Trader’s Report 5-15

Good Day Traders,

Overview & Highlights:  The Indexes are on the ledge and if symmetry within the established downtrend channel is maintained this ledge may be slippery.  Secondly, I’m working on a new layout for the weekly potential trades that will help all members plan their trades and be less dependent on the text and email alerts.  Look for the update within the next 4-5 weeks.

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, May 20th

Register Here:  https://attendee.gotowebinar.com/register/5054701618110893827

Note this session will be at: 11:30 a.m. PDT

 

Next Training Webinar:  May 18th

For Premium Members our Wednesday evening training is developing some fantastic traders!

Mid-Week Market Sanity Check Topic:  Intraday Charts for After Hour Analysis-Conclusion


Managing Existing Trades:   Positions open for 2 strategies.

Strategy I Portfolio Building:  No Open Strategy I Positions 

Bought 340 shares of FIVE at 40.18
T1 =  5% -10% to close 170 shares
T2 = Attempt to hold remaining shares up to earnings and then close
Stop Loss  = 38.57
Earnings:  6/1 AMC
Stopped out at 38.52;  Loss = $564.40

 

Strategy II Income Generation:  Speculative Trade going on VXX

Opened speculative trade with the expectation that volatility will pick up between now and June.  Bought 5 contracts of VXX Jun 19C at 1.42
Will let this trade play out over the next 4-5 weeks.  I will close out 3 contracts at 2.84.

The timing on this VXX trade may have been a tad early so I’ll be looking for a potential trade in a month further in the future.

Strategy II stocks of interest for this week:  TSLA, SPX & Index ETFs. 

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:  Two 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 SPY and TSLA to both pay for the capital invested and gain between 50% – 100%.

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.

Strategy III Weekly Results Week ending 5/13:
SPY:  Profit + $518
TSLA:  Profit + $110

Trade 1:  Foundation Position is 4 contracts of SPY Jan17 205C and 4 contracts of SPY Jan17 200P Current Trade—Currently Up 11.62%; Premium Collected since opening trade on 1/4/16 = $4082.
Sold 4 contracts of SPY 20 May 204.5P at 1.25—Potential Profit $500

 Trade 2:  Long TSLA Jan17 250C & Long Jan17 220—Current Trade—Currently Up 53.64%; Premium Collected since opening trade on 9/28/15 = $10,188
Waiting for set up.

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  


Pre-Earnings Trade:  So far our pre-earnings trades have worked out well for both Strategies I and III.   The following have promise for Pre-Earning trades: SWHC, PLAY & VEEV

Pre-earnings trades can be a great supplement to the portfolio building portion of Strategy I.  Depending on the stock and technical analysis they tend to be predictable and repeatable.  For busy traders focusing on pre-earning opportunities can free one up from the necessity of constantly chasing stocks during other periods of the year.  The process repeats four times a year and capturing a 5%-15% return four times a year can compound very nicely! 

Potential Set Ups for this week:  I’m not in a hurry to go either way this week until the Indexes have better defined a direction.  At this point we will err to the side of caution and take partial positions if a set up appears on any trade up or down.  When the Indexes define the direction it will open up our choices.  I will focus on TSLA and Index ETF’s or their derivatives for each of the Strategies because of their patterns are established.

Upside:  LGND, NVDA, NTES, OLLI, BABA, FB, TZA, SQQQ and SPXU.   

Downside:  If the Indexes pullback from current resistance zone look for weak stocks or go to the inverse Index ETFs.  Some weak stocks include: AYI, EW, MAS, THO, SONC, BIDU, AAPL and NFLX

On the Radar:  Stocks & ETFs that could go either way include:  UPRO, SPXU, TQQQ, SQQQ, TNA, TZA, TSLA (270 resistance/140 support), ALK (reversion to mean trade), PYPL, LNKD, BABA, OLLI, NOAH, CRM, AMZN, FB and AOS.

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

Early Warning Alerts for Leveraged Index ETFs:  Waiting for Second Chance Entry trigger and Alert reset.  As stated previously, if there are downside signals on the indexes that trigger a trade in one of the Inverse Index ETFs a courtesy alert will be sent out to both Early Warning and Premium Members.

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 upcoming week is monthly option expiration week and tends to have a positive bias.  The question which side will win the battle, buyers or sellers moving into this week.  Earnings season is winding down with a few retailers still to report so what might propel the Indexes this week?  Home starts and sales?  Manufacturing news or CPI?  We know that each Index starts this week sitting close to support after moving down on Friday.  Give that each of the three Tracking Indexes are working within the confines of lower highs and lower lows perhaps a follow through to the downside will take place.  The S&P is just at the 50 day EMA but below the 8/20 daily EMA’s.  The NDX looks weaker and is now below all of the primary moving averages.  The Russell came to rest at the 100 day moving average which is still below the 200 day moving average.  If price action deteriorates further, we could see each of the Indexes use the current support as a ledge to leap from.

This is very evident on the Russell weekly chart below.  Like the other Tracking Indexes the TSI and Momentum have turned negative perhaps providing a clue to additional downside.  The 20 week moving average (approximately equal to the 100 day) provides an excellent level of support.  If this support is broken this will be my line of demarcation for downside trades.  This coincides with the 1100 level which served as both support and resistance during past gyrations.  If the RUT falls look for the other Indexes to follow suit.

For the week I will trade any rebound back into the moving averages as a downside opportunity.  If we break below the current support could also provide a downside trade.  Lay your Fibonacci Retracement from the low in February to the high in April to see potential downside targets and levels where bounces may take place.  On the RUT the 38.2% retracement is at the 1074 level or about 2.5% below Friday’s close.

RUT Wkly 5-13

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 Show—Free Webinar every Friday at 11:30 a.m. PDT.  I’m looking for the best time to offer this webinar.  I want to try closer to the close on Friday to see how that works out for potential trades going into the close.  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, May 20th

Register Here:  https://attendee.gotowebinar.com/register/5054701618110893827

Note this session will be at: 11:30 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/channel/UCLK-GdCSCGTo5IN2hvuDP0w

–   The Active Trend Trader Referral Affiliate Program is ready.  For more information or to become an Affiliate please register here:  http://activetrendtrading.com/affiliates-sign-up-and-login/


Index Returns YTD 2016

If the Indexes are slipping off the ledge we could see a retracement to yearly lows in the short term of a few weeks.  Note both DJI & SPX are barely in positive territory for 2016, but NDX and COMP are looking weak!

Index 5-13

 

ATTS Returns for 2016 through May 6, 2016

I’m pleased how the ATTS system has shown growth every month of the year thus far.  We are managing Strategy I which encompasses portfolio building well because thus far this year it has not been a great portfolio building year.  The quick hitting option trades of Strategy II are working along with the steady Income & Wealth objective of Strategy III. 

ATTS YTD 5-13

Percent invested $100K account:  Strategies I & II invested at 3%; Strategy III invested at 20%.

ATTS YTD 5-13a

Current Strategy Performance YTD (Closed Trades)
Strategy I:  Down -1408.45 or -1.41%
Strategy II:  Up $1687 or +16.87%
Strategy III:  Up $10640 or +53.2%
Cumulative YTD:  +10.9%

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.


Outs & Ins:   EA makes its debut on the IBD 50 this week.  It has gapped up to resistance after earnings last week.  EA has been in a consolidation pattern for the last 11 months.  The gap up was on solid volume so maybe worth watching.

I’ve said many times one of the reasons I like the IBD 50 and then tracking all the stocks that appear there for the year is that not only does it provide an excellent list of stocks that have passed stringent fundamental test but it also works well when the markets start to falter.  Growth stocks tend to go up and fall faster than non-growth stocks.  So the IBD 50 and my Running List provides a great stable of candidate for all market conditions.

Potential candidates this week.  Downside: AYI, EW, MAS, THO & SONC.  Upside: LGND, NVDA & NTES.  Pre-Earnings: SWHC, PLAY & VEEV.

In-Out 5-13

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 mailto:dww@activetrendtrading.com or leave a post on the website.   Thanks.

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