Good Day Traders,
Overview & Highlights: Only a week to go until the end of September. September is known as a historically weak month and this year’s edition has shown no abnormal strength. With the Fed standing aside until closer to the election what’s in store? I’m sensing we could see an early rally going into the 4th quarter and then a potential sell-off after the election is over regardless who wins. If the Fed senses there is a greenlight to raise rates at the end of the year, December may finish with a plop! Of course this is speculation at this point and we must trade the charts in front of us!
We exited our Early Warning Alert trade when a trailing stop was hit. Profit YTD on the EWAS is 12%.
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 30th
Register now for the next live webinar at the link below:
Register Here: https://attendee.gotowebinar.com/register/2727166400059649
11:00 a.m. PDT
Next Training Webinar: Sept 28th
For Premium Members our Wednesday evening training is developing some fantastic traders!
Topic: How to find Rock Solid Support and Resistance—Part 2
Managing Existing Trades: Positions open for 2 strategies.
Strategy I Portfolio Building:
Strategy I Weekly Results Week ending 9/23:
JUNO: Profit of $345.45
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 = Move to Break Even
Strategy II Income Generation: No Open Position
For members wanting to better understand this Strategy there is a very good training video at: https://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 9/22:
SPY: Profit of $655.00
TSLA: Profit of $121.00
NUGT: Profit 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 26%; Premium Collected since opening trade on 1/4/16 = $7,051
Sold 5 contracts of SPY 30Sept 216P at 1.14; for a profit $570
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 83.6%: Premium Collected since opening trade on 9/28/15 = $15,688.50 + New Positions at $4,405.50 = Total Collected $20,094
Sold 1 contracts of TSLA 30Sept 202.5P at 1.93; potential profit $193
Sold 1 contract of TSLA 30Sept 212.5C at 1.57; potential profit $157
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.
Sold 3 contracts of NUGT 30Sept 19.5P at 0.95; potential profit $285
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: https://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: https://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: Most of the stocks on the watch list are showing mixed signals between the daily and weekly charts. When this type of circumstance happens upside can be muted on rebounds so lower expectation for potential profits need to be maintained. I 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 15%-25% range.
Pre-Earnings Trade: None
Upside: ACIA, PLNT, MOMO, VIPS, COR & FIVE
Downside: NFLX & ALK
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: NUGT, ACIA, PLNT, MOMO, VIPS, COR, LGIH, FIVE, WYNN, TSLA, NFLX & ALK
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: https://activetrendtrading.com/etf-early-warning-alerts-video/
General Market Observation: My big question going into the final week of September is how will the 3 Tracking Indexes shape up for an end-of-year rally? Each Index responded well to the Fed’s decision to leave interest rates unchanged this may leave 6 weeks of positive trading opportunities before the next meeting. A second question is how will the Presidential Debates and actual election drive expectations for the positive or the negative? As I said in the opening comments, let the charts tell us what to do.
The SPX had the weakest reaction to the Fed’s decision. As we can see in the chart below prices did push up into a past resistance zone and then sold off on Friday. If this is simply pullback to the moving average cluster, then we need to be ready to trade this Index or it’s surrogates at that point. A Fib retracement of the move up over the past week places a 38.2% retracement at the moving average cluster. This is a point to pay attention and be ready for a bounce to at least retest the resistance zone. Momentum needs to kick in at some point and move back above the zero line for the highs at 2193 to be broken!
The NDX provided the strongest move since the bounce on 9/12. It has broken to new highs and could pull back into support at the breakout level of 4840. This is the level where NDX would become interesting to the upside. The RUT also broke to new yearly highs but then reversed back below 1261 on Friday. For both of these indexes we can also use the moving average clusters to plan long side trades. On the RUT watch for a retracement between the 1227 and 1241 levels.
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 11:00 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 30th
Register now for the next live webinar at the link below:
Register Here: https://attendee.gotowebinar.com/register/2727166400059649
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
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Index Returns YTD 2016
ATTS Returns for 2016 through Sept 23, 2016
Percent invested initial $100K account: Strategies I & II invested at 3.5%; Strategy III invested at 15%.
Current Strategy Performance YTD (Closed Trades)
Strategy I: Down -550.3 or -0.7%
Strategy II: Up $3187.00 or +3.18%
Strategy III: Up $24,164
Cumulative YTD: 26.8%
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: https://activetrendtrading.com/current-positions/
Updated first full week of each month. The next update first week in October.
Outs & Ins: CARB makes it’s IBD 50 debut this weekend. This low price and low volume stock is pushing up against long term resistance at 15.43. There are better choices for long side trades.
I’ll be watching ACIA, PLNT, MOMO, VIPS, COR, LGIH, & FIVE this week. Several of these need to pullback to a better launch point but look promising if the market stays in gear to the upside.
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.
