The market is quite hesitant. In morning trading yesterday the market moved to a top of 12,640 and a bottom of 12,445, within a few hours. This allowed our June620Puts to close profitably. Day traders got up to 3.00 a contract in profits on the June630C.
New trades were possible on the June630C, for tight scalping profits, as the market gyrated, we also continue to hold a longer position to this in the money call; Day traders got up to 3.00 a contract in profits on the June630C.
The market can be viewed as in a technical befuddle; that is, either ripe for upside, or poised for downside. Wyckoff chartists would read this market as ripe for another sell off, despite a stronger count still to the call.
Downside will occur and will surprise the bulls. Right back to former moving averages. A complete sell off has not occurred.
But a sucker's rally, or a just a burst of buying, still just as likely in this range bound market.
From our subscribers:
"Looking at the history of the last 60 days, the theoretical DJ has really been lethal. Someone bought my calls for 13.9 yesterday at the end. Today I bought and sold puts for net 18% and bought calls at $12. I will sell the calls when the buy is back on the puts. I will not walk away until all is sold and I will use a 20% stop which is getting pretty dusty and rusty. :) Wow ! As reality unfolds the shock and aw become quiet. I think the enemy is really close now, me. "-TP, Oregon
and hours later:
"There it is, the put is back were it was and my sell order on the call got filled. I am not buying anymore until tomorrow."
“Interesting to watch.”? That is an understatement! It was like someone flipped at switch at 3:27. Is that just years of experience knowing times of the day that the buyers might step in? Based on what happened, I feel like I know so very little. I know not one thing magically tells the story; however I would certainly not predicted that – other than the DOW being near a strong support level and the 21 day trend you speak of. Institutional buyers at that time of day?
Higher volume on increasing prices and ending at or near the high….. Clear sailing Thursday. Maybe ;-)
As Ed McMahon so eloquently coined: I will simply call you Karnack the Magnificent.
Kind Regards,
RC
Floyd: This subscriber was noticing the increasing volume and thinking we were near a sell off. I had advised "interesting to watch" and commented on our regular tests of support lines.
"I really appreciate your responses Floyd. It is obvious that I need to still "learn what I do not know."
A couple of things are holding me up right now. One of them is HOW or WHY the market moves. Am I right by saying that your service teaches that it is all based on supply and demand, over bought/oversold, support and resistance lines and mathematical sequences? It really has nothing to do with the news or what is going on "out there?" What about FOMC meetings, earnings, commodity prices, the value of the dollar etc.? Don't those things cause market changes? When you say that they "trigger" moves in the market, what you are really saying is that they are not responsible for what was already going to happen correct? How do you KNOW (with the accuracy that you have) what is going to happen (you say that 70% is intuitive - is the rest x's and o's?). And can we develop this "intuition?"
Floyd: The Dow projections are mere tools. Do NOT get hung up on just the Dow projections. I am suggesting that the "news" triggers cause and effect off supply and demand.
Ex: If the market is vastly high and overextended, and "news" comes out that the FEDS are raising rates, the ODDS of a greater downturn off this are greater than if the Feds announced a rate cut and the market was already high, but with this news moved up only a slight bit.
Do nothing more than study s/r, pivot points and the Dow to understand the moves of that day.
The second thing messing me up is my intraday analysis. I am confused as to WHEN and HOW to analyze intraday. Do you do this an noon? And when you do, do you just calculate a new pivot (high + low divided by 2) and this new pivot will provide new support and resistance lines?
Floyd: Traders often recalculate at 10.30 a.m and again in the early afternoon. It's ONLY necessary to do if the market is showing 100 point type swings during the day. All of this is in the calculation models on the website.
Thirdly, when you list the Fibonacci percentages...is there a reason why 62% is listed before 50%? Which is most important (the 50%?). And what exactly are you looking for with the Fibonacci lines? Is this just for pullback reasons and better entry points or do you use these to help predict reversals at all?
Floyd: There are three Fib retracements. All three are listed. The alert identifies all three, and that the 50% line is the common "support" line, just another support line to know.
From the tone of your questions, I can see a subscriber that has not truly studied the manual, and continues to miss many obvious things, making them more complicated than they are, and trades without knowledge. This way you'll lose money.
Hey Floyd,
I am learning some lessons the tough way.
I've been holding the 630 calls since Friday (3 calls with an average price of 13.80).
Floyd: Stop loss should be this Friday Two buys should have been made. The position has been available several times for scalp profits also.
Tuesday's 2nd signal was the 620 Put. I jumped the gun slightly and filled 2 positions at 8.00. This was at 9:55am (5 minutes before the new home sales report and the consumer confidence report came out). I figured that both would be below expectations. Well at 10am, after the reports came out, the DOW shot up. I quickly sold my puts for a $60 total loss b/c I thought we were taking off on the upside. After about 1/2 hour, I noticed the DOW falling again. This time I filled four 620 Puts at 7.80. There was one point, about an hour or two later, where I was up about $400 (that is about a 13% gain). I never sold any of my puts until I slowly watched my profit dwindle to a measly $80. All in all, I ended up taking a $16 loss dues to commissions.
Floyd: The lesson here is buying too early. You were "guessing" on the report, and "guessing" on "taking off one the upside.
You would know this from studying support/resistance and pivot points.
I need to come up with a freakin' plan because trading like this will get you broke real quick!!
Floyd: The plan already exists. You must just follow it.
1. What system do you follow with regards to "high risk" day trades? What are the profit goals? 10-15%? Because I was thinking that the DOW had more room to drop, I was holding out (greed) and it just never got there. Now if I had a system in place, some strict rules to follow, I would have probably been much better off. Any suggestions?
Floyd:If puts were higher risk and you were new to trading, why take that risk? You must have profit goals in advance. I cannot give you exact profit goals, as each trader with us is different, and has different risk management methods and goals.
Trader A might buy 100 contracts at settle for 8%, another might buy 2 contracts and be willing to buy 4 more, and settle for 20%.
And, as an example, puts were profitable today on several downturns. We entered a trade range.
2. When the DOW did drop to the low to mid 12.400's...should I have bought some more 630 calls? That just seemed like a good idea being down that far. I wanted to buy some more calls but you had previously mentioned having made to 2 buys already. Would that have been a bad move to buy more?
Floyd: This would have been the time to do so, but if you already made two buys on the position you would be breaking rules.
Some traders had not bought the second time yet.
3. I see in your new alert that you write, "The open put, sold by many traders yesterday, remains a viable buy if market conditions show deterioration. Buy no higher than prior day close, sell for only UP to 18% profits." I appreciate the specific profit goals. To be more conservative, I will stick to 10-15%. My question to you is the following, :How will a trader with little experience know when and if the "market conditions show deterioration?" What am I looking for exactly? Breaking through support lines? What are the key indicators?
Floyd: We were close to a Dow bottom. I advised a shorter term hold, and the higher risk. I would, if little experience, been paper trading still. You must learn first what you do not know.
Thanks for your help Floyd,
I'm learning good stuff here! Unfortunately, some of it is the hard way. What I like is that I am gaining some confidence because my understanding is increasing. Oh I almost forgot. You keep mentioning that you anticipate a move back up to 13,000. Wouldn't we want to keep some 630 calls until then or do you like to just keep taking profits and continue buying along the way up? If you prefer the latter, can you explain why?
Floyd: Always take profits off the table. One can always rebuy. Market moves may CHANGE trom a projection in a revised projection as market conditions change each day.
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