Trader’s Report 10-3

Good Day Traders,

Overview & Highlights:  I fly back to Hawaii on Tuesday this week and will be back to a normal schedule by the end of the week.  An Active Trend Trading member asked if I could do a webinar during market hours with live trading and how I do my orders.  If there is enough interest I would consider doing a live webinar called “The Final Hour” for Strategy III set ups and trades during the last trading hour on Fridays.  If this something that would interest you please let me know at dww@activetrendtrading.com

Webinars:  At Active Trend Trading we offer two webinars per week to provide training plus trade and market updates.  See the schedule below for the next webinars.

How to Make Money Trading Stocks on Friday, Oct 7th  
Register now for the next live webinar at the link below:
 Register Here:  https://attendee.gotowebinar.com/register/1406282346712848642
11:00 a.m. PDT

Next Training Webinar:  Oct 5th    
For Premium Members our Wednesday evening training is developing some fantastic traders!
Topic:  Building a Strategic Plan—Pulling it all Together

Managing Existing Trades:   Positions open for 2 strategies.

Strategy I Portfolio Building:   JUNO made an impressive bounce back today and is up 14% on the last ½ of the position opened on 9/19.  If price move above the 15% mark I will move the trailing stop up to 10% gain.

Strategy I Weekly Results Week ending 9/30:
JUNO: $672.10
NUGT: $495.00

Opened position in JUNO on 9/19 at 29.32
Target 1 = 5% — Closed ½ position at 30.79 or $345.45 profit
Target 2 = 15-20%
Stop Loss = Hit Trailing Stop on 9/28 at 32.18 for a $672.10 profit
Total Profit = $1017.55

Opened position in NUGT on 9/28 at 17.80
Target 1 = 10% — Closed ½ position at 19.78 or $495 profit
Target 2 = 15-20%
Stop Loss = Trailing Stop Set at Breakeven

Strategy II Income Generation:  No Open Position

For members wanting to better understand this Strategy there is a very good training video at:  http://activetrendtrading.com/basic-option-strategy/

Strategy III Wealth & Income Generation Trades:  Three Foundational Positions are in place to sell weekly options against.  The recalculated weekly revenue needed from these foundational positions was forward in an update report earning last week.  My objective with this Strategy is to collect enough weekly premium during the life of the LEAPS Strangle on both NUGT, SPY and TSLA to both pay for the capital invested and gain between 50% – 100%.  Closed the first TSLA LEAPS Strangle which was opened on 9/28/15 for a 100% profit on 9/2/16.

The closed half of the TSLA position was replaced with January 2018 LEAPS.  This is a very volatile vehicle but if we get the timing correct my lead to a gain of 100% at an accelerated pace over the next 16 months.  Details on the new positions are below.

Strategy III Weekly Results Week ending 9/30:
SPY:  Profit of $484.00
TSLAProfit of $571.00
NUGTProfit of $240.00

Trade 1:  Foundation Position is 4 contracts of SPY Jan17 205C and 4 contracts of SPY Jan17 200P Current Trade—Currently Up 31%; Premium Collected since opening trade on 1/4/16 = $7,535

Waiting for Weekly Set Up

Trade 2:  (Long TSLA Jan17 250C & Long Jan17 220—Closed on 9/2 for 100% gain since 9/29) + New Positions Jan17 210C and 220P: Current Position Total Invested $14,900.  Currently Up 82.08%: Premium Collected since opening trade on 9/28/15 = $15,688.50 + New Positions at $4,976.50 = Total Collected $20,664

Sold 2 contracts of TSLA 7Oct 200P at 3.15; potential profit $630; bought back 1 contract at 0.63 on 10/3 for a profit of $252

Trade 3:  Long NUGT Jan18 18.4C + NUGT Jan18 18.4P.  4 contracts each side of the straddle for total investment of $6,720.  The required weekly premium to collect each week to achieve a 100% return by Jan 2018 is $191.43 per week.

I will wait for appropriate set ups for the remaining available NUGT LEAPS.

Tip for Experienced Option Traders: Occasionally after a weekly trade goes against me but the trend appears to be changing I will add one naked contract over and above my foundation position and close this out after it gains at least half of the premium I’ve collected.  Doing naked options is not for everyone and I keep my risk small by only doing one contract above my covered limit.  In other words, if I can sell 4 contract covered by my long leaps I’ll sell one additional.  This helps hedge the losses a bit but it this tactic is not without risk and must maintain a tighter stop than I would normally use with the regular position.

Note:  We do our best to get both text alerts and email alerts out in a timely manner, occasionally there will be trades that are missed because of delay in the Text or Email alert applications.  Additionally, please double check with your broker to assure they allow spread trades like we do with Strategy III.  Some do and some don’t.

Additionally, it is crucial when selling premium against the Long LEAPS position that the premium collected cover the weekly cost of holding the LEAPS plus an additional amount to over this amount as a gain.  This is one of the reason I sell premium of weekly options that are close to be “At The Money”.  I base my selling on the expected move during the next week.  If one is not bringing enough weekly premium this trade will not work out as well and may wind up being a losing trade.

Several members have asked about this strategy and a more detailed explanation is available at:  http://activetrendtrading.com/wealth-and-income-strategy/

I posted a video about how to choose the weekly options to short for this strategy. It can be viewed at:  http://activetrendtrading.com/videos/

Additionally, some of these trade may be selling weekly puts on up trending stocks.  If you are interested in parallel trading this strategy register at this link:  http://forms.aweber.com/form/99/1278533099.htm

 

Potential Set Ups for this week:  Keep your eye on this section of the weekend Trader’s Report and Market Updates later next week.  I will be honing down to fewer choices but providing the charts with specific entry points and profit targets.  My objective is to highlight 2-5 stocks per weekend for Strategy I consideration.  Each of candidates will be analyzed in agreement with the training sessions we’ve provided over the past several months.  I provided a sample on 9/27 in the Market Update Report.    

No hurry to jump into any trade on any Monday.  Let the market settle in and use Monday to identify candidates and preferred trading levels.

I still like NUGT off of identifiable levels of support.  This is a highly volatile ETF for gold miners.  The ideal way to trade it is to know how much it usually runs after a bounce and then plan to take profits during the run not at absolute profit projections. Using this strategy should open the door to profits in the 10%-25% range within a very few days.  So we will have to be quick.

Pre-Earnings Trade:  Quarterly earnings will start spinning up over the next couple of weeks.  Will be on the lookout for candidates with a history of pre-earning runs.

Upside:   NFLX & potentially TSLA

Downside:   None

On the Radar:  Stocks & ETFs that could go either way include:  UPRO, SPXU, TQQQ, SQQQ, TNA, TZA & their associated non-leveraged Index ETFs.

Other candidates on the radar include: SIMO, ACIA, BGS, PLNT, CHFC, SIX, WOR, CBM, NFLX & TSLA

Stocks identified by ** that are close to a potential entry point.

Early Warning Alerts for Leveraged Index ETFs:   Last Trigger: 9/14, Buy Order issued on 9/15.  Entered position in UPRO at $69.43.  Closed position on 9/23 for an 8 day hold period.  Sold ½ at 74.03 and the remainder at 73.59.  Total profit $659.25 or 6.33%

EWA Account Return to date:  12.09%

The Early Warning Alert Service hit all eight major market trading points in 2015.  See this brief update video for more details:  Early Warning Alerts Update Video  or at https://youtu.be/GJwXCL4Sjl4

If simplifying your life by trading along with us using the index ETF is of interest, you can get the full background video at:  http://activetrendtrading.com/etf-early-warning-alerts-video/


General Market Observation:  The 3 Tracking Indexes finished off September with the typical end of quarter flurry.  Both the NDX and RUT finished up for the month, but the SPX could not make up the downside hit it took at the beginning of September.  The question at this point is what lies ahead?

It is almost a given that the Fed will not touch rates until after the November election.  The November Fed meeting is shaping up as a non-event.  Two more presidential debates remain but at this point there are probably very few undecided voters except those buried in Chicago.  Other outside influence that could come in to move the market are overseas events.  If Duetsche Bank issues continue to grow will this have an unsettling impact or it could result in a pop for the US market as more European Bank money seeks safety in the US markets?  Will the German government step in to bail out the bank?  Will the PIIGS come to the trough over the next few weeks?  Greece is making noise wanting another bailout.  It’s not so much that any of these events by themselves would move the market but will the weight of all of them act as a catalyst.  What about Asia?

I can see a scenario working out where the markets continue working between established support and resistance until after the election.  After the election regardless of who wins, the Fed would no longer be constrained and could raise rates in December.  Given the current soft economy this would be bad for the market and a reaction similar to last December and January would be likely.  What happens if the Fed raised by a half a percentage point rather than a quarter?  I guess it would be a litmus test of how well the economy both within the US and globally is actually doing.  Glad I already refinanced my home at low rates.

Our objective is to read the charts and then trade appropriately.  Based on the charts, the SPX is still the weakest of the Tracking Indexes.  The chart below shows price action working within a range from the 2120 and 2179 levels.  This equates to a range over 2.5% so planning trades at support and resistance could provide some quick trades.  Unfortunately, a longer term trend in either direction has not fully been established.  Churning with in the exiting range appears likely for the immediate future.

Both the NDX and RUT may provide more potential movement to the upside.  The NDX did breakout to new highs so the upside appears to provide the least resistance.  Upside trades from pullbacks to support should be considered until the buying the dip stops working.  The RUT is less predictable because after pushing to new highs for the year it quickly retreated and has not made a serious attempt to move back to the new high levels.

spx-10-3

SPX:   Downside Market Short the SPY, SPY Puts or SPXU.
Preferred Long ETF’s:  SPY, UPRO and SPXL

NDX:   Downside Market Short the QQQ, QQQ Puts or SQQQ.
Preferred Long ETF’s: QQQ and TQQQ

RUT:   Downside Market Short the IWM, IWM Puts or TZA.
Preferred Long ETF’s:  IWM and TNA

The How to Make Money Trading Stock ShowFree Webinar every Friday at 11:00 a.m. PDT.   This weekly live and recorded webinar helped traders find great stocks and ETF’s to trade with excellent timing and helped them stay out of the market during times of weakness.

How to Make Money Trading Stocks on Friday, Oct 7th  
Register now for the next live webinar at the link below:
 Register Here:  https://attendee.gotowebinar.com/register/1406282346712848642
11:00 a.m. PDT

To get notifications of the newly recorded and posted How to Make Money Trading Stocks every week subscribe at the Market Tech Talk Channel:   https://www.youtube.com/c/MarketTechTalk


Index Returns YTD 2016

index-9-30

ATTS Returns for 2016 through Sept 30, 2016

atts-ytd-9-30

Percent invested initial $100K account:  Strategies I & II invested at 3.5%; Strategy III invested at 15%.

atts-ytd-9-30a

 

Current Strategy Performance YTD (Closed Trades)
Strategy I:  Up $616.80 or +0.88%
Strategy II:  Up $3187.00 or +3.18%
Strategy III:  Up $25,262.80
Cumulative YTD:  29.26%

Active Trend Trading’s Yearly Objectives:
–          Yearly Return of 40%
–          60% Winning Trades
–          Early Warning Alert Target Yearly Return = 15% or better

For a complete view of specific trades closed visit the website at:  http://activetrendtrading.com/current-positions/
Updated first full week of each month.  The next update first week in October.


Outs & Ins:   CVG joins the ranks of the IBD 50 this week.  Price action is up against resistance as a consolidation pattern forms.  Of the other stocks that have come back on the list this weekend, PZZA is furthest in its pullback to support.  PZZA has run almost 100% from the low in January.

Many stocks on the IBD 50 are showing overbought weekly charts and oversold daily charts.  This divergence is a reason for caution because the stronger oversold conditions on the weekly charts typically eventually lead to a solid pullback.  With the oversold condition of the daily charts there can be bounces during the pullback that are tradable, but require lower expectations for potential profits.  Additionally, entering prior to solid signals on each timeframe can elongate the time required for a solid move.

Stocks that are in the process of a pullback consolidation include: SIMO, ACIA, BGS, PLNT and CHFC.

in-out-9-30

Share Your Success:  Many of you have sent me notes regarding the success you are having with the Active Trend Trading System.  Please send your stories to me at dww@activetrendtrading.com or leave a post on the website.   Thanks.

 

Comments are closed