Trader’s Report 9-11

Good Day Traders,

Overview & Highlights:   The theme for the next few days until the Fed meets next week is to “Keep Calm and Carry On.”  We know that September is historically a weak month so we’ll let the current drop help set us up for a potential rally moving into the last quarter of the year.  I’m back from my road trip adventure and all features of Active Trend Trading are now back on schedule!  Additionally, be looking for more Strategy I alerts as many stocks provide the much waited on pullback.

Lastly, I want to remember the brave souls who perished 15 years ago on this day in the terrorist attack.  We must never forget the sacrifice of these people and the men and women who responded in the hour of tragedy.  God Bless you all, we will continue the good fight!

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, Sept 16th
Register now for the next live webinar at the link below:
 Register Here:  https://attendee.gotowebinar.com/register/2318434993628897794
11:00 a.m. PDT

 Next Training Webinar:  Sept 14  
For Premium Members our Wednesday evening training is developing some fantastic traders!
Topic:  ATTS Rules Review and Adjustments—Part 2


Managing Existing Trades:   Positions open for 1 strategies.

Strategy I Portfolio Building:  No Open Position

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:  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%.  Closed the first TSLA LEAPS Strangle which was opened on 9/28/15 for a 100% profit on 9/2/16.

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.

Strategy III Weekly Results Week ending 9/9:
SPY:  Profit of $452.00
TSLAProfit of $295.00

Trade 1:  Foundation Position is 4 contracts of SPY Jan17 205C and 4 contracts of SPY Jan17 200P Current Trade—Currently Up 20.29%; Premium Collected since opening trade on 1/4/16 = $6,396

Waiting for new SPY 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 81.6%: Premium Collected since opening trade on 9/28/15 = $15,688.50 + New Positions at $4,095.50 = Total Collected $19,784

Waiting for new TSLA 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


Potential Set Ups for this week:  With weakness with a significant magnitude showing up on Friday there are short side candidates tonight with only a couple long side choices.  I’m patiently posturing towards the rebound which typically takes place the last quarter of the year but will have my scope focused just in case the rally fails to appear.

TSLA is weakening and may provide a significant downside opportunity.  I’m adding NUGT to the “On the Radar” list.  Currently NUGT is selling off with gold, but it just went through a 5:1 stock split and may provide some potential set ups if gold strengthens into September on market weakness.  It also has weekly options with rich premiums!  NUGT may also be a good candidate for Strategy III.  Currently it has weekly options but the ride it would go on is not for the faint of heart.

Pre-Earnings Trade:  None.

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! 

Upside:   Waiting for pullbacks on the Inverse Index ETF’s, WYNN & CBM.  Also keep an eye on GIMO and COR.

Downside:   NFLX, ALK, ANET, AVGO, LGIH, INCY and WBMD.  TSLA has broken down and continues to face a strong headwind.  Price is currently close to a strong support level.  While I would prefer a pullback into the moving averages a drop below support at 190 may be a short opportunity.  We shall see if Elon’s silver tongue can talk the price of TSLA back up.  It has worked in the past but then there was that little boy who cried wolf!

On the Radar:  Stocks & ETFs that could go either way include:  UPRO, SPXU, TQQQ, SQQQ, TNA, TZA & their associated non-leveraged Index ETFs. NVDA, WYNN, NUGT, GLD, PYP, COR, TEAM, MTCH and EDU.

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

Early Warning Alerts for Leveraged Index ETFs:  Waiting for either an initial or a second chance entry.  Last Trigger:  6/27
EWA Account Return to date:  5.5%

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:   Some of the Fed Presidents started making noise regarding a potential rate hike at the September 20-21 meeting and the Indexes reacted.  For several weeks we have been talking about how the price action on both the SPX and NDX has been moving in a tight range and that eventually it would choose a direction.  On Friday the direction chosen was down.  The strongest selloff since 6/24.  Now what?  Given that September is typically a weak month the magnitude of Friday’s drop may have been influenced by this seasonality.  Secondly, the move up since June 27th has been stellar but for the last 60 days’ price action has done nothing but move sideways.  Based simply on magnitude, Friday’s move would be considered significant in a normal market.  However, 2016 cannot really be considered normal.  There have been many forces such as foreign central banks and a very accommodating Fed that has propped up the market.  Retreats have been swift but somewhat shallow. 

The SPX fell about 2.4% on Friday and wiped out 61 days of a slow grind higher.  The chart below shows that price action has now fallen below both the 8/20 EMA combo and the 50 day EMA.  Add to this a break of the 23.6% Fib Retracement and now the Fib box between the 38.2% and 61.8% retracement may come into play.  Going into this week, I will use any pullback up to the 23.6% or the 2150 level as a potential trigger for a short trade.  I will count on continued September weakness and be ready for a bounce moving into October leading up to the elections.  The current sell off is healthy so as the Brits say, Keep Calm and Carry On.

The NDX fell but not quite as hard as the SPX on Friday.  The drop came to rest at the 23.6% retracement just below the 50 day EMA.  Any pullup into the 4750 level may provide a short set up.  The RUT also fell to the 23.6% retracement but held above the 50 day EMA.  Over the next couple of days, we will see if Friday’s fall was merely a one-day reaction or the start of something more significant.  A selloff of large proportions as Friday’s can often signal something more severe is in the offing.  Another possible scenario may be that the Fed is toying with the markets as a set up for the election.  If the Fed doesn’t raise rates on the 21st it may be a catalyst to rally into the election and we know who that would benefit.

spx-9-9

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, Sept 16th
Register now for the next live webinar at the link below:
 Register Here:  https://attendee.gotowebinar.com/register/2318434993628897794
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

–   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

index-ytd-9-9

ATTS Returns for 2016 through Sept 9, 2016

atts-ytd-9-9

Percent invested initial $100K account:  Strategies I & II invested at 0.0%; Strategy III invested at 15%.

atts-ytd-9-9a

Current Strategy Performance YTD (Closed Trades)
Strategy I:  Down -895.75 or -1.27%
Strategy II:  Up $3187.00 or +3.18%
Strategy III:  Up $22959 or +87%
Cumulative YTD:  25.3%

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 in September.


Outs & Ins:   Only CHFC was added to the IBD 50 this weekend and is actually a candidate that is pulling back with a great looking chart.  Even with a down market Friday, shares of CHFC were being scooped up. 

Keep an eye on the IBD 50 or the Running list if the market continues to be weak.  Watch for the stocks that are holding up better than the market.  These may lead the charge when the market rebounds.  Any IBD 50 stock that has broken through the 50 day EMA on high selling volume should be considered a short candidate.  Dust off those weekly charts and patiently wait for healthy pullbacks to plan strategic entries.  Here are the stocks I’ll be watching to the long side, GIMO, SSTK, COR and ACIA.  Short side candidates include: MBLY, STOR, ULTA and ZBH.

in-out-9-9

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.

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