell off but we need to see at least the first 2 hrs to make the judgement as it can also be just the delayed fake move that I was expecting for Friday. (I am giving this low chance but just wanted to acknowledge)

Anything below 286 opening will be a straight sell I believe, although it may give one last chance to short just below 286.7 in the first hour of trading on Monday.

I have been trading short term SPY puts and UVXY calls this week while keeping the SPXU position and 9/21 SPXU calls. I have replaced UVXY calls with UVXY position this afternoon. I will be adding 9/14 SPY puts if I see a gap down opening on Monday.

I am also short HRS TXT SNA FAST JEC XYL GPRO with 9/21 and/or 10/19 puts.

I started to buy back MU today with a small %. If the market moves as described in Scenario 2, although it doesn’t make much sense to me, MU may see as low as 33$ range which will be one of the best opportunities in my opinion.

I am also holding small % long positions on EA, HBM,CHK, AFMD and initiated small long positions today on BMY,CMI,GE, TEVA

I  am considering GE for short term only for 2-3 weeks and also holding GE 12.5 call options

BMY,CMI,MU,LRCX,ALGN,TEVA will be on my buy/add more list after the drop.

 

 

 

 

 

 

 

Market Update 9/4/18

Finally, we started to see signs of reversal in the last 2 trading days.

Although it is not necessary, one thing to keep in mind is that reaching 292.5 level will light up all the bearish formations and that might be the max pain spot for shorts that SPY can push before a decent pull back and if it pushes little more higher from here, reaching to at least 275 scenario weighs in

The lower opening had potential to trigger a sharp sell off with a SPY 270-275 price target. I will discuss the potential scenarios after we reach this level but we need to keep in mind there things may turn ugly below 270.

Today, I would like to discuss on couple other signs that I see about the coming correction and these signs will also lead if the correction will get deeper or not.

UVXY closed on 8.32 on Friday while 9/7 8 $ puts were @0.17 and 9.5 calls were @0.18. This is a quite large premium difference for a 4 day period. About 14 % higher price call premium is higher than a 2% drop put premium!  Quite interesting!   I am holding UVXY calls for Friday.

Out of this above list, I was holding ROKU and GPRO from past week and closed ROKU on Friday with a profit to re-short higher in 2-3 weeks. Also closed VAR this morning with a small profit. All others were added on Thursday opening based on their booming patterns with bearish formations and will hold them until SPY reaches below 275 target.

When I look at the above listing for HRS, TXT, SNA and FAST, I have been seeing a very unique pricing for the options in the last two days. For an average of 0.75%-1.3% decline on Thursday and Friday in these stocks,  the 1-2 month due puts have gone up minimum 15 % to 33% range. This is a quite interesting fact also pointing a potential larger degree decline.

I am short SPY with SPXU, SPY puts, SPXU calls and UVXY calls with a minimum SPY below 275 PT for covering.

I am also short on HRS TXT SNA FAST JEC XYL GPRO with puts

 

 

 

 

 

 

Market Update 8/28/18

Let’s start  with looking back on 8/16 update after SPY reaches 280.4 on 8/15.

Market Update 8/16/18

Scenario 2: Short Term Bullish, Mid Term Bullish

In this scenario, I expect SPY to push higher and higher in a relatively slower pace in a wedging triangular pattern. It may stay around 283.5 for a single day than move up and the key thing to watch will be exceeding 286 within this week. It is not necessary to make ATH within this week although it is also possible.

Reaching Wednesday lows clarified one important thing. ” We are not going above 286 before coming below 280!”  This was the deviation from scenario 2.

At that point, we have new short term PT of 284-285 as pivot level for reversal. I kept limited long position for 284+ target and acknowledged to be cautious above 285 in my twits.

Was 8/15 a fake daily bar? 

The strategy I shared for the above scenario 2 was straight forward. Hold on the long SPY position and sell short term call options when price is reaching the top line of the wedging triangle. 

This pattern was clearly deviated on Wednesday 8/15 price move and I had to initiate the alternative strategy play because of this deviation.

What happened after 8/15 was quite interesting as the pattern proceeded on it’s optimum speed and pattern as if 8/15 was not existed within the green wedging triangular path as shown below.

SPY daily

We will know the answer for the above question in couple days. if the next move down finds a support around 283 and reverses to make a new high from there I will mark 8/15 as a fake daily bar for future considerations!

If it continues below to 275 range, it will be fitting to the below pattern that was acknowledged on 8/26.  The way it will progress should give us hints.

Today’s negative closing would be a perfect reversal signal on the daily bars but it is bought up in the last 3 mins to close (+)!  Although it is not necessary, one thing to keep in mind is that reaching 292.5 level will light up all the bearish formations and that might be the max pain spot for shorts that SPY can push before a decent pull back and if it pushes little more higher from here, reaching to at least 275 scenario weighs in.

I am short SPY via SPXU and SPY puts.

 

 

 

 

 

Market Update 8/25/2018

Since I have started sharing my market directional updates, there were couple times I got caught up on the wrong side of the trade. Those wrong side trades last couple days ending either a stop or market alignment to my position. I believe this time might be the longest strike with 7 days being on the short side while the market was keep pushing higher.

So why do I insist on the short position and didn’t activated stops?

SPY Daily 8/25/18

The main reason to stay on the short position was; the way this wave progressing was not fitting into a typical impulsive wave pattern. It was more of a wave B of a corrective pattern extending more than expected which should be followed by a sharper C wave down.

Quite interestingly 8 month resistance level was broken with no resistance or prior pull back which I was expecting at least 1-2% pull back before testing a new high. Multi week bearish formations started to kick in at 287 level and there are multiple ones waiting up to 292 level.

Without a 2.5-3% pull back, I think it will be really difficult to exceed 288.5 level this week( upper channel line)

Timing vise, a reversal on Tuesday with a negative rest of the week would be good match for the best fitting detected pattern. On this expected reversal my new exit target will be a range of 275-278.

If SPY continues to push higher without giving this pullback, I believe the next pull back has potential to be more devastating one which may end up below 275.

I am short SPY via SPXU and SPY puts.

 

Market Update 8/18/18

As I have acknowledged on Thursday’s update session, I am back to short position on SPY for the second time in 3 months targeting to capture a 2.5% pullback in the next 1-2 weeks period and despite today’s price action was being on the negative side, I mark this as “high confidence trade entry

Let’s take a quick look at Thursday’s write up and acknowledge what has changed from there.

In addition to the short S&P position via SPXU, I am holding SPY 283 8/17 puts to capture the chance of this potential single day drop.  I will be holding the short position min till 280 below with a main target of 277. If the pace will be slower than I expect, I will be adding more SPXU and new 8/22 puts to my existing shorts.

With Friday’s price action the range is now between 285.5 & 278.  As the pace was quite varying, we have to consider that the duration of this next leg can be extended to 1-2 weeks.

In the first week the range maybe between 281.75 to 285 followed by a deeper second week correction to 278 level.  All this move can happen on a single week as well. The first 2 days would give a good idea about the pace in my opinion.

SPY Daily 8/17

SPY 281.75 level by Tuesday will be a critical level to watch where I may cover my 8/22 puts and 1/2 of the SPXU position targeting to reopen again at 284-285 range.

The safest SPY puts play would be 8/29 which I am planning to add during the week.

I am not providing an alternative pattern on this unless SPY exceeds 286 which I do not expect at this point.

Upon reaching 278 level, I will be super bullish for the following 2 weeks which I believe SPY will make a new all time highs.

 

 

 

 

 

 

Market Update 8/16/18

Let’s provide a short update as we are in a critical zone!

S&P was in between scenario 1 & 2 which was acknowledged this weekend in the first couple days of the week.

Scenario 1: Short Term Bearish, Mid Term Bullish 

This was the main reason for my long SPY position exit after 2.5 months. After a quick bounce to 285 range, I expect a sharp decline (around 3%) to 276-277 range. We may see a doji at around 285 followed by 1-2 day decline or even it can be a single day move all in ones. The expected time frame for this move is 1-3 days. I expect this move to be bought up rapidly leading to a new all time high all most with the same pace!  (It will be just a nice options play set up)

Scenario 2: Short Term Bullish, Mid Term Bullish

In this scenario, I expect SPY to push higher and higher in a relatively slower pace in a wedging triangular pattern. It may stay around 283.5 for a single day than move up and the key thing to watch will be exceeding 286 within this week. It is not necessary to make ATH within this week although it is also possible.

Reaching Wednesday lows clarified one important thing. ” We are not going above 286 before coming below 280!”  This was the deviation from scenario 2.

At that point, we have new short term PT of 284-285 as pivot level for reversal. I kept limited long position for 284+ target and acknowledged to be cautious above 285 in my twits.

285 appeared to be the perfect short entry point targeting below 280.

As I have mentioned in the weekend section, it may be 1-3 days to reach the 277-280 level from here. 

In addition to the short S&P position via SPXU, I am holding SPY 283 8/17 puts to capture the chance of this potential single day drop.  I will be holding the short position min till 280 below with a main target of 277. If the pace will be slower than I expect, I will be adding more SPXU and new 8/22 puts to my existing shorts.

Have a good trading day!