Good Day Traders,
Overview & Highlights: Hope all are having a great Memorial Day weekend! Many of you know that I’m moving back to Hawaii after being in California for the past 12 years. We lived in Hawaii for 14 years prior to coming back to the mainland so for us this is going home. I will be in transit through June 7th. Webinar’s will start again on June 8th live from Hawaii. While in transition I will lightly trade great set ups and continue to manage existing positions. One of the things I’ve learned over the years of trading, is if there is a potential distraction such as a vacation or moving—limit downside exposure by setting in protective stops. Secondly be very careful initiating new positions because of distractions. Once settled in back home the time difference will allow me more analysis time and members will start to see more after-hour alerts. This is a good thing!
Here is a sample of the weekly stock update I’m working on which will list the stock or ETF along with detail about where to execute a trade. This sample is not a recommendation just a sample of the format I’ll use. My intention is to post a simple table like this providing the basics so members can be better prepared for the week. Member’s feedback would be appreciated.
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, June 10th
Register Here: https://attendee.gotowebinar.com/register/6740381586676275713
11:30 a.m. PDT
Next Training Webinar: June 8th
For Premium Members our Wednesday evening training is developing some fantastic traders!
Mid-Week Market Sanity Check Topic: Is it Me? Trading Psychology
Managing Existing Trades: Positions open for 3 strategies.
Strategy I Portfolio Building: Long 100 shares of TZA
Bought 200 shares of TZA at 41.60
T1 = 5% -10% to close 100 Shares
T2 = Attempt to hold remaining shares until July 1st
Stop Loss = Will hold and sell weekly covered calls on remaining position to reduce cost basis while waiting for the Market downturn. Will hold until July 1st
Hit T1 sold 100 shares at 43.79 for a gain of 5.26% or Profit of $219.00
Strategy II Income Generation:
Sold 1 Lot SRPT Iron Condor for a credit of $8.20; bought back at $4.15—Profit: $405
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: https://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 5/27:
SPY: Loss -$540
TSLA: Profit + $90
Trade 1: Foundation Position is 4 contracts of SPY Jan17 205C and 4 contracts of SPY Jan17 200P Current Trade—Currently Up 9.5%; Premium Collected since opening trade on 1/4/16 = $3998.
Sold 4 contracts of SPY 3Jun 210C at 1.03—Potential Profit $412
Trade 2: Long TSLA Jan17 250C & Long Jan17 220—Current Trade—Currently Up 54%; Premium Collected since opening trade on 9/28/15 = $11,158
Sold 1 contracts of TSLA 3Jun 225C at 2.97—Potential Profit $297
Sold 1 contracts of TSLA 3Jun 215P at 1.20—Potential Profit $120
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
Pre-Earnings Trade: The following have promise for Pre-Earning trades: THO, AVGO, PLAY & FIVE
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: The GAS factor for the market is very low at the current time. There is very little fear in the Market even though many analysts are seeing dark clouds on the horizon. For now, though it appears that the path of least resistance may be up into previous resistance levels. The June Fed meeting is on the horizon so stocks may maintain a holding pattern waiting to see if the Fed raises rates. What kind of a catalyst might that be? One observation over the past few weeks is that many stocks are showing ‘V’ bottoms. This type of bottom tends to be weak and can provide some violent correction once the momentum starts running out. Because of this we need to adjust expectations for returns on individual trades to smaller profit targets and tight stops. 5% – 15% are great objectives for initial targets and if hit setting breakeven stop losses is prudent.
Upside: COR (a slow but steady mover), CTXS, & CBM.
Downside: No downside candidates until bearish candlestick formation start appearing. Most stocks are moving with the Indexes.
On the Radar: Stocks & ETFs that could go either way include: UPRO, SPXU, TQQQ, SQQQ, TNA, TZA, TSLA (270 resistance/140 support), NFLX, BIDU, MA, V, 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.
A downside trade for TZA triggered on 5/17 and a courtesy alert was sent to all EWA members. I plan on holding this position until July 1st or until price hits $55. During this time rather than a stop loss I will sell weekly covered calls. A major reason of choosing TZA is that it has weekly options which provides the opportunity to collect premium while price oscillate. Going forward Mike will trigger the long EWA alerts and I will trigger the short side triggers as courtesy alerts to 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: https://activetrendtrading.com/etf-early-warning-alerts-video/
General Market Observation: Last week the Indexes thumbed their collective noses at the potential of rate hike in June. After putting in a daily Bearish Harami on Monday, all three Tracking Indexes pushed out of short term resistance formed by either a downward or horizontal channel. On the daily chart of the SPX there is a new measured target for the SPX at the 2111 level. This level was established by measuring the width of the channel and then adding it to the breakout level from Tuesday’s price action. I am always intrigued by how these measured move so often coincide with past levels depicted by swing highs or swing lows.
My big question as we finish May trading on Tuesday and move into June is, will the Indexes move into a holding pattern until the Fed meeting mid-month or will the current tailwind provide enough momentum to push close to last year’s highs? Several scenarios could work out going forward. First the swing low on 4/20 now represents a potential higher low. This is the first ingredient needed to move back into an uptrend. If the swing high of 5/10 is taken out the Index would be in a new short term uptrend and increase the probabilities that the highs from last year will be challenged. As is evident from the chart price action is swinging quickly from oversold to overbought conditions when assessed by the distance from the 8 and 20 day EMA’s. With neither of these moving averages providing solid support nor resistance we must look at support and resistance formed by past price action. It seems that buyers and sellers are zeroing in on these levels to take action. At this point we must wait for a pullback for potential upside trades and bounces from stronger resistance to plan downside trades.
The NDX and RUT provide a similar view. The NDX broke from a horizontal channel and the RUT broke from a downward sloping channel. Price projections on both take current price back into resistance formed by the swing highs from mid-April. Looking for pullbacks for upside trades and stalling at established resistance for potential downside trades.
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, June 10th
Register Here: https://attendee.gotowebinar.com/register/6740381586676275713
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/c/MarketTechTalk
– The Active Trend Trader Referral Affiliate Program is ready. For more information or to become an Affiliate please register here: https://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. DJI, SPX and RUT have pushed into positive territory for the year. NDX and COMP made progress for the week but are still negative for the year.
ATTS Returns for 2016 through May 27, 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.
Percent invested $100K account: Strategies I & II invested at 3%; Strategy III invested at 20%.
Current Strategy Performance YTD (Closed Trades)
Strategy I: Down -1189.45 or -1.19%
Strategy II: Up $2155 or 21.5%
Strategy III: Up $11526 or +57.6%
Cumulative YTD: 12.49%
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.
Outs & Ins: There are no new stocks debuting on the IBD 50 this week. Potential candidates this week. Downside: None. Upside: COR, CTXS, CBM, BGS, INCR & IPHI. Pre-Earnings: AVGO, THO, PLAY & FIVE.
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.comor leave a post on the website. Thanks.
