Another good day...

It was prudent to close out the longs yesterday for any overshoot past r1 will almost always trigger a retracement in the morning albeit strong trend. This morning we had bad PPI and HD reports. However, the market is on an up trend and pivot 628 held. Longs were initiated and the news from IBM just fueled the up move. Again, as you can see in the chart, the longs were closed out when
r1 (635ish) was reached . Not to be greedy, there is sometimes overshoot by the late comers and you can see they were the losers by the close. Tomorrow's numbers are 640, 633 and 628. This 635 area is an important area, and one would not be surprised to see some retracement before going up again especially when it is overbought. The market is attempting to stage an intermediate up trend, if it can close above 635. The chart is to show how pivot numbers can be used to trade profitably. Real time posting of trades is not the objective of this blog for there is no need to prove anything. Recognitions and glories can be left to other posters. Realisation of monetary rewards way surpasses any other recognitions.

2c

Beauty

Two trades were done successfully today. As soon as the market reached OEX r1 (627-628) a short was in order and was closed out at pivot 620. Why? because it held. Longs were initiated as it rose beyond 620 and closed out by the end of the day. Why? because it has gone past r1 (628) and beyond. Now that it has broken out of the symmetrical triangle to the up side more rise could be seen. Tomorrow's numbers are 635, 628 and 623. If it is a bullish trend under normal circumstances you would see it ride on r1 till it drops. But this is a skittish abnormal market and tomorrow we have PPI, Consumer confidence etc. and it is better to get what the market gives you and not be too greedy. As a side bar, this blog experienced the first spam on the weekend and in order to keep this blog clean, comments will be moderated from now on and you can still put in comments by validation and remain anonymous if you wish. Freedom after all has a price.

2c

Weekend update...diary of an option trader

In order to clarify how profits can be made from the market via options the following chart helps to explain the diary of last four trades. Notice trades were fired off at r1 and s1 levels and pivots are used to gauge the very short term trends. You can see the pivots are still sloping down that means further down trend is expected until proven otherwise. Longs are closed out at r1 or higher and shorts were closed out at s1 or lower.

Here's the summary of approximately how the last four trades were done using one OEX contract as an example.

Feb 19, Mar OEX 630 put, 18-22, $400 profit
Feb 20, Mar OEX 620 Call, 16-21, $500 profit
Feb 21, Mar OEX 630 put, 18-22, $400 profit
Feb 22, Mar OEX 620 put, 16-20, $400 profit

Now you can imagine, the effect of mulitplier if you have multiple contracts. You can also visiualise how the next day's plan is. This perhaps will clarify why just numbers are mentioned day after day and this is not so boring after all and is actually very exciting if you have money in your pocket everyday.

2c

Day trading for survival?

Right after it could not surpass 623 pivot, short was in order and a contination of yesterday's sell off until it hit S1 614 and below. If you followed the numbers and the plan, you would not get slaughtered by the AMBAC bail out news by the close. If you are day trading, the important times are 10 am and 2 pm. whereby market normally turns. Ya, it was massive short coverings. Today, as anticipated, it fell out of the symmetric triangle signaled by the double WR7 but what happened at the close distorted it and now it is back inside the triangle. However, it has not changed the sentiment one iota. Next week there will be a flurry of economic data such as PPI, Housing, Consumer sentiment etc and all can be assumed to be bad. Except of course, the truth of the Ambac bail out news. If anything else, it will provide a higher ground to short from, there is unfinished business on the down side. Monday's numbers are 628, 620 and 615.

Have a good weekend.

2c

Philly Fed did it...

what a horrible number and is quite significant too. Yes, it is a confirmed recession and the market sold off just about having signs of recovery. Well let's look at the damage today. Again, it spanned r1(630) to s1(619) and closed below s1. You've two WR7s side by side and if we consider the move from Feb8 is an up move, we got exhaustion here. Watch the lower channel very carefully, if broken we start wave 5. Right now it is not looking good. Except for RIMM, AAPL and GOOG got turned back from reversing. Perhaps it is only a delay and will see. OIH and POT are retreating. This makes sense if we have a recession. Tomorrow's numbers are 627, 623 and 614.

2c

Volatility rules

The bad CPI brought the DOW down 100 points but the Fed minutes brought it back up 200 point. The options guy loves it but you have to day trade it to get the benefits. In a nut shell, the Feds are saying they will lower inflation expectation to accomodate the economy. That means more rate cuts. As mentioned before, the bias is still down but the picture is changing. Today, OEX spanned s1 (618) to r1(629). Tomorrow's numbers are 630, 623 and 619. 618 was tested multiple times and if held again to close around 630-631, the chances are breakout to the upside. The NASDAQ 3 horsemen are turning up especially RIMM. Commodities related trades such as POT, and OIH are already into intermediate up trend.

2c

Sideways...

It is not that easy to work off a confirmed sell signal. The DOW traversed 200 points and eventually fell back down to reality. Ok we've got $100 oil and where do we go from here. Tomorrow's numbers are 629, 625 and 618. CPI tomorrow and see if it will spark one way or the other. The bias is still down, although the selling sentiment subsided a lot. Well best is to stand aside and let it break out of the triangle before doing anything....

2c